Georgia Dream Homeownership Program seller guide

Georgia Dream Homeownership
Program Seller Guide
Georgia Department of Community Affairs Office of Housing Finance
60 Executive Park South, NE Atlanta, Georgia 30329-2231
1-800-359-HOME www.gadream.com

Georgia Dream Homeownership Program
SELLER GUIDE
Georgia Department of Community Affairs 60 Executive Park South, N.E. Atlanta, GA 30329
Phone (404) 679-4840 Fax (404) 679-5839 Toll Free Inside Georgia (800) 359-4663
TDD (800) 736-1155 TTY (800) 228-4992 Web Site: www.gadream.com
Para informacin en Espaol acerca de nuestro programa Georgia Dream Home (El Sueo Compra de Casa Georgia), por favor deje nos nombre y nmero y nosotros les contactaremos lo antes posible

An Equal Housing Opportunity Lender

An Equal Opportunity Employer

Georgia Dream Homeownership Program

Seller Guide

Office of Homeownership All numbers begin in 404 prefixes unless stated otherwise

Denise Thomas, Homeownership Office Director
Tracey Turman, Housing Outreach Coordinator/Lender Training

679-0653 denise.thomas@dca.ga.gov 470-504-8173 tracey.turman@dca.ga.gov

Kay Daniell, Program Specialist Lender Portal www.gadream.com

679-4851 kay.daniell@dca.ga.gov

Doris Suero, Program Coordinator DCAReservations@dca.ga.gov

679-4847 doris.suero@dca.ga.gov

Martha Forest, Senior Underwriter Tracy Ali, Underwriter

679-0613 679-1731

martha.forest@dca.ga.gov tracy.ali@dca.ga.gov

Agatha Turner, Underwriter

679-5278 agatha.turner@dca.ga.gov

Tamie Lamar, Loan Administration Manager

679-0595 tamie.lamar@dca.ga.gov

Sharon Kenney, Loan Funding Assistant
Jamilla Byrd, Grants Consultant/Home Buyer Education
Rate Line/Underwriting Turn time

679-0598 sharon.kenney@dca.ga.gov 327-6858 jamilla.byrd@dca.ga.gov 679-0581

State Home Mortgage (Loan Servicing) Donna Martin, Servicing Manager/Customer Service
Michael Galloway, Servicing Manager/Default
Kerry Haynes, Servicing Manager/Foreclosure

679-0584 679-4908 679-0606

donna.martin@dca.ga.gov michael.galloway@dca.ga.gov kerry.haynes@dca.ga.gov

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Table of Contents

Seller Guide

INTRODUCTION

Chapter 1

Lender Relationships

101 102 103 104 105 105.1 106 107 108 109 110 110.1 110.2 110.3 111 112 113 114

DCA Lenders Application Process for New Lenders Application Review Process Loan Seller Agreement Lender's Basic Duties and Responsibilities
Electronic Media Lender Organizational Changes Loan Servicing Program Contact Lender's Repurchase Obligation Remedies for Non-Performance
Limited Participation Termination Notification and Appeal Lender Portal Program Compliance Annual Lender Renewal Changes to the Program

Chapter 2
201 202 203 204 204.1 205 205.1 205.2 206 207 207.1 207.2 207.3 207.4 207.5 207.6
207.7 207.8
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The DCA Loan Process
General Funds Availability Loan Origination Issuance of Reservations
First Mortgage Loan Interest Rates Reservation Period
Reservation Period Extension Extension Fees Cancellation of Reservation Underwriting Compliance Underwriting Credit Underwriting Credit Report Automated Underwriting Manual Underwriting Minimum Credit Score Requirements for FHA, VA, USDA/RD & Conventional Uninsured Loans Underwriting Package Format Incomplete Underwriting Package

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207.9 208 208.1 208.2 208.3 209 210 210.1 211 211.1 211.2 211.3 211.4 211.5 211.6 211.7 211.8 212 213 214

DCA's Underwriting Period Underwriting Decision
Underwriting Approval Letter Underwriting Deferral Letter Underwriting Rejection Letter Clearing Conditions Closing Power of Attorney Loan Purchase Purchase Deadline Contents of Purchase Packages Purchase Package Review and Purchase Delay Penalty Fees Incomplete Purchase Packages Loan Purchase Price Non-Purchase of Closed Loan Non-Purchase of Delinquent Loan Mortgage Record changes in FHA connection Final Documents Quality Control Loan Servicing State Home Mortgage

Chapter 3
301 301.1 302 302.1 302.2 302.3 302.4 302.5 302.6 302.7 302.8 302.9 302.10 302.11 302.12 303 303.1 303.2 303.3 303.4 303.5 303.6 304

Georgia Dream Homeownership Program Requirement
Eligible Loans Warranties and Representations
Loan Requirements Interest Rate Mortgage Insurance Requirements FHA Loans Requirements VA Loans Conventional Loans USDA/RD Loans Pool Insurance Subordinate Financing Loan Amount Determining the Down Payment Construction Loans Amortization
Eligible Applicants First-Time Home Buyer Requirement Ownership Interests No Ownership of Other Residential Real Estate Principal Residence Requirement Co-Signers Liquid Assets Limitation
Household Annual Income & Debt

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304.1 304.2 304.3 304.4 304.5 304.6 304.7 304.8 304.9 305 306 307 308 308.1 308.2 308.3 308.4 309 309.1 309.2 309.3 309.4 309.5 309.6 309.7 309.8 309.9 310 310.1 310.2 310.3 310.4 310.5 310.6 311 311.1 311.2 311.3 311.4 311.5 311.6 311.7 311.8 311.9 312 312.1

Household Members Household Income Limitations Calculating Household Income Termination of Employment Child Support/Alimony Overtime/Bonuses Unemployment Compensation Self Employed Applicants Student Loans Bank Statements, Paystubs and Section 1010 Language Tax Transcripts Homebuyer Education Eligible Properties Maximum Purchase Price Manufactured & Modular Homes Condominium Trade, Business, or Investment Property Property Standards Private Wells Septic System New Construction Acreage Environmental Review Flood Hazard Zone Certification Utilities and Appliances Lead Paint Swimming Pools Appraisal Guidelines Standards for Appraisers FHA Appraisals FHA Single Family Property Disposition Program USDA/RD Guaranteed Loans VA Loans Conventional Loans Loan Closing Documents Warranty Deed & Transfer Survey Title Insurance Policy Hazard Insurance (See (d) for Mortgagee Clause) Flood Insurance Termite Letters Note & Endorsement Mortgage Loan Estimate Tax Exempt Financing Rider Closing Costs and Lender Fees Calculating the Prepaids

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312.2 312.3 312.4 313 314 315 315.1 315.2 315.3 315.4 315.5

Interest Credit at Closing Cash Out at Closing Taxed, Special Assessments and Contractor Liens Loan Assumptions High Cost Loans Recapture Tax IRS Reporting and Calculation of Recapture Tax Refinancing Assumptions Lender's Responsibility Notice at Closing

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Chapter 4
401 401.1 401.2 401.2a 401.2b 401.2c
401.3 401.4 401.5 401.6 402 403 404 405 406 407 408 409 410 411

Special Georgia Dream Second Mortgage Program
Loan Terms Interest Rate Loan Amount Standard Protectors, Educators and Nurses (PEN) CHOICE (Consumers Homeownership & Independence Choices for Everyone) Mortgage Insurer Requirements Use of the Georgia Dream Second Mortgage Loan Amount Debarred and Suspended List Recapture Tax
Eligible Applicants Household Annual Income Eligible Properties Appraisal Requirements Additional Documentation for Underwriting Package Loan Closing and Purchase Subordinate Financing Purchase Documentation Loan Purchase Applicants Funds Required

Chapter 5
501 502 503 504 505 506

Georgia Dream HHF DPA Program
Georgia Dream HHF DPA Program Eligible Properties Eligible Loans Loan Terms Eligible Borrowers Loan Closing

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Worksheets
Household Income Worksheet Year-to-date Conversion Chart Year-to-date Conversion Chart for Leap Year

Seller Guide

Checklists

Underwriting Package Checklist (First and Second Mortgage Loans) Closing Checklist (First and Second Mortgage Loans) Purchase Package Checklist (First and Second Mortgage Loans) Servicing Package Checklist (First Mortgage Loans) Final Documents Checklist (First and Second Mortgage Loans)

Appendices
I II III VI VIII IX

Definitions Metropolitan Statistical Areas Targeted Areas Private Mortgage Insurers DCA Approved Housing Counseling Agencies Section 1010 Language

Forms
SF-5 SF-6 SF-7 SF-10 SF-12 SF-15 SF-16 SF-30 SF-31 SF-40 SF-44 SF-46 SF-50 SF-60 SF-61 SF-82 SF-84 SF-85 SF-86 SF-87 SF-88

Program Forms List "Extension Form" "Reservation Cancellation" "Reservation Change Form" "Loan Applicant Profile" "Application Affidavit" "Affidavit of Non-Applicant Household Member" "Acquisition Cost Certification" "Loan Funding Profile" "Servicing Loan Profile" "Tax-Exempt Financing Rider" "Transfer and Assignment" "Mortgagor's Closing Affidavit" "Notice to Purchaser of Potential Recapture Tax on Sale of Home" "Lender Certification" "Notice of Assignment, Sale or Transfer or Servicing Rights" "Second Mortgage Note" "Second Mortgage Subordinate Security Deed" "Georgia's Hardest Hit Fund Promissory Note" "Georgia's Hardest Hit Fund Subordinate Deed To Secure Debt" "Georgia's Hardest Hit Fund Transfer And Assignment" "Georgia's Hardest Hit Fund Borrower Certification"

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SF-100 "Surviving Spouse Affidavit" SF-6012 "Tax Return Affidavit"

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Chapter 1 Lender Relationships

Seller Guide

Our relationships with DCA Lenders are central to the success of the Georgia Dream Homeownership Program. Throughout the year, a mortgage lender may apply to be a DCA Lender. This Chapter outlines the process for becoming a DCA Lender, the basic duties and responsibilities of a DCA Lender, and the annual renewal process for DCA Lenders. The duties and responsibilities of a DCA Lender are more specifically described in the Loan Seller Agreement and other chapters in this Guide.

The Georgia Department of Community Affairs is committed to providing all persons with equal access to its services, programs, activities, education and employment regardless of race, color, national origin, religion, sex, familial status, marital status, disability or age.

101 DCA Lenders

A DCA Lender must: a) be a legally organized and properly licensed business entity with a office located in the State of Georgia or in a State contiguous to Georgia; different branch offices of the same legal entity will not qualify as individual Lenders but different wholly owned subsidiaries may qualify as individual Lenders if they constitute separate legal entities; b) have as a principal purpose the origination of secured single family residential mortgage loans; c) be approved as (i) an FHA Direct Endorsement lender and VA lender, or (ii) be a federally regulated financial institution or a state or federal agency; d) be approved as (i) a Fannie Mae, Freddie Mac, or Ginnie Mae Issuer, or (ii) be a federally regulated financial institution, or a state or federal agency; e) demonstrate a proven ability to originate mortgage loans for sale in the secondary market; f) maintain quality control and management systems to evaluate and monitor the quality of loan production and compliance with DCA procedures; g) have in effect and maintain fidelity bond and errors and omissions coverage in amounts equal to that established for Fannie Mae Seller/Servicers and agree to any modifications needed to meet our requirements; h) have a minimum net worth of $2,500,000; and i) document a HUD Neighborhood Watch compare ratio for Georgia of less than 125%. If there are no Georgia loans, then a compare ratio of 125% of national production will be considered.

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102 Application Process for New Lenders

A Lender Application package must be completed and returned to DCA for review and approval. The application package must contain:
a) a completed Lender Application form and all required attachments; b) two (2) original Loan Seller Agreements executed by a duly authorized
senior officer; c) two (2) original Loan Servicing Release Agreements executed by a
duly authorized senior officer; d) the three (3) most recent year-end financial statements available,
certified by an independent certified public accountant; e) evidence of fidelity bond and errors and omissions coverage in
amounts equal to that established for Fannie Mae Seller/Servicers; f) a copy of the Lender's Quality Control Plan. If applicable, a 203(k)
Quality Control Plan must also be provided; g) a complete O.C.G.A. 50-36-1(e)(2) Affidavit executed by a duly
authorized officer and a copy of one verifiable documentation of citizenship; h) a Corporate Resolution designating the officers or individuals authorized to execute assignments and other legal documents; and i) an Original Limited Power of Attorney executed by a duly authorized senior officer.

103 Application

Upon receipt of a complete application package, we will analyze the Lender's

Review Process ability to originate Georgia Dream Loans in compliance with our procedures

and requirements. Upon completion of our review, we will send notification by

email of the approval or denial of the application.

Information and/or documentation submitted to DCA as a part of the application process may be subject to public disclosure.

104 Loan Seller Agreement

The Loan Seller Agreement between Lender and DCA: a) sets forth the requirements with which Lender must comply in order to maintain its status as a DCA Lender; b) provides the terms and conditions for the sale of Georgia Dream Loans; c) incorporates this Seller Guide by reference; and d) incorporates DCA's Fair Housing Statement and requires DCA Lenders to maintain policies prohibiting discrimination based on race, color, sex, religion, national origin, familial status, disability or age. It also requires DCA Lenders to comply with all federal and state fair housing and lending laws, rules, regulations, orders, and provisions.

The Lender performs origination and selling functions under the Loan Seller Agreement as an independent contractor and principal, not as an agent or representative of GHFA or DCA.

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105 Lender's

Lender's duties and responsibilities include but are not limited to the following:

Basic Duties

a) Ensuring compliance with the requirements set forth in this Seller

and

Guide and the Loan Seller Agreement;

Responsibilities b) Ensuring Georgia Dream Loans meet Program requirements and all

applicable mortgage insurer requirements;

c) Having adequate staff and facilities to originate and sell quality Georgia

Dream Loans on a timely basis, including but not limited to:

o Assisting each loan applicant with the requirements of the

Program and advising of the status of the loan application;

o Reserving, underwriting and submitting approved Georgia

Dream Loans to DCA for compliance underwriting approval

before closing;

o Funding and closing of the Georgia Dream Loans;

o If applicable, submitting required documents to the Mortgage

Insurer to obtain mortgage insurance and arranging for the

transfer of the insurance to GHFA;

d) Ensuring staff are knowledgeable in all aspects of loan origination and

selling;

e) Having fully documented written procedures and quality control

measures to determine that the procedures are being followed;

f) Protecting GHFA and DCA against fraud, misrepresentation or

negligence by any parties involved in the origination process; and

g) Designating a Program Contact as described in this Chapter.

105.1 Electronic Media

If Lender elects to transfer a paper copy of this Seller Guide into electronic format, the Lender expressly warrants that all such electronic Seller Guide forms and material used in connection with Georgia Dream Loans shall have only minor variations in format.

Acceptable minor format variations include: a) change in type font; b) change in type size, so long as the document is easily readable; and c) absence of the form borders.

Unacceptable format variations include: a) absence of Georgia Dream Homeownership Program form number; b) absence of Georgia Dream Homeownership Program form version designation; and c) any change in content, including substitution, omission or addition of one (1) or more words.

You should contact us with any questions about reproduction of the Seller Guide or its forms before distribution of these documents in conjunction with the origination of Georgia Dream Loans.

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106 Lender

Lenders must send written notice to DCA of any major organizational changes

Organizational contemplated, including, but not limited to:

Changes

a) resignation or replacement of any senior management personnel;

b) mergers, consolidations or reorganizations;

c) changes in ownership of over 5% by whatever means;

d) a change in corporate name;

e) a change in a savings and loan association's charter from federal to state

or vice versa or change to a banking association; and/or

f) a change in your financial position which would render you unable to

honor the Loan Seller Agreement.

Lenders must notify the DCA's Program Specialist by email of any changes in primary business office address, email or wiring instructions within five (5) Business Days of the change. On a periodic basis, Lender may be asked to verify addresses, telephone numbers, primary contacts and email addresses.

107 Loan Servicing Lenders must release the servicing rights on Georgia Dream Loans to DCA's servicing division, State Home Mortgage. Servicing rights released must be transferred immediately after closing in accordance with this Guide.

108 Program Contact

The Lender must designate one (1) employee to serve as the Program Contact for the purpose of participating in the Program. The Program Contact should be an individual who can fulfill the responsibilities outlined in this Section on a timely and informed basis.

The Program Contact is expected to disseminate information to the appropriate persons involved with the origination, underwriting, closing and servicing associated with Georgia Dream Loans. The Program Contact should inform all appropriate person to sign up for the weekly Georgia Dream rate sheet at the following link: https://dca.ga.gov/safe-affordable-housing/homeownership/georgiadream/lenders.

While specific questions related to underwriting, reservations, purchase or final documents may be directed to other Lender staff, the Program Contact is expected to resolve problems, answer questions or represent Lender's position on various issues related to Lender's participation in the Program.

The Program Contact must be designated at the time of lender application. Lender must notify DCA's Program Specialist by email within five (5) Business Days of a decision to designate a new Program Contact due to change in staff or change in staff responsibilities. Failure to provide this notification may result in immediate limited participation as described in this Chapter and may result in additional sanctions.

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109 Lender's Repurchase Obligation
110 Remedies for NonPerformance 110.1 Limited Participation
110.2 Termination

For reasons including but not limited to the following, Lender must repurchase any Loan sold to GHFA by the 15th Business Day following our demand in accordance with the Loan Seller Agreement:
a) Any of the warranties contained in the forms and certifications required by the Seller Guide are untrue or misleading in any material respect;
b) the Loan is found to be in violation of any applicable Program or Mortgage Insurer requirements;
c) Lender fails to deliver any required documents and/or certifications; d) Lender takes action which impairs GHFA's security and/or causes the
Loan to no longer meet the requirements of the Seller Guide, either before or after the sale of the Loan to GHFA and execution of the Lender Certification (Form SF-60); and/or e) Lender fails to take action that protects GHFA's security and/or causes the Loan to no longer meet the requirements of the Seller Guide, either before or after the sale of the Loan to GHFA.
In the event Lender is required to repurchase a Loan, the amount due to DCA on GHFA's behalf will be governed by the terms of the most recently executed Loan Seller Agreement.
DCA retains the right to either limit or terminate Lender's participation in the Program for (i) any failure to abide by the terms of the Loan Seller Agreement or this Guide, (ii) any untrue or materially misleading statement in the Lender Application or Lender Application Renewal forms or attachments thereto, or (iii) lack of loan participation
Limited participation means the Lender will be unable to make a reservation until the specific violations which caused the limited participation have been resolved to our satisfaction. Such violations include but are not limited to:
a) loss of mortgage insurer certification; b) failure to maintain a branch in Georgia or contiguous state; c) outstanding repurchases of loans or outstanding final documents; or d) excessive HUD or GHFA delinquency ratios.
Limited participation does not relieve the Lender of any responsibilities under the Loan Seller Agreement or this Guide. At the conclusion of the period of limited participation, DCA will notify Lender either (i) when reservations may resume, or (ii) the Lender's participation in the Program has been terminated.
Termination means Lender will no longer be allowed to participate in the Program and Lender's name will be removed from all DCA materials intended for the public as soon as practical. The decision to terminate participation will be based upon an evaluation of the severity and magnitude of the violation and will be solely within DCA's discretion. After termination, a Lender which has taken the necessary steps to prevent a reoccurrence of the violation that led to the termination may submit a request to reinstate participation to DCA's

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Program Specialist with an explanation of the steps taken. After review, we will notify you of our decision.

At time of Lender renewal, if Lender has zero production the previous year, Lender participation in the Program will be terminated.

110.3 Notification and Appeal

The Program Contact will be notified of limited participation or termination via email. Lenders will have 15 Business Days from the date of the notice to appeal the action to DCA's Program Manager of Homeownership. The appeal must (i) demonstrate why Lender feels the action was unwarranted, (ii) describe any measures underway to correct the deficiencies, and (iii) demonstrate measurable progress toward correcting the deficiencies. DCA may, in our sole discretion, schedule an informal conference with Lender to gather information related to the limited participation or termination. A decision will be made within 15 Business Days of receipt of the appeal.

111 Lender Portal Lender Portal is DCA's internet-based system that allows Lenders to enter Reservations, complete and print DCA required forms, check the status of Reservations, submit electronic documents for review and access various reports. Lenders are required to utilize Lender Portal to reserve funds with DCA. Anyone utilizing Lender Portal must be assigned an individual username and password.

112 Program Compliance

Lender is responsible for ensuring each Loan submitted to DCA complies with our Program requirements and the requirements of the Mortgage Insurer as set forth in the Loan Seller Agreement and this Guide.

Even if the loan is purchased based upon DCA's review of the underwriting package, DCA reserves the right to require Lender to repurchase the Loan if the Loan does not comply with the applicable Program requirements and/or the requirements of the Mortgage Insurer as set forth in the Loan Seller Agreement and/or this Guide.

113 Annual Lender Each year, Lender is required to complete a Lender Application Renewal

Renewal

package within the time specified by DCA. The renewal package must contain:

a) a completed Lender Application Renewal form and all required

attachments;

b) if required by DCA, two (2) original Loan Seller Agreements executed

by a duly authorized senior officer;

c) the most recent year-end financial statements available, certified by an

independent certified public accountant;

d) evidence of fidelity bond and errors and omissions coverage in amounts

equal to that established for Fannie Mae Seller/Servicers;

e) any requirements of new applicants specified in this Guide not

previously requested of Lender; and

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f) documentation showing a HUD Neighborhood Watch compare ratio for Georgia of less than 150%. If compare ratio exceeds 150%, we will consider the Lender's Georgia Dream loan performance. If the compare ratio exceeds 150% for two consecutive quarters, we reserve the right to remedies for non-performance, in accordance with this guide.

114 Changes to the The provisions of the Loan Seller and Loan Servicing Agreements and this

Program

Guide may be amended from time to time. Lender must abide by any such

changes or may withdraw from participation by providing notice to DCA's

Program Specialist within ten (10) Business Days following notification of any

such changes.

Federal and State laws governing the Program are subject to change. When you sign the Loan Seller Agreement and/or Loan Servicing Agreement, you are acknowledging and agreeing that Federal or State legislation or both could be enacted in the future that would require amendment of the provisions of this Guide, Loan Seller Agreement and/or the Loan Servicing Agreement. You are also acknowledging and agreeing that future DCA Program changes might require an amendment of the provisions of this Guide and/or the Loan Seller Agreement.

You also acknowledge and agree that the requirements and procedures of Mortgage Insurers applicable to the Program may change. When you sign the Loan Seller Agreement and Loan Servicing Agreement you are agreeing to comply with any such future changes in the Mortgage Insurers' requirements or procedures.

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Chapter 2 DCA Loan Process

Seller Guide

The loan process described in this Chapter allows DCA to manage the Georgia Dream Homeownership Program pipeline and provide DCA Lenders with information about the loans in the pipeline. It is critical that Lenders maintain correct information and take timely action to ensure loans meet our deadlines.

201 General

As a DCA Lender, it is your responsibility to ensure each loan submitted to DCA complies with Program requirements and the requirements of the Mortgage Insurer and to assist eligible borrowers throughout the loan process.

DCA will review Underwriting Packages, clear underwriting conditions, and review Purchase Packages on a first-come, first-served basis. Lenders should submit Underwriting Packages and Purchase Packages as early as possible to allow sufficient time for DCA to review each package and for the Lender to address any issues.

202 Funds Availability

Generally, DCA expects to make funds for the Program available to Lenders on an ongoing basis. DCA must, however, comply with certain State and Federal laws relating to the geographic allocation of its funds. Therefore, we reserve the right to select Reservations that meet those requirements and hold other Reservations for a later date if sufficient funds are not available for all Reservation requests.

In the unlikely event that funds are not available for all expected Reservations, DCA will post notification on the Rate Sheet, Lender Portal, and notify the Program Contacts by email.

203 Loan Origination

DCA recognizes there are procedural variations among Lenders. Therefore, the procedures outlined in this section only suggest the sequence of events for loan origination: a) The Lender is encouraged to provide Applicants who inquire about the
Program with a Georgia Dream Homeownership Program brochure and answer any questions the Applicant may have regarding the Program, eligibility requirements and the loan process; b) The Lender advises the Applicant to attend homebuyer education through a HUD approved housing counseling agency and provide evidence of completion in the Underwriting Package; c) The Lender takes a formal application and determines if the Applicant is eligible for the Program based on information received for Household Annual Income, Acquisition Cost, prior homeownership, and other relevant information. If the Applicant appears eligible, the

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Lender obtains completed and signed copies of the Program documents required at application, d) The Lender reserves funds pursuant to the Reservation procedures outlined in this Chapter, e) The Lender underwrites the application for credit approval based on the requirements of the Mortgage Insurer and determines if the loan complies with DCA's guidelines, and f) Once the Lender's underwriter has approved the loan and completed its review, an underwriting package is submitted to DCA for a compliance underwriting review.

203.1 Completion of Forms

Lender must submit fully completed and signed Georgia Dream documents at time loan is submitted to the Lender Portal for review. If required forms are not included in the loan file, review of the loan file may be suspended until documents are uploaded to the Lender Portal.

Georgia Dream Documents which have been signed with borrower's electronic signature must be accompanied by the borrower(s) Electronic Signature Authorization. If unable to provide, all forms must be wet signed.

The Note and Deed must continue to be signed by the borrower(s) at closing.

204 Issuance of Reservations

To request a Reservation for the Program, Lender must enter the required information via the Lender Portal. Lender should select the correct category for the loan.

If the Reservation request meets Program requirements and funds are available, Lender will receive a Reservation Number via a "Reservation Accepted" response from the Lender Portal. The "Reservation Accepted" screen must be printed and uploaded in the Underwriting Package in eDocs.

Lender must make note of the DCA Reservation Number and make it accessible to all personnel involved with the loan. The Reservation Number must be included in all verbal and written communication with DCA to facilitate accessing information about the loan.

If any information needs to be changed (property address, income, purchase price, loan amount, etc.) after a Reservation Number has been issued, Lender must complete the Reservation Change Form (SF-7) and email it to dcareservations@dca.ga.gov. DCA will make the changes upon receipt of the Reservation Change Form and notify Lender once the changes have been made.

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If the Reservation Period expires, the loan will be cancelled unless Lender requests an extension in accordance with this Chapter.

DCA does not allow substitution of a borrower on any Reservation.

204.1 First Mortgage Loan Interest Rates

The interest rate for Georgia Dream First Mortgage loans is the rate that is effective at the time the reservation is received by DCA and is attached to the property.
DCA will notify Lenders of the interest rate and the effective period for the rate each Thursday or as necessary. A reserved loan is not subject to increases or decreases based on market fluctuation.

If Thursday is not a Business Day, then DCA will send the Rate Sheet on the previous Business Day. As such, DCA will deliver a Rate Sheet by email every Thursday afternoon before 5:00 p.m. Interest rates are also available 24 hours a day on the Lender Portal and by dialing the Lender Information Line at (404) 679-0581.

205 Reservation Period

The Reservation Period is the period the Lender must submit the Underwriting Package to DCA for approval, close the loan, and submit the Purchase Package to DCA for funding. The Reservation Period is 75 calendar days.

Lender must periodically review the status reports available on the Lender Portal to monitor and notify DCA of any cancellations or extensions needed.

205.1 Reservation Period Extension

Lender may request an extension of the Reservation Period by submitting Form (SF-5) to dcareservations@dca.ga.gov.
With payment of an Extension Fee, Lender may request one 30-day extension of any Georgia Dream loan reservation. For FHA 203K loans, Lender may request up to two 30-day extensions with no Extension Fee and one additional 30-day extension with payment of an Extension Fee. Within our discretion, we may grant an additional 30-day extension for any Georgia Dream loan reservation if we have completed our underwriting review.

Within three (3) Business Days of receipt of an Extension Form (SF-5), DCA will notify Lender by email of the approval or denial of the request for extension. If approved, the approval will show the new Expiration Date and the total Extension Fee due.

After the expiration of any approved extension period, the reservation will be cancelled. The Lender may send a written request to make a second

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reservation, which is within the sole discretion of DCA whether to approve.

205.2 Extension Fees

If the interest rate at the time of initial extension request is greater than the interest rate at time of Reservation, the Extension Fee is $250.00. For all other extension requests and additional discretionary requests, the Extension Fee is $75.00. Extension Fees will not be pro-rated.

Extension Fees are not refundable and may not be charged to the borrower. The Extension Fee will be deducted from the net purchase amount when we purchase the loan.

206 Cancellation of Immediately upon learning that a loan with an active Reservation will not Reservation be presented for purchase, Lender must complete a Reservation Cancellation (Form SF-6) requesting cancellation of the Reservation and send via email to dcareservations@dca.ga.gov.

Loans may not be cancelled and re-reserved to obtain a lower interest rate. A reservation made within six (6) months of a previous reservation for the same borrower and the same property will result in the higher of the current or previous interest rate.

207 Underwriting

The credit decision on each loan is made by the Lender in accordance with this Chapter. Each loan submitted to DCA must also meet the Program requirements and the applicable Mortgage Insurer's requirements as determined by the Lender's underwriter. DCA will underwrite loans for compliance with Program requirements prior to issuing an underwriting decision to the Lender.

207.1 Compliance Underwriting

Lenders are required to review the file for compliance with Program requirements prior to submitting the Underwriting Package to DCA for compliance underwriting, but DCA reserves the right to require further information to insure compliance with Program requirements and/or Mortgage Insurer requirements.

DCA's compliance underwriting decision will be based on, but not limited to, a review whether the documentation in the Underwriting Package demonstrates satisfactory compliance with the following criteria: a) Applicant meets the first time homebuyer requirements; b) Applicant's total Household Annual Income meets Program
requirements; c) Acquisition Cost of the subject property is within the published
Acquisition Cost limits for the county in which the property is located; d) DCA required forms are complete and accurate; e) Loan proceeds are utilized for purchase only transactions;

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207.2 Credit Underwriting
207.3 Credit Report
207.4 Automated Underwriting

f) Complete and accurate information is provided prior to loan closing and all underwriting approval conditions are satisfied and adequately documented; and
g) Collateral assessment of the subject property meets Program requirements and the requirements set forth by the Mortgage Insurer.

Lenders must follow the underwriting guidelines set forth by DCA and/or the Mortgage Insurer, Lender's credit underwriting must evaluate the creditworthiness of each Applicant. Approved loans are then submitted to DCA for compliance underwriting.

Lender's Underwriter assumes full responsibility for compliance with the insurer's credit underwriting requirements.

All Underwriting Packages submitted to DCA must include the appropriate Mortgage Insurer approval documents. A copy of the approved Mortgage Insurance certificate, FHA Loan Underwriting and Transmittal Summary (92900LT) and Conditional Commitment completed and signed by the Direct Endorsement Underwriter, signed Conditional Commitment form (USDA-RD Form 3550.7), or proof of the VA automatic or Lender Appraisal Processing Program approval must be in the Underwriting Package.

Lender must submit to DCA a complete copy of the Residential Mortgage Credit Report (RMCR) or a tri-merged credit report. A credit report utilized by an Approved Automated Underwriting System may also be accepted. The credit report may not be older than one hundred and twenty (120) days at the time of final underwriting approval.

Lender must submit a data verification report, including liens and judgments, with the complete underwriting package. The report must come from an acceptable vendor (i.e., Fraudguard, Drive, Lexus Nexis, Corelogic).

For all loans underwritten by an Automated Underwriting System (DU, LP

or GUS), AUS approval will not be accepted unless the Housing Expense

ratio meets the following requirements:

Credit Score

Housing Expense Ratio DTI Ratio

700+

Per AUS approval

Per AUS approval

660-699

<35%

<43%

640-659

<28%

<36%

If a borrower does not meet these requirements, the Lender's Underwriter may request an exception. Exceptions for ratios are limited to two points over the maximum allowable ratio for the credit score. After the complete submission has been reviewed, DCA may, in its discretion, grant an

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207.5 Manual Underwriting
207.6 Minimum Credit Score Requirements for FHA, VA, USDA/ RD, & Conventional Uninsured Loans

exception to the ratio requirements if no negative indicators of credit are present and there are compensating factors including but not limited to:
a) The borrower has successfully demonstrated the ability to pay housing expenses greater or equal to the proposed monthly housing expenses for the new mortgage over the past 12-24 months;
b) The borrower has substantial documented cash reserves of at least 3 months after closing demonstrating an ability to save; or
c) The borrower receives documented compensation or income that is not reflected in effective income but directly affects his/her ability to pay the mortgage.
As part of the Underwriting Package, Lender must submit to DCA all documentation used or required by the Approved Automated Underwriting System in determining the credit recommendation. DCA will accept the streamlined documentation required by the Approved Automated Underwriting System, with the exception of the Appraisal. The information provided on the loan application, source documents and verifications prior to loan closing must conform to the information contained in the AUS approval and all conditions must be satisfied and adequately documented.
DCA will accept manually underwritten loans when a credit score does not exist. Alternative credit is acceptable. DCA will not accept manually underwritten loans when derogatory credit or high ratios exist. FHA and VA loans must comply with the manual underwriting requirements as set forth in HUD 4000.1 or the VA Lender Handbook.
For all manually underwritten loans, the maximum Housing Expense ratio may not exceed 28% and the total Debt to Income ratio may not exceed 36%. If a co-signer is used, the borrower must qualify individually but the maximum Housing Expense ratio may not exceed 50% and the total Debt to Income ratio may not exceed 50%.
All FHA, VA, USDA/RD and Conventional uninsured loans must have a low middle credit score of at least 640.
Applicants with no credit scores that meet FHA's non-traditional credit policy as outlined in the HUD 4000.1 will continue to be accepted as meeting the minimum 640 credit score requirement, but the Housing Expense ratio may not exceed 28% and the total Debt to Income ratio may not exceed 36%.

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207.7 Underwriting Package Format

The Underwriting Package must include at least the items listed on the Underwriting Package Checklist in this Guide and the documents must be arranged in the order listed on the checklist. If not arranged in the order listed, the package will be suspended.

The Lender must insure the Underwriting Package includes all documentation that was deemed necessary to obtain credit underwriting approval, including all documentation required to clear any credit underwriting conditions. The loan must be fully approved by Lender's underwriter prior to submission of the Underwriting Package.

The documents in the Underwriting Package must be uploaded and submitted through eDocs into the Underwriting Package, accessible on the Lender Portal.

207.8 Incomplete Underwriting Package

Lender will be notified via email or phone if the Underwriting Package is substantially incomplete. When the requested documentation is received by DCA, the Underwriting Package will be considered complete and will be placed into underwriting on that date.

207.9 DCA's Underwriting Period

Upon receipt of a complete Underwriting Package, DCA will notify Lender of the initiation of underwriting review within five (5) Business Days. In periods of unusually heavy activity or due to circumstances beyond our control, it may be necessary for DCA to extend the time required for underwriting review beyond ten (10) Business Days.

Lender should consider the DCA underwriting period when planning to close a loan. Lenders may check the status of DCA's underwriting turnaround time by calling the Lender Information Line at (404) 679-0581.

208 Underwriting Lender will be sent an approval, deferral or rejection letter by email as

Decision

outlined in this section.

208.1 Underwriting Approval Letter

If approved, an underwriting approval letter will be sent to Lender stating it is a "Firm Commitment". The underwriting approval letter will identify any conditions which must be satisfied, documentation of which must be included in the Purchase Package.

208.2 Underwriting Deferral Letter

A deferral letter may be issued stating an underwriting decision cannot be made until receipt of listed documentation. Upon receipt of the requested information, the Underwriting Package will be reviewed again with results of the review being uploaded in eDocs.

208.3

A rejection letter is sent when DCA determines a loan does not meet the

Underwriting guidelines for the Program. The letter will include the reason the loan is

Rejection Letter being rejected for delivery to DCA. The Reservation will be cancelled

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unless the Lender notifies DCA within ten (10) Business Days from the date of the rejection that it wishes to attempt to "cure" the rejection. If an Extension of the Reservation Period is needed, Lender must request an Extension in accordance with the procedures outlined in this Seller Guide.

209 Clearing Conditions

To clear conditions or to respond to a deferral or rejection, Lender must upload the requested information to the Underwriting Package in eDocs. The DCA underwriter will review within 24 hours of receipt and will respond by emailing Lender and uploading either (1) a new letter to the Underwriting Package in eDocs if the underwriting decision changes or (2) the previous letter with an indication of which conditions have been cleared.

210 Closing

The loan closing must occur in enough time to allow for the delivery of the loan to DCA prior to the expiration of the Reservation Period.

The Underwriting Approval Letter contains a restatement of the terms under which the loan has been underwritten and the loan must close in accordance with these terms.

The Underwriting Approval Letter is DCA's commitment to purchase the loan after closing as long as it is closed in accordance with: a) any conditions or instructions contained in the Underwriting Approval
Letter; b) the provisions of this Guide and the loan Seller Agreement; and c) applicable Federal, State and local laws and regulations.

210.1 Power of Attorney

The use of a Power of Attorney is not allowed unless the borrower is active personnel in the United States Military and is currently deployed overseas. Only then may a specific Power of Attorney be used by the approved agent designated in the Power of Attorney. This requirement does not apply to the seller.

211 Loan Purchase Lenders must submit purchase packages to DCA within 15 calendar days after loan closing. Lender must also submit the required servicing package described in this Guide.

DCA purchases loans two (2) times each week. All Purchase Packages that are complete as of 12:00 p.m. on Tuesday will be funded on Wednesday. All Purchase Packages that are complete as of 12:00 p.m. on Thursday will be funded on Friday.

DCA reserves the right to periodically amend this purchase schedule due to State holidays, domestic or foreign bank holidays, acts of God and/or any circumstances which, in our opinion, warrant a change.

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211.1 Purchase Deadline
211.2 Contents of Purchase Packages

If DCA has not received a Purchase Package for a loan within the Reservation Period, the Reservation will expire and will be cancelled (unless the Reservation Period is extended in accordance with this Chapter).
Purchase Packages must include the items listed on the Purchase Package Checklists in this Guide. The documents in each Purchase Package must be arranged in the order listed on the checklist. The Purchase Package must be uploaded and submitted through eDocs, accessible on the Lender Portal.

211.3 Purchase Package Review and Purchase Delay Penalty Fees

Generally, DCA will review Purchase Packages within three (3) Business Days of receipt. Lender will be notified by email of any missing or incorrect items and is responsible for submitting or correcting all deficiencies in the Purchase Package within 15 Business Days.
If missing or incorrect items are not provided or corrected within 15 Business Days, DCA may begin charging a Purchase Delay Penalty Fee of $5.00 per Business Day. The Purchase Delay Penalty Fee will be subtracted from the loan Purchase Price for the applicable Georgia Dream First Mortgage loan.

If the Reservation is cancelled after Purchase Delay Penalty Fees have accrued or the loan is not purchased, the Purchase Delay Penalty Fees due may be invoiced to the Lender. If the invoice remains unpaid 90 days after invoice date, DCA may place Lender on Limited Participation as described in Chapter 1 of this Seller Guide.

211.4 Incomplete Purchase Packages

DCA will notify Lender if any Purchase Package is determined to be substantially incomplete or uploaded incorrectly. A substantially incomplete package will not be considered to have met the deadline requirements during the Reservation Period.

211.5 Loan Purchase Price

At the time of funding, the amount disbursed to Lender will be the original principal balance, plus or minus any adjustments for accrued interest, earned servicing fees, extension fees, and Purchase Delay Penalty Fees at time of purchase. Funds will be wired using the wiring instructions provided on the lender application, unless written notification of any change is sent to DCA.

The Servicing Release Premium (SRP) for loans will be as follows:

Credit Score 720+
680-719 <680

SRP 1.125% of the loan amount 1.0% of the loan amount 0.75% of the loan amount

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State Home Mortgage will wire funds for the SRP, deducting the current tax service fee.

211.6 Non-Purchase of Closed Loan

If documentation is requested during the purchase review and is not provided within 60 days, DCA may elect not to purchase the loan. The Reservation will be cancelled, and the loan will be transferred back to the Lender.

211.7 Non-Purchase of Delinquent Loan

If a Loan is delinquent (calculated from the first of the month), we will not purchase the loan until the loan payment is made. If the loan becomes 45 calendar days or more delinquent, we will not purchase the loan even if the loan subsequently becomes current. The Reservation will be cancelled, and the loan will be transferred back to the Lender.

211.8 Mortgage Record Changes in FHA Connection

Within 15 days of our purchase of the loan, the Lender must submit a Mortgage Record Change in FHA Connection to change the holder of record to Georgia Housing and Finance Authority, FHA Holder #09497. Any loan not transferred to Georgia Housing and Finance Authority within the 15-day period will be subject to repurchase by the Lender.
After the Loan is purchased, DCA will email a letter listing the final documents required for the Loan. These documents include those listed on the Checklists in this Guide and may include other items. The failure to include a document from the Final Document or Purchase Package Checklist in the letter does not relieve Lender of the requirement to provide the document.

212 Final Documents

All final documents must be accompanied by a copy of the Final Documents Letter and must be addressed to the attention of "loan Funding Department." Any final documents we receive that we cannot identify, may be returned via certified mail. In such event, Lender's obligation to provide final documents will not have been satisfied. Documents need to be sent to our office attached to a cover sheet providing the loan number.

All requested final documents must be provided to DCA within 90 days of our purchase of the loan or the loan will be subject to repurchase in accordance with the loan Seller Agreement.

Lender must provide a properly executed Form SF-60 Lender Certification dated after all documents have been correctly recorded.

213 Quality Control

DCA requires each Lender to maintain a quality control plan which provides for a comprehensive review of a selection of loans in accordance with insurer/guarantor guidelines. Lender's review must include a minimal amount of loans purchased by DCA. DCA may

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214 Loan ServicingState Home Mortgage

request and Lender must provide a copy of their selection lists and any reviews conducted of loans purchased by DCA.
DCA reserves the right to conduct a quality control review following purchase on any loan as deemed necessary.
The servicing rights to all Georgia Dream First Mortgage loans are sold to State Home Mortgage. Loans released to State Home Mortgage for servicing should not be "set-up" on Lender's servicing system but must be transferred immediately after closing to State Home Mortgage.
Servicing Packages must include the items listed on the Servicing Package Checklist in this Guide. The documents in each paper Servicing Package must be delivered to State Home Mortgage at the address below, along with the escrow check within 15 calendar days after closing.
60 Executive Park South, N.E. Atlanta, GA 30329
Attn: New Loans Department All first payments are due and payable to State Home Mortgage. If any payments from the borrower are received by Lender, the payments must be forwarded to State Home Mortgage upon receipt.
DCA services all Georgia Dream Second Mortgage loans. However, we do not require a Servicing Package for such loans.

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Chapter 3 Georgia Dream First Mortgage Loan Program

Seller Guide

The Georgia Dream First Mortgage Loan Program provides affordable mortgage financing for low and moderate income homebuyers. The program's requirements are contained in this Chapter and must be followed along with the requirements for all Georgia Dream Homeownership Program loans contained throughout the Seller Guide.

301 Eligible Loans
301.1 Warranties and Representations
302 Loan Requirements
302.1 Interest Rate
302.2 Mortgage Insurance Requirements
302.3 FHA Loan Requirements
a)

Federal and State law and regulatory guidelines define what types of loans are eligible for the Program. Eligible Georgia Dream First Mortgage loans are fixed rate FHA, USDA, VA or Conventional loans that must be new permanent loans on the property, meaning the Applicant is not seeking to refinance an existing permanent loan.
Georgia Dream Homeownership Program loans must be closed in your name as the originating Lender. You are fully responsible for all warranties and representations made to us under the loan Seller Agreement, regardless of who originates and/or packages the loan.
A Georgia Dream First Mortgage loan is financed with proceeds of certain tax-exempt bonds issued by GHFA pursuant to certain state laws and federal income tax laws. The tax-exempt status of such bonds is dependent, in part, on GHFA's purchase of loans that are in compliance with the applicable sections of the Internal Revenue Code and applicable Georgia state laws.
The interest rate for Georgia Dream First Mortgage loans is the rate that is in effect at the time the Reservation is received by DCA. Interest rates are posted on the Lender Portal, the Rate Sheet, and are available via our Lender Information Line (404-679-0581).
Georgia Dream First Mortgage loans must be (i) insured by FHA (ii) guaranteed by VA or USDA/RD, or (iii) with respect to conventional loans, meet certain LTV requirements. The loan must meet the requirements of the Mortgage Insurer. The Lender should check with the Mortgage Insurer to verify the precise requirements.
Georgia Dream First Mortgage loans insured by FHA must conform to one of the following Sections of the Federal Housing Code:
FHA Section 203(b) For the $100.00 down HUD REO program, we accept UFMIP provided the total amount of the mortgage does not exceed 100% of the "as is" appraised value and the borrower makes our required $1,000 minimum

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investment. If UFMIP is paid in cash, it is an allowable cost and can be part of our borrower's $1,000 minimum investment. If the bid price exceeds the list price, then the difference must be from the borrower's funds and in addition to our $1,000 minimum investment. Any amount that exceeds the appraised value must be paid from the borrower's own funds in addition to our $1,000 minimum investment.
FHA Section 203(k) Limited (formerly Streamline) b)
Lender must meet and certify all requirements outlined in SF Handbook 4000.1. DE underwriters must have successfully completed 203(k) training. Lender will provide a 203(k) Quality Control Policy Manual at lender application or renewal.
Additional documentation will be required in the Underwriting Package: 203(k) Applicant Acknowledgement Rehabilitation loan Agreement 203(k) Streamline Max. Mortgage Worksheet HUD 92700 Cost Estimate and Contractor Bid Analysis of Appraisal Report HUD 54113

In addition to verification of FHA mortgage insurance, the following documents are required on or prior to the date of purchase: Final Inspection signed by Appraiser and Underwriter Final Release Notice 203(k) Draw Request 9746A and interim draws, if needed Mortgagor Letter of Completion Rehabilitation Loan Rider FHA Connection 203(k) escrow close out screen print reflecting any principal reduction Maximum Base Loan Amount Worksheet w/HUD Required Repairs c) FHA Section 220(d) (3) (A) - Urban Renewal d) FHA Section 234(c) - Condominiums

302.4 VA Loans

Georgia Dream First Mortgage loans guaranteed by the VA must conform to Title 38, Chapter 37, Section 3703 of the United States Code. The sum of any down-payment plus the VA guaranty must equal at least twentyfive percent (25%) of the lower of the Purchase Price or the Appraised Value of the mortgaged property.

302.5 Conventional Loans

Conventional loans must have an LTV of 80% or less.

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302.6 USDA/RD Loans 302.7 Pool Insurance
302.8 Subordinate Financing
302.9 Loan Amount

Loans guaranteed by USDA/RD must be underwritten to meet the current Program requirements and the current USDA/RD requirements.

At the present time, Mortgage Pool Insurance is not required. If required in the future, the Lender will be responsible for submitting the necessary documents and obtaining Pool Insurance for the specified loans from the designated Mortgage Pool Insurer.

Public and privately sponsored down payment and closing cost assistance programs are encouraged. However, the only additional subordinate financing permitted with the Georgia Dream Mortgage loan Program without prior approval from DCA is an employer assisted home buyer down payment grant program. Layering of any subordinate financing must be submitted for review and approval.

The Lender must include in the Underwriting Package an approval letter or other document, which evidences the Applicant's approval for the subordinate financing. The document evidencing approval must provide the dollar amount of the loan or grant, interest rate, monthly payment, number of monthly payments, and other repayment or forgiveness terms as applicable. The subordinate financing must be reflected in the CLTV and meet the Mortgage Insurer's guidelines. If the assistance is in the form of a loan, it must be subordinate to the Georgia Dream First Mortgage loan and any monthly payment must be included in the computation of the underwriting ratios.

The maximum base amount of a Georgia Dream First Mortgage loan is determined as follows:

Lesser of Sales Contract Price or Appraised Value
PLUS: 203b or 203k Required Repairs Total Acquisition Cost LESS: DCA or other 2nd Mortgage: LESS: DCA required borrower Contribution of $1,000: Subtotal: PLUS: 1st/2nd Mtg Closing costs from
1003 PLUS: Prepaids from 1003 MINUS: Seller Paid Closing Cost Maximum Base Loan Amount:

$_____________________ $_____________________ $_____________________ $_____________________
$_____________________ $_____________________ $_____________________
$_____________________ $_____________________ $_____________________

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In addition: a) The borrower must contribute cash to the transaction equal to the
difference in the sales price and the appraised value when the appraised value is less. b) The loan amount at closing must not be greater than the amount stated in the Underwriting Approval letter without our prior written approval.

302.10 Determining the Down Payment

All loans must meet the mortgage insurer's down payment requirements. Funds must be documented in accordance with standard FHA, VA, Conventional, or USDA-Rural Development requirements.

302.11 Construction Loans

DCA does not consider a construction loan, bridge loan or similar temporary financing which has a term of less than 24 months to be a permanent loan. If the First Mortgage loan is used to pay-off a construction loan, DCA requires that the construction be satisfactorily completed and that the Applicant not receive "cash out" at closing that would exceed the sum of the Applicant's own funds used for earnest money, credit report, appraisal and application fees. Any costs the Applicant paid on the construction loan other than a verified earnest money deposit may be applied toward funds required on the Georgia Dream First Mortgage loan.

The LTV is to be calculated using the total Acquisition Cost or the Appraised Value, whichever is less.

302.12 Amortization

The term of the Georgia Dream First Mortgage loan may not exceed 30 years. Loans must be amortized in equal monthly installments of principal and interest payable on the first day of each month.

303 Eligible Applicants

Federal and state laws and regulatory guidelines define who is eligible for assistance under our programs.

303.1 First-Time Home Buyer Requirement

Generally, the Applicant must be a first-time home buyer, with the following exceptions: a) The Applicant does not have a present ownership interest and has not
had an ownership interest in a home used as his or her principal residence in the three (3) years prior to closing on the loan; b) The Applicant is purchasing a home in a Targeted Area, or c) The Applicant is a veteran (as defined in section 101 of title 38, United States Code) that has not previously qualified for and received bond-financed mortgage assistance without being a first time homebuyer.

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Non-applicant household members are not required to be first time home buyers.

303.2 Ownership Interest

An Applicant holding any of the following ownership interests would not be classified as a first-time homebuyer: a) a fee simple interest; b) a joint tenancy; c) a tenancy in common; d) a tenancy by entirety; e) a tenant-share hold in a cooperative; f) a life estate; g) a land contract pursuant to which possession and burdens of
ownership are transferred, but legal title is not transferred until some later time; h) a beneficial interest in a trust that would constitute a present ownership interest if it were held directly by the mortgagor.

An Applicant is considered to have an ownership interest in a property if he/she received the benefits of the mortgage interest or real estate tax deduction through the filing of a joint federal income return with a spouse, even if the Applicant did not hold title to the home within 36 months of the closing date of the new home.

Interests that are not considered to be ownership interests are: a) a remainder interest; b) a lease (without regard to any purchase option); c) a mere expectancy to inherit an interest in a principal residence; d) an interest that a purchaser of a residence acquires upon the execution
of purchase contract; e) an interest in a residential property other than a principal residence
during the previous three (3) years; and f) an interest in a vacation timeshare.

An Applicant is not considered to have had a prior ownership interest in a primary residence in the last three years if: a) the Applicant did not hold title to the home, but did receive all or a
portion of the proceeds of the sale of the residence; b) the Applicant continued to hold title following a divorce which
granted property to other spouse, but the Applicant has not used the property as a principal residence in the last three (3) years; or c) the Applicant owns a manufactured home that is currently titled by the Department of Motor Vehicles, is not permanently affixed to a permanent foundation and is taxed as personal property; or d) the Applicant owns vacant land.

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303.3 No Ownership of Other Residential Real Estate
303.4 Principal Residence Requirement
303.5 Co-Signers

We reserve the right to investigate or require further substantiation of the Applicant's first time homebuyer status.
Under no circumstance may an Applicant own any other residential real estate within or outside the United States as of the date of closing the loan. If the Applicant owns residential real estate property used solely as a rental property but never as a primary residence during the previous three (3) years, the Applicant must terminate his or her interest in such property prior to closing the loan.
Even if not included as a Borrower, Applicant's spouse may not own any other residential real estate as of the date of closing.
Each Applicant must occupy the mortgaged property as his or her principal residence within 60 days after closing the loan. Lender must make the Applicant aware of this requirement at application and origination of the loan.
An Applicant is temporarily exempt from this 60-day occupancy requirement if his or her employment or military orders require that he or she reside temporarily away from the mortgaged property and (i) his or her principal residence is the mortgaged property, (ii) he or she expects to return to the mortgaged property to live, and/or (iii) a co-Applicant will occupy the mortgage property within 60 days of closing.
Lender must make clear to the Applicant that he or she will not be allowed to rent the property after closing, except the Applicant may rent the property back to the property seller for up to, but no more than, 60 days after closing.
Co-signers are permitted only in accordance with the following requirements: a) Co-signers cannot take title to the property or live in the property
securing the loan. Co-signers who live in the mortgaged property or who will take title to the property are considered co-Applicants. b) Co-signers must sign the Note, but may not sign the Security Deed or DCA forms; c) The co-signers' income is not included in Household Annual Income, but may be used as qualifying income; d) The Underwriting Package must contain complete credit documentation for the co-signer along with a completed FHA Loan Transmittal or 1008 underwriting worksheet; e) Co-signers' credit and ratios must meet the requirements of the applicable Mortgage Insurer; and f) If a co-signer is used, the borrower must have income to qualify for one half of the housing payment with the maximum housing ratio not

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303.6 Liquid Assets Limitation
304 Household Annual Income & Debt

to exceed 50%. If the loan is a manual underwrite, the borrower must qualify individually with the maximum Housing Expense ratio not to exceed 50% and the total Debt to Income ratio not to exceed 50%.
The Applicant must not have liquid assets at time of loan closing in excess of the greater of $20,000 or 20% of the sales price, unless the liquid assets over the allowable amount have been or will be consumed by a documented emergency or other extraordinary event beyond the control or planning of the Applicant or will be used in the purchase transaction.
Gifts in excess of $5,000 are considered liquid assets. Stocks and other readily salable securities are considered liquid assets, unless they are restricted by IRA, 401(k) or other similar requirements. IRAs, 401(k) plans and other similarly qualified retirement accounts are not considered to be liquid assets.
Applicants approaching retirement age may have retirement savings, but such savings may not exceed an amount considered reasonable for a person of low or moderate income. Some exceptions may be made due to the nature of the source of funds. For example, insurance settlements that compensate an Applicant for lost wages during disability or death of a spouse may not be considered excessive.
DCA underwriters will be alert to any unusual activity or transfer of funds in and out of the accounts to meet the allowable amount.
Household Annual Income is all amounts, which will go to, or will be provided on behalf of any Household Member who will occupy the subject property within the 12-month period immediately following loan closing. Household annual income is the sum of the anticipated income for each Household Member during the 12-month period commencing with the date of application and is determined by ascertaining the income received from each source over the most recent representative period and projecting those amounts over a one (1) year period.
The income of all Non-Applicant Adult Household Members must be included in Household Annual Income.
The Lender is required to ensure that all Household Members who will occupy the property within 12 months of the closing date have disclosed their income as required on form SF-12 Applicant Affidavit and form SF15 Affidavit of Non-Applicant Household Member (if applicable). While it is not common lending practice to request information for NonApplicants, loans made through the Program require verification the Household Annual Income is within Household Annual Income limits.

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304.1 Household Members

"Household Member" includes: a) the Applicant, co-Applicant, spouse (unless it can be shown that a
spouse resides elsewhere), and parents or children who live with the Applicant and co-Applicant at least six (6) months of each year; b) any related or un-related person who will reside in the mortgaged property during the 12-month period immediately following closing; and c) any person who has resided with the Applicant and/or co-Applicant prior to closing and whose financial affairs are combined with the Applicant's and/or the co-Applicant's according to the documents in the Underwriting Package. (If such person will not occupy the mortgaged property, his or her income may be excluded from Household Annual Income if the Underwriting Package contains a sufficient explanation from the Applicant as to the person's future residence plans).
"Household Member" does not include foster children; live-in aides and children of live-in aides; unborn children; and children being pursued for legal custody or adoption who are not currently living with the household.
Sufficient documentation may be required by DCA to confirm possible status as a Household Member.
Non-Applicant adults (18 years of age or older) who are also full time high school or college students must provide evidence of enrollment from the high school or college at the time of application.

304.2 Household Income Limitations

The Applicant's total Household Annual Income, including the income for a Non-Applicant 18 years of age or older (as stated on Forms SF-12 and SF-15), must not exceed the following amounts based on the Household size and the location of the property:

H Household Size 1 to 2 persons 3 or more persons

Statewide $69,000 $79,000

MSA* $80,000 $92,000

* See Appendix II for MSA counties

304.3 Calculating Household Income

Each Underwriting Package must include a completed Household Income Worksheet. The Household Income Worksheet is located in the Worksheet section of this Guide. DCA may, in its sole discretion, require additional documentation to determine Household Annual Income.

The income calculation shown on the Household Income Worksheet and the supporting documents for each Household member must agree.

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Income calculations for compliance underwriting are different from income calculations for credit underwriting. The compliance underwriting income calculation will not necessarily be the same as the income calculation used in credit underwriting.
Lenders must make every reasonable effort to include the income of all Household members on Forms SF-12 and SF-15, as applicable. DCA will review copies of the Verifications of Employment (VOE), W-2's, pay stubs and/or copies of additional income verifications to substantiate income calculations.
Each Non-Applicant must complete and sign the Affidavit of NonApplicant Household Member (Form SF-15). The Non-Applicant's income must be documented by providing the most recent W-2 and a current pay-stub (or similar third party document for other types of income) dated within forty-five (45) days of Lender's underwriter's approval. DCA underwriter may, at their discretion, require the NonApplicant's tax transcript.
No adjustments or deductions are made to Household Annual Income with respect to childcare expenses, medical expenses, or adjustments for family size.
Household Annual Income includes, but is not limited to: a) the full amount, before any payroll deductions, of wages and salaries,
overtime, commissions, fees, tips, bonuses and other compensation for personal services (including raises indicated by the employer on the VOE which are expected to take effect prior to closing); b) net income from operation of a business or profession; c) income from trusts, investments, interest, dividends, royalties, net rental income and other net income from real or personal property; d) periodic payments from Social Security (including that received on behalf of children), annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic payments; e) payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; f) Welfare Assistance, where payments include amounts specifically designated for shelter and utilities; g) periodic and determinable allowances such as alimony and child support, and regular contributions or gifts received from organizations or persons not residing in the dwelling; h) all housing allowances and similar allowances which are not reimbursement for job-related expenses;

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i) all regular and special pay, and allowances of members of the Armed Forces (whether living in the dwelling) who are the head of the family or the spouse;
j) undocumented non-payroll deposits, extrapolated to an annualized amount;
k) earnings up to $480 annually for each full-time student 18 years or older who is not the head of household and spouse (must provide evidence of enrollment from the high school or college at the time of application; and
l) adoption assistance payments up to $480 annually per adopted child.
Household Annual Income excludes: a) non-reoccurring, sporadic, or irregular income, including gifts; b) amounts received by an employee as employer-paid benefits under a
"cafeteria plan" and included as income on pay documents, but which would be discontinued if employee declined benefits; c) amounts included as income on a W-2, but claimed by the employee as un-reimbursed business expenses for federal tax purposes; d) amounts which are specifically for reimbursement of medical expenses of a family member; e) lump sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; f) amounts of educational scholarships paid directly to the student or the educational institution; g) special pay to a military head of a family who is away from home and exposed to hostile fire; h) foster child or foster adult care payments; i) income from the employment of children (including foster children) under the age of 18 years; j) income of a live-in aide; k) amounts received under training programs funded by HUD; l) amounts received by a disabled person that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS); m) amounts received by a participant in publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, childcare, etc.) and which are made solely to allow participation in a specific program; n) reparation payments made by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era;

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304.4 Termination of Employment
304.5 Child Support/ Alimony
304.6 Overtime/ Bonuses

o) earnings in excess of $480 annually for each full-time student 18 years or older (excluding the head of household and spouse);
p) adoption assistance payments in excess of $480 annually per adopted child;
q) a resident service stipend (not to exceed $200 per month); r) compensation from state or local employment training programs and
training of a family member as resident management staff; s) deferred period payments of Supplemental Security Income and
Social Security benefits that are received in a lump-sum payment; t) amounts received by family in form of refunds or rebates under state
or local law for property taxes paid on the dwelling unit; u) amounts paid by state agency to a family with a developmentally
disabled family member living at home to offset the cost of services and equipment needed to keep the disabled family member at home; v) amounts specifically excluded by any other Federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 CFR 5.609(c) apply. For further information, a list is published by HUD periodically in the Federal Register.
Household members whose employment has terminated less than three (3) months before the date of loan application must provide a detailed explanation of the reason for termination and their intent of future employment. Verification from the employer of the termination of employment will be required. DCA will be alert to any indication that employment termination is temporary and/or may be for the purpose of meeting the Household Annual Income guidelines.
At DCA's discretion, termination of employment during this timeframe may not exclude income from household income limits.
If the Underwriting Package contains legal documents (such as divorce decrees) detailing the amount of child support to be paid, child support and/or alimony in the amounts received by the Applicants will be included in the calculation of Household Annual Income so long as a reasonable explanation is included in the Underwriting Package.
For applicants with variable earnings (overtime, bonus, commission, and/or shift differential), Household Annual Income is determined using the appropriate method on the Household Income Worksheet located at: https://dca.ga.gov/sites/default/files/gadreamhomeownershipincomewor ksheet_0.xls.
For applicants with variable earnings, average the total of year-to-date and the previous year's total income up through paystubs dated June 30

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304.7 Unemployment Compensation
304.8 Self-Employed Applicants
304.9 Student Loans
305 Bank Statements and Paystubs

of the calendar year; after June 30, average only year-to-date. (Method B).
Unemployment compensation is included in the calculation of Household Annual Income by multiplying the weekly benefit times 52 weeks, regardless of the amount of unemployment benefits remaining. This approach is based upon the assumption that the discontinuance of unemployment compensation will be accompanied by re-employment.
The income reported by the borrower on the previous year's filed income tax return on Schedule C and the current audited or CPA completed Profit and Loss Statement (P&L) is used to calculate Household Income for a self-employed Applicant.
Student loan debt documentation must conform to insurer guidelines.
For all Applicants, the Underwriting Package must include the most recent bank statement for all accounts and must cover thirty (30) consecutive days. Georgia Dream underwriters will examine the statements to determine if there are deposits or patterns that indicate additional nondisclosed income. All non-payroll deposits reflected on the bank statement(s) of 1% of the sales price or more must be documented and included as Household Annual Income in the last section of the DCA Household Income Worksheet. Any deposits not included in Household Annual Income must be clearly and fully explained in a letter that is signed and dated by the borrower and included in the Underwriting Package.
Education refunds cannot be used toward Minimum Required Investment and must be deducted from account balance. Education refunds are unsecured and therefore an unacceptable source.
The letter should include: a) a complete description of the deposit; b) the date(s) the deposit(s) posted to the bank statement and the
frequency of the deposits; c) the source of the funds; d) a reason why the funds should not be included as income; e) The following certification:
Warning: Section 1010 of Title 18, U.S.C. Federal Housing Administration provides "Whoever, for the purpose of influencing in any way the action of such administration Makes, Passes, Utters, or publishes any statement, knowing the same to be false shall be fined not more than $5,000 or imprisoned not more than two years or both".

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For all Applicants, the Underwriting Package must also include the current year to date paystubs from each employer and must be dated within forty-five (45) days of the Lender's underwriting approval.

306 Tax Transcripts

For each Applicant, legible copies of IRS tax transcripts for each Applicant for the most recent three (3) year period and the most recent W-2s must be submitted with the Underwriting Package. On a limited basis, DCA will accept signed tax returns. Signatures may be photocopies.

If the Applicant itemized deductions during any of the three (3) previous years, we must have a copy of the IRS Form 1040 and Schedule A. Tax transcripts from the IRS are acceptable for an Applicant who itemized if the printouts attached include Schedule A.

DCA will review the tax transcripts to verify Applicant's eligibility for the Program, including a review (1) whether the Applicant claimed a mortgage interest deduction or payment of real estate taxes within 36 months of the closing on the new home; (2) whether the basic demographic information (such as names, social security numbers, addresses, marital status and dependents) is consistent with the remainder of the Underwriting Package; and (3) any other items necessary to verify eligibility for the loan.

If the borrower was not required to file federal tax returns for any period during the last 3 years, the borrower will be required to complete DCA form SF-6012 and the lender to provide transcripts for each year to show no record of tax return filing found.

DCA at its discretion, may require any past due Federal and State taxes to be paid in full prior to or at closing.

307 Home Buyer Education

Homebuyer education is required for all Georgia Dream loans. Applicants must attend and complete a home buyer education workshop or individual housing counseling session(s) with a DCA or HUD approved Housing Counseling agency OR complete the online homebuyer education course at www.ehomeamerica.org/dca. The home buyer education or individual housing counseling may be provided by: a) Community-based organizations under contract with DCA
DCA contracts with a number of communities based non-profit organizations around the State who provide home buyer education at no cost to the home buyer. These organizations are listed in Appendix VIII. b) Other non-profit or for profit organizations.

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308 Eligible Properties

The Applicant may receive the required home buyer education from other DCA or HUD approved providers and is allowed to pay for the service. c) Online counseling services. The E-Home Online Homebuyer Course is available at www.ehomeamerica.org/dca at a cost of $50.00. Topics covered include: Are You Ready to Buy a Home, Managing Your Money, Understanding Credit, Getting A Mortgage Loan, Shopping For A Home, Keeping Your Home, and Managing Your Finances. Course vouchers are available to homebuyers' whose household income is at or below Very Low Income, Extremely Low Income or Low-Income based on HUD's current Statewide Income Limits for Georgia. Lender may complete and submit the Certification of Income Form to be provided such voucher.
Any fees paid for home buyer education must be paid to a third party provider and may not exceed $100.00. DCA will not pay this fee and will not be responsible for ensuring the fees are paid to the provider. This fee is generally paid prior to closing and may be shown on the HUD-1. If paid by the Applicant, the fees can be counted towards meeting the Applicant's Required Funds.
The Underwriting Package must contain a copy of the Certificate of Completion issued by the home buyer education provider evidencing the Applicant's completion of the home buyer education course within 12 months prior to closing.
For a cost of $50.00, Applicants with a low middle credit score of less than 640 can complete an online Money Management course (available at www.ehomeamerica.org/dca) and receive three free personalized housing counseling sessions with a housing counselor. Participants will receive an Action Plan which will provide them with tangible steps to increase their credit score. This is not a substitute for required homebuyer education.
Loans must be secured by property that is a one (1) unit single family dwelling which: a) is located in the state of Georgia; and b) the title is held by the mortgagor at the time of closing as fee simple
or under an eligible leasehold interest (the terms of the ground lease must extend beyond the maturity date of the loan and only the land may be under a ground lease; the improvements must be owned by the mortgagor).

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308.1 Maximum Purchase Price

The Purchase Price or Acquisition Cost is the total cost to acquire the completed single family residence, excluding financing costs such as closing costs and prepaid items. Form SF-16 must be used to calculate the Acquisition Cost.

The Maximum Purchase Price for existing and newly constructed properties must be equal to or less than the following amounts based on the location of the property:

Statewide

MSA*

$200,000

$250,000

*See Appendix II for a listing of all counties in the MSA.

When the Applicant is also the builder, DCA requires the following: a copy of the construction contract or cost to build (including receipts) to be in the Underwriting Package to document the Acquisition Cost and to ensure it is not over the Maximum Purchase Price limit; the LTV ratio is to be calculated using the total Acquisition Cost or the Appraised Value, whichever is less; and all credit and closing documents to indicate the transaction as a purchase or construction to permanent financing. It must not be presented as a refinance transaction.

308.2 Manufactured & Modular Homes

Manufactured home loans are not eligible for purchase.
Modular homes (Industrialized Buildings) may be purchased if they bear the "DCA insignia" described in O.C.G.A. 8-2-112(b)(1) and are built under the standards of the State of Georgia's Industrialized Building Program. Modular homes must also be built to comply with all city and county building codes which apply to site built homes.

308.3 Condominium

Lenders must provide evidence of project approval for any loan secured by a condominium, PUD, or town home. The property must also meet the Mortgage Insurers' requirements.

We require a HO-6 or "all inclusive" hazard policy and a completed Limited Review Condominium Questionnaire on all condominium loans. Fees for this policy must be included in the PITI and escrowed.

We reserve the right to reject any loan for the purchase of a condominium if we determine, in our sole discretion, that it would constitute an excessive underwriting risk.

308.4 Trade, Business, or Investment Property

The property itself may not be used to conduct a trade or business and the property may not be an investment property.

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309 Property Standards
309.1 Private Wells

The movement of people and/or materials onto the property is indicative of the property being used as a trade or business. Examples of residential property business use which are not acceptable include: a) car repair; b) childcare; c) hair styling; d) merchandise distribution; and e) farming.
Some home-based businesses may be acceptable. Examples of acceptable home-based businesses include: a) sales positions requiring some record keeping and telephoning at the
home. If there is any question as to whether a type of business is acceptable, contact DCA's Underwriting staff before processing the loan.
The loan must be secured by a property that is safe, decent, sanitary, structurally sound, and functionally adequate to meet the present and foreseeable housing needs of the Applicant.
To ensure satisfactory long-term security, the property should be compatible with the surrounding properties in terms of those factors that affect marketability, such as function, design, and quality of construction.
Neither the mortgaged property nor any adjacent property should pose a specific physical or environmental risk which could endanger the health and/or safety of the occupants. The present or anticipated use of adjacent real estate should not adversely affect the livability, value, or marketability of the property for residential use.
We will examine the following: a) Appraiser's assessment of the property and market conditions of the
neighborhood; b) sewer, water, and other utilities; c) accessibility by roads meeting local standards; d) agreements for shared driveways and private road maintenance.
If the subject property has a private well as its water source, a local or county health inspector test and certification as to the safety and adequacy of the water source is required. This certification must be dated within 30 days prior to closing. The well certification must comply with all requirements of the Mortgage Insurer.
In the case of a shared well, a recorded shared well agreement must be in force prior to closing unless specifically approved by the Mortgage Insurer.

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309.2 Septic Systems

If the property is new construction and it is served by a private or shared septic system, the system must be tested by a licensed plumbing contractor or local government health or building inspector. The inspector must certify to the adequacy and proper functioning of the septic system as of the date of inspection and that it does not contaminate the water source to the subject property.

For existing properties, the septic system must be tested by a licensed plumbing contractor or local government health or building inspector prior to loan approval, if: (i) the appraiser suggests that problems may exist with the septic system, and/or (ii) the property is guaranteed by USDA/RD. The inspector's certification as to the adequacy of the septic system must be dated within 30 days of the Lender's Underwriting approval.

In the case of a shared septic system, for new or existing properties, a recorded septic system agreement must be in force prior to closing.

309.3 New Construction

DCA considers a property to be new construction when it is being sold to the Applicant by the builder and all the original warranties are in place. All newly constructed residences must be inspected during construction to ensure compliance with all applicable minimum building and housing codes. The inspections must be done in accordance with the requirements of the Mortgage Insurer.

For USDA/RD Guaranteed loans originated by USDA/RD, the RD form HB1-3550 Attachment 5-B, Single Family Housing Site Checklist and Form FmHA 1940-22, Environmental Checklist for Categorical Exclusions must be complete and signed by the Community Development Manager (CDM).
All construction must be complete, and a clear final inspection included in the Purchase Package. If the loan was closed with the establishment of an escrow account for minor completion work (including landscaping), Lender must ensure the work is complete, disburse the escrow funds, and provide a clear final inspection.
Estimates of Monthly Real Estate Tax payments on new construction property must be based on at least 125% of the purchase price or taxes based on county millage rate must be documented.

309.4 Acreage

The full value of the land may be financed by the loan only if documentation is provided verifying that such land is needed to reasonably maintain the basic livability of the residence and does not provide, other than incidentally, a source of income to the mortgagor. The land value must be less than 30% of the total Appraised Value of the property unless we have given prior written approval specific to the issue.

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309.5 Environmental Review

During the physical inspection of the property, the appraiser must be alert for any indication of the presence of any hazardous materials on the subject property or any adjacent or nearby properties (including, but not limited to, asbestos or polychlorinated biphenyls (PCBs) or any indication that the property or any nearby site is or has been used as a landfill or the site of activity related to or used for the storage of oil, asbestos, PCBs, other hazardous wastes or other toxic substances). Lender must notify us in writing of any report by the appraiser indicating the possible presence of hazardous materials at the time the Underwriting Package is submitted.

309. 6 Flood Hazard Zone Certification

A flood hazard zone certification must be obtained in accordance with federal law and the guidelines of the Mortgage Insurer and included in the Underwriting Package. The flood hazard zone certification must be for the life of the loan and transferable to the Servicer of the loan.

309.7 Utilities and Appliances

Lenders must provide a copy of clear plumbing, electrical, and heating certifications if the appraiser indicated the property was vacant and/or the systems were not operational at the time of the appraisal inspection. Clear plumbing, electrical and heating certifications will also be required if the appraiser recommends them or there is an indication in the appraisal or the agreement of sale that there is an existing or potential problem with the plumbing, electrical and/or heating system(s). A stove/oven in working condition must be installed at the property.

309.8 Lead Paint
309.9 Swimming Pools
310 Appraisal Guidelines

The Applicant must be provided with a copy of the HUD/EPA pamphlet "Protect Your Family From Lead in Your Home" on properties built prior to 1978. The "Notice to Purchasers of Housing Constructed Before 1978" exhibit must be signed and made a part of the Sales Contract.
Properties with indoor pools are not eligible. All outdoor swimming pools must be fully functional at the time of closing and documented by the appraiser.
The Appraisal must be reported on the most recent version of the Uniform Residential Appraisal Report (URAR). All appraisals must conform to the Uniform Standards of Professional Appraisal Practice, the Home Valuation Code of Conduct (conventional loans only) and the DCA appraisal guidelines contained in this Guide. The appraiser must complete these forms in a manner that will clearly reflect the thoroughness of his or her investigation and analysis and provide the rationale for the estimate of market value. The Lender must disclose to the appraiser any and all information about the subject property that affects either the marketability of the property or the appraiser's estimate of its market value.

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All appraisals must conform to the following requirements: a) The property must have been appraised within the 120 days that
proceeded the date of the note and mortgage or in accordance with the applicable Mortgage Insurer requirements based on loan type. b) The subject property must be identified by its complete property address and legal description. c) The appraisal must show the census tract or block number in which the subject property is located. d) When there are incomplete items or conditions that affect the livability of the property or physical deficiencies that could affect the soundness or structural integrity of the improvements, the property must be appraised subject to completion. In such cases, the Lender must obtain a clear final inspection from an appraiser before they submit the Purchase Package. e) If the subject property is located in an area in which there is a shortage of recent truly comparable sales either because of the nature of the improvements of the subject property or the relatively low number of sales transactions in the neighborhood and the appraiser utilizes comparables that are not truly comparable to the subject property, the appraiser must adequately document his or her analysis in the appraisal report and explain why such comparable(s) are used. f) The neighborhood analysis must identify the area (based on common characteristics or trends) that is subject to the same influences as the subject property. The sales prices of comparable properties in the identified area should reflect the positive and negative influences of the neighborhood. The results of the neighborhood analysis should enable the appraiser to define the area from which to select comparables, to understand market preferences and price patterns and to identify any other value influences affecting the neighborhood. The appraiser and the Lender's underwriter must be sensitive to the varying conditions that characterize different types of locations. g) Any and all additional comments made by the appraiser and the limiting conditions statement must accompany the appraisal in the Underwriting Package.
For existing properties, any improvements to the subject property must be completed when the Purchase Package is delivered to us. The appraisal may be based on the "as is" condition of the property if minor conditions exist that do not affect the livability of the property. The Lender must carefully review the appraisal for a property appraised in an "as is" condition to assure that the property does not have any physical deficiencies or conditions that would affect its livability, or health and safety of the occupants.
For proposed construction, the appraisal may be based on plans and specifications if the Lender obtains a certification of completion before

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310.1 Standards for Appraisers
310.2 FHA Appraisals

the Purchase Package is submitted to us. This certification should be completed by the appraiser and must be accompanied by photographs of the completed improvements. The appraiser must certify that the improvements are completed in accordance with the requirements and conditions stated in the original appraisal report.
The following are required to support each appraisal report: a) Clear, descriptive original color digital images or color photographs
of the front, back, and street scene of the subject property. b) Clear, descriptive color digital images or photographs that show the
front of each comparable sale and that are appropriately identified. c) Certification of completion and value, either as a letter or as a form
that provides the necessary information, if applicable. d) A street map that shows the location of the subject property and of
all comparables that the appraiser used. e) Any other information, as an attachment or addendum to the
appraisal report form, which is necessary to provide an adequately supported estimate of market value. f) All mortgage insurer required appraisal addendums (i.e. 1004 MC, Market Conditions Addendum).
Upon request, Lender must furnish evidence the appraiser has appropriate experience and approvals from the applicable Mortgage Insurers.
Generally, the appraiser must: a) be a real estate appraiser certified with the State of Georgia; b) have successfully completed a nationally recognized basic appraisal
course and have appropriate appraisal experience; c) have demonstrated a high level of integrity, professional ethics, and
technical ability; and d) be approved by HUD to perform FHA and/or VA appraisals, as
applicable (for Conventional Loans, the FHA or VA status is not required unless there is an accompanying Georgia Dream Second Mortgage Loan.)
For FHA Loans, the appraisal must be accompanied by a HUD Form 92800.5B, "Conditional Commitment/Direct Endorsement Statement of Appraisal Value."
A VA Certification of Reasonable Value that has been converted from a HUD Conditional Commitment or vice versa will be accepted. If submitted, photos of the property are not required.

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310.3 FHA Single Family Property Disposition Program

We encourage the use of Georgia Dream Mortgage loans for the purchase of HUD Real Estate Owned (REO) property.
The maximum allowable mortgage amount is determined by using the lesser of the sales price or: a) The "as-is" appraised value as determined by the HUD REO or
updated appraisal. b) The "as repaired" value as determined by an FHA appraisal for 203b
or 203k loans.

All HUD REO appraisals will be valid for a period of 120 days from the effective date of the appraisal. A valid HUD REO sales contract must be ratified within 120 days of the appraisal effective date or a new appraisal or an appraisal update is required in accordance with FHA guidelines to support the mortgage transaction. An updated appraisal may be obtained in accordance with FHA guidelines when repairs are required by the FHA appraiser.

If the sales price is more than the appraised value, the difference must be paid by a documented cash investment from the borrower. Georgia Dream Second Mortgage funds may not be used to fund this difference.

310.4 USDA/RD Guaranteed Loans

USDA/RD Guaranteed loans must be supported by an FHA appraisal. The appraisal must be conducted by an FHA-eligible appraiser in order to satisfy federal regulatory requirements.

310.5 VA Loans

For VA loans, the appraisal must be accompanied by a VA Form 261843, "Certificate of Reasonable Value" (CRV) or the Notification of Value letter for automatic approval lenders.

310.6 Conventional Loans

For Conventional loans, appraisal report must state property meets HUD minimum property standards.

311 Loan Closing Documents

All closing documents and legal documents must reference "Georgia Housing and Finance Authority" (GHFA) and not DCA. GHFA is the legal entity that will purchase the loan from the DCA Lender.

311.1 Warranty Deed & Transfer

All property must be conveyed by a Warranty Deed, with an interest in the same property granted to Lender by a Security Deed. The Security Deed must be transferred from Lender to the Georgia Housing and Finance Authority via a completed Form SF-44 Transfer & Assignment. The Georgia Housing and Finance Authority will not accept Assignments of Security Deeds from MERS (Mortgage Electronic Registration System).

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311.2 Survey
311.3 Title Insurance Policy

In accordance with O.C.G.A. 14-2-151, the Transfer & Assignment must be signed by an authorized officer and attested to by another officer who the Lender's current bylaws say can authenticate the document. GHFA may require a copy of the Lender's current bylaws to verify compliance. If not signed by the president or a vice-president, then the document must have the corporate seal.
A survey may be required in accordance with the requirements of the Mortgage Insurer. The survey must be signed and sealed by a licensed surveyor or engineer showing the boundaries, improvements, setback lines, easements and encroachments onto or off the mortgaged property and certifying whether the mortgaged property or any portion thereof is located in a special flood hazard area as identified by the Mortgage Insurer.
Each loan must be insured by a title insurance policy on the current standard form of the American Land Title Association in an amount at least equal to the principal amount of the mortgage indebtedness. The title insurance policy must show the insured as the Lender, Mortgage Insurer and successors and assigns as their interest may appear. The title insurance policy must be endorsed to the Georgia Housing Finance Authority, showing all recorded transfers and assignments.
The title insurer must be licensed to conduct business in the State of Georgia and approved by Fannie Mae, Freddie Mac, or Ginnie Mae. The policy must insure the loan is a valid and recorded first lien on the mortgaged property. Additionally, the policy cannot be subject to any exceptions other than those previously approved by the Mortgage Insurer. Lender must receive prior written approval for deviation in the title policy from this requirement.
The Short Form Residential Loan Policy or Master Residential Loan Policy showing the Lender, the Mortgage Insurer, and its successors and assigns as the insured is also acceptable.
In the event the policy identifies a Fi.Fa, it must be cleared to the satisfaction of DCA and a clear and marketable title provided as per insurer requirements must be provided.
DCA does not allow affirmative coverage or "insuring over" of title defects. Any title defects or corrections must be cleared or resolved to the satisfaction of DCA prior to or at closing in order for DCA to obtain clear and marketable title.

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311.4 Hazard Insurance See (d) for Mortgagee Clause
311.5 Flood Insurance

Lender must ensure the property securing the loan is covered by hazard insurance that, at a minimum, meets the following requirements: a) Term. Policies must be for a period of at least one (1) year, effective
as of the date of closing of the loan; b) Ratings. Policies must be issued by an insurance carrier specifically
licensed or authorized by law to transact business within the State of Georgia. The firm must have a financial rating of Class VI or better by Best's Insurance Reports and a Best's general policyholder's rating of B or better. We will allow coverage with a Reinsurance Agreement, whereby an insurer with a classification lower than Class VI is covered by reinsurance from a company satisfying the aforesaid rating requirements; c) Fire and Extended Coverage. Policies must afford protection against loss or damage from fire and other hazards covered by the standard extended coverage endorsement in an amount at least equal to the lesser of the outstanding principal balance of the loan at the time Lender delivers it for purchase or the maximum insurable value of the improvements, determined by subtracting the land value as shown on the Uniform Residential Appraisal Report from the final reconciliation of value as calculated on the report; d) Mortgagee Clause. Policies must contain a standard mortgagee clause endorsed in favor of the Lender and/or its successors or assigns, as their interest may appear. Upon assignment of the loan to GHFA, an endorsement must be obtained which contains the standard mortgagee clause endorsed in favor of GHFA and/or its successors or assigns, as their interest may appear; e) Deductible. Policies must contain a deductible clause of no more than $1,000; f) Wind and hail Coverage in Coastal Areas. Policies must afford protection against loss or damage from wind and hail as a result of tropical cyclones or named hurricanes. The maximum deductible for this coverage may be no greater than 5% of the total dwelling coverage; and g) We require a HO-6 or all-inclusive master hazard policy on all condominium loans. Fees for this policy must be included in the PITI and escrowed.
If any portion of the mortgaged property is located in an area identified by the Federal Emergency Management Agency (FEMA) as an area having special flood hazards (unless the improvements themselves are not located in a special flood hazard area), and if insurance is available under the National Flood Insurance Act of 1968, Lender must ensure that flood insurance is obtained in the amount of the outstanding principal balance of the loan or the maximum limit of coverage available under the 1968 Act, whichever is less. Lender must also comply with provisions

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of the Flood Disaster Protection Act of 1973 whenever applicable to any loan.

A flood insurance policy containing a maximum $500 deductible clause for new construction and $1500 for existing properties is acceptable. Policies with a higher deductible must be approved by DCA prior to closing.

311.6 Termite Letters

The property securing the loan must have been inspected for termites and other pest infestation in accordance with the requirements of the Mortgage Insurer.

New construction must be built on ground which has been treated prior to the construction of the property.

The Applicant must sign the termite letter. If there is evidence of previous infestation, the graph showing locations of the infestation must be attached. If a structural engineering inspection is required by the termite inspector, Lender must provide a copy of the report.

If the sales contract states a termite inspection is required, the termite report must be included in the purchase package.

311.7 Note & Endorsement

Each loan must be evidenced by a properly executed Note, endorsed to the Georgia Housing and Finance Authority. The endorsement must read "Pay to the Order of the Georgia Housing and Finance Authority Without Recourse." An Allonge for endorsement of the Note, if necessary, will be accepted only if sent with the original Note.

Lender must include a provision in the Note for an enforceable late charge of the monthly principal and interest payment on any installment that is not received by the 15th day after it is due. A late charge of 4% is required on FHA and VA loans and a late charge of 5% is required for Conventional loans and USDA/RD Guaranteed loans.

311.8 Mortgage Loan Estimate

Loan Estimate should state that there will not be a prepayment penalty and that the loan may be assumed. GHFA does not require or allow a prepayment penalty on any type of loan.

311.9 Tax Exempt Financing Rider

Lender must record an executed Tax-Exempt Financing Rider (Form SF40) with the Georgia Dream First Mortgage loan.

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312 Closing Costs and Lender Fees

The closing costs (whether paid by the property seller or the mortgagor) may not exceed the aggregate of: a) the actual amounts expended for the following third party costs as
itemized on the Closing Disclosure: title examination and title insurance attorney's fees credit reports termite reports tax service fees flood certification fees surveys appraisal fees filing and recording fees transfer tax and intangible taxes mortgage insurance Georgia Residential Mortgage Act (GRMA) fee express mail and courier fees paid to company other than Lender application, processing or underwriting fees paid to an
independent third party
b) The following fees payable to Lender: an origination fee of no more than 2.00% of the Georgia Dream first mortgage loan amount FHA 203(k) fees to the extent allowed by FHA

All allowable fees must meet applicable mortgage insurer guidelines. Customary lender fees may be charged, but such fees may not exceed the amount of fees charged for non-DCA loans and may not in the aggregate exceed $1000. The fees may be called an application, processing or underwriting fee, or other similar name, as long as the name is not unique to our loans and does not include GHFA, Georgia Dream or DCA by name. All allowable fees must meet applicable mortgage insurer guidelines. None of such fees may be based on the size of the loan. All allowable fees must meet applicable mortgage insurer guidelines.

312.1 Calculating the Prepaids

The prepaid expenses which are eligible for payment with the Georgia Dream Second Mortgage loan proceeds include the amounts required by the Mortgage Insurer to be deposited in the escrow account for property taxes, hazard insurance, homeowner association or condominium fees and prorated interest expenses up to the first payment date.

312.2 Interest Credit at Closing

If the loan closes during the first seven (7) calendar days of the month, the first payment due date may be no later than the first day of the second complete calendar month after closing. (Example: the loan closes March 7, the first payment due date may be April 1 with interest credit given at

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closing or may be May 1 with interest paid at closing). Interest credit given at closing must be shown on the Closing Disclosure.

If the loan closes after the 7th day of the month, the first payment due date must be the first day of the second complete month after closing. (Example: the loan closes March 17, the first payment due date must be May 1 with interest paid at closing).

312.3 Cash Out at Closing

The amount of cash paid to the Applicant at the closing of a loan must be no greater than the sum of the Applicant's own funds used for earnest money, credit report, appraisal and application fees, regardless of any greater allowances permitted by the Mortgage Insurer. Any principal reductions cannot exceed $250.

312.4 Taxes, Special Assessments and Contractor Liens

The closing attorney must submit payment for all taxes and special assessments to the applicable entity within 45 days of the loan closing. All outstanding contractors' liens must be satisfied prior to submission of the loan to us for purchase.

313 Loan Assumptions

Lender must make Applicant aware that any household seeking to assume the loan must: a) occupy the property as a principal residence; b) be an Eligible Applicant as defined in this Chapter; c) purchase the residence at a price that does not exceed the federal
Purchase Price limitations in effect for existing property at the time of the assumption d) have a Household Annual Income that does not exceed the limits established by the Internal Revenue Code at the time of the assumption; and e) be aware that as the new owner(s), he or she will be subject to potential Recapture Tax as outlined in this Guide.

314 High Cost Loans

"High Cost" loans as defined by the Georgia Fair Lending Act (GFLA) are not permitted.

315 Recapture Tax

The recapture tax is a potential tax owed to the IRS as a result of a tax code provision applicable to Georgia Dream loans, because the loans are funded with the proceeds of tax-exempt bonds.

Under the tax code provision, the borrower may have to pay a recapture tax to the IRS if the home is sold or otherwise transferred by the borrower within 9 years of purchase. Based on DCA's experience, it is a rare occurrence for a borrower to owe any recapture tax.

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In general, the borrower will not have to pay recapture tax unless all 3 of the following apply:
a) the property is transferred within 9 years of purchase, b) the borrower earns money on the transfer; and c) the borrower's income at the time of sale is more than the recapture
income limits as set forth for the year the property was purchased.
The actual recapture amount owed can only be calculated after the borrower's home is transferred as it depends on the amount earned by the borrower and is minimized in the following ways:
a) The maximum amount owed by the borrower is limited to the smaller amount of either 6.25% of the amount of the Georgia Dream loan or 50% of the net amount earned when the property is transferred.
b) Real estate commission, legal fees and closing costs are subtracted from the amount earned and only a percentage of the amount earned is owed to the IRS, depending on the number of years the borrower has owned the property (starting at 20% in year 1, going up to 100% in year 5 and then decreasing back down to 20% in year 9).
c) The borrower will not owe any recapture tax if borrower's Income at the time of sale is less than the recapture tax income limit at time of purchase (plus 5% for each year since the purchase of the home) for the borrower's current family size. If the borrower's income is within $5,000 of this amount, then the borrower will owe a reduced portion of the amount earned on the sale.
Special circumstances:
a) If the borrower receives insurance proceeds from a forced disposition of the property (fire, storm, etc.), then the property is assumed to be sold at fair market value. However, no recapture tax is due if another home is purchased on the same site within 2 years of receiving the insurance proceeds.
b) If property is transferred because of borrower's death or to a spouse/former spouse as a result of a divorce, then generally no recapture tax due.
c) No recapture tax is due upon refinancing, but the borrower remains liable for potential recapture tax owed. If the property is refinanced within 4 years of purchase, then the period for being potentially liable for recapture is less than the typical 9 years.

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315.1 IRS Reporting and Calculation of Recapture Tax

DCA will report the name, address and social security number of all borrowers receiving a Georgia Dream loan but is not responsible for reporting the sale or transfer of a borrower's property to the IRS and/or any potential recapture tax owed.
All Applicants will need to complete IRS Form 8828, Recapture of Federal Mortgage Subsidy, when they file their federal income taxes for the year in which the home is sold or otherwise disposed. IRS Form 8828 calculates any Recapture Tax that may be due.

315.2 Refinancing

If the Applicant refinances his or her loan which is subject to Recapture Tax, the refinancing does not trigger the calculation of Recapture Tax because the property has not been disposed of or sold. If the Applicant does not sell or dispose of the home within nine (9) years of the closing date of the Georgia Dream First Mortgage loan, a Recapture Tax will not be due. If the Applicant, after a refinance, does sell or dispose of the home within nine (9) years of the closing date of the Georgia Dream First Mortgage loan, the Notice to Purchaser of Potential Recapture Tax on Sale of Home (Form SF-50) cannot be used to calculate the Recapture Tax, if any, that is due. The assistance of the IRS or a tax preparer will be required to calculate any Recapture Tax due.

315.3 Assumptions

If the loan, which is subject to Recapture Tax, is assumed within nine (9) years of the closing date of the Georgia Dream First Mortgage loan, calculation of any Recapture Tax due is triggered because the property has been sold or transferred. The Applicant who assumes the loan will also be subject to Recapture Tax for a nine (9) year period beginning on the date of assumption.

The Servicer of the loan can provide information to the Applicant about processing the assumption.

315.4 Lender's Responsibility

The Applicant must be made aware of the federally imposed Recapture Tax law at the time of loan application using the disclosure provided in the Application Affidavit (Form SF-12). Lender should be prepared to respond to questions from Applicants about the Recapture Tax but should refrain from assisting Applicants in calculating an expected tax. Lender should advise the Applicant to consult with a tax advisor or the IRS for further information.

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315.5 Notice at Closing

The Notice to Applicant of Potential Recapture Tax on Sale of Home (Form SF-50) must be executed at closing. Applicants' signatures must appear on page 1 and Lender must complete the information on page 2 as follows: a) Address of Property. Insert the street address of the mortgaged
property. b) Lending Institution. Insert the name and address of your company. c) Loan Closing Date. Insert the date of the closing of the Georgia
Dream First Mortgage loan. d) Federal Subsidized Amount. Multiply the original loan amount by
6.25% and insert that number in the blank. e) Targeted Area. Check whether the mortgaged property is in a
targeted census tract or other Targeted Area

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Chapter 4 Georgia Dream Second Mortgage Programs

Seller Guide

The Georgia Dream Second Mortgage Program provides first time home buyers with a deferred payment subordinate mortgage loan for the down payment, closing costs, prepaid expenses or principal reduction associated with the purchase of a home. Georgia Dream Second Mortgage Loans must be used in conjunction with a Georgia Dream First Mortgage Loan.

401 Loan Terms

The Georgia Dream Second Mortgage Loan is a deferred repayment subordinate mortgage loan. In general, the Georgia Dream Second Mortgage Loan is in second lien position.

The Georgia Dream Second Mortgage Loan must be repaid in full if the Applicant: a) sells or transfers the property; b) refinances the first mortgage; or c) no longer uses the mortgaged property as the principal residence.

401.1

The interest rate for Georgia Dream Second Mortgage Loans is 0% per

Interest Rate annum.

401.2 Loan Amount

Georgia Dream Second Mortgage Loans provide the amounts of down payment assistance outlined in this Section to Georgia home buyers. These loan amounts cannot be combined.

401.2a Standard

The Standard Loan provides $5,000.

401.2b Protectors, Educators, and Nurses (PEN)

The PEN Loan provides $7,500 to the following Georgia heroes: a) Protectors- Employees and/or active duty personnel of the following: (i) a police department, sheriff's office, corrections department*, Georgia Department of Motor Vehicles or other law enforcement agency administered by or part of a local, state, or federal government or other political subdivision of the state, that is responsible for the enforcement of the penal, traffic, or highway laws or the incarceration or detention of offenders; (ii) a local, state, or federal fire department, including volunteer firefighters, that are responsible for at least one of the following: natural disaster response, fire suppression, emergency medical response and patient care, fire and injury prevention, arson investigation, hazardous materials, incident response and management, and/or response to acts of terrorism;

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(iii) the armed forces of the United States of America consisting of the United States Army, United States Navy, United States Air Force, United States Marine Corps, United States Coast Guard;
(iv) the Army National Guard; (v) the Air National Guard; and/or (vi) Civil Servants for a Military Base
*Including Homeland Security and/or the correction departments that are administered by a private corporation under State or Federal guidelines. b) Educators - Employees of the following: (i) a local, city or county school board that is recognized by the state or accredited by a state or regional accrediting association. This would include Head Start programs, Pre-K, elementary and high school teachers and all other employees of a school or board of education, school Bus drivers working for an accredited school system, even if outsource; (ii) a private school system that is recognized by the state or accredited by a state or regional accrediting association; (iii) state-certified teachers of a Head Start, Pre-K program or day care provider not connected to a local school board system that can provide evidence of current certification in the state of Georgia at time of DCA underwriting; and (iv) post-secondary institutions accredited by a State or Regional Accreditation Association, including employees of agencies that are "units" of a University System who are eligible for participation in the Teachers Retirements System and employees of Sylvan and Total Learning Center as long as they can provide a current teaching certificate. c) Nurses (health care workers) - Employees of a state licensed health care facility including but not limited to: hospitals, medical and dental offices, health departments, nursing homes, lab technicians, pharmacy technicians, assisted living workers, red cross employees, home health care workers, Georgia Department of Community Health, public health care, county health care and residential mental health facilities.

401.2c CHOICE

A Consumer Homeownership & Independence Choices for Everyone (CHOICE) Loan provides applicants with disabilities, or those who have a disabled dependent as a household member, with $7,500.

401.3 Mortgage Insurer Requirements

Lender must ensure the Georgia Dream Second Mortgage Loan meets the requirements of the Mortgage Insurer of the Georgia Dream First Mortgage Loan. You should check with the Mortgage Insurer to verify the precise requirements. a) FHA Loans. FHA has approved the Georgia Dream Second Mortgage
Program as provided under Mortgagee Letter 94-2. The combined LTV

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for all mortgages cannot exceed 100% of the cost to acquire the property, plus any normal prepaid expenses, as described in HUD SF Handbook 4000.1 Per HUD Mortgagee Letter 2013-14 the Georgia Dream Second Mortgage Loan directly provides the borrower's required cash investment through secondary financing as an instrumentality of the State of Georgia. DCA incurs a legal enforceable obligation as a result of it agreement to provide funds towards the borrower's minimum cash investment. b) VA Loans. The Georgia Dream Second Mortgage Loan may be used with a VA guaranteed loan. c) USDA/RD Loans. The Georgia Dream Second Mortgage Loan may be used with a USDA/RD Loan. The USDA/RD Loan and the Georgia Dream Second Mortgage Loan amounts may exceed the appraised value of the property only by an amount equal to closing costs and prepaid expenses.

401.4 Use of the Georgia Dream Second Mortgage Loan Amount

The Georgia Dream Second Mortgage Loan funds may be used for principal reduction, down payment, allowable closing costs and prepaid expenses associated with the home purchase. If the Applicant's required costs for the principal reduction, down payment, closing costs, and prepaid expenses associated with the home purchase are more than the Georgia Dream Second Mortgage Loan amount, the amount over the Loan amount must be provided by the Applicant, the seller or another party acceptable to the Mortgage Insurer.

Georgia Dream Second Mortgage Loan proceeds may not be used for buy downs or repairs.

When purchasing a HUD REO property where the maximum loan amount, based on the "as-is" appraised value, is less than the sales price, Georgia Dream Second Mortgage Loan proceeds may not be used as the borrowers cash investment for the difference.

401.5 Debarred and Suspended Lists

The borrower(s), seller(s), realtor(s) or any other parties to the second mortgage transaction may not appear on the current HUD Debarred or Suspended lists as per mortgage insurer guidelines. Lender is responsible for certifying that it has checked the most recent HUD lists to verify the parties to the transaction do not appear on either list by signing page 2 of the SF-60, Lender Certification.

401.6 Recapture Tax

Georgia Dream Second Mortgage Loans which close after January 1, 1991 and are financed with tax exempt bond funds may be subject to Recapture Tax. It will be noted on the Underwriting Approval Letter if the loan is financed with tax exempt bond funding. Lenders must refer to Chapter 3 of this Seller Guide for information regarding Recapture Tax requirements and disclosures.

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402 Eligible Applicants

Federal and state laws and regulatory guidelines define who is eligible for assistance under our programs.

Generally, the Applicant must be a first-time home buyer, with the following exceptions: a) The Applicant does not have a present ownership interest and has not
had an ownership interest in a home used as his or her principal residence in the three (3) years prior to closing on the Loan; b) The Applicant is purchasing a home in a Targeted Area, or c) The Applicant is a veteran (as defined in section 101 of title 38, United States Code) that has not previously qualified for and received bondfinanced mortgage assistance without being a first time homebuyer.

Non-applicant household members are not required to be first time home buyers.
See Chapter 3 of this Guide for complete definitions of ownership interest.

403 Household Annual Income

The Applicant's total Household Annual Income, including the income of Non-Applicants 18 years of age and older (as stated on Forms SF-12 and SF-15), must not exceed the maximum allowable income for the program based on the location of the home.

Household Size

Statewide

MSA*

1 to 2 persons

$69,000

$80,000

3 or more persons

$79,000

$92,000

* See Appendix II for counties in the MSA

404 Eligible Properties

Properties secured by a Georgia Dream Second Mortgage Loan must meet the property requirements described in Chapter 3 of this guide.

405 Appraisal

Georgia Dream Second Mortgage Loans must be supported by an FHA

Requirements appraisal conducted by an FHA-approved appraiser in order to satisfy

federal regulatory requirements. This applies in cases in which the first

mortgage is a Conventional Loan, USDA/RD Leveraged or Guaranteed

Loan, as well as if it is an FHA Loan.

406 Additional The following is required in the DCA Underwriting Package as evidence

Documentatio that the Applicant meets the requirements of the Program being used:

n for

Underwriting PEN: Documentation verifying to the satisfaction of DCA that the

Package

applicant(s) is a Georgia Hero as described in this Chapter.

CHOICE: Documentation verifying the status of the disability and dependency, either (1) a Social Security Disability Determination Letter or (2) a certified denial from SSI which states that a disability exists but

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the applicant is not income eligible for funds, or (3) documentation from an acceptable medical source that indicates the existence of an impairment listed on the Social Security Administration's website "listing of Impairments", https://www.ssa.gov/disability/professionals/bluebook/listingimpairments.htm

A disability determination is only acceptable for the applicant, the applicant's spouse or a dependent of an applicant.

407 Loan Closing All closing documents and legal documents must reference "Georgia and Purchase Housing and Finance Authority" (GHFA) and not DCA. GHFA is the legal entity that will purchase the Loan from the DCA Lender.

408 Subordinate Financing

Any additional subordinate financing to be utilized with the Georgia Dream Second Mortgage Loan Program must be approved by GHFA management. Employer assisted home buyer down payment grant programs are permitted in third position behind the Georgia Dream Second Mortgage.

409 Purchase Documents

Georgia Dream Second Mortgage Loans require the following purchase documentation: (See Purchase Package Checklist) a) Note and Deed. All Georgia Dream Second Mortgage Loans must be
evidenced by the Georgia Dream Second Mortgage Note (Form SF-82) and the Georgia Dream Second Mortgage Subordinate Security Deed (Form SF-84). The Note should be endorsed as follows: "Pay to the order of the Georgia Housing and Finance Authority without recourse." b) Transfer and Assignment. All Georgia Dream Second Mortgage Loans must have a completed and signed original recorded Transfer and Assignment (Form SF-44) reflecting the second mortgage loan amount. c) First Mortgage Closing Disclosure. The Georgia Dream Second mortgage Loan (Georgia Dream whole dollar amount) must be shown on Lines 06-07 under Section L, Other Credits of the Georgia Dream First Mortgage Loan Closing Disclosure. d) Second Mortgage Closing Disclosure. The Georgia Dream Second Mortgage Loan Closing Disclosure should reflect only the following fees:
Attorney Fees of no more than $150 Filing and recording fees Actual Transfer and Intangible Taxes Actual GRMA Fees A second Mortgage Closing Disclosure is not required if the settlement cost is less than 1% of the loan amount and consists only of fees permitted under section 4 and 5 of RESPA. If the Lender elects not to provide a Closing Disclosure, a TIL statement is required.

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410 Loan Purchase
411 Applicant Funds Required

At the time of funding, the original principal balance of the Georgia Dream Second Mortgage Loan will be disbursed to the DCA Lender using the wiring instructions that provided by Lender on the initial lender application.
The Applicant must contribute a minimum of $1,000 to the purchase transaction. Funds may be a gift or a loan documented in accordance with the Mortgage Insurer's requirements.
The funds may be contributed to the transaction prior to closing and/or at closing. Examples of items which may be included in determining the amount contributed by the Applicant include: a) Earnest money; b) credit report fee paid outside of closing (POC), even if credited back
at closing; c) appraisal fee (POC), even if credited back at closing; d) hazard insurance if paid for by Applicant prior to closing; e) homeowner's title insurance if paid for by Applicant prior to closing; f) home inspection fees paid (POC) by the Applicant; and or g) cash brought to closing

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Chapter 5 Georgia Dream HHF DPA Program

Seller Guide

501 Georgia Dream HHF DPA Program

502 Eligible Properties

503

Eligible Loans

The Georgia Dream Hardest Hit Funds Down Payment Assistance (HHF DPA) Program was created to provide an incentive to qualified applicants to purchase a primary residence and thereby stabilize the housing market in those counties that have been the hardest hit with serious delinquency, negative equity, distressed sales and foreclosures. Funding for the program is provided by the U.S. Department of Treasury. The down payment assistance will be available on a first come, first served basis until the allotted funds for the program are depleted.

Funds may be used for down payment, closing costs, prepaid expenses or principal reduction associated with the purchase of an eligible property as specified in Section 502.

The Georgia Dream HHF DPA Program loan will be provided in the form of a forgivable subordinate lien.

The subject property must meet the requirements specified in this Seller Guide and be an existing, previously occupied single-family home (including a condominium unit, townhome, modular home or manufactured home that is permanently affixed to a foundation on real estate to be owned by the borrower and taxed as real property) located in one of the following impacted counties:

Bibb Chatham Clayton DeKalb

Fulton Douglas Muscogee

The Georgia Dream HHF DPA Program funds must be used in conjunction with a Georgia Dream Homeownership First Mortgage. All requirements contained in Chapter 3 of this Seller Guide, including but not limited to the minimum required investment of $1000, are applicable unless there is a specific exception stated in this chapter.

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Georgia Dream Homeownership Program 504 Loan Terms
505 Eligible Borrowers
506 Loan Closing

Seller Guide
The Georgia Dream HHF DPA Program funds may not be combined with other down payment assistance funds.
The loan amount is $15,000 and will be a zero (0%) interest, non-recourse, deferred-payment subordinate loan evidenced by a promissory note and secured by a deed on the property.
The loan balance will be forgiven after five years. However, the loan balance will be due and payable if the borrower sells the property before the 5-year period expires. If the sale does not generate proceeds sufficient to repay the note, the portion of the note remaining unpaid after the proceeds are applied will be forgiven.
Upon request of the borrower, a subordination of the loan may be approved if the Georgia Dream Homeownership First Mortgage is refinanced and the borrower receives less than $500 cash back.
Eligible borrowers must meet all requirements of the Georgia Dream Homeownership Program, including but not limited to: income requirements, first-time homebuyer requirements and pre-purchase counseling requirements.
Additionally, the borrower must not have been convicted, within the last 10 years, of any one of the following in connection with a mortgage or real estate transaction: (a) felony larceny, theft, fraud or forgery; (b) money laundering; or (c) tax evasion. Borrower will be required to sign the Borrower Certification (SF-88) which authorizes an investigation to verify the same.
All closing documents and legal documents must reference "GHFA Affordable Housing, Inc. GHFA Affordable Housing, Inc. is the legal entity that will fund the Loan.
In addition to any disclosures required under state or federal law, you must use the following closing documents: Promissory Note (SF-85), Subordinate Deed to Secure Debt (SF-86), Transfer and Assignment (SF-87).

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Total Household Income Worksheet
Input Total Income for Applicant, Co-Applicant, and Adult Non-Applicant pursuant to Chapter 3 of the Seller Guide

County:

Family Size:

Maximum Household Income Limit:

The maximum purchase price for all properties must be equal to or less than the following:

Statewide Counties

MSA Counties

$200,000

$250,000

Employment Income
Name of Person Employed Company Name

Method A
Each paystub is the same and is consistent with current year VOE 1 Enter Gross Income from Paycheck: 2 Enter Pay Periods per Year: 3 Line 1 Multiplied by Line 2:

Choose Only One Method for Each Employer

Method B - Preferred
Gross pay and/or variable pay
1 Enter YTD Gross Pay: * 2 Enter Number of Days in YTD: ** 3 Line 1 Divided by Line 2: 4 Line 3 Multiplied by 365 Days:

Other Income / Child Support and Non-Applicant Income

Recipient

Source

Amount Received

Number of Periods in Year

Totals

Non-Payroll Deposits - more than 1% of sales price

Bank Name & Account Number

Total of Deposits Not Included Above

SubTotal

Enter Number of Monthly Statements

Total deposits divided by number of statements multiplied by 12

SubTotal

Grand Total Can Not Exceed Program Income Limits
* If paystub(s) dated prior to July 1st, use previous year W-2 + year to date pay ** If paystub(s) dated after July 1st, use year to date pay

GRAND TOTAL

$0.00

Version 2019

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January
11 22 33 44 55 66 77 88 99 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31

February
1 32 2 33 3 34 4 35 5 36 6 37 7 38 8 39 9 40 10 41 11 42 12 43 13 44 14 45 15 46 16 47 17 48 18 49 19 50 20 51 21 52 22 53 23 54 24 55 25 56 26 57 27 58 28 59

March
1 60 2 61 3 62 4 63 5 64 6 65 7 66 8 67 9 68 10 69 11 70 12 71 13 72 14 73 15 74 16 75 17 76 18 77 19 78 20 79 21 80 22 81 23 82 24 83 25 84 26 85 27 86 28 87 29 88 30 89 31 90

April
1 91 2 92 3 93 4 94 5 95 6 96 7 97 8 98 9 99 10 100 11 101 12 102 13 103 14 104 15 105 16 106 17 107 18 108 19 109 20 110 21 111 22 112 23 113 24 114 25 115 26 116 27 117 28 118 29 119 30 120

Year to Date Conversion Chart

May
1 121 2 122 3 123 4 124 5 125 6 126 7 127 8 128 9 129 10 130 11 131 12 132 13 133 14 134 15 135 16 136 17 137 18 138 19 139 20 140 21 141 22 142 23 143 24 144 25 145 26 146 27 147 28 148 29 149 30 150 31 151

June
1 152 2 153 3 154 4 155 5 156 6 157 7 158 8 159 9 160 10 161 11 162 12 163 13 164 14 165 15 166 16 167 17 168 18 169 19 170 20 171 21 172 22 173 23 174 24 175 25 176 26 177 27 178 28 179 29 180 30 181

July
1 182 2 183 3 184 4 185 5 186 6 187 7 188 8 189 9 190 10 191 11 192 12 193 13 194 14 195 15 196 16 197 17 198 18 199 19 200 20 201 21 202 22 203 23 204 24 205 25 206 26 207 27 208 28 209 29 210 30 211 31 212

August
1 213 2 214 3 215 4 216 5 217 6 218 7 219 8 220 9 221 10 222 11 223 12 224 13 225 14 226 15 227 16 228 17 229 18 230 19 231 20 232 21 233 22 234 23 235 24 236 25 237 26 238 27 239 28 240 29 241 30 242 31 243

September
1 244 2 245 3 246 4 247 5 248 6 249 7 250 8 251 9 252 10 253 11 254 12 255 13 256 14 257 15 258 16 259 17 260 18 261 19 262 20 263 21 264 22 265 23 266 24 267 25 268 26 269 27 270 28 271 29 272 30 273

October
1 274 2 275 3 276 4 277 5 278 6 279 7 280 8 281 9 282 10 283 11 284 12 285 13 286 14 287 15 288 16 289 17 290 18 291 19 292 20 293 21 294 22 295 23 296 24 297 25 298 26 299 27 300 28 301 29 302 30 303 31 304

November
1 305 2 306 3 307 4 308 5 309 6 310 7 311 8 312 9 313 10 314 11 315 12 316 13 317 14 318 15 319 16 320 17 321 18 322 19 323 20 324 21 325 22 326 23 327 24 328 25 329 26 330 27 331 28 332 29 333 30 334

December
1 335 2 336 3 337 4 338 5 339 6 340 7 341 8 342 9 343 10 344 11 345 12 346 13 347 14 348 15 349 16 350 17 351 18 352 19 353 20 354 21 355 22 356 23 357 24 358 25 359 26 360 27 361 28 362 29 363 30 364 31 365

Version 2018

Year to Date Conversion Chart

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January
11 22 33 44 55 66 77 88 99 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31

February
1 32 2 33 3 34 4 35 5 36 6 37 7 38 8 39 9 40 10 41 11 42 12 43 13 44 14 45 15 46 16 47 17 48 18 49 19 50 20 51 21 52 22 53 23 54 24 55 25 56 26 57 27 58 28 59 29 60

March
1 61 2 62 3 63 4 64 5 65 6 66 7 67 8 68 9 69 10 70 11 71 12 72 13 73 14 74 15 75 16 76 17 77 18 78 19 79 20 80 21 81 22 82 23 83 24 84 25 85 26 86 27 87 28 88 29 89 30 90 31 91

April
1 92 2 93 3 94 4 95 5 96 6 97 7 98 8 99 9 100 10 101 11 102 12 103 13 104 14 105 15 106 16 107 17 108 18 109 19 110 20 111 21 112 22 113 23 114 24 115 25 116 26 117 27 118 28 119 29 120 30 121

Year to Date Conversion Chart (Leap Year)

May
1 122 2 123 3 124 4 125 5 126 6 127 7 128 8 129 9 130 10 131 11 132 12 133 13 134 14 135 15 136 16 137 17 138 18 139 19 140 20 141 21 142 22 143 23 144 24 145 25 146 26 147 27 148 28 149 29 150 30 151 31 152

June
1 153 2 154 3 155 4 156 5 157 6 158 7 159 8 160 9 161 10 162 11 163 12 164 13 165 14 166 15 167 16 168 17 169 18 170 19 171 20 172 21 173 22 174 23 175 24 176 25 177 26 178 27 179 28 180 29 181 30 182

July
1 183 2 184 3 185 4 186 5 187 6 188 7 189 8 190 9 191 10 192 11 193 12 194 13 195 14 196 15 197 16 198 17 199 18 200 19 201 20 202 21 203 22 204 23 205 24 206 25 207 26 208 27 209 28 210 29 211 30 212 31 213

August
1 214 2 215 3 216 4 217 5 218 6 219 7 220 8 221 9 222 10 223 11 224 12 225 13 226 14 227 15 228 16 229 17 230 18 231 19 232 20 233 21 234 22 235 23 236 24 237 25 238 26 239 27 240 28 241 29 242 30 243 31 244

September
1 245 2 246 3 247 4 248 5 249 6 250 7 251 8 252 9 253 10 254 11 255 12 256 13 257 14 258 15 259 16 260 17 261 18 262 19 263 20 264 21 265 22 266 23 267 24 268 25 269 26 270 27 271 28 272 29 273 30 274

October
1 275 2 276 3 277 4 278 5 279 6 280 7 281 8 282 9 283 10 284 11 285 12 286 13 287 14 288 15 289 16 290 17 291 18 292 19 293 20 294 21 295 22 296 23 297 24 298 25 299 26 300 27 301 28 302 29 303 30 304 31 305

November
1 306 2 307 3 308 4 309 5 310 6 311 7 312 8 313 9 314 10 315 11 316 12 317 13 318 14 319 15 320 16 321 17 322 18 323 19 324 20 325 21 326 22 327 23 328 24 329 25 330 26 331 27 332 28 333 29 334 30 335

December
1 336 2 337 3 338 4 339 5 340 6 341 7 342 8 343 9 344 10 345 11 346 12 347 13 348 14 349 15 350 16 351 17 352 18 353 19 354 20 355 21 356 22 357 23 358 24 359 25 360 26 361 27 362 28 363 29 364 30 365 31 366

Version 2018

Year to Date Conversion Chart (Leap Year)

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Georgia Dream Homeownership Program

Seller Guide

Underwriting Package Checklist
Don't forget to click SUBMIT **Loan will be suspended if not in checklist order and approved by lender's underwriter**
1. "Loan Applicant Profile," (Form SF-10) with Underwriters Phone Number fully completed (all areas)
2. "Reservation Accepted" screen printed from LOL @ time loan reserved
3. SAM authorization on borrower(s) verifying no mortgage related convictions if using HHF DPA
4. Total Household Income Worksheet completed for applicant(s) and adult non-applicant(s) Household Members 5. Fully executed "Application Affidavit," (Form SF-12)
Household Members complete with birthday and Social Security Number Annual Income Section complete 3 Year Residence History must agree with other loan documents. Landlord name & address required Signed and dated
6. "Affidavit of Adult (18 years or older) Non-Applicant Household Member," (Form SF-15), if applicable Signed by non-applicant. If student provide evidence of enrollment Documentation for all sources of income: current pay stub or similar third-party documentation, 2-year work history, VOE/Verbal and W2s.
7. Copy of "Acquisition Cost Certification," (Form SF-16) Fully Completed, Signed and dated by all Borrowers and Sellers on the same form. Print name and title under seller's signature on page 2. Corporate Resolution/ Recorded POA, if discrepancy with owner of record/authorized signee
8. Applications and Addendums Final FNMA Form 1003 with updated PITI, income, assets and details and transactions Signed FHA or VA Addendum (page 1,2 & 4), if applicable Typed, signed and dated by lender and applicant DE Approval signed w/approval and expiration dates. UW to sign in all applicable areas Liquid Assets meet program requirements All financing sources listed in details of transaction Must match amount on Max Loan Amount Worksheet Complete loan originator name and identifier number if applicable
9. Copy of the applicable all signed and dated by Lender's Underwriter: a. FHA Form 92900 LT: "FHA Loan Underwriting Transmittal Summary" and "Direct Endorsement Approval" HUD Form 92900-A, page 3 b. VA form 26-6393: "Loan Analysis" c. FNMA Form 1008: "Transmittal Summary" with Mortgage Insurance approval (for USDA/RD Guaranteed Loans verify CAVIRS number is written on the form) d. USDA Form 3555-18E Conditional Commitment and Waiver Letter (credit or ratios), if applicable for USDA/RD Guaranteed Loan e. Eligibility Summary (Guaranteed Loans originated by USDA/RD only
10. Automated Underwriting Findings a. Final findings reports on loans approved through DU/LP/GUS signed by the underwriter b. All documents required by the Automated Underwriting System, the Mortgage Insurer and the Lender's underwriter to determine the credit decision
11. Internal Underwriting Approval with conditions listed. Signed and dated by Underwriter w/phone #
12. Credit Report dated within 120 days of the lenders underwriting decision. Any credit supplements or updated reports to be placed in front of original report. If credit report reflects a current or previous mortgage document that borrower has no current ownership interest. a. Data verification report from acceptable vendor (i.e. Fraudguard, Drive, Lexis Nexus, Corelogic), must include liens and judgment recertification
13. Verbal Verification of Employment from last 12 months of employment
14. Employment Verification documentation required per Automated Findings: DU, LP, GUS, etc.

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15. Verification of Income dated within forty-five (45) days of your underwriting decision date shown on the 92900A Copy of most recent paystubs for borrower and co-borrower, must reflect year-to-date earnings, most current paystub to be placed first Other sources of income such as child support, SSI, pension, etc.
Most current year's W-2's from all jobs worked for year in question. DO NOT NEED W-2 TAX TRANSCRIPT
16. Bank Statement(s) on ALL open accounts for the most recent 30-day period dated within forty- five (45) days of your underwriting decision date shown on the 92900A put most recent statement on top Explanation and source for non-payroll deposits greater than 1% of sales price over 1010 warning (attached) Assets on bank statement(s) must agree with figures on 1003 and Automated Underwriting Findings. (SG 304.8) Verification of funds source as per insurer guidelines including gift funds Copy of earnest money and source of funds. Any POC's to be sourced to receive credit on CD __Education refunds deducted from available balance
17. Rental History Verification, if manual review.
18. Federal IRS Tax Transcripts for each Borrower for the past 3 years (A SF-6012 Tax Affidavit may be provided for applicable years if no tax return filed. (Full tax returns, W2's and State tax returns not required unless requested by DCA underwriter) If evidence of home mortgage interest or real estate taxes deduction, see Seller Guide 303.1 Number of dependents consistent with loan application. If not, satisfactory explanation over 1010 language is required
19. Co-Signer Documentation 1003 Credit report data verification lien and judgment report income documentation asset accounts
20. Sales Contract and applicable Addenda signed by all parties a. Addendum referencing disclosure of Lead-Based paint and Lead-Based paint hazards if property built prior to 1978 b. Amendments correcting original sales price/seller paid closing costs or other terms to be on top of sales contract. Must match SF16 and other documentation throughout file
21. Uniform Residential Appraisal Report and all attachments including legible photographs with one of the following, if applicable: a. If VA Loan, VA Form 26-1843: "Certificate of Reasonable Value" or VA Notification of Value Letter (must be signed/dated by Lenders Underwriter) along with the VA Case Number Assignment and CAIVRS b. If FHA Loan, FHA Form 92800.5B: "Conditional Commitment/Direct Endorsement Statement of Appraised Value" (must be signed/dated by Lenders Underwriter) along with the FHA Case Number Assignment with Success, FHA Appraisal Logging results with Success, CAIVRS and LDP/GSA on all parties to the loan c. If Conventional Loan,1st mortgage with a DCA 2nd provide evidence appraiser is FHA approved/URAR must reflect "Property meets HUD minimum property standards".
22. FEMA Flood Certification w/ Life of Loan coverage
23. Home Buyer Education Certificate of Completion for all borrowers on all loans, must be dated within 12 months of DCA commitment. Must be with a HUD approved agency. See seller guide for list of approved agencies
24. Borrower's Authorization form signed by Borrower
25. 4506T signed by Borrower with items #6 #9 completed in full. Must state 3 years
26. Support documentation for the following Georgia Dream Second Mortgage Loan programs (See Section 401.2 & 406 OF Seller Guide): a. CHOICE Documentation of the status of the disability and dependency (if applicable). b. Approval of the 2nd mortgage from issuing Non-Profit, if applicable
27. Preliminary Title Policy with chain of title and annual taxes reviewed by underwriter for any insurability issue. (Taxes must be w/o exemptions- Homestead acceptable) __ Insured closing letter
28. Evidence of Hazard Insurance with not more than $1,000.00 deductible. Coverage equal to loan amount
29.. Photo ID for Borrower(s). Must be legible

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30. Condos ONLY Borrower's HO6 Condo Policy Evidence of FHA Condo Approval from lender's U.W. Master Condo Policy Condominium Limited Review Questionnaire
31. Scratch application and FHA Addendum (92900A), signed and dated by Lender and Borrower(s)
32. SF-88 Certificate if using HHF DPA
33. Electronic Signature Authorization if DCA docs signed electronically.
34. Loan Estimate
34. 203K documents if applicable. See section 302.3 __ 203(k) Applicant Acknowledgement ___Rehabilitation loan Agreement __ 203(k) Streamline Max. Mortgage Worksheet HUD 92700 __Cost Estimate and Contractor Bid __Analysis of Appraisal Report HUD 54113

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Closing Checklist
Documents to send to Closing for Georgia Dream 1st and 2nd Mortgage Loans
This checklist includes only the items that are unique to the Georgia Dream First and/or Second Mortgage Loans; closers must also send usual loan documents to closing.

MORTGAGE MAY NOT BE REGISTERED WITH MERS

First Mortgage Loans:
FHA Loan: 1. FHA Note 2. FHA Deed to Secure Debt* MORTGAGE MAY NOT BE REGISTERED WITH MERS 3. Form SF-40 - "Tax-Exempt Financing Rider"* 4. Form SF-46 - "Mortgagor's Closing Affidavit" 5. Form SF-50 - "Notice to Purchaser of Potential Recapture Tax" 6. Form SF-61 Pgs. 1-2 "Notice of Assignment, Sale or Transfer of Servicing Rights
VA Loan: 1. VA Note 2. VA Deed to Secure Debt* 3. Form SF-40- "Tax-Exempt Financing Rider"* 4. Form SF-46 - "Mortgagor's Closing Affidavit" 5. Form SF-50 - "Notice to Purchaser of Potential Recapture Tax" 6. Form SF-61 Pgs. 1-2 "Notice of Assignment, Sale or Transfer of Servicing Rights
Conventional or USDA/RD Loan: 1. FNMA or FHLMC Note 2 FNMA or FHLMC Deed to Secure Debt* 3 Form SF-40 "Tax-Exempt Financing Rider"* 4. Form SF-46 - "Mortgagor's Closing Affidavit" 5. Form SF-50 - "Notice to Purchaser of Potential Recapture Tax" 6. Form SF-61 Pgs. 1-2 "Notice of Assignment, Sale or Transfer of Servicing Rights

Georgia Dream Second Mortgage Loans or Hardest Hit Fund DPA Loan:

1. 2.

Form SF-82 - "Georgia Dream Second Mortgage Note", or Form SF-85 - "HHF DPA Loan Promissory Note" Form SF-84 - "Georgia Dream Second Mortgage Subordinate Security Deed"** or Form SF-86 - "HHF DPA Loan Subordinate Deed to Secure Debt"**

* These documents must be recorded. ** This document must be recorded after the First Mortgage Deed.

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Closing Checklist

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Seller Guide

Purchase Package Checklist
(Use for Georgia Dream First and Georgia Dream Second Mortgage or Hardest Hit Fund Loans)
Upload Package to EDOCS in Purchase Package Loan file Don't forget to click SUBMIT

MAIL NOTES TO: LOAN FUNDING DEPT. GEORGIA DEPARTMENT OF COMMUNITY AFFAIRS 60 EXECUTIVE PARK SOUTH, N.E. ATLANTA, GEORGIA 30329-2231

1. Signed "Loan Funding Profile", (Form SF-30)
2. Any documents required to clear conditions in the Underwriting Approval letter for the First
and Second Mortgage Loans.
3. Copy of Escrow Check
4. Executed Note endorsed to "Georgia Housing and Finance Authority", signed by Authorized
Officer and Lender. Mail original to our office
5. Executed "Georgia Dream Second Mortgage Note", (Form SF-82) endorsed to "Georgia
Housing and Finance Authority", signed by Authorized Officer and Lender or Hardest Hit Fund Note (Form SF-85) endorsed to "GHFA Affordable Housing, Inc.", signed by Authorized Officer and Lender. Mail original to our office.
6. Closing Disclosure
7. If FHA Loan: "Direct Endorsement Approval for a HUD/FHA-Insured Mortgage": FHA form
92900a (page 4) signed by borrower and lender
8. If VA Loan: "Certificate of Commitment for VA Home Loan Guaranty, "VA Form 26-1866a
or VA Loan Analysis, VA Form 26-6393
9. Signed Security Deed with "Waiver of Borrower's Rights and Closing Attorney's Affidavit",
PUD or Condo Rider, if applicable (MORTGAGE MAY NOT BE REGISTERED WITH MERS and MERS DOCUMENTS MAY NOT BE USED)
10. " Tax-Exempt Financing Rider," (Form SF-40) for all loans.
11. "Transfer and Assignment" (Form SF-44), transferring the mortgage to GHFA Signed by an
Officer designated to act on behalf of the Corporation and any required Corporate seals.
12. Title Insurance Binder/Commitment or Short Form Policy for first mortgage. Add FHA
language, lender name and or the Secretary of Housing and Urban Development ISAOA/ATIMA
13. "Mortgagor's Closing Affidavit" (Form SF-46)
14. "Notice to Purchaser of Potential Recapture Tax on Sale of Home",(Form SF-50) Second
Mortgage Amount should be $0.00 if using HHF DPA Funds
15. Clear termite letter with attachments, if applicable
16. HO6 Policy for condos.

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17. Survey, if applicable.
18. 203K
Final Inspection signed by Appraiser and Underwriter Final Release Notice 203(k)Draw Request 9746A and interim draws, if needed Mortgage Letter of Completion Rehabilitation Loan Rider FHA connection 203(k) escrow close out screen print reflecting any principal reduction Maximum Base Loan Amount Worksheet w/ HUD Required Repairs FHA Section 220(d) (3) (A) Urban Renewal FHA Section 234(c)- Condominiums

Georgia Dream Second Mortgage Documents (if applicable)
1. Closing Disclosure for the Second Mortgage, if applicable
2. Signed "Georgia Dream Second Mortgage Subordinate Security Deed", (Form SF-84)
or Hardest Hit Fund DPA Subordinate Deed to Secure Debt (Form SF-86)
3. "Transfer & Assignment", (Form SF-44) transferring the Second Mortgage to GHFA
or Hardest Hit Fund Transfer & Assignment (Form SF-87) transferring to GHFA Affordable Housing, Inc. (MORTGAGE MAY NOT BE REGISTERED WITH MERS)

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Purchase Package Checklist

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Servicing Package Checklist Due to State Home Mortgage (Use for Georgia Dream First Mortgage Loans)
ACCO CLASP PACKAGE DOWN IN A MANILA FOLDER WITH ESCROW CHECK AND MAIL TO:
STATE HOME MORTGAGE 60 EXECUTIVE PARK SOUTH, N.E. ATLANTA, GEORGIA 30329-2231
1. State Home Mortgage Servicing Loan Profile (Form SF-31) 2. Copy of Signed Note and Security Deed 3. Copy of properly executed
"Tax-Exempt Financing Rider," (Form SF-40)
4. If FHA Loan: "Direct Endorsement Approval " - FHA Form 92900a 5. If Conventional Loan: Private Mortgage Insurance Certificate and Pool Insurance
Certificate, if applicable
6. IF VA Loan: "Certificate of Commitment for VA Home Loan Guaranty, VA Form 26-1866a
or VA Loan Analysis, VA Form 26-6393
7. If USDA/RD: Conditional Commitment, "RD Form 1980-18, page 2, Lender Certificate
signed by Lender
8. Title insurance policy or title binder 9. Hazard insurance policy with proof of payment of first year's premium 10. Flood insurance policy, if applicable, with proof of payment of first year's premium 11. Tax Information Sheet 12. Flood Certification Form 13. Closing Disclosure 14. IRS form W-9 15. Copy of "Transfer and Assignment" (Form SF-44) 16. Transfer of Servicing letters sent to the Hazard Insurance Agent, PMI Company and
Flood Certification Company with Mortgagee Clause as follows: Georgia Housing and Finance Authority its Successors and/or Assigns c/o State Home Mortgage 60 Executive Park South N.E. Atlanta, GA 30329
17. Notice of Assignment, Sale or Transfer of Servicing Rights (Form SF-61) Pages 1-2 18. Initial Aggregate Escrow Account Disclosure Statement 19. HUD-92900-LT (FHA Only) 20. Loan application 21. Complete appraisal 22. At closing payment, if sent to lender must be sent immediately to State Home Mortgage 23. HO6 Policy for condo and proof of payment of 1st year's premium

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Servicing Package Checklist

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Final Document Checklist
Use for Georgia Dream First and Georgia Dream Second Mortgage or Hardest Hit Fund Loans

Upload Package to EDOCS in Final Document Loan file Don't forget to Click SUBMIT

MAIL ORIGINALS TO: LOAN FUNDING DEPT. GEORGIA DEPARTMENT OF COMMUNITY AFFAIRS 60 EXECUTIVE PARK SOUTH, N.E. ATLANTA, GEORGIA 30329-2231

Georgia Dream First Mortgage Documents

1. Original recorded Security Deed and evidence of payment of intangible tax 2. Original recorded "Tax Exempt Financing Rider," (Form SF-40) 3. Original recorded "Transfer and Assignment," (Form SF-44) 4. As applicable:

a. VA Loan Guaranty Certificate, or

b. FHA Mortgage Insurance Certificate, or

c. USDA/RD Loan Note Guarantee (RD Form 1980-17)

5.

Title Policy a. Minimum loan amount coverage

b. Insured name (lender name and Mortgage Insurance Verbiage)

6. "Lender Certification," (Form SF-60)

7. FHA Connection Printout to reflect and include:
a. Active insurance status b. Endorsement date c. Georgia Housing and Finance Authority as current holder
8. If FHA 203(k)
a. Final Inspection signed by Appraiser and Underwriter b. Final Release Notice c. 203(k) Draw Request 9746A and interim draws, if needed d. Mortgagor letter of completion e. Rehabilitation Loan Rider f. FHA Connection 203(k) escrow closeout screen print reflecting any principal reduction g. Maximum Base Loan Amount Worksheet w/HUD Required Repairs

9. Any other documents required

Georgia Dream Second Mortgage Documents

1. 2. 3.

Original recorded "Georgia Dream Second Mortgage Security Deed," (Form SF-84) or HHF DPA "Subordinate Deed to Secure Debt", (Form SF-86) and evidence of payment of intangible tax. Original recorded "Transfer and Assignment" of the Georgia Dream Second Mortgage Loan from Lender to GHFA, (Form SF-44) or original recorded "HHF Transfer and Assignment" transferring the loan to GHFA Affordable Housing, Inc. (Form SF-87) Any other documents required

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Appendix I Definitions
All words and phrases used in this Guide and not defined below shall have the same meaning as in the Loan Seller Agreement. In any case in which the definitions in this Guide vary from the definitions in the Loan Seller Agreement, the Loan Seller Agreement shall prevail.
"Acquisition Cost" means the borrower's cost of acquiring a residence from a seller as a completed unit. See Form SF-16 to calculate Acquisition Cost.
"Applicant" means the person(s) who initiates the mortgage loan process of applying for a Georgia Dream Homeownership Program loan by completing the necessary paperwork, as well as providing a DCA lender with information about their income, debt, and assets as well as information about the property being financed.
"Appraised Value" means the market value of the home to be purchased with the proceeds of a Loan, as determined by a professional real estate appraiser and documented by a Uniform Residential Appraisal Report (URAR).
"Approved Automated Underwriting System" means those computerized underwriting programs approved for use by DCA for DCA Loans. Currently, Desktop Underwriter (DU) and Loan Prospector (LP) are approved by DCA.
"Bond Issue" means "Series of Bonds" as defined in this Appendix.
"Bonds" means the single family mortgage revenue bonds of GHFA issued to finance the Program.
"Business Day" means any day other than: (a) a Saturday or Sunday, (b) a day proclaimed by the Governor of the State as a holiday for State employees or (c) a day on which banking institutions in Georgia are authorized or obligated by law or executive order to be closed for business.
"CLTV" means combined loan-to-value ratio. A ratio that is used for a mortgage that is subject to subordinate financing, which is developed by dividing the sum of the unpaid principal balance of the first mortgage, the unpaid principal balance of any home equity line of credit from which the borrower has withdrawn funds, and the unpaid principal balance of all other subordinate financing by the lower of the property's sales price or appraised value.
"CHOICE" means the Georgia Dream Second Mortgage program of purchasing Loans secured by subordinate Security Deeds on Single Family Residences owned and occupied by eligible borrowers who meet the eligible borrower definitions in Chapter 4 of this Guide. Purchases shall be financed with funds received by GHFA or DCA from the U.S. Department of Housing and Urban Development pursuant to the Cranston-Gonzalez National Affordable Housing Act of 1990, from Bond Issues, or from other funding sources.
"Closing Costs" means only the costs specified in Chapter 3 of this Guide.

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"Conventional Loan" means a Loan that is not insured by FHA or guaranteed by VA or USDA/RD, and the principal amount of which Loan is less than 80% of the lesser of the purchase price or the initial Appraised Value of the subject Single Family Residence, or which Loan is insured under Private Mortgage Insurance.
"Copy" means a photocopy reproduction of an original document which omits no portion of the original.
"Corporate Resolution" is a written statement made by the Board of Directors detailing which officers are authorized to act on behalf of the corporation.
"DCA" means the Department of Community Affairs, a legislatively executive branch, Georgia State Government, created pursuant to the official code of Georgia. Annotated, Title 50, Chapter 8, Article 1, as amended.
"DCA Lender or Lender" means a Seller as defined in this Appendix.
"Day" means a calendar day, unless specifically noted as being a Business Day.
"DE Underwriter" means an underwriter designated by the Lender as a FHA Direct Endorsement underwriter.
"Discretion" when used in the context of "the sole discretion," means the sole and absolute discretion.
"Expiration Date" means the last day of the Reservation/Commitment Period.
"Extension Fees" means the fees charged to Sellers in accordance with Chapter 2 of this Guide.
"Fannie Mae" means the Federal National Mortgage Association, or any other agency or instrumentality created or chartered by the United States to which the powers and obligations of the Federal National Mortgage Association have been transferred.
"FHA" means the Federal Housing Administration of the United States Department of Housing and Urban Development, or any other agency or instrumentality created or chartered by the United States to which the powers and obligations of the Federal Housing Administration have been transferred.
"FHA 203(k)" means the HUD home rehabilitation insurance program.
"Fieri Facias (Fi.Fa)" means a Latin term for "cause it to be done". A Fi.Fa is based on a judgment. Once the Fi.Fa is filed the judgment attaches to the property of the defendant. The Fi.FA has priority based on the date of filing, and expires 7 years if not renewed. In some cases, possession for 4 years by a bona fide purchaser for value will dislodge a Fi.Fa if against a prior owner.

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"First Mortgage Program" means the Georgia Dream First Mortgage Loan Program of purchasing loans and securities, including, without limitation, the purchase with Bond proceeds of Loans and of Program Securities backed by Pools of Loans.
"Freddie Mac" means the Federal Home Loan Mortgage Corporation, or any other agency or instrumentality created or chartered by the United States to which the powers and obligations of the Federal Home Loan Mortgage Corporation have been transferred.
"Georgia Dream First Mortgage Loan Program" means First Mortgage Program as defined in this Appendix.
"Georgia Dream Homeownership Program" means the specific Program under which the subject Loan is being purchased, as specified by the Reservation issued by DCA. "Program" shall include the Georgia Dream First Mortgage Program, the Georgia Dream Second Mortgage Program, and any other programs established by DCA or GHFA for the purchase of Loans.
"Georgia Dream Loan" means a Loan as defined in this Appendix.
"Georgia Dream Second Mortgage Program" means the Georgia Dream Second Mortgage program of purchasing Loans secured by subordinate Security Deeds on Single Family Residences that meet the requirement of the Georgia Dream Homeownership Program. The Single Family Residences must be owned and occupied by eligible borrowers who meet the eligible borrower definitions in Chapter 3 of this Guide.
"Georgia Dream Second Mortgage Loan" means the Second Mortgage programs as defined in this Appendix.
"Georgia Security and Immigration Compliance Act" means the State law that requires that every agency or political subdivision shall verify the lawful presence in the United States of any applicant for public benefits.
"GHFA" means the Georgia Housing and Finance Authority.
"Ginnie Mae" means the Government National Mortgage Association, or any other agency or instrument created or chartered by the United States to which the powers and obligations of the Government National Mortgage Association have been transferred.
"GRMA" means the Georgia Residential Mortgage Act which imposes a fee on each mortgage loan transaction.
"Guide" means Seller Guide as defined in this Appendix.
"Household" means all members proposed to reside in the house being financed, whether or not related by blood, marriage or law.

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"Household Annual Income" means the sum of the total anticipated income for each Household member during the 12-month period commencing with the date of initial occupancy, as further described in Chapter 3 of this Guide.
"HUD" means the United States Department of Housing and Urban Development, or any successor to its functions and obligations.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, together with corresponding final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the Treasury Department or Internal Revenue Service of the United States.
"Lender" or "DCA Lender" means a mortgage lender approved by DCA to originate first and second mortgages under the Georgia Dream Homeownership Program.
"Lender Portal" means DCA's internet based system which allows Lenders to enter a Reservation online, as well as complete and print Georgia Dream Homeownership Program forms, check the status of a Reservation, and access various reports.
"Loan" means a mortgage loan made in accordance with the provisions of this Guide and the Loan Seller Agreement.
"Loan Purchase Price" means the price paid by DCA to a Seller for the purchase of a Loan, which shall be calculated in accordance with Chapter 2 of this Guide.
"Loan Seller Agreement" means the agreement and any and all appendices and exhibits thereto (including this Seller Guide) entered into by GHFA and the Seller in connection with the purchase of Loans and Program Securities under the First Mortgage Program, as may be amended from time to time. This Seller Guide is is incorporated by reference into each Loan Seller Agreement.
"Loan Servicing Release Agreement" means each and all Loan Servicing Release Agreements, including any and all Appendices and Exhibits thereto entered into between State Home Mortgage (the servicing division of GHFA) and approved Loan Seller, as may be amended from time to time.
"LTV" means loan to value ratio obtained by dividing the loan amount by the lesser of the Appraised Value or the Purchase Price.
"Maximum Purchase Price" means the Maximum Purchase Price of property acquired with a DCA Loan. The Maximum Purchase Price is calculated on Form SF-16 as the total acquisition cost and as further described in applicable Chapters of this Guide.
"Mortgage Insurer" means FHA, VA, USDA/RD, Private Mortgage Insurer, or Mortgage Pool Insurer as applicable.

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"Mortgage Pool Insurer" means the applicable Qualified Mortgage Insurance Company that issued Mortgage Pool Insurance or any successor Qualified Mortgage Insurance Company that issues replacement or substitute Mortgage Pool Insurance.
"Mortgagor" means a maker or makers of a Note, or any other party obligated to repay the applicable Loan.
"MSA" means a Metropolitan Statistical Area.
"Note" means the written debt instrument executed to evidence the Mortgagor's obligation to repay the Loan, in a form which shall be in accordance with the Seller Guide.
"PEN" means DCA's program of purchasing Loans secured by subordinate Security Deeds on Single Family Residences that are purchased by public protectors, health care workers and educators who meet the eligible borrower definitions in Chapter 4 of this Guide. The Single Family Residences must be owned and occupied by eligible borrowers, whose purchase will be financed with funds received by GHFA or DCA from the U.S. Department of Housing and Urban Development pursuant to the Cranston-Gonzalez National Affordable Housing Act of 1990, from Bond Issues, or from other funding sources.
"Prepaid Expenses" means the amount required by the Mortgage Insurer (or the investor if the Loan is uninsured) to be deposited in the escrow account for property taxes, hazard insurance, and homeowner association or condominium