Arkansas Administrative Code › Agency 109 - Arkansas Development Finance Authority › Division 03 - Single Family Housing › Rule 109.03.05-001 - Single Family HomeToOwn Program

Current through Register Vol. 49, No. 6, June, 2024
CHAPTER
			 1 - INTRODUCTION
A.
About
			 the Program Guide
The Arkansas Development Finance Authority ("ADFA" or the
				"Authority") has developed this HomeToOwn Program Guide (the "Program Guide")
				for the use and benefit of any and all parties having an interest in the
				HomeToOwn Program (the "Single Family Program" or the "Program"). However, we
				have attempted to target the materials in the Program Guide to the Mortgage
				Lenders (as defined in Chapter 1, Section G) in order to aid and assist them in
				complying with the terms and conditions required for participation in the
				Single Family Program. Mortgage Lenders should familiarize themselves with each
				and every obligation set out in the Program Guide - the requirements discussed
				herein are mandatory and the failure of a Mortgage Lender to adhere to the
				Single Family Program requirements may lead to the termination of such Mortgage
				Lender's participation in the Single Family Program, as well as triggering
				possible claims for damages from other parties having a role or an interest in
				the Program. The terms and conditions set forth in this Program Guide are
				specifically incorporated by reference into each Mortgage Lender's "Mortgage
				Origination Agreement" by and among ADFA, the Master Servicer (as defined in
				Chapter 1, Section G) and the Mortgage Lender.
B.
The Arkansas Development Finance
			 Authority
ADFA was created by Act 1062 of 1985, the Arkansas Development
				Finance Authority Act. This act abolished the former Arkansas Housing
				Development Agency, whose purpose was to develop safe, decent, sanitary and
				affordable housing for low and moderate income Arkansans, and transferred all
				records, funds, property, obligations, debts, functions, powers and duties to
				ADFA. This newly created Authority was empowered to issue tax-exempt bonds and
				other debt instruments for housing, manufacturing, export finance, small
				business, agricultural business enterprises, education, health care,
				municipalities and infrastructure projects.
The State of Arkansas is not obligated to pay the Bonds (as
				defined in Chapter 1, Section G) and other debt instruments of the Authority,
				and neither the faith and credit nor the taxing power of the State of Arkansas
				is pledged to the payment of the principal or redemption of interest on the
				Bonds and other debt instruments.
C.
The HomeToOwn Program
The HomeToOwn Program, formally known as the Mortgage Revenue
				Bond Program and referred to herein as the Single Family Program, has been a
				mainstay of the Authority since its formation and is designed to provide
				low-cost homebuyer financing for the low- to moderate-income citizens of
				Arkansas. As a means of providing improved delivery to the marketplace of
				low-cost Mortgage Loans (as defined in Chapter 1, Section G), ADFA is pleased
				to provide a "continuous funding" program. What this means to the Mortgage
				Lender is that ADFA will always have funds available. This will eliminate the
				peak periods of high demand and the rapid depletion of funds. By simplifying
				the procedure, the Authority hopes that Mortgage Lenders will soon realize that
				ADFA is offering an improved product for Eligible Borrowers (as defined in
				Chapter 1, Section G) that Mortgage Lenders can happily recommend.
D.
Mortgage Revenue
			 Bonds
Under the Single Family Program, ADFA accomplishes its public
				purpose primarily by selling Bonds in the municipal bond market. The interest
				that Bond holders receive is generally exempt from both Federal and Arkansas
				state income taxes. Because of this feature, investors are willing to accept a
				lower interest rate. This lower cost of borrowing enables ADFA to provide
				financing to Eligible Borrowers at a rate lower than the prevailing market
				rate. Bond proceeds ultimately are used to purchase Mortgage Loans from
				participating Mortgage Lenders.
Federal tax law places restrictions on (a) the type and value
				of property that may qualify; and (b) the persons who may qualify. This Program
				Guide will explain these various restrictions in later chapters. As an issuer
				of tax-exempt bond financing, ADFA must make a good faith effort to ensure that
				all Mortgage Loans comply with the guidelines. This is accomplished by the
				Mortgage Lenders and the ADFA staff. All Mortgage Lenders must thoroughly
				review all documents, tax returns, etc., before making any submission of the
				proposed Mortgage Loan to ADFA.
The consequences of ADFA's acceptance of a Mortgage Loan that
				does not comply with the Tax Code (as defined in Chapter 1, Section G) could be
				catastrophic to the Authority. The Bonds issued could become taxable, with
				interest and penalties, retroactive to the date of Bond sale. Thus, it is
				imperative that Mortgage Loans are made only to Eligible Borrowers purchasing
				Qualified Dwellings (all as defined in Chapter 1, Section G).
E.
Servicing of Single Family Program
			 Mortgage Loans
The Authority currently utilizes a master servicer to act as
				servicing agent and to purchase qualified Mortgage Loans from participating
				Mortgage Lenders. The master servicer (referred to in this Program Guide as the
				"Master Servicer" or the "Servicer") is:
U.S. Bank Home Mortgage 17500 Rockside Road Bedford, Ohio 44146
				Telephone: 800-562-5165
The Master Servicer will pay each participating Mortgage Lender
				a Servicing Release Fee (as defined in Chapter 1, Section G) in an amount
				established by the Authority from time to time. The current Servicing Release
				Fee is posted on the ADFA website.
For information concerning the submission of documents to the
				Master Servicer, see Chapter 8 of this Program Guide.
F.
Term of the Mortgage Loans
Currently, the Single Family Program features a 30-year,
				fixed-rate Mortgage Loan. The interest rate on qualified Mortgage Loans is
				typically 50-75 basis points below the prevailing "conventional" rate for
				similar term, fixed-rate mortgage loans. With the implementation of continuous
				funding, ADFA will periodically adjust the Mortgage Loan interest rate.
				Remember, we want to eliminate peaks and valleys in the availability of funds.
				In addition, ADFA must offer other products from time to time. ADFA will notify
				each Mortgage Lender via facsimile transmission, email transmission, or
				otherwise, in the event that the loan rate is raised or lowered or new products
				are offered; also, current loan rate and other Single Family Program
				information will be posted on the ADFA website.
G.
Definitions
The following words and phrases shall have the following
				meanings:
Acquisition Cost
means the total cost
				of acquiring a residence from a Seller as a completed residential unit and more
				fully described in Exhibit 5-B, Borrower's Application Affidavit and
				Certification. The meaning of Acquisition Cost is set forth in further detail
				in Chapter 2, Section C.l.c. of this Program Guide.
Affidavit of Seller
shall have the
				same meaning as "Seller's Certificate," as defined below.
Annual Household Income
means, for
				purposes of determining the qualifications of proposed borrowers under the
				income limitations of the Single Family Program, the current household income
				of a proposed borrower determined pursuant to Exhibit 5-A, Borrower's
				Certification as to Income, and shall in any event include the current gross
				income of all persons who reside or intend to reside with such borrower in the
				same residence (other than persons under age 18 who are not primarily or
				secondarily liable on the Mortgage Note), but exclusive of the income of any
				co-signer of a Mortgage Note who does not reside or intend to reside in the
				residence, as evidenced by documentation satisfactory to the Authority. The
				concept of Annual Household Income is further described in Chapter 2, Section B
				of the Program Guide.
Application Agreement
means the
				"Application for ADFA Approved Mortgage Lender" which proposed mortgage lenders
				must submit to ADFA for approval prior to the execution of any Mortgage
				Origination Agreement.
Assignment of Mortgage Note and Mortgage/Deed of
				Trust
means the instrument substantially in the form of Exhibit
				7-0, completed and executed by the Mortgage Lender, in recordable form, and
				pursuant to which a Mortgage Lender assigns and delivers the related Mortgage
				and endorses the Mortgage Note to the Master Servicer in connection with the
				purchase of the related Mortgage Loan by the Master Servicer.
Average Area Purchase Price
means the
				purchase price amounts, respectively, for (i) residences not previously
				occupied ("new residences") and (ii) residences previously occupied ("existing
				residences"), for the State as specified in Schedule II hereto or such other
				amounts as may from time to time be determined by the Authority or published by
				the United States Department of the Treasury as the average area purchase price
				for the State. An Average Area Purchase Price is not provided for new
				residences for three- and four-family homes because multi-unit dwellings, other
				than duplexes, may not be financed with the proceeds of the Bonds.
Bonds
means any of the Authority's
				Home Mortgage Revenue Bonds authorized under the General Resolution and issued
				pursuant to a Home Mortgage Revenue Bond Series Resolution.
Builder
means a person or firm
				regularly engaged in the construction of residential property within the
				State.
Business Day
means any day other than
				a Saturday or Sunday or a day on which the principal trust office of the
				Trustee, Master Servicer or the banks in the City of New York are authorized to
				be open for regular business.
Buyer
shall have the same meaning as
				borrower as used within this Program Guide.
Certificate of Compliance
means the
				Authority's Certificate, substantially in the form of Exhibit 6-H, in which the
				Authority must certify to certain investigations made with respect to each
				Mortgage Loan approved for purchase by the Master Servicer. A Certificate of
				Compliance shall cover each Mortgage Loan and must be issued prior to Mortgage
				Loan Closing.
Closing
and
Closing
				Date
mean the funding of the Mortgage Loan by the Mortgage Lender
				and the execution and delivery by the Borrower of all documents in connection
				therewith and the date on which such Closing occurs.
Commit
or
Commitment
means a binding written commitment by the
				Mortgage Lender, in the form customarily used by the Mortgage Lender in its
				owner-occupied home lending practice or in a form customarily used in the
				mortgage lending industry, as may be specified by the Master Servicer, to a
				particular Eligible Borrower to finance the purchase of a particular Qualified
				Dwelling with a Mortgage Loan, which Commitment shall specify a stated
				expiration date, a stated principal amount and an interest rate equal to the
				Loan Rate.
Compliance Package
or
Preliminary Approval and Compliance Package
means the
				documents listed in Exhibit 6-G.
Condominium Unit
means a single family
				unit in a multi-unit housing development (i) which has been subject to a
				recorded declaration pursuant to the Condominium Property Act, and (ii) in
				which ownership of the units includes the ownership in fee of a specified
				residential unit together with an undivided pro rata interest in appurtenant
				real estate and any improvements thereon. A loan made on a condominium unit
				must be eligible for insurance by FHA, VA, USDARD, or the PMI insurer and
				Fannie Mae.
Cure Period
shall mean the period of
				[thirty (30)] days from the earlier of the time the Mortgage Lender discovers a
				Defect or the Mortgage Lender receives notice of such Defect from the Authority
				or the Master Servicer.
Deed of Trust
shall have the same
				meaning as the term "Mortgage", as set forth below.
Default
means one or more of the following
				events:
a. Any representation or
			 warranty of a Mortgage Lender to the Authority and the Master Servicer shall be
			 false in any material respect;
b.
			 Failure of a Mortgage Lender to duly observe or perform any other covenant,
			 condition or agreement in the Mortgage Origination Agreement or the Program
			 Guide to be observed or performed by such Mortgage Lender in any material
			 respect for a period of thirty (30) days after a written notice to such
			 Mortgage Lender from the Authority specifying such failure and requesting that
			 it be remedied,
provided, however,
if the failure stated in
			 the notice cannot be corrected within the applicable period, the party giving
			 such notice shall consent to a reasonable extension of time if corrective
			 action is instituted by the Mortgage Lender within the applicable period and
			 diligently pursued until such failure or defect is fully corrected;
c. Requirement that the Master Servicer
			 purchase a Mortgage Loan as a result of a failure of such Mortgage Lender to
			 abide by the provisions of the Mortgage Origination Agreement and the Program
			 Guide, and the failure of such Mortgage Lender to timely repurchase said
			 Mortgage Loan upon receipt of proper notice;
d. Decree or order of a court, agency or
			 supervisory authority having jurisdiction in the premises appointing a
			 conservator, receiver or liquidator in any insolvency, readjustment of debt,
			 marshalling of assets and liabilities or similar proceeding affecting the
			 Mortgage Lender or substantially all of its properties, or for the winding-up
			 or liquidation of its affairs, if such decree or order shall have remained in
			 force undischarged or unstayed for a period of thirty (30) days;
e. Consent by the Mortgage Lender to the
			 appointment of a conservator, receiver or liquidator in any insolvency,
			 readjustment of debt, marshalling or assets and liabilities or similar
			 proceeding affecting the Mortgage Lender or substantially all of its
			 properties; or f. Admission in writing by the Mortgage Lender of its inability
			 to pay debts generally as they mature, or the filing of a petition to take
			 advantage of any applicable bankruptcy or insolvency statute, or the making of
			 an assignment for the benefit of creditors.
Defect
or
Defective
shall mean a failure to cause any Mortgage
				Loan to comply with the terms of the Mortgage Origination Agreement or this
				Program Guide.
Discount Fee
means the fee to be
				collected at closing by each Mortgage Lender and remitted to the Authority
				within [thirty (30)] days of each Closing Date. The amount will be communicated
				separately to all lenders through the program brochure update as needed.
Eligible Borrower
means a
				person:
a. Who is or will be a
			 resident of the state of Arkansas within sixty (60) days of the Closing of a
			 Mortgage Loan;
b. Whose Annual
			 Household Income does not exceed the amount set forth by the Authority, which
			 amount may be amended from time to time by ADFA; and c. Who intends to occupy
			 the Qualified Dwelling financed by the Mortgage Loan as his or her principal
			 residence within sixty (60) days after the Closing of the Mortgage Loan. Please
			 see the definition of Qualified Dwelling and Chapter 2, Section C of the
			 Program Guide for further information on the rules for determining whether a
			 residence is a Qualified Dwelling.
Escrow Account
means the account by
				that name created and maintained by the Mortgage Lender.
Fannie Mae
means the Federal National
				Mortgage Association, or any successor thereto.
Fannie Mae Community Home Buyer's
				Program
means the Community Home Buyer's Program described in the
				Pool Purchase Contract.
Fannie Mae Custodial Agreement
means
				the Fannie Mae Form No. 2003 from a Custodian to Fannie Mae for the
				Program.
FDIC
means the Federal Deposit
				Insurance Corporation, or any successor to its functions.
FHA
means the Federal Housing
				Administration of the Department of Housing and Urban Development or any agency
				or instrumentality of the United States of America succeeding to the mortgage
				insurance functions thereof.
FHA Insurance
means FHA mortgage
				insurance issued under one of the following FHA Insurance programs pursuant to
				the National Housing Act: FHA Section 203(b), FHA Section 234(c), FHA Section
				221(d)(2), FHA Section 203b\vet, FHA Section 203(k) and FHA Section 203(h) in
				applicable areas. ADFA encourages all participating Mortgage Lenders to
				disclose to potential Eligible Borrowers the availability of an energy saving
				home mortgage. This optional service may be obtained and financed with an
				FHA-insured loan.
First-Time
Homebuyer
means any
				borrower who has NOT had a present ownership interest in his or her principal
				residence at any time during the three-year period ending on the date of the
				Closing of the Mortgage Loan and the execution of the Mortgage related thereto.
				The meaning of First-Time Homebuyer is set forth in further detail in Chapter
				2, Section A of this Program Guide.
Flood Insurance Policy
means the
				insurance coverage provided under the National Flood Insurance Program
				authorized by 42 U.S.C. Sections 4001-4128.
General Resolution
means the Home
				Mortgage Revenue Bond General Resolution of the Authority adopted June 20,
				1995.
GNMA Custodial Agreement
means the HUD
				Form 11215 from a Custodian to GNMA for the Program.
GNMA Commitment
means a commitment to
				the Master Servicer from GNMA that GNMA will guarantee securities in the
				amounts stated in such commitment for a period of one year from the date of
				such commitment.
Government Obligations
means direct
				obligations of the United States of America, or obligations the principal of
				which and interest on which are fully guaranteed by the United States of
				America.
HUD
means the United States Department
				of Housing and Urban Development.
Loan Rate
means the interest rate per
				annum with respect to the Mortgage Loans as specified by the Authority from
				time to time. The Loan Rate for each specific Mortgage Loan will be set at the
				time of loan reservation by the Mortgage Lender.
Manufactured Home
means any
				residential dwelling built in an "off-site" production facility, transported to
				the customer's destination, and installed with a minimum of on-site
				construction.
Master Servicer
means U.S. Bank Home
				Mortgage, its successors and assigns as servicer hereunder and under the
				Servicing Agreement, or any substitute or successor appointed pursuant to the
				Servicing Agreement.
Maximum Household Income Limit
means
				the maximum permitted Annual Household Income of a borrower and anyone 18 years
				or older who resides in the Single Family Residence, determined pursuant to
				Chapter 2, Section B with reference to Schedules III and IV hereto and as such
				schedules may be modified from time to time by the Authority.
Maximum Purchase Price
means the
				maximum Purchase Price permitted by the Single Family Program determined
				pursuant to Chapter 2, Section C with reference to Schedule II hereto and as
				such schedule may be modified by the Authority subject to the standards stated
				therein.
Mortgage
means the written Mortgage or
				Deed of Trust instrument securing the related Mortgage Loan and encumbering a
				Single-Family Residence, which instrument shall be in the then-effective form
				required by FHA for FHA Insured Mortgage Loans, USDARD for USDARD Guaranteed
				Mortgage Loans, VA for VA Guaranteed Mortgage Loans, or Fannie Mae for
				Conventional Mortgage Loans, as applicable, with appropriate riders, and with
				such modifications as may be required by the terms hereof (particularly the
				restriction on assumptions set forth as Exhibit 7-N hereto).
Mortgage File
means the mortgage
				documents (or photocopies, thereof) listed in Exhibit A to the Program Guide
				pertaining to a particular Mortgage Loan, except the original Mortgage Note and
				the related Mortgage, and all other documents as are customarily maintained in
				mortgage loan files by private institutional mortgage servicers,
provided
that there need be contained only a copy (or other
				evidence satisfactory to the Master Servicer) of hazard or other insurance
				policies, the original of which is not customarily held by a mortgagee.
Mortgage Lender
means any party
				executing a Mortgage Origination Agreement on the final execution page thereof,
				being a home mortgage lending institution or entity approved by the Authority
				(i) which has been doing business on a regular basis in the State for at least
				12 months and is currently participating in the local private home lending
				market from one or more offices located within the State, (ii) is a mortgagee
				approved by FHA, USDARD and/or VA, as applicable, (iii) which can make the
				representations, warranties and covenants set forth in Section 1.02 of the
				Mortgage Origination Agreement, and (iv) which has agreed to originate and sell
				Mortgage Loans in accordance with the terms of this Program Guide and to
				release servicing to the Master Servicer pursuant hereto.
Mortgage Lender's Delivery Obligation
.
				The Mortgage Lender's agreement to make, deliver, and sell qualified Mortgage
				Loans to the Servicer pursuant to the Authority's agreement to purchase
				Mortgage Loans under the Mortgage Origination Agreements.
Mortgage Loan
. A loan made by a
				participating Mortgage Lender to an Eligible Borrower for the purchase of a
				Qualified Dwelling and secured by a Mortgage on such real estate.
Mortgage Note
means the written
				instrument executed to evidence the borrower's obligation to repay the Mortgage
				Loan, which shall be the then-effective form of mortgage note required by FHA
				for FHA Insured Mortgage Loans, USDARD for USDARD Guaranteed Mortgage Loans, or
				VA for VA Guaranteed Mortgage Loans, each approved under the GNMA Guide, or in
				the form required by Fannie Mae for Conventional Mortgage Loans, with such
				modifications or riders or addenda as may be required by the terms
				hereof.
Mortgage Origination Agreement
means
				the agreement executed by the Authority, the Master Servicer and any Mortgage
				Lender that serves as the basis for such Mortgage Lender's participation in the
				Single Family Program.
Mortgage Purchase
or
Purchase
means any closing held at which a Mortgage
				Loan is sold by the Mortgage Lender to the Master Servicer.
Mortgage Purchase Date
or
Purchase Date
means the date on which a Mortgage
				Purchase occurs.
Mortgage Submission Voucher
means the
				voucher substantially in the form of Exhibit B hereto, as the same may be
				amended by the Authority from time to time, which is submitted by the Mortgage
				Lender to the Master Servicer.
Mortgagor
means any person who has a
				present ownership interest in a Single-Family Residence subject to the related
				Mortgage and/or executes the Mortgage (but such term does not include any
				person who (i) executes only the Mortgage Note as a guarantor or co-signor and
				does not have such a present ownership interest in the Single Family Residence,
				or (ii) executes the Mortgage solely for the purpose of waiving any rights of
				dower or curtesy in the Single Family Residence).
Mortgagor's Certificate
means the
				forms of Mortgagor's Application Affidavit and Certification (attached as
				Exhibit 5-A) and Mortgagor's Closing Affidavit and Certification (attached as
				Exhibit 5-B) upon which each prospective borrower must certify certain things
				in order to comply with the Tax Code.
New Construction
means a residence
				which has not previously been occupied.
Non-Qualifying
Mortgage Loan
shall
				mean and include any Mortgage Loan purchased hereunder with respect to which:
a. The Master Servicer fails to
			 approve the Pool Documentation Package, as defined in the Servicing Agreement,
			 or the Mortgage Lender fails to deliver all documents to the Mortgage File on a
			 timely basis, or such documentation for Mortgage Loans do not conform to the
			 requirements of the Program Guide and the GNMA Guide or the Fannie Mae Guides,
			 as applicable.
b. Borrower fails to
			 occupy the related Single-Family Residence as a principal residence within
			 sixty (60) days after execution of the related Mortgage.
c. The related residence does not qualify as
			 a Single-Family Residence as defined herein, including, but not limited to, a
			 situation where more than fifteen (15%) percent of the total area of the
			 residence will be used in a trade or business, including child care services on
			 a regular basis for compensation, or as investment or rental property, or as a
			 recreational home.
d. The Purchase
			 Price of the related residence exceeded the Maximum Purchase Price.
e. Except as to Mortgage Loans that relate to
			 residences in Targeted Areas, prospective Eligible Borrowers are not First-Time
			 Homebuyers.
f. The prospective
			 Eligible Borrower's Annual Household Income at the time of the Closing of the
			 Mortgage Loan exceeds the applicable Maximum Household Income Limit.
g. The Mortgage Loan fails to comply with all
			 the applicable provisions of Chapter 2 of this
Program Guide or the Mortgagor's Certificate or Seller's
				Certificate or Notice to Mortgagor of Information Regarding Potential Recapture
				Tax (attached as Exhibit 7-P).
h. Any statements contained in any of the
			 Affidavits of the Buyer, Seller or Mortgage Lender are determined to be
			 incorrect, untrue, misleading or fraudulent.
i. The Mortgage Loan is a refinancing of an
			 existing loan other than a construction period loan, bridge loan, or similar
			 temporary financing of not more than twenty-four (24) months.
j. The Mortgage assumability rider attached
			 to an FHA Insured or USDARD or VA Guaranteed Mortgage Loan is not approved by
			 FHA, USDARD or VA, as applicable, or the Mortgage assumability rider attached
			 to an USDARD Guaranteed or Conventional Mortgage Loan is not approved by Fannie
			 Mae.
l. Failure to provide the
			 Master Servicer with the documentation required in Part II of Exhibit A of the
			 Program Guide within the time period specified therein.
m. The Mortgage Loan otherwise fails to
			 comply with the terms set forth in the Mortgage Origination Agreement or this
			 Program Guide.
Notice Address
means:
a. As to the Authority:
Attention: Single Family Housing
Arkansas Development Finance Authority
423 Main Street - Suite 500
Little Rock, Arkansas 72201 or
P.O. Box 8023
Little Rock, Arkansas 72203-8023
b. As to the Master Servicer:
U.S. Bank Home Mortgage 17500 Rockside Road Bedford, Ohio
				44146
c. As to the Trustee:
Attention: Corporate Trust Department
Simmons First National Bank
501 Main Street
Pine Bluff, Arkansas 71611
d. As to the Mortgage Lender, the address
			 shown on the Mortgage Origination Agreement.
Origination Fees
means the fees
				collected by the Mortgage Lender from an Eligible Borrower or Seller of a
				Single Family Residence.
Permitted Encumbrances
means liens,
				encumbrances and clouds on the legal title of a Single Family Residence
				permitted by FHA, USDARD, VA, the PMI Insurer or Fannie Mae, as
				applicable.
Preliminary Approval and Compliance
				Package
means Exhibit 6-G hereto, and all documents required by
				Exhibit 6-G to be delivered to the Authority prior to the Closing of a Mortgage
				Loan.
Prepayment
means any monies, however
				derived, which are received or recovered by the Authority from any payment of,
				or with respect to, principal on any Mortgage Loan prior to scheduled payments
				of principal called for by such Mortgage Loan;
provided, however,
that no monies received or recovered by the Authority from the
				repurchase of a Mortgage Loan by a Mortgage Lender pursuant to any Mortgage
				Origination Agreement must be a prepayment.
Private Mortgage Insurance
or
PMI
means any private mortgage insurance company
				approved by Fannie Mae and providing private mortgage guaranty insurance on
				Conventional Mortgage Loans in accordance with the Fannie Mae Guide, and
				licensed to conduct business in the State of Arkansas.
Property Value
means the lesser of the
				Acquisition Cost or the Appraised Value of the Qualified Dwelling at the time
				of origination of the Mortgage Loan.
Qualified Appraiser
means an
				individual who is approved and/or assigned, as applicable, by FHA, USDARD or
				VA, or the PMI Insurer and Fannie Mae, as applicable, and is licensed by the
				State under Arkansas Code Annotated Sections
				17-51-101 et seq., as amended and
				supplemented from time to time.
Qualified Census Tract
means a census
				tract (as defined by the Secretary of Commerce) in which 70 percent or more of
				the families have an income which is 80 percent or less of the State-wide
				median family income.
Qualified Condominium Unit
means a
				condominium unit meeting the requirements of the GNMA Guide or the Fannie Mae
				Guides, as applicable, and which is acceptable to FHA, USDARD or VA, or the PMI
				Insurer and Fannie Mae, as applicable.
Qualified Duplex
means a Single Family
				Residence (i) consisting of two attached single family units, one unit of which
				is occupied by the owner as his or her primary residence or is to be so
				occupied within a reasonable time after the Purchase Date but not more than
				sixty (60) days thereafter and (ii) which was first occupied as a residence at
				least five (5) years before the Closing of the Mortgage Loan and the execution
				of the Mortgage related thereto.
Qualified Dwelling
or
Single Family Residence
means a private detached or
				attached owner-occupied house, rowhouse, townhouse, or condominium
				which:
a. contains complete living
			 facilities and facilities functionally related and subordinate
			 thereto;
b. is located within the
			 State;
c. is designed and intended
			 primarily for residential housing (not more than 15% of the total area of which
			 can be used in a trade or business) for one family;
d. which is determined by a Qualified
			 Appraiser to have an expected useful life of not less than the FHA, USDARD, VA
			 or Fannie Mae requirement for a 30-year loan;
e. will be occupied by the Eligible Borrower
			 as his or her principal residence within 60 days of Mortgage Loan
			 Closing;
f. is permanently affixed
			 to land;
g. the Purchase Price does
			 not exceed the Maximum Purchase Price as set by the Authority; and h. which
			 appurtenant land does not exceed five acres and reasonably maintains the basic
			 livability of the residence and does not provide, other than incidentally, a
			 source of income to the borrower, including child care services on a regular
			 basis for compensation.
THE TERM QUALIFIED DWELLING SPECIFICALLY DOES NOT
				INCLUDE:
. Rental houses;
. Vacation homes;
. Factory-made housing that is not permanently affixed to
				land;
. Stock or any other ownership interest in a cooperative
				housing corporation or organization;
. Property, such as appliances or furniture, that is not a
				fixture under applicable law;
. Land that is not necessary to maintain basic livability of a
				residence or which provides, other than incidentally, a source of income to the
				eligible borrower. A general rule of thumb is that a residence in which more
				than fifteen percent (15%) of the total area is expected to be used in a trade
				or business or which contains land greater than 5 acres is NOT eligible!
Qualified Insurer
means any insurance
				company approved by FHA, USDARD, VA, Fannie Mae, GNMA and the PMI Insurer, as
				applicable, to provide insurance, other than Private Mortgage Guaranty
				Insurance on single family residences in the State.
Qualified Mortgage Loan
means a
				Mortgage Loan which is not a Non-Qualifying Mortgage Loan.
Resolution
means, together, the
				General Resolution and the Series Resolution.
Seller
shall mean any seller or
				sellers of a Qualified Dwelling to be acquired by a borrower using the proceeds
				of a Mortgage Loan.
Seller's Certification
shall mean the
				Seller's Affidavit and Certification (attached as Exhibit 7-M) to be completed
				by the Seller of a Qualified Dwelling to be acquired using the proceeds of a
				Mortgage Loan upon which each Seller must certify certain things in order to
				comply with the Tax Code.
Series Resolution
means any Series
				Resolution authorizing the issuance and sale of Home Mortgage Revenue
				Bonds.
Servicing Agreement
means,
				collectively, the Master Program Administration and Servicing Agreement dated
				as of July 1, 1998, and supplemented as of June 1, 2000, and again on June 1,
				2001, by and among the Authority and the Master Servicer.
Servicing Release Fee
means the fee
				payable by the Servicer to a Mortgage Lender that shall equal a percentage of
				the outstanding principal amount of a Mortgage Loan as the Authority shall from
				time to time determine.
Single Family Residence
has the same
				meaning as Qualified Dwelling, as set forth above.
Standard Hazard Insurance Policy
means
				a standard homeowner's fire insurance policy with extended coverage as approved
				by the Insurance Commissioner of the State, and which qualifies under all
				applicable requirements of FHA, USDARD, VA or Fannie Mae, as applicable.
Standard Residential Purchase Contract
means a contract to purchase residential property, but not an installment
				agreement for deed, articles of agreement for deed, land sales contract or any
				other form of ownership or financing that allows a purchaser to enjoy the
				benefits of ownership without title to the property.
State
means the State of
				Arkansas.
Supplemental Notice
means a written
				notice from the Authority to all affected Mortgage Lenders and the Master
				Servicer, by which the Authority exercises its reserved right to modify certain
				provisions of the Mortgage Origination Agreement and this Program Guide.
Targeted Area
means an area which is
				either (a) listed as a Qualified Census Tract, or (b) an "area of chronic
				economic distress" designated by the State as meeting the standards established
				by the State and approved by HUD. AD FA maintains a current list of Targeted
				Areas on its website; also, the Targeted Area list is contained in Exhibit
				E.
Targeted Area Loans
means Mortgage
				Loans secured by Mortgages on Single Family Residences located in a Targeted
				Area.
Tax Code
means the Federal Internal
				Revenue Code of 1986, as amended, and all subsequent tax legislation duly
				enacted by the Congress of the United States of America. Each reference to a
				section of the Tax Code herein shall be deemed to include the United States
				Treasury Regulations proposed or in effect with respect or applicable thereto
				and applicable to the Bonds or the use of the proceeds thereof.
USDARD
means the USDA Rural
				Development or any successor to its functions.
USDARD Guaranteed
means guaranteed
				pursuant to an USDARD Guaranty.
USDARD Guaranty
means a guaranty of a
				Mortgage Loan by the USDARD under Section 502 of Title V of the Housing Act of
				1949, as amended, and as such Act may be amended from time to time.
VA
means the Department of Veterans
				Affairs of the United States of America or any successor to its
				functions.
VA Guaranteed
means guaranteed
				pursuant to a VA Guaranty.
VA Guaranty
means a guaranty of a
				Mortgage Loan by the VA in accordance with the provisions hereof and under the
				Servicemen's Readjustment Act of 1944, as amended.
Unless otherwise defined herein, all words and phrases defined
				in Article I of the General Resolution or Article I of the Series Resolution
				shall have the same meaning herein.
H.
A Special Word About Buyers, Borrowers and Mortgagors
You will notice throughout the Program Guide that, from time to
				time, the terms "buyer", "borrower", and "mortgagor" are used somewhat
				interchangeably. We apologize for any confusion this may cause. Please note
				that these variations are a product of the Tax Code. For the most part, when
				either term is used, it is possible to use the other without disrupting the
				overall meaning of the relevant provision.
Arkansas Development Finance Authority HomeToOwn Program