MCC-LenderGuide by pengxiuhui

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									                         OHIO HOUSING FINANCE AGENCY

                    MORTGAGE CREDIT CERTIFICATE GUIDE


                                TABLE OF CONTENTS


INTRODUCTION                                                     Page
     General Overview                                              2
     Participant Responsibilities                                  5
     Definitions                                                   6

I       LOAN PROCESSING PROCEDURES AND PROGRAM ADMINISTRATION
       A. Participation and Promotion                              12
       B. Mortgage Loan Origination and MCC Application            13
       C. Participant Underwriting and Verification                15
       D. Submission of the MCC Application by Participant to OHFA 15
       E. OHFA Review of Participant MCC Commitment Package        16
       F. Mortgage Loan Closing and Submission of Closing Package  16
       G. Record Keeping and Federal Report Filing                 17
       H. Revocations                                              17
       I. Audit                                                    17
       J. Recapture Tax Notice                                     17
       K. Participant-Agency Communication                         18
       L. Refinancing and Reissuance                               18

II     BORROWER, PURCHASE PRICE AND MORTGAGE UNDERWRITING
       REQUIREMENTS
       A. Overview                                                 20
       B. Qualifying with a Mortgage Credit Certificate            20
       C. Borrower Eligibility Requirements                        20
       D. Eligible Property Requirements                           23
       E. Mortgage Requirements                                    23
       F. Allowable Fees and Charges                               24


III    MCC SUBMISSION AND COMMITMENT
       A. Mortgage Loan Numbers                                    25
       B. Exhibits for MCC Commitment Package                      25
       C. Resubmission                                             25
       D. Commitment for MCC                                       25
       E. Changes Prior to Closing                                 26
       F. Exhibits for MCC Closing Package                         27


APPENDIX


                                        1
                              Ohio Housing Finance Agency
                        Mortgage Credit Certificate (MCC) Program



                                       General Overview



The Mortgage Credit Certificate (MCC) Program was authorized by Congress in the 1984 Tax
Reform Act as a new concept for providing housing assistance. An MCC permits a qualifying
buyer purchasing a qualifying home to claim a tax credit that may reduce the buyer’s federal
income tax liability, if any. Buyers may use any extra income from the tax savings to help with
their mortgage payments. The Ohio Housing Finance Agency (OHFA) will make available
$12,500,000 of MCC’s toward a Mortgage Credit Certificate Program for approximately 700
mortgages. OHFA will reserve 20% of the MCC funding authority for Target Areas and 20%
for REO properties for a period of at least one year after the date MCC’s are first made
available. The program will be made available on a first-come, first served basis.

The amount of the annual tax credit will be 20% (Non-target areas), 25% (Target areas) or 30%
for purchase of Real Estate Owned (REO) single family properties from HUD, Fannie Mae,
Freddie Mac, VA, USDA-RD or a financial institution that acquired the property through
foreclosure, the annual interest paid on the certified portion of the mortgage. The credit taken
cannot be larger than the homebuyer’s annual federal income tax liability, after
deductions, personal exemptions and certain other credits are taken into account. Under
no circumstances can the annual credit taken be greater than $2,000. In any case, the
amount of the credit will reduce the homebuyer’s home mortgage interest deduction.

As an example of how the MCC works, suppose the credit holder has a $90,000 mortgage at
5% for 30 years. The interest on the loan for the first 12 months would be approximately
$4,470. If the credit holder has an MCC, the credit holder could claim a tax credit for 20% of
the interest amount paid, or $894, in the first year. Higher credit percentages apply for Target
Area and REO purchases. This credit would reduce the amount of federal income tax the credit
holder would otherwise owe (assuming the credit holder’s tax liability after certain other credits
is at least $894) when filing credit holder tax return. In order to claim the credit, the credit
holder must use a Form 1040 when filing taxes. Credit holder may not use Form 1040A or
1040 EZ. The credit holder’s deduction for home mortgage interest on Schedule A of 1040
would be $3,576 ($4,470 of home mortgage interest credit holder paid, minus the $894 credit
amount).

MCC’s will be available to borrowers, through a Participating Lender, with generally the same
non-credit eligibility requirements, i.e. income limits and sales price limits, as are in effect for
OHFA’s single-family mortgage program. A purchaser of a new or existing single-family
residence may apply for an MCC at the time of purchasing a home and obtaining financing
from that Lender. An MCC cannot be issued to a borrower who is refinancing an existing
mortgage.

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The Ohio Housing Finance Agency encourages anyone who believes they qualify to apply for
an MCC after the Lender has explained the program and all state and federal guidelines so that
both the applicant and the seller alike are aware of these guidelines prior to formal application
because both the applicant(s) and the property must qualify under the limits of the program.
Potential applicants are further encouraged to consult IRS Publication 530 for additional
information.

Borrower Eligibility Requirements
Similar to any conventional mortgage loan, the borrower must meet the credit and underwriting
criteria established by the Participating Lender providing the loan.

Based on federal and state regulations, borrowers must meet the following requirements:

               1. No homeownership within the last three years. Except for situations
                  where an MCC application is being made for an MCC loan in a Target Area
                  or when the borrower is a Qualified Veteran, the borrower cannot have had
                  an Ownership Interest in a Principal Residence at any time during the
                  preceding three years. This qualifies the borrower as a first time borrower
                  with respect to the Internal Revenue Code.

               2. Principal Residence Requirement. The borrower must occupy the
                  Residence that involves the MCC as their Principal Residence. The borrower
                  must provide an affidavit as to their intent to occupy the Residence as their
                  Principal Residence within 60 days after the MCC is issued.

               3. Borrower Income Limit Schedule. The borrower’s current gross annual
                  Family Income can be no more than that allowed under OHFA’s single-
                  family mortgage revenue program.

               4. Revocation. An MCC will be revoked if the borrower does not meet the
                  requirements for a qualified MCC. Revocation will occur upon the
                  discovery of any misstatement, whether negligent or fraud. Revocation will
                  also occur if the residence to which the MCC relates ceases to be the
                  Borrower’s Principal Residence.

               5. Penalties for Misstatement. If any person makes a material misstatement
                  in any affidavit or certification made in connection with application for, or
                  issuance of an MCC and such misstatement is due to negligence of that
                  person, that person shall pay a fine of $1,000 for each MCC with respect to
                  which a misstatement was made.




                                               3
Maximum Purchase Price Requirements
The purchase price of the borrower’s Residence must be no more than that allowed per the
limits of OHFA’s single-family mortgage program. The seller must execute a Seller Affidavit
which states the purchase price, and that the Maximum Purchase Price requirements have been
met. The affidavit includes an itemized list of:
        1. any payments made by the borrower or for the benefit of the borrower;
        2. an estimate of the reasonable cost of completing the Residence if it is incomplete;
        3. the capitalized value of a ground rent, if applicable.

Mortgage Requirements

       1. New Mortgage Requirements. An MCC cannot be issued in conjunction with the
          acquisition or replacement of the borrower’s existing mortgage. However, an MCC
          can be used in conjunction with the replacement of construction period loans or
          bridge loans of 24 months or less. The borrower must provide an affidavit stating
          that the loan being acquired in connection with the MCC will not be used to acquire
          or replace their existing mortgage.

       2. Prohibited mortgages. An MCC cannot be issued in conjunction with an OHFA
          single-family mortgage revenue bond loan.  An MCC cannot be used on an
          adjustable rate or interest only mortgage.

       3. Reasonable Interest Rate. If the mortgage rate is 100 basis points or more above
          the current Freddie Mac Primary Mortgage Market Survey® (PMMS®), OHFA will
          deem the mortgage commercially unreasonable.

       4. No Interest Paid To Related Persons. No interest on the certified indebtedness
          amount can be paid to a person who is related to the borrower, as the term Related
          Person is defined in the Internal Revenue Code and Tax Regulation Section 1.103-
          10(e). An affidavit must be provided stating that a Related Person does not have,
          and is not expected to have, an interest as a creditor in the certified indebtedness
          amount.




                                              4
                     Mortgage Credit Certificate Program
                        Participants Responsibilities


   Based on the Mortgage Credit Certificate Program guidelines, a participating lender
    determines if a mortgage loan applicant is eligible for a Mortgage Credit Certificate.
    The homebuyer’s mortgage must be at commercially reasonable terms and rates. If the
    proposed mortgage has a rate greater than 100 basis points higher than the current
    Freddie Mac Primary Mortgage Market Survey® (PMMS®) for a 30 year fixed rate
    mortgage, OHFA will deem the mortgage commercially unreasonable.

   Participant should inform the mortgage applicant that it is the applicant’s responsibility
    to consult with a tax advisor in determining the estimated benefits of the Mortgage
    Credit Certificate.

   Through the Participant’s normal verification process, the Participant will perform a
    reasonable analysis as to whether the Mortgage Credit Certificate Program conditions
    have been met.

   Participant will submit and track applicant reservation via the Agency’s Lender Online
    tracking system.

   Participant will have the borrower execute the necessary certifications and affidavits,
    then submit the completed application package to OHFA.

   After the Agency has issued its commitment approval the Participant will close the loan
    through its usual process with the addition of having the borrower execute the
    Mortgage Credit Certificate Program Borrower Closing Affidavit.

   Participant will submit the completed Mortgage Credit Certificate Program Closing
    Submission Package along with $300 fee to OHFA.

   Participant must submit an annual Mortgage Credit Certificate report provided by the
    Agency to the Internal Revenue Service.




                                             5
               MORTGAGE CREDIT CERTIFICATE PROGRAM (MCC)

                                           Definitions

The following words and phrases shall have the following meanings:

Affidavit: means an affidavit filed in connection with the program shall be made under oath
and subject to the penalties of perjury.

Agency: means the Ohio Housing Finance Agency, exercising essential public functions.

Agreements: means this MCC Guide and all other agreements, contracts or instruments
contemplated by or related to the foregoing.

Annual Gross Income: means the gross monthly income of the Mortgagor (which in the case
of cohabitating adults shall relate to both or all) as shown on the Family Income Certification
included in the Lender’s Guide multiplied by 12. Information with respect to gross monthly
income may be obtained from available loan documents.

Appraisal: means an appraisal of an Eligible Residence conducted in accordance with
generally accepted standards by a Qualified Appraiser.

Business Day: means any day of the week other than Saturday, Sunday or a day which shall be
in the State a legal holiday or a day on which banking institutions are authorized or obligated by
law or executive order to close.

Closing: means the execution of a Mortgage Note and Mortgage by an Eligible Borrower and
the concurrent origination and funding of a mortgage loan by a participating Lender.

Code: means the Internal Revenue Code of 1986, as amended, and any rules or regulations
promulgated there under.

Conventional Mortgage Loan: means a mortgage loan which is not insured by FHA or
guaranteed by VA or USDA-RD.

Credit Rate: means the annual credit rate of 20% for Non-target, 25% for Target areas, and
30% for purchase of REO single family properties.

Eligible Borrower: means a person or persons and families (i) intending to reside principally
and permanently as a household in an Eligible Residence, (ii) whose Family Income in the case
of families of 3 or more does not exceed 115 percent (140 percent in Target Areas) of the
applicable median family income or in the case of families of 1 or 2 persons, 100 percent (120
percent in Target Areas) of the applicable median family income (as determined by the
Secretary of the United States Treasury after taking into account the regulations prescribed
under Section 8 of the United States Housing Act of 1937, and (iii), unless the Eligible
Residence is located within a Target Area, or when the borrower is a Qualified Veteran. Each

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person executing the Mortgage must be an Eligible Borrower. In the event of cohabitating
adults, Eligible Borrower shall include both or all such persons.

Eligible Residence: means a completed single family residential unit located in the State,
including a townhouse, or planned unit development, a condominium unit if such unit is a
Qualified Condominium Unit, or factory-made housing (including a mobile home) which is
permanently affixed to real property and titled as real estate.

The residence may not be used as an investment property, vacation home, or recreational home.
No more than 15% of the area of the residence may be used in a trade or business. The land
acquired in connection with the mortgage loan may not exceed two (2) acres within a municipal
corporation and five (5) acres not in a municipal corporation. Property in excess of two (2)
acres may not be subdivided for the purpose of qualifying for MCC Program, unless required
by local health or safety code(s). The Eligible Property must be occupied and used as the
principal residence within sixty (60) days after the date of mortgage loan closing.

Existing Home:     means a dwelling unit that has been previously occupied prior to loan
commitment.

Family Income: means the family income of a Mortgagor or Mortgagors as determined
pursuant to the Family Income Certification included in the Lender’s Guide, and as set forth on
the Agency’s website at www.ohiohome.org, and in the event of cohabitating adults and/or
persons releasing dower interest shall refer to the aggregated income of both or all such
persons. The current maximum Family Income is posted at www.ohiohome.org, which amount
may be adjusted from time to time by the Agency to the extent required by the federal tax laws.
Participating Lenders may also receive copies of the Family Income limits by calling the
Participating Lender’s representative at the Agency.

Fannie Mae: means the Federal National Mortgage Association or any successor thereto.

FHA: means the Federal Housing Administration of the United States Department of Housing
and Urban Development, or other agency or instrumentality created or chartered by the United
States to which the powers of the Federal Housing Administration have been transferred.

Freddie Mac: means the Federal Home Loan Mortgage Corporation or any successor thereto.

Guide: refers to this MCC guide and all amendments or supplements hereto and where
appropriate, all forms or reports prescribed by the Agency as provided herein.

Holder: refers to name of borrower in which MCC shall be issued.

HUD: means the Department of Housing and Urban Development or any successor thereto.

HUD Fair Housing Advertising Guidelines: means the Department of Housing and Urban
Development Fair Housing Advertising Guidelines included in the Guide.

Issuer: means the Ohio Housing Finance Agency (OHFA), also referred to as the Agency.


                                              7
Law(s): means all applicable statues, laws, ordinances, regulations, orders, writs, injunctions,
or decrees of the United States, any state, municipality or court of competent jurisdiction.

Loan Commitment: means a binding written commitment by the Participating Lender, to a
particular Eligible Borrower to finance the purchase of a particular Eligible Residence with a
Mortgage Loan, which commitment shall be for a stated period of time, for a stated amount,
and for a stated interest rate.

Loan Type: means any fixed rate mortgage loan product currently used by a participating
lender. The MCC Program cannot be used with variable or adjustable rate loans.

Maximum Purchase Price: means the amounts as may be published and effective from time
to time by the Agency as the Maximum Purchase Price limitations for the statistical area in
which a Residence is located and as set forth on the Agency’s website at www.ohiohome.org.
Participating Lenders may also receive copies of the Maximum Purchase Price limitations by
calling the Participating Lender’s representative at the Agency.

MCC Commitment: means a written communication of conditional commitment for an MCC
to the Participating Lender from the Agency.

Mortgage: means the instrument securing a Mortgage Loan which creates a first lien on a
residence subject only to permitted encumbrances, and which shall in the case of a
Conventional Mortgage Loan, or a Mortgage Loan which has FHA Insurance, USDA-RD, or a
VA Guaranty, be in the form, as amended from time to time, of the Ohio 1 to 4 Family Fannie
Mae/Freddie Mac Uniform Instrument, FHA Form No. HUD-99165, or VA Form No. 26-6333,
respectively, with such additions or modifications as required under the Code or this Guide and
prescribed by the Agency.

Mortgage Loan: means a loan to finance the purchase of an Eligible Residence which meets
the requirements of the MCC Program.

Mortgage Note: means the promissory note evidencing the obligation to repay the Mortgage
Loan, which shall, in the case of a Conventional Mortgage Loan, or a Mortgage Loan which has
FHA Insurance or a VA Guaranty, be in the form, as amended from time to time, of the Ohio 1
to 4 Family Fannie Mae/Freddie Mac Uniform Instrument, FHA Form No. 92165, or VA Form
No. 26-6333a, respectively, with such additions or modifications as required under the Code or
this Guide and prescribed by the Agency.

Mortgagor: means a maker or makers of or any other party obligated on a Mortgage Note.

New Home: means a dwelling unit that is proposed to be constructed, currently under
construction, or existing but not previously occupied, such as a SPEC or model home.

OHFA: refers to the Ohio Housing Finance Agency, also referred to as the Agency.

Ownership Interest: means Ownership by any means, whether outright or partial, including
property subject to a mortgage or other security interest. Ownership interest also means a fee
simple ownership interest, a joint ownership interest by joint tenancy, tenancy in common, or

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tenancy by the entirety, an ownership interest in trust, a life estate interest, dower interest, or
purchase by land contract.

Participant or Participating Lender: means a bank, trust company, mortgage company,
savings and loan association, mortgage bank, national banking association, savings bank,
building and loan association, credit union, or other lending institution, all authorized to make
mortgage loans in the State and deemed eligible by the Agency to participate in the MCC
Program to the extent permitted by law and the MCC Guide of the Agency who has entered into
a Participation Agreement.

Participation Agreement: means the document executed by OHFA and the Participating
Lender providing for the Participant’s origination of Mortgage loans under the OHFA Mortgage
Credit Certificate Program and the attachments.

Present Ownership Interest: means all forms of Ownership Interest including (i) a fee simple
interest, (ii) a joint tenancy, a tenancy in common, or tenancy by the entirety, (iii) the interest of
a tenant-shareholder in a stock cooperative, (iv) a life estate, (v) a land contract (i.e., a contract
pursuant to which possession and the benefits and burdens of ownership are transferred
although legal title is not transferred until some later time), (vi) a mobile home which is
permanently affixed to real property or which has a minimum of 400 square feet of living space
and a minimum width in excess of 102 inches and which is of a kind customarily used at a fixed
location regardless of how it is titled, and (vii) an interest held in trust for the Mortgagor
(whether or not created by the Mortgagor) that would constitute a Present Ownership Interest .

Present Ownership Interest does not include (a) an ordinary lease, without a purchase option or
an ordinary lease with an option to purchase at fair market value, (b) the interest of a buyer
under a standard residential purchase contract, (c) an expectancy to inherit property, (d) a
remainder interest, (e) an Ownership Interest in a Residence that is not occupied as a Principal
Residence, e.g., a vacation home, a recreational home or rental property and (f) any ownership
interest in factory-made housing which does not meet the above specifications.

Principal Residence: means an Eligible Residence which, in accordance with Federal law, in
view of all the facts and circumstances of each case, including the good faith of the proposed
Mortgagor (i) has not been used by the proposed Mortgagor or is not primarily intended by the
proposed Mortgagor to be used in a trade or business; (ii) has not been used or is not to be used
by the proposed Mortgagor as an investment property or as a recreational home; and (iii) is
otherwise deemed a “principal residence” under Federal law. In determining use pursuant to (i)
above, (a) any use which fails to give rise to a deduction allowable for certain expenses
incurred in connection with the business use of a home pursuant to Section 280A of the Code
shall not be deemed used in a trade or business, and (b) if more than fifteen (15%) of the total
area of a Residence has been used by the proposed Mortgagor or is expected to be used
primarily in a trade or business, then such Residence shall be deemed to be used in a trade or
business.

Program: means the Agency’s Mortgage Credit Certificate Program described in this Guide
pursuant to which the Agency will issue Mortgage Credit Certificates to Eligible Borrowers
with a copy to Participating Lenders.


                                                  9
Qualified Census Tracts: means those areas within the State, which are identified in the
Lender’s Guide.

Oualified Veteran: A change in the Internal Revenue Code in 2008 created an exception to
the established Mortgage Credit Certificate (MCC) Program guidelines. Any veteran who has
received an honorable discharge from the United States military is now eligible to use the MCC
Program even if they previously have owned a home.

Qualified Condominium Unit: means a condominium unit meeting the requirements of the
GNMA and which is eligible for FHA Insurance.

Real Estate Owned (REO) Property: An REO property is a single family property purchased
from HUD, Fannie Mae, Freddie Mac, VA or USDA-RD, or from a financial institution that
acquired the property through foreclosure.

Recapture Provision: means all Mortgage Loans that utilize the MCC Program will be
subject to the recapture provisions, which have been incorporated into the Internal Revenue
Code of 1986, as, amended (the “Code”). The recapture of the federal mortgage subsidy
applies only if the Holder meets all of the following conditions. (1) The Holder sells or
otherwise disposes of their home within the first nine years of the purchase date, (2) if there is a
net profit (gain) on the sale of the home and, (3) if the total household income exceeds OHFA’s
adjusted maximum income limits at the time of the sale. All three of these provisions must
occur at the time of sale for any potential recapture tax obligation to apply. A portion of the
interest rate subsidy must be recaptured upon the sale of the Eligible Property, but not in excess
of fifty percent (50%) of the gain recognized by the Mortgagor. The recapture will be
implemented through the filing of the Mortgagor’s income tax return.

Recapture Reimbursement: If Holder is subject to the recapture tax upon disposition of their
home, OHFA will reimburse Holder in an amount equal to the recapture tax reported to the
Internal Revenue Service. Under current law, the Lender and Servicer will not be subject to
any additional administrative requirements regarding these provisions, other than disclosure to
the Mortgagor at the time of closing.

Single-Family Residence: means a housing unit consisting of one unit only provided the unit
is occupied by the borrower as the borrower’s principal residence.

State: means the State of Ohio.

Target Area: means one of the areas within the State listed as Qualified Census Tracts and
Areas of Chronic Economic Distress and identified in the Lender’s Guide.

USDA-RD: means United States Department of Agriculture, formerly Rural Economic and
Community Development Agency, or any successor.

USDA-RD Guaranteed: means guaranteed by the USDA-RD.

VA: means Veteran’s Administration, an agency of the United States, or any successor.


                                                10
VA Guaranteed: means guaranteed by the VA under the Serviceman’s Readjustment Act of
1944, as amended.




                                        11
I.   LOAN PROCESSING PROCEDURES AND PROGRAM ADMINISTRATION

     The Ohio Housing Finance Agency (OHFA) is the designated program administrator for
     MCC’s in Ohio. OHFA will delegate part of its administrative role to Participants
     through a Participation Agreement.

     Borrowers that may be eligible will apply for MCC’s in conjunction with their normal
     loan application. An application for an MCC must be preceded by the borrower first
     making application for financing at the Participant of their choice.

     The MCC processing procedures are designed to coincide with the regular, ongoing loan
     processing, credit and underwriting procedures that are in place for most Participants,
     which are the responsibility of the Participant. OHFA recognizes that there are
     procedural variations among the Participants; consequently, the procedures outlined
     here are meant to be suggestive with respect to the sequence of events. However, the
     responsible party must at some point complete all the elements of the processing
     sequence noted below.

     The following is the loan processing and program administration flow chart for the
     MCC program:

     A.     Participation and Promotion-Preliminary Activities Prior to Mortgage
            Loan Origination

            1. OHFA gives public notice of MCC program availability.

            2. OHFA solicits participation of Ohio lending institutions.

            3. MCC Program is explained through OHFA meetings with lending
               institutions.

            4. Participants must sign a Participation Agreement defining how the
               Participant and OHFA will interact, and detailing their respective
               responsibilities.

            5. Participants may advertise the MCC program to the general home buying
               public in accordance with the Guide and HUD Fair Housing Advertising
               Guidelines. OHFA may impose the following corrective actions if Fair
               Housing Advertising policy is not in compliance: (a) Access to funds may
               be terminated (including loans in process); (b) Corrective advertisements
               may be required for each improper advertisement. The Agency may require
               six (6) weeks corrected advertising in a minority newspaper of its choosing
               and four (4) weeks corrected advertising in the newspaper in which the ad(s)
               originally appeared. Corrected advertising must be of the same size as the
               original ad(s).


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      6. OHFA will develop and maintain a list of MCC Participants, and will
         provide such list to prospective borrowers on the agency’s website
         www.ohiohome.org. This list will be updated as needed.

      7. Participants may continue to promote and advertise the program. The
         Participant is required to make various written and oral disclosures
         (disclaimer) to the Applicant regarding the Program. The Participant shall
         not rely on an affidavit or other statement made under penalty of perjury if it
         has reason to know that the information contained within is false.

      8. Disclosure to the applicant. The Participant must advise the applicant of the
         following:

         a) He or she is to perform his or her own calculations of the estimated tax
            benefit of the Mortgage Credit Certificate.

         b) They are to seek advice from their own tax advisor as to estimate tax
            benefits of the Mortgage Credit Certificate.

         c) That the mortgage interest deduction for federal income tax purposes
            might be reduced due to the use of a Mortgage Credit Certificate.

         d) Details on how the Mortgage Credit Certificate will reduce federal
            income tax liability are explained in the Internal Revenue Service (IRS)
            Publication 530 “Tax Information for First-time Homeowners”.
            Participants are encouraged to provide applicants with Publication 530.

         e) Applicants may also choose to utilize the benefits of MCC tax credit each
            month by adjusting their W-4. It is recommended that they discuss this
            process with their tax preparer to properly adjust their W-4 Employee's
            Withholding Allowance. If applicants choose to complete the W-4
            Employee's Withholding Allowance themselves, use IRS Publication 919"
            How do I Adjust My Tax Withholding?" for assistance. After the
            adjustments to Form W-4 are completed, it should be returned to their
            Employer.

B. Mortgage Loan Origination and MCC Application

      1. Borrower applies for mortgage loan financing from a Participant.

      2. Participant generally determines if a loan applicant is a likely eligible
         candidate for an MCC, based on preliminary indications of income, purchase
         price, prior home ownership, tax liability, and other factors under the Guide.
         Participant preliminarily determines if borrower is specifically eligible under
         the OHFA income and sales price limitations.

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3. Participant may give borrower an MCC brochure (if available) that explains
   the MCC program and contains information for potential borrowers.
   Moreover, IRS Publication 530 “Tax Information for First-time
   Homeowners” has details on how the MCC is applied for federal tax
   purposes. Obtain information about Publication 530 by visiting the IRS
   website www.irs.gov.

4. As part of the loan origination process, the Participant has the borrower sign
   the Disclosure of Potential Recapture (UNIV-001), and MCC Borrower
   Initial Affidavit (MCC-002). This document serves as the MCC application,
   and contains all the certifications and affidavits required by the federal MCC
   regulations and state requirements as follows:

5. Certification that residence will be used as Principal Residence and the
   borrower must notify the Agency when the home ceases being the Principal
   Residence of the MCC borrower.

6. Certification that borrower has not owned or had an ownership interest in
   their Principal Residence during the preceding three (3) year period.

7. Certification that the acquisition cost does not exceed Program Maximum
   Purchase Price limits. Seller signature required on Builder/Seller Affidavit.

8. Certification that this is a new Mortgage Loan, as defined in the Code.

9. Certification that the loan applied for does not constitute a prohibited
   Mortgage.

10. Certification that the borrower was not forced to apply through a particular
    Participant.

11. Certification that borrower’s gross annual Family Income does not exceed
    permitted income limits.

12. Certification that no interest is being paid to a Related Person, as defined in
    Section 144(a) (3) of the Code.

13. Acknowledgement that any material misstatement or fraud made by
    borrowers’ is under penalty of perjury.

     a) Participant submits applicants’ information via Lender-On-Line (LOL).
        Lender-on-line is a system that allows participating lenders to register
        loan reservations via the Internet and access information concerning the
        status of the borrower(s) MCC progress. All participating lenders will
        be assigned a login name and password to access LOL. Once
        participant has been assigned a login name and password to reserve the
        loan, click on “New Reservation” and select the MCC Series. Select

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                   the allocation of funds: New Construction, REO or Target. LOL
                   initiates a computer file on each case, records the MCC reservation on
                   the computerized reservation system by name and MCC loan tracking
                   number, and records the estimated loan amount and reservation date.

               b) The LOL system will keep a cumulative total of loan amounts reserved
                  to achieve an estimate of expected aggregate certified indebtedness of
                  loan amount, and aggregate amount of MCC’s to be issued. The
                  aggregate certified indebtedness amount cannot exceed the aggregate
                  amount of mortgage credit certificates issued (25 percent of the amount
                  Mortgage Revenue Bond issuing authority which OHFA has elected to
                  convert to MCCs).

               c) Participant completes the remainder of the application process as would
                  normally be completed as follows:

    C. Participant Underwriting and Verification

          1. Participant performs normal underwriting procedures for any fixed rate
             mortgage that meets program requirements.

          2. Participant may consider the MCC when determining the amount of family
             income available for the monthly housing payment in order to determine
             borrower qualification.

          3. Participant performs usual verifications for loan underwriting.         In
             conjunction with Participant’s regular verification process, and under the
             Participation Agreement with OHFA, the Participant performs reasonable
             investigation as to whether the MCC program requirements have been met.

          4. Participants may verify these facts at different times and in various ways,
             depending upon that Participant’s particular procedures for processing loans.

          5. Participant verifies that income limits, purchase price limits, and other non-
             credit OHFA requirements are met.

          6. Participant otherwise completes all other underwriting and verification.

    D. Submission of the MCC Application by Participant to OHFA

          1. Participant submits to OHFA a completed and executed MCC Borrower
             Initial Affidavit (MCC-002) and submission package. See Section III for
             description.

.




                                         15
E. OHFA Review of Participant MCC Commitment Submission Package

      1. OHFA confirms that the MCC reservation (60 days for existing homes or 90
         days for New Homes and 120 days for REO Properties) has not expired
         unless an extension was requested in advance.

      2. OHFA reviews the MCC submission package for completeness and
         determines whether or not all necessary certifications and affidavits are
         present and properly executed. If corrections are necessary the Participant
         will incur a correction fee of $25. Participant will have twenty (20)
         business days to resubmit corrected information.

      3. If OHFA determines the MCC Submission is acceptable, OHFA sends an
         MCC Commitment to the Participant stating that the application is approved.
         An MCC will be executed and issued upon confirmation of the Mortgage
         Closing with no material changes.

      4.   The MCC Commitment will contain an expiration date of 30 days for
           Existing Homes, 60 days for New Homes, and 90 days for REO Properties.

      5. The OHFA Lender online computer system will track MCC Commitments
         and will help Participants produce periodic reports of expiring MCC
         Commitments.

F. Mortgage Loan Closing and Submission of Closing Package

      1. The Participant confirms that the MCC Commitment has not expired before
         submission of closing file to OHFA.

      2. The Participant closes the loan in the normal fashion with the borrower
         executing the Borrower Closing Affidavit (MCC-002).

      3. Participant closing submission package should include all the executed
         certifications and affidavits in regards to the checklist: Self addressed
         stamped envelope; Loan fee; MCC Loan Closing Voucher; Borrower
         Closing Affidavit (MCC-002); Settlement Statement; Certificate of
         Occupancy (new homes).

      4. The Participant executes the re-certification of the Borrower Initial Affidavit
         attesting to the fact that the loan was closed and there were no material
         changes, unless stated.

      5. The Participant also forwards to OHFA the completed Closing Submission
         Package and $300 loan fee, paid by lender.




                                      16
      6. OHFA reviews the loan file to verify that the completion of the file, that the
         MCC Commitment was exercised, and the loan was closed. OHFA will then
         forward to the Participant an executed copy of the MCC and the original
         MCC to Holder(s).


G. Record Keeping and Federal Report Filing

      1. The Participant must file a one time annual report using IRS Form 8329.
         OHFA will provide each participant with a draft of this form for their
         certification and submission to IRS.

      2. For six (6) years, the Participant must retain:
            a) Name, address, TIN (social security number or tax identification
                 number) of the Holder.
            b) Name, address and TIN of Issuer.
            c) Date of loan, certified indebtedness amount, and credit rate.

H. Revocations

      1. Automatic revocation occurs when the Residence for which the MCC was
         used ceases to be the Holder(s) Principal Residence.

      2. The MCC will be revoked if the Holder does not meet the requirements for a
         qualified MCC.

      3. Revocation will occur upon the discovery of any material misstatement
         whether negligent or fraudulent.

      4. Automatic revocation occurs if the Holder does not notify OHFA within one
         year from the date they refinance.

I.    Audit

      OHFA may perform a random case audit of Participant records.

J.    Recapture Tax Notice

      All Mortgage Loans that close after December 31, 1990 and that are the subject
      of Mortgage Credit Certificate will be subject to the recapture provisions that
      were incorporated in the Code pursuant to the Technical and Miscellaneous
      Revenue Act of 1988.

      These recapture provisions require that, where a Mortgagee’s income has
      increased to more than an amount prescribed by the Code, a portion of the
      federal interest rate subsidy must be recaptured upon the sale of the Eligible
      Property. The recapture tax will be applicable if the Eligible Property is sold
      within nine (9) years of the date from which the Mortgage Loan is closed and is

                                     17
       limited in amount to no more than fifty percent (50%) of the net gain recognized
       by the Mortgagor. The recapture tax is implemented by the filing of the
       Mortgagor’s federal income tax return in the year of the sale.

       With respect to the origination of a Mortgage Credit Certificate subject to
       recapture, the Participant is required to present a Notice of Potential Recapture
       (UNIV-002) to each applicant at the time of mortgage loan application. A
       signed Notice of Potential Recapture Tax (UNIV-002) must accompany the
       Commitment Submission package. The Participant is not subject to any
       additional administrative requirements regarding these recapture provisions.

       The Agency will mail to the Holder after loan closing a Notice of Maximum
       Recapture Tax and Calculation Form. If the Holder is subject to the recapture
       tax upon disposition of their home, OHFA will reimburse Holder in an amount
       equal to the recapture tax reported to the Internal Revenue Service.

       If either the Potential or Final Notice of Recapture Tax is provided to the Holder,
       or the Mortgage Credit Certificate does not become subject to the recapture
       provisions because the Agency does not issue the MCC, then the Agency will
       give the Holder prompt written notice that the recapture provisions are not
       applicable to the Mortgage Loan. Additional information regarding to Recapture
       Tax can be found in IRS Publication 523 “Selling Your Home”, or by calling the
       IRS at 1-800-829-1040 or visiting their website www.irs.gov.

K. Participant-Agency Communication
      The Agency works through and in cooperation with the Participant. The
      Participant must not suggest to the borrower or to any other person(s) involved
      in the processing of the Mortgage Credit Certificate application that they contact
      the Agency personally with questions.

       The Agency will not review any case with the borrower prior to loan closing
       without a Participant’s representative being present. Exceptions may be made
       for unusual circumstances.

L. Refinancing and Reissuance
      The Department of Treasury has released temporary and proposed income tax
      regulations governing the re-issuance of a mortgage credit certificate (MCC)
      when an MCC related mortgage is refinanced. The refinancing provision is an
      exception to the general requirement that the mortgage in an MCC program
      cannot be used when refinancing an existing mortgage.

       Under the MCC program legislation, the IRS is authorized to issue regulations to
       permit the re-issuance of MCCs to the same holder in the event of refinancing of
       the mortgage under conditions designed to prevent any increase in the allowable
       credit. The regulations apply to re-issuance of MCCs with respect to certain past
       refinancing as well as current or future refinancing of the residence. A reissued
       certificate is effective as of the date of the mortgage refinancing. The holder of a


                                       18
reissued certificate may file an amended federal income tax return to claim
credits for the period from the date of refinancing.

According to the IRS Form 8393 and Publication 530 an MCC Holder must
meet the following conditions to retain their existing MCC:

1. MCC must be reissued to the same holder with respect to the same property.

2. Reissued MCC must entirely replace the existing MCC.

3. The certified indebtedness on the reissued MCC cannot exceed the
   outstanding balance on existing certificate.

4. MCC credit rate must remain the same.

5. Reissued MCCs cannot result in a larger credit amount than otherwise have
   been allowed under the existing certificate for any tax year.

6. After refinance, the MCC Holder has up to one year to notify the Agency to
   reissue their certificate. The Agency must receive the following information
   to reissue an MCC.

       a.   Copy of the Original MCC and/or Reissued MCC
       b.   Copy of Original Note
       c.   Copy of New Note
       d.   Copy of Settlement Statement
       e.   Copy of recent Federal Tax Return with schedules
       f.   A current telephone number in case the Agency has questions.




                               19
II.    BORROWER, PURCHASE PRICE, AND MORTGAGE UNDERWRITING
       REQUIREMENTS

A. Overview

For loans involving MCCs, the conventional underwriting standard may be modified to reflect
recognition of the MCC derived Federal income tax credit for mortgage interest in determining
housing expense and indebtedness ratios. The secondary mortgage market and mortgage
insurance industry have established underwriting policies for loans involving MCCs. Contact
specific entities for detailed clarification.

The borrower, purchase price, and loan underwriting requirements covered in this section are
incorporated in the MCC program documents as contained in this Guide. It will be necessary
for all borrowers and Participants to complete and sign the appropriate MCC program
documents and attest to their validity. The Participant will be required to submit certifications
that to the best of its knowledge no material misstatements appear in the application and
program documents. If the Participant becomes aware of misstatements, whether negligently or
intentionally made, it must notify OHFA immediately. OHFA will take all appropriate actions
including if necessary, denial or cancellation of the MCC. The Participant should also be aware
and inform the borrower that Federal law provides for fines and criminal penalties for
misrepresentations made in connection with participation in the program. In an attempt to
assure that requirements are clarified, an MCC Borrower Initial Affidavit is required from each
applicant, which must be included in the MCC submission package with a re-certified copy in
the closing package.

The MCC program non-credit requirements (including, but not limited to, Target Areas,
maximum gross Family Income and Maximum Purchases) are similar to OHFA’s mortgage
revenue bond programs and are derived from similar sections in the Internal Revenue Code, and
relevant Ohio law and OHFA regulations.

Under the MCC program, there are no restrictions with regard to the type of financing vehicle
the Participant uses, except for adjustable rate or interest only mortgages. The MCC program
allows any fixed rate financing instrument being used in the marketplace.
Mortgage terms must be reasonable.

B. Qualifying with A Mortgage Credit Certificate
The Mortgage Credit Certificate may have a positive effect when qualifying borrowers for a
mortgage loan, because the tax credit recognized may result in an increase in the borrower’s
cash flow. The manner in which various mortgage loan insurers and guarantors’ recognize the
tax credit can fluctuate widely. In all cases, the annual tax credit is divided by twelve (12) to
obtain a monthly tax savings for qualifying purposes. Participants shall comply with the
appropriate loan product guidelines.

C. Borrower Eligibility Requirements
Similar to any conventional mortgage loan, the borrower must meet the credit and underwriting
criteria established by the Participant providing the loan.

                                                20
Based on relevant federal and state regulations, borrowers must also meet the following
requirements specific to MCCs:

       1. Three-year no prior home ownership requirement. Except for situations where MCC
          application is being made for an MCC loan in a Target Area or when the borrower is
          a qualified veteran, the borrower who will become an MCC holder cannot have had
          Ownership Interest in a Principal Residence at any time during the preceding three
          years ending on the date the new Mortgage is executed. This requirement qualifies
          the borrower as a first time borrower with respect to the Internal Revenue Code.

              a. Affadavit Required. The Participant must obtain from the borrower an
              affidavit to the effect that the borrower had no Ownership Interest in a Principal
              Residence at any time during the three-year period prior to the date of
              application and the date on which the MCC being requested is executed. To
              meet the prior homeownership restriction requirement, the borrower(s) must
              complete and sign the Borrower Initial Affidavit and the Borrower Closing
              Affidavit, and at time of application provide copies of their last three years
              signed Federal tax returns (or acceptable alternate exhibits – see below).

              b. Examination of Federal Tax Returns. The information on the Affadavit must
              be verified by the Participant through request for, and examination of, the
              borrower’s Federal tax returns for the preceding three years, to determine
              whether the borrower has claimed a deduction for interest or taxes on property
              that was the borrower’s Principal Residence. To summarize this procedure as it
              applies to different cases:

                   i. If the borrower(s) can produce their last three (3) years signed 1040A,
                      1040EZ, or 1040 returns with all schedules that show no deductions for
                      interest or taxes for a Principal Residence, these forms must be submitted
                      to the Participant, and forwarded to the Agency with the Borrower Initial
                      Affidavit and the completed MCC submission package.

                  ii. If the borrower(s) has filed the short form 1040A or 1040EZ for the last
                      three (3) years, completes and signs the required Affidavits, but is unable
                      to produce the signed returns, OHFA will accept a verification letter of
                      filing status from the IRS that verifies that the applicant filed the 1040A
                      or 1040EZ for the year(s) in question. The letter may be requested from
                      the IRS by filing IRS Form 4506 and indicating in the proper spaces that
                      a letter of filing status of Form 1040A or 1040EZ for the year(s) in
                      question is being requested.

                 iii. In the unusual event the borrower(s) was not required by law to file
                      Federal income tax returns for any year during the preceding three (3)
                      years, it will be necessary for the borrower(s) to complete the appropriate
                      section of the Borrower Initial Affidavit.




                                              21
          iv. When the loan is committed or closed during the period between January
              1 and April 15 and the borrower has not yet filed his Federal income tax
              return for the preceding year with the IRS, the Agency may, with respect
              to such year rely on the appropriate executed portion of the Borrower
              Initial Affidavit that attests that the borrower was not entitled to claim
              deductions for taxes or interest on indebtedness with respect to property
              constituting their Principal Residence for the preceding calendar year.

2. Exceptions to Prior Homeownership
      a. Target Area: The three-year requirement (first time borrower requirement)
          does not have to be met if the Residence for which a Mortgage Loan
          application is being made is located in designated Target Area. Lists
          identifying the Target areas in the State are posted on www.ohiohome.org.
          The Internal Revenue Code for MCCs requires OHFA to reserve 20% of the
          MCC funding authority for these Target Areas for a period of one year after
          the date MCCs are first made available.The Participant must clearly
          designate loan applications involving Target Area Residences at appropriate
          places in MCC documents.

       b. Veteran Status.: The three-year home ownership requirement does not apply
          if the borrower is a qualified veteran.

3. Principal Residence Requirement. The borrower must occupy the Residence that
   involves the MCC as his or her Principal Residence. The Participant must obtain
   from the borrower, via the program Affidavits, a statement of the borrower’s intent
   to occupy the Residence as their Principal Residence within 60 days after the MCC
   is issued. This Affidavit further states that the borrower will notify the Participant
   and OHFA if the Residence ceases to be their Principal Residence.

       a. Household Occupancy: The eligible property must be suitable for single-
       family occupancy by no more than one (1) household.

       b. Business Use of Home: No more than fifteen percent (15%) of the residence
       may have any income-producing components (space used in any trade or
       business activity that would qualify for a home business deduction for federal
       income tax purposes). Daycare is considered business use of more than fifteen
       percent (15%) of the Eligible Property.

4. Borrower Income Limit Schedule. The borrower’s current gross annual Family
   Income can be no more that that allowed per the Gross Family Income Schedule
   provided at www.ohiohome.org.

5. Revocation. A Holder will have the MCC revoked if the Holder does not meet the
   requirements for a qualified MCC. Revocation will occur upon the discovery of any
   material misstatement, whether negligent or fraudulent. Revocation will occur if the
   residence to which the MCC relates ceases to be the Holder’s Principal Residence.




                                        22
      6. Penalties for Misstatement. If any person makes a material misstatement in any
         affidavit or certification made in connection with application for, or issuance of an
         MCC and such misstatement is due to negligence of that person, that person shall
         pay a fine of $1,000 for each MCC with respect to which a misstatement was made.

         If any person makes a material misstatement in any affidavit or certification made in
         connection with application for, or issuance of an MCC and such misstatement is
         due to fraud, then any MCC issued shall be automatically null and void without the
         need for any further action on behalf of OHFA. In addition, that person shall pay a
         fine of $10,000 for each MCC with respect to which the fraudulent misstatement
         was made. The above describe penalty shall be imposed in addition to any criminal
         penalty provided by law.

D. Eligible Property Requirements


      1. Allowable Properties: A completed residential unit located in the State, including a
      townhouse, or planned unit development, a condominium unit, if such unit is a Qualified
      Condominium, or factory-made housing which is permanently affixed to real property
      (as determined on the basis of the facts and circumstances of each particular case), and
      land appurtenant to the residential unit.

      2. Maximum Purchase Price Requirements: The cost of the borrower’s Residence must
      be no more than that allowed per the Schedule of Maximum Purchases posted on
      www.ohiohome.org.

      The Participant must obtain the Builder/Seller Affidavit executed by the seller which
      states the sales price, and that the Maximum Purchase Price requirements have been
      met. The affidavit includes an itemized list of (i) any payments made by the borrower
      or for the benefit of the; (ii) an estimate of the reasonable cost of completing the
      residence if it is incomplete; (iii) the capitalized value of ground rent, if applicable.

      3. Acreage Limitation: Qualified properties located within a municipal corporation can
      be up to two (2) acres unless a higher minimum acreage has been established for that
      specific local area. Qualified properties outside of a municipal corporation can be up to
      five (5) acres in total.


E. Mortgage Requirements

      1. New Mortgage Requirements. An MCC cannot be issued in conjunction with the
      acquisition or replacement of the borrower’s existing mortgage. However, an MCC can
      be used in conjunction with the replacement of construction period loans or bridge loans
      of a temporary nature. Construction period or bridge loans must be for no longer than
      24 months. The Participant must obtain from the borrower, via the program affidavit, a
      statement to the effect that the loan being acquired in connection with the MCC will not
      be used to acquire or replace their existing mortgage.


                                              23
      2. Prohibited Mortgages. An MCC cannot be used in conjunction with a single family
      mortgage revenue tax-exempt bond. The Participant must obtain from the borrower, via
      the program affidavits, a statement that no portion of the financing for acquisition of the
      Residence in connection with which the MCC is issued is provided from a qualified
      mortgage bond. Adjustable rate and Interest only mortgages are prohibited.

      3. No interest Paid to Related Persons. No interest on the certified indebtedness
      amount can be paid to a person who is a related person to the borrower, as the term
      Related Person is defined in Section 144(a)(3) of the Code and Regulation Section
      1.103-10(e). The Participant must obtain from the borrower, via the program affidavits,
      a statement that a Related Person does not have, and is not expected to have, an interest
      as a creditor in the certified indebtedness amount.

      4. The homebuyer’s mortgage must be at commercially reasonable terms and rates. If
      the proposed mortgage has a rate greater than 100 basis points higher than the current
      Freddie Mac Primary Mortgage Market Survey®(PMMS®) for a 30 year fixed rate
      mortgage, OHFA will deem the mortgage commercially unreasonable.

F. Allowable Fees and Charges

      Participants will pay OHFA a $300 fee per loan, submitted with the closing package.
      This fee may be assessed to the borrower. Additional charges to the borrower may not
      exceed one percent loan origination fee and not more than $500 in miscellaneous non-
      third party fees including but not limited to underwriting, rate lock, processing and
      commitment. Discount points are allowed only to lower the mortgage interest rate, and
      must be explained in the closing submission.




                                              24
III.   MCC SUBMISSION AND COMMITMENT

       A. Mortgage Loan Numbers
       OHFA will assign an eleven (11)-digit MCC loan number at the point the Participant
       completes the reservation process.

       The first three digit numbers are the MCC Series identification number. The three-digit
       field number is the participant’s assigned code number. The five-digit field number will
       be consecutively assigned to each MCC loan application in the order of the reservations
       received by OHFA. This 11-digit number will be identified as the “Loan Tracking
       Number”.

       B. Exhibits for MCC Commitment Package
       An MCC package submitted to OHFA for a MCC Commitment must contain the
       exhibits listed below. Each document must be completed and signed where appropriate.
       All documents must be dated within sixty days of the submission date to OHFA.
       Original documents should be sent to OHFA, except as otherwise indicated. The
       Participant must review the submission package and related documents to determine
       their completeness in accordance with the terms of the MCC Guide. Reasonable efforts
       should be undertaken to verify the information given, either independently or
       concurrently with underwriting procedures. MCC commitment submission package
       exhibits are as follows:

                     1.   URLA Form 1003 and HUD92900-A/VA 26-1802a Addendum
                     2.   Sales Contract (copy)
                     3.   Borrower Initial Affidavits, etc (MCC-002)
                     4.   Three (3) Years Federal Tax Returns and recent pay stub(s) (copies)
                     5.   Builder/Seller Affidavit (MCC-003)
                     6.   Family Income Certification (MCC-005)
                     7.   Acquisition Cost Worksheet (UNIV-001)
                     8.   Recapture Disclosure (UNIV-002)
                     9.   First Page of Appraisal

       C.     Resubmission of Mortgage Credit Certification Applications Returned or
              Rejected
       If an MCC application, as constituted by the MCC program documents exhibits, has
       been returned or denied by OHFA, any resubmission must include all information which
       OHFA has determined necessary for reconsideration. An MCC application that is being
       submitted a second time will be reviewed in depth, before a determination is made.

       D.      Commitment for Mortgage Credit Certificate (MCC)

            1. Issuance: OHFA will review each MCC application submission package for
               acceptability and completeness. In the event the submission package must be
               returned for correction a fee of $25.00 will apply and Participant has twenty (20)

                                                25
        business days to return the package with correction(s). Acceptable MCC
        submission packages will be kept on file at OHFA, and an MCC Commitment
        will be issued to the Participant, with an expiration period of 30 days for
        Existing Homes, 60 days for New Homes and 90 days for REO Homes.

     2. Extensions: In regard to any OHFA Commitment that is currently outstanding
        and will not close prior to the expiration date, an extension may be requested
        prior to the expiration date. A 90-day extension will be given upon the
        Participant’s request and submission of a $100.00 OHFA extension fee.
        Additional extensions may be granted if and when the Agency determines that
        extenuating circumstances exist. Expiration dates may be subject to additional
        federal requirements.

     3. Cancellations/Reinstatements: The Participant should notify OHFA of any
        cancellations of Commitments by submitting written notification and returning
        the original OHFA Commitment. Should Participant request cancellation of
        loan, then request for reinstatement, a fee will be incurred.

E.      Changes Prior to Closing

     OHFA MCC Commitments are issued upon the Participant’s certification that all the
     requirements necessary for issuance of a qualified certificate have been met. The
     Participant must notify OHFA of any changes that affect the conditions under which
     the MCC Commitment was issued.

     1. Borrower’s Financial Status. The borrower eligibility for an MCC is based upon
        the borrower’s current income, and OHFA will issue its MCC Commitment
        based on facts as they exist as of the date the MCC Commitment is issued.
        Changes in the borrower financial status occurring after the MCC Commitment
        is issued will affect the validity of the MCC Commitment. If the additional
        income causes the family income to exceed Family Income limitations, the MCC
        Commitment shall be revoked. Changes in income whether or not foreseen or
        predictable at the time of the issuance of the MCC Commitment, and changes in
        the working status of a spouse or any other co-mortgagor from unemployed to
        employed will affect the validity of the MCC Commitment. If the additional
        income causes the Family Income to exceed Family income limitations, the
        MCC Commitment shall be revoked.

     2. Borrower’s Marital Status. If the borrower marries after issuance of the MCC
        Commitment and prior to closing, the new spouse must satisfy the prior
        homeownership requirements contained in the Borrower Initial Affidavit, and
        the Participant must notify OHFA. Any income added to the Family Income
        previously declared because of a new spouse will affect the validity of the MCC
        Commitment.

     3. Purchase Price. If the total sales price of the Residence purchased in connection
        with the MCC increases exceeding the Maximum Purchase Price limitations set
        forth herein, the MCC Commitment shall be revoked.

                                        26
     4. Changes in Loan Amount After MCC Commitment Issued.

        If a loan amount increases after OHFA has issued a commitment, OHFA may
        approve a high credit amount upon request by the participant, if credit is
        available. If the amount of the loan increases, thereby causing an increase in the
        credit amount, the MCC Commitment will be revoked if that increase in the
        credit amount serves to increase the aggregate credit amount of all MCCs issued
        by OHFA above the aggregate credit limit imposed by law.

     5. Other Changes in Circumstances After Issuance of Commitment and Prior to
        Closing.

        The MCC Commitment is based upon the Borrower and Seller Affidavits and
        the Participant’s Certifications that the requirements necessary for issuance of a
        qualified MCC have been met. The Participant must immediately notify OHFA
        in writing of any change in the circumstances upon which the MCC
        Commitment was issued. If any other change in the circumstances upon which
        the MCC Commitment was issued occur so that the MCC to be issued will not
        meet the requirements of a qualified MCC, the MCC Commitment will be
        revoked.

F.      Exhibits for MCC Closing Package

        MCC closing submission package exhibits are as follows:

             1   Self-addressed stamped envelope or overnight package
             2   $300 MCC Fee
             3   Borrower Closing Affidavits, etc (MCC-002 page 3)
             4   Settlement Statement and addendum (copy)
             5   Certificate of Occupancy (copy)




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