AHFA Announces Big Change to Step Up Program

All mortgage lenders can now offer down payment assistance program

In order to make the Step Up program more accessible, AHFA now allows participating lenders with Correspondent TPO Operations to deliver third party-originated loans. This change is designed for mortgage lenders that are interested in offering secondary market mortgage products to their customers but do not have the expertise or budget to develop their own internal mortgage department.

Step Up is AHFA’s flagship homeownership program designed specifically for moderate-income home buyers who can afford a mortgage, but need help with the down payment. The down payment funds are secured by a 10-year second mortgage and are combined with a 30-year, fixed-rate first mortgage. Since the loans are serviced by ServiSolutions, a division of AHFA, homeowners have only one check to write each month. Program participants must complete a homebuyer education course to qualify. Participants who earn less than $97,300 are eligible for the Step Up program, regardless of household size or location.

There are a few housekeeping items to note:

  • All servicing is retained by AHFA and serviced in house. We won’t compete for your customers. You’ll be able to continue your relationship with customers without any threat of cross-selling from us.
  • All loans originated by a third party originator must be “borrower paid” transactions. The third party originator must charge and retain the required 1 percent loan origination fee as well as any other fee to the extent permitted by law not in excess of the amounts that would be assessed if made in connection with a non-program mortgage loan.
  • All loans must close in the name of the participating lender. Loans cannot close in the name of the third party originator and then be sold to the participating lender.
  • The participating lender must make all reservations in the Lender Online system. The participating lender cannot provide a password and access to the Lender Online system to anyone other than their own employees.
  • The participating lender is responsible for ensuring that all underwriting is in compliance with secondary market standards and guidelines for FHA, Freddie Mac or Fannie Mae loans. In the event that there is a requirement for repurchase the participating lender, not the third party originator, will be required to repurchase the loan.

To find out more about the Step Up program, visit http://www.ahfa.com/homebuyers. Third party originators interested in working with a participating lender to offer the Step Up program can contact Brian Hunt at bhunt@ahfa.com for more information.