SS Memo 07-04

SELLING GUIDE REVISIONS: CONTACT UNDERWRITING

Date: March 22, 2007

Tax-Exempt Program

(Section 5002)

AHFC is pleased to announce the following change to the Tax-Exempt Program made possible with the passage of the Tax Relief and Health Care Act of 2006, signed into law by President Bush on December 19, 2006.The requirement that borrowers be first-time homebuyers is waived for eligible veterans provided the veteran has not previously used the Tax-Exempt First-time Home Buyer Program or Veteran’s Mortgage Bond Program. All other program guidelines, such as Income limits and acquisition cost limits, remain unchanged.

Veterans must have been retired, discharged, or released from duty under conditions other than dishonorable, and active duty military borrowers must have completed their initial military obligation. Acceptable evidence of eligibility includes a copy of the veteran’s certificate of eligibility or Title 38 letter, and DD214 or Statement of Service.

For married veterans, the co-borrower does not have to be a first-time homebuyer. In the case of unmarried borrowers, both must be eligible veterans, or the non-veteran co-borrower must be a first-time homebuyer.

The changes are effective with the date of this memorandum. Lenders are instructed to indicate “other” and fill in “Veterans” Tax-Exempt (VTEP) on the Form UND-3. The Tax-Exempt First-Time Home Buyer Booklet and the Applicant’s Affidavit, Form PRG-43 have been revised to reflect this change.

Military Borrowers

(Section 1004.05)

Section 1004.05 has been revised as follows to more clearly address financing availability for active duty service personnel who are within 12 months of rotation or separation. “A borrower currently in the military and subject to rotation or separation less than twelve months after loan closing will typically not be eligible for maximum financing. Military personnel not assigned a specific rotation date (on an indefinite rotation status) will be favorably considered unless documentation indicates rotation is likely to occur within one year. In the event rotation is scheduled within twelve months, the loan file must include one of the following:

  • Evidence the borrower is being transferred to a temporary duty assignment with guaranteed reassignment to a local military installation; or
  • Evidence the borrower has extended his/her rotation date beyond the twelve month period; or
  • A statement from the borrower that he/she intends to extend his/her rotation date, plus a statement from the borrower’s commanding officer confirming that: a) the borrower is eligible to extend; and b) the commanding officer has no reason to believe the extension will not be granted.

In the event separation is scheduled within twelve months, the loan file must include one of the following:

  • Evidence the borrower has re-enlisted or extended his/her period of active duty beyond the twelve month period; or
  • A statement from the borrower that he/she intends to re-enlist or extend, plus a statement from the borrower’s commanding officer confirming that: a) the borrower is eligible to reenlist or extend; and b) the commanding officer has no reason to believe the re-enlistment of extension will not be granted; or
  • Evidence the borrower has guaranteed employment at a sufficient salary in a line of work in which he/she is experienced; or
  • Evidence the borrower has a sufficient retirement or other income to support the proposed mortgage.

Refer to Section 8000.02 for required documentation.”

Forms

PRG-43 - Revised 03/07

Attachments

(PDF only)

Tax-Exempt Booklet

Selling Guide Section 5002

Selling Guide Section 1004.05