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Step Up+ Provides Affordable Financing with PMI Assistance for Qualifying Borrowers

June 13, 2017

AHFA is announcing a new, temporary Step Up+ mortgage enhancement that will pay the upfront split private mortgage insurance premium (up to $1,500) for homebuyers who earn less than 80 percent of the area median income. In turn, homebuyers will pay a lower monthly premium as part of their mortgage payment. 

Information and qualifications:

  • HFA Preferred conventional loans only
  • 3% down payment assistance available through Step Up
  • For new or existing homes in Alabama
  • Homebuyers must have a credit score of 620 or higher
  • Homebuyers must complete a homeownership education course
  • Must apply for loan through a participating lender
  • Private mortgage insurance will be underwritten by Genworth or ARCH (no delegated options)

Procedural specifications:

  • Lenders will make Step-Up+ reservations within Lender Online, under the "New Reservation" page. 
  • These funds should be classified as a 'gift' when credit-qualifying but lenders will enter the $1,500 amount (no more/ no less) as a '3rd mortgage' when making the reservation so they can be reimbursed for the split premium to be remitted to the Ml company.
  • Lenders will close and remit the upfront portion of the PMI premium to Genworth or ARCH. AHFA will, in turn, refund the premium to the originator at loan purchase.
  • AHFA will enter a special feature code at loan delivery to identify the loan as Step-Up+. There will not be a specific place for lenders to do so.
  • If the entire $1,500 amount isn't required to pay the upfront split PMI, the borrower can use the remaining funds towards closing costs/prepaids.
  • If the upfront PMI requirement is more than $1,500, the additional funds can be paid at closing or the upfront percentage can be adjusted as per Genworth/ARCH options.
  • Lenders will be required to furnish a copy of the rate calculation split PMI quote within the compliance package (Step 2). The transmittal checklist has been updated to add this particular document for Step Up+.
  • All Step Up+ loans must close by September 30, 2017. No exceptions will be made.
  • All Step Up+ loans must be purchased by October 20, 2017. No exceptions will be made.
  • The Step Up program's standard $97,300 household income limits will NOT apply for Step Up+. Please review the program income limits. A copy of the income limits will be available on the Lender Online bulletin board.

Upcoming lender training sessions for the Step Up program will focus on the Step Up+ enhancement.

Please contact AHFA's compliance staff or Lisa Treece with any questions.