Code of Massachusetts Regulations › 761 CMR - MASSACHUSETTS HOME MORTGAGE FINANCE AGENCY › Title 761 CMR 21.00 - Seller's Guide › Section 21.11 - General Loan Eligibility Requirements

Current through Register 1525, July 5, 2024
Mortgage Loans made by Mortgage Lenders must meet the following requirements:
(1) No Mortgage Loan may exceed an amount such that the total first year's mortgage payments, property taxes and other escrow payments would be greater than 25% of the Borrower's income as determined for purposes of credit evaluation (See 761 CMR 21.40 through 21.44 ). In any case MHMFA will not purchase Loan Participations in Mortgage Loans exceeding $45,000 for a single family or condominium unit, $48,750 for a 2 or 3 family structure or $56,000 for a 4 family structure.
(2)
Loan-to-value ratio
. The principal amount of the Mortgage Loan may not exceed 95% of the Value of the Property on any residential structure. The Value of Property shall mean (a) in the case of a Mortgage Loan for the purchase of a one-to-four unit structure (no rehabilitation costs included) the purchase price or the appraised value whichever is less, or (b) in the case of a Mortgage Loan part or all of which is financing rehabilitation costs, the estimated appraised value at the completion of the proposed improvement(s). If the principal balance of the Mortgage Loan exceeds 80% of the Value of the Property then the Mortgage Loan must either (a) be insured or guaranteed by the Federal Housing Administration, or the Veteran's Administration or another agency or instrumentality of the United States or the Commonwealth to which the powers of the FHA or VA have been transferred or which is exercising similar powers with reference to the insurance or guaranty of Mortgage Loans (See 761 CMR 21.31 ) or (b) be insured under a mortgage insurance policy by a private mortgage insurance company, qualified to do business in the Commonwealth and qualified to insure Mortgage Loans purchased by FHLMC or FNMA under which the insurer, upon foreclosure of the property securing the Mortgage Loan, must pay the holder of the Mortgage Loan the unrecovered balance of a claim including the unpaid principal, accrued interest, taxes, insurance premiums and expenses of foreclosure, if any, or in lieu thereof may permit the holder of the Mortgage Loan to retain title and may pay an agreed insured percentage of such claim. (See 761 CMR 21.32 ).
(3)
Limitations on Borrower's Income
. The Borrower's adjusted annual income shall not exceed: $16,000 if Borrower's household consists of one person, $19,000 if Borrower's household consists of (a) one person who is disabled or over 65, or (b) two or more persons. For the purposes of determining eligibility of a Borrower to receive a MHMFA assisted Mortgage Loan, the Borrower's adjusted annual income is determined by Seller based on current annual income calculated according to the method used by the IRS for determining adjusted gross income on the current federal income tax return, minus $1,000 for each person, excluding the Borrower and one dependent, eligible as a tax deduction on such return. The income of each person living in the Borrower's household earning in excess of $1,000 shall be included in calculating adjusted income. This method of income calculation is not required to be used for purposes of credit evaluation (See 761 CMR 21.40 through 21.45 ).
(4)
Maturity
. No Mortgage Loan shall have a stated maturity of less than 20 years or more than 30 years from the Closing Date.
(5)
Interest Rate
. Interest rates on the Mortgage Loans shall be no less than the MHMFA Minimum Rate and no more than the MHMFA Maximum Rate, as stated on the cover of the applicable Loan Participation Agreement.
(6)
Fees and Charges
:
(a)
Closing Costs
. Closing costs shall not exceed reasonable expenses incurred in connection with the origination of such Mortgage Loans, limited to the aggregate of (1) the actual amounts expended for continuation of abstract, title insurance, deed tax, attorney's fees, credit reports, surveys, appraisal fees, and filing and recording fees or other required fees, (2) the actual amount paid or escrowed for taxes and insurance, and (3) origination and discount fees not to exceed an amount equal to one percent of the Mortgage Loan in the case of Mortgage Loans used to finance the purchase of a residential structure and 1-1/2% in the case of a Mortgage Loan used, in whole or in part, to finance the rehabilitation of a residential structure.
(b)
Late Charges
. MHMFA does not require a minimum or maximum amount of late charges or length of grace period to be stated in a Mortgage Loan bond or note (except that the amounts and period as stated must be permissible under applicable law). However, with respect to Conventional Loans in which Loan Participations are purchased by MHMFA, Seller shall collect only late charges on monthly installments more than 15 days late and shall not collect any late charges in excess of four percent of the payment which is late.
(c)
Prepayment charges
. There shall be no prepayment charges on any Conventional Mortgage Loan in which MHMFA holds a Loan Participation.