PROCEDURAL MANUAL

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					AMERICAN DREAM DOWNPAYMENT INITATIVE

PROCEDURAL MANUAL
AUGUST 2009
ALABAMA HOUSING FINANCE AUTHORITY
CONTENTS
AMERICAN DREAM DOWNPAYMENT INITIATIVE

INTRODUCTION .......................................................................................................................................... 3

SECTION I - DEFINITIONS ......................................................................................................................... 4

SECTION II - MORTGAGOR ELIGIBILITY EVALUATION .......................................................................... 6

     A.    Income Restrictions ......................................................................................................................... 6
     B.    Ownership Interest .......................................................................................................................... 6
     C.    Occupancy ...................................................................................................................................... 7
     D.    Residence Usage of Renting, Leasing, Assigning or Transferring Residence ............................... 7
     E.    Usage of Residence in Trade or Business ...................................................................................... 7
     F.    Residence Used for Investment Purpose ....................................................................................... 7
     G.    Residence Used as Vacation, Seasonal, Recreation or Second Home ......................................... 7
     H.    Co-Mortgagor/Non-Occupants and Guarantors .............................................................................. 7
     I.    Legal Separation ............................................................................................................................. 7
     J.    Powers of Attorney for the Mortgagors ........................................................................................... 7
     K.    Title Restrictions .............................................................................................................................. 7
     L.    Liquid Asset Limits .......................................................................................................................... 8

SECTION III - LOAN ELIGIBILITY EVALUATION ....................................................................................... 8

     A. Permitted Encumbrances ................................................................................................................ 8
     B. Credit Review Determination ........................................................................................................... 8

SECTION IV - PROPERTY ELIGIBILITY EVALUATION ............................................................................. 8

     A.    Eligible Loan Area ............................................................................................................................ 8
     B.    Qualifying Residences .................................................................................................................... 8
     C.    Sales Price Limitations .................................................................................................................... 9
     D.    Land ................................................................................................................................................ 9
     E.    Computing Acquisition Cost of Land and Dwelling ......................................................................... 9
     F.    Leased Land ................................................................................................................................... 9
     G.    Foreclosures ................................................................................................................................... 9

SECTION V - RESERVATION PROCEDURES .......................................................................................... 9

     A.    Online Reservation Procedure ........................................................................................................ 9
     B.    Reservation Form .......................................................................................................................... 10
     C.    Reservation Document Delivery ................................................................................................... 10
     D.    Reservation Expiration Date ......................................................................................................... 10
     E.    Cancellation of Reservation .......................................................................................................... 10
     F.    Transfer of Reservation ................................................................................................................. 10

SECTION VI - LOAN PROCESSING AND UNDERWRITING PROCEDURES ........................................ 10

     A.    Homeownership Counseling ......................................................................................................... 10
     B.    Homebuyer Agreement ................................................................................................................. 11
     C.    Request for Conditional Commitment Package ............................................................................ 11
     D.    Conditional Commitment Expiration .............................................................................................. 15
     E.    Curative Requests and Expiration ................................................................................................ 15

SECTION VII - INCOME GUIDELINES FOR SALARIED AND SELF-EMPLOYED MORTGAGORS ...... 15

     A. Salaried Mortgagors ...................................................................................................................... 15


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     B. Self-Employed Mortgagors ........................................................................................................... 18

SECTION VIII - PRE-CLOSING PROCEDURES ...................................................................................... 20

     A.   Conditional Commitment ............................................................................................................... 20
     B.   Requesting the ADDI Assistance Closing Check ......................................................................... 20
     C.   Preparing the ADDI Closing Package ........................................................................................... 20
     D.   ADDI-Allowable Closing Fees ....................................................................................................... 21
     E.   Power of Attorney for Sellers ........................................................................................................ 21
     F.   Settlement Statement Fees .......................................................................................................... 21
     G.   Other Certifications ....................................................................................................................... 21

SECTION IX - LOAN DELIVERY ............................................................................................................... 21

     A. Review of the Mortgage Loan ....................................................................................................... 21
     B. Final Documentation ..................................................................................................................... 21

SECTION X - LOAN ADMINISTRATION ................................................................................................... 22

     A.   Record-Keeping ............................................................................................................................ 22
     B.   Privacy Notices ............................................................................................................................. 22
     C.   Payoff Requests ............................................................................................................................ 22
     D.   Mortgage Satisfactions .................................................................................................................. 22

SECTION XI - MORTGAGORS’ UTILIZATION OF ADDI ASSISTANCE ................................................. 22

SECTION XII - MODIFICATIONS .............................................................................................................. 22

     A.   Reservation Expiration ................................................................................................................... 22
     B.   Property Address .......................................................................................................................... 22
     C.   Income ........................................................................................................................................... 22
     D.   Marriage ........................................................................................................................................ 23
     E.   Acquisition/Sales Price .................................................................................................................. 23

SECTION XIII – RECAPTURE .................................................................................................................. 23

SECTION XIV – APPENDICES ................................................................................................................. 24




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INTRODUCTION
The Alabama Housing Finance Authority (the Authority), is a public corporation and an instrumentality of
the State. It was organized pursuant to Title 24, Chapter 1A of the Code of Alabama, as revised. The
Authority, a non-profit organization, was established as the housing entity for the state in 1980 and
currently administers several housing programs such as the First Step Mortgage Revenue Bond Program,
Step Up, Down Payment Assistance, Mortgage Credit Certificates, the Habitat for Humanity Loan
Purchase Program, the Low-Income Housing Tax Credit and the HOME Program, as well as several
specialty housing programs within the state of Alabama.

The American Dream Downpayment Initiative, authorized by President Bush in December 2003, is a
component of the United States Department of Housing and Urban Development’s (HUD) HOME
Investment Partnerships Program.

The Originator obtains information to determine that the mortgagor, loan, and property meet the
requirements as stated in the ADDI Procedural Manual. The Originator explains the program and its
requirements to both the buyer and the seller. The Originator must decline those applications in which the
applicant does not qualify under the requirements of the ADDI Program.

The Originator makes a reservation of funds at AHFAonline.com and sends to the Authority the
reservation package as stated in Section V of the ADDI Procedural Manual. The Originator sends to the
Authority the Request for Conditional Commitment Package before closing as stated in Section VI of the
ADDI Procedural Manual. Upon approval of ADDI assistance, the Originator will receive from the
Authority a conditional commitment. The Originator may then close the loan with the conditions listed on
the conditional commitment being satisfied. The Originator must have the ADDI approved by the Authority
and close the loan before the reservation of funds expire.

After the loan closing, the Originator sends to the Authority the closed loan package as stated in Section
IX of the ADDI Procedural Manual.

The purpose of the ADDI Procedural Manual is to describe the program and to set forth the relevant
Authority and federal regulations as well as to identify the respective roles of the Authority, the Originator,
the potential mortgagors and the seller. Please utilize appropriate documents and appendices as
applicable. The Authority reserves the right to update or revise the ADDI Procedural Manual at any time.




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SECTION I - DEFINITIONS
ADDI Program Documents: The set of documents the homebuyer must execute to receive the
assistance.

Affidavits: Written sworn statements made under oath to determine eligibility under the program.

Affordability Period: The period of time designated by the ADDI guidelines during which recapture is
applicable to the ADDI assistance, and also by which the ADDI assistance is forgiven.

Appraised Value: An appraisers’ opinion of value based on regulations and guidelines established by the
mortgage industry.

Authority: Alabama Housing Finance Authority, a public corporation and instrumentality of the State
organized pursuant to Act No. 80-585 of the Alabama Legislature, or any successor to its duties.

Bond For Title (Deed): A contract to transfer property into the purchasers name only when the debt for
the property is paid in full.

Capital Gain or Loss: The gain or loss arising from the sale or exchange of a capital asset.

Co-Borrower: A person who will occupy the property being purchased and who will be secondarily liable
for the mortgage loan.

Community Property Interest: A form of ownership under which property acquired during a marriage is
considered to be owned jointly unless acquired as separate property of either spouse.

Co-Mortgagor/Non-Occupant: A relative that will not occupy or take title to the property being
purchased and is signing the note and mortgage solely for the purpose of providing additional security.

Date of Closing: The date the Originator disburses funds under the note.

Depletion: A tax deductible expense reflecting the decrease of a depletable natural resource, such as oil
or gas.

Depreciation: A sum representing presumed loss in the value of a building or other real estate
improvements, resulting from age, physical wear, and economic or functional obsolescence and deducted
annually from net income to arrive at taxable income.

Eligible Mortgagor: A person intending to purchase a principal residence to be financed with ADDI
assistance, who can meet all qualifications as established in Sections II, III & IV of this Procedural
Manual.

Eligible Loan Area: All areas of the State of Alabama except the City of Huntsville, the City of
Montgomery, the City of Mobile, Mobile County, the City of Birmingham, and Jefferson County.

Equal Credit Opportunity Act (ECOA): A federal law that prohibits Originators from denying mortgages
on the basis of the borrower’s race, color, religion, national origin, age, sex, marital status, or receipt of
income from public assistance programs.

Existing Property: A property which has been previously occupied or new properties more than one year
old.

Fannie Mae: The Federal National Mortgage Association, or any successor thereto.

Fee Simple: The greatest possible interest a person can have in real estate, including the right to dispose
of the property or pass it on to one’s heirs.



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FHA: The Federal Housing Administration of the Department of Housing and Urban Development of the
United States of America, or any successor thereto.

First-Time Homebuyer: A buyer of a residence who has not had an ownership interest in a principal
residence, as described in Section II of this Procedural Manual, at any time during the three-year period
prior to loan closing.

Guarantor: A promise by one party to pay debt or perform an obligation contracted by another in the
event that the original obligor fails to perform as contracted.

Interest Held In Trust: Property held in trust until fulfillment of certain conditions are met.

Joint Tenancy: Joint ownership by two or more persons, giving each tenant equal interest and rights in
the property, including the right of survivorship.

Lease: A written document containing the conditions under which the possession and use of real and/or
personal property are given by the owner to another for a stated period and for a dated consideration.

Life Estate: A freehold estate giving a beneficiary all property rights, except the right to sell. The estate is
terminated upon the death of the beneficiary.

Maximum Family Income: An amount of income not to exceed the federal income limitation described in
the Schedule of Maximum Income Limits (Appendix 1).

Maximum Sales Price Limit: An amount not to exceed the limitations described in the Schedule of
Maximum Sales Price Limits (Appendix 2).

Mortgage: The instrument securing a mortgage loan which creates a lien on a residence subject only to
Permitted Encumbrances.

Mortgage Documents: The documents specified for delivery to the Authority as stated in this ADDI
Procedural Manual.

Mortgage Loan: Any loan evidenced by a Mortgage Note which is secured by the related Mortgage for
financing the purchase of a residence.

Mortgage Note: The promissory note evidencing the obligation to repay a mortgage loan, payable to the
order of an Originator, executed by a mortgagor to evidence obligation to repay the mortgage loan.

Mortgagor: The purchaser of a single-family residence who borrows funds to obtain a residence.

New Construction: Single-Family residences less than one year old and never occupied.

Originators: Lending institutions that execute an Agreement with the Authority to participate in the
Program.

Originator’s Participation Agreement: The agreement dated July 1, 2004, among the Originator(s) and
the Authority, and all amendments or supplements hereto and where appropriate, the Invitation, Notices
of Acceptance, Questionnaire, Notice of Availability of Funds, ADDI Procedural Manual, and all forms,
appendices and reports prescribed by the Authority and provided herein.

Present Ownership Interest: Any form of ownership interest as described in Section II of this Procedural
Manual.

Principal Residence: Housing which the eligible mortgagor intends to occupy as a primary residence
and which is not to be used in a trade or business, or as an investment property.

Profit and Loss: A statement by a business reflecting a financial gain or loss for a given period.


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Proposed Construction: Property proposed to be constructed.

Recapture: A provision of the ADDI program which requires the home buyer to pay back all or a portion
of the ADDI assistance, under certain situations and circumstances, during the affordability period.

Reservation of Funds: Reserved funds equal to the ADDI loan amount for an eligible mortgagor.

Residence: A single-family, owner-occupied, site-built dwelling unit located within the Eligible Loan Area,
including detached and attached units, condominiums, and planned unit developments

Right of Redemption: A legally enforceable right provided by law permitting the mortgagor or owner to
reclaim foreclosed property by making full payment of the mortgage debt or the foreclosure sales price,
as applicable. The right of redemption exists for a one year period of time known as the redemption
period.

State: The State of Alabama.

Subordinate Mortgage Loan: Any loan evidenced by a mortgage note, secured by the related mortgage
that is recorded after the first mortgage loan and in a secondary lien position.

Survivorship: The legal right of the survivor or persons having joint interest in property to take the
interest of the person who is deceased.

Tenancy: A holding of real estate under any kind of right of title. Used alone, tenancy implies a hold
under a lease.

Tenancy in Common: The type of ownership created when real or personal property is granted to two or
more persons, without express words creating a joint tenancy. There is no right of survivorship.

Tenancy by Entirety: The joint ownership of property by a husband and wife where both are viewed as
one person under common law that provides for the right of survivorship.

Tenant Shareholder: Ownership whereby real property is held in the name of the shareholders rather
than in the name of individual partners.

VA: The Department of Veterans Affairs of the United States of America, or any successor thereto.

Zoning: The act of city or county authorities specifying the type of property use in specific areas.



SECTION II - MORTGAGOR ELIGIBILITY EVALUATION
    A. Income Restrictions. To be eligible, a mortgagor must not exceed the income requirements of
       “low-income families,” whose total annual incomes do not exceed 80% of the median income for
       the area as determined by HUD, with adjustments for family size (see Appendix 1). All income
       received by anyone intending to reside in the property being purchased will be counted in
       determining eligibility regardless of source, taxable or tax-exempt status, or age of wage
       earner(s). The Authority may revise the income eligibility criteria in the future in a manner
       consistent with state and federal law and HUD amendments.

    B. Ownership Interest. All individuals applying for the ADDI assistance must be “first-time
       homebuyers,” defined as an individual and his or her spouse who have not owned a home during
       the three-year period prior to purchase. A first-time homebuyer includes an individual who is a
       “displaced homemaker” or “single parent” and who, even if while a homemaker or married, owned
       a home with his or her spouse or resided in a home owned by the spouse. A “displaced
       homemaker” means an individual who (i) is an adult; (ii) has not worked full-time in the labor force
       for a number of years but has, during such years, worked primarily without remuneration to care

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     for the home and family; and (iii) is unemployed or under-employed and is experiencing difficulty
     in obtaining or upgrading employment. A “single parent” is defined as an individual who (i) is
     unmarried; and (ii) has one or more minor children for whom the individual has custody, or is
     pregnant.

C. Occupancy. Mortgagors must occupy the residence as their Principal Residence within 60 days
   after the closing and thereafter as their principal and permanent residence.

D. Residence Usage of Renting, Leasing, Assigning or Transferring Residence. The mortgagor
   cannot rent, lease, sell, assign or transfer any interest in the residence to another party and will
   not enter into any agreement, understanding or other arrangement without prior approval of the
   Authority.

E. Usage of Residence in Trade or Business. The mortgagor cannot use the residence in a trade or
   business and can not deduct any portion of the cost of the residence as a home business
   expense on the mortgagor’s federal income tax returns. No portion of the residence can be
   specifically designated for any commercial use.

F. Residence Used for Investment Purpose. The mortgagor cannot use the residence as investment
   property and will not receive any income from the residence or the land. This provision prevents
   the mortgagor from later using the property for rental income.

G. Residence Used as Vacation, Seasonal, Recreation or Second Home. The mortgagor cannot use
   the residence as a recreational, seasonal, vacation or second residence.

H. Co-Mortgagor/Non-Occupants and Guarantors. Co-Mortgagor/Non-Occupants and Guarantors
   are accepted on behalf of an eligible mortgagor in accordance with the Agreement, provided that
   the following conditions are met:

     1. The Co-Mortgagor/Non-Occupant or Guarantor is acting in such capacity solely for the
        purposes of providing additional security for the mortgage loan, and will not take title to the
        property.

     2. The Co-Mortgagor/Non-Occupant or Guarantor will not occupy the residence as his
        Principal/Permanent Residence.

     3. The Co-Mortgagor/Non-Occupant or Guarantor is a relative of the mortgagor.

     4. The Co-Mortgagor/Non-Occupant or Guarantor is permitted by applicable FHA, VA, RD,
        GNMA, and Fannie Mae guidelines.

     5. The Co-Mortgagor/Non-Occupant or Guarantor will be required to sign a statement certifying
        to the above conditions, see Appendix 12, Co-Mortgagor/Non-Occupant Statement. Tax
        returns and income verifications are not applicable. These Co-Mortgagor/Non-Occupants or
        Guarantors will be treated as non-occupant co-mortgagors for ADDI qualifying purposes.

I.   Legal Separation. Legal separation agreements are not acceptable documentation in the
     determination of a separated mortgagors’ eligibility. Originators must treat separated mortgagors
     as married and the separated spouse must meet all ADDI guidelines as established in Sections II,
     III, & IV of this manual.

J.   Powers of Attorney for the Mortgagors. Specific Powers of Attorney are acceptable if the property,
     loan amount, loan term, and interest rate is specifically addressed. Prior approval is required by
     the Authority and a recorded copy will be a closing condition.

K. Title Restrictions. Title can be held only in the names of those persons who sign BOTH the
   Mortgage Note AND the Mortgage.



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  L. Liquid Asset Limits. Individuals and households applying for the ADDI assistance may not have
     liquid assets that exceed $4,000. Liquid assets are defined as cash or assets that can be
     liquidated within a short period of time. Examples of liquid assets are checking and savings
     accounts, CDs, stocks, bonds, gifts and cash on hand. Retirement IRAs and 401(k)s are not
     considered as liquid assets.



SECTION III - LOAN ELIGIBILITY EVALUATION
  A. Permitted Encumbrances. ADDI-assisted loans will be subordinate only to the first lien on the fee
     simple title or leasehold estate to the residence, unless approval has been obtained from AHFA
     otherwise.

  B. Credit Review Determination. Risk on the first mortgage loan is reduced by the ADDI assistance.
     AHFA absorbs that risk through the second lien position of ADDI. Therefore, on any loan where a
     borrower’s credit score is below 580 or the total debt ratio exceeds 50%, credit evaluation by
     AHFA will be required. The originator must furnish a copy of the credit report and the
     compensating factors for the loan in question in those instances.



SECTION IV - PROPERTY ELIGIBILITY EVALUATION
  A. Eligible Loan Area. The Eligible Loan Area shall be the entire geographic boundaries of the State
     with the exception of those local participating jurisdictions receiving their own allocations of ADDI
     funds. The areas ineligible for this ADDI assistance are the City of Huntsville, the City of
     Montgomery, the City of Mobile, Mobile County, the City of Birmingham, and Jefferson County.

  B. Qualifying Residences. Subject to certain limitations described below, all residences financed by
     the ADDI Program must meet the following:

      1. The residences must be permanently affixed, and considered “Real Property”;

      2. Detached single-family houses, consisting of no more than one dwelling unit;

      3. Attached single-family houses or townhouses;

      4. Units of a “condominium” or units within a “planned unit development” as such terms are
         defined in the Fannie Mae guide;

      5. Property must meet applicable local codes, ordinances, and zoning ordinances. In the
         absence of a local code for new construction, the property must meet one of the following
         model codes: Uniform Building Code (ICBO), National Building Code (BOCA), Standard
         (Southern) Building Code, or Council of American Building Officials (CABO) one-family code.
         A Housing Quality Standard (HQS) Inspection will be conducted on all homes by an approved
         AHFA inspector. This inspection will be completed prior to loan closing.

      6. Newly constructed housing must meet the current edition of the Model Energy Code.

      7. Flood insurance coverage must be maintained by the homeowners if the property is located
         in a flood zone.

      8. Properties must be free of lead-based paint. If a property is identified as having lead-based
         paint, lead-based paint abatement is required. ADDI funds may not be used to fund lead-
         based paint abatement.



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  C. Sales Price Limitations. The maximum sales price which may be paid by an eligible mortgagor to
     acquire a residence shall be in accordance with FHA’s 203(b) loan limits.

  D. Land. Land being purchased with the residence should maintain the basic livability of the
     residence and cannot provide a source of income to the eligible mortgagor. If such land is
     capable of being subdivided, the eligible mortgagors will certify that they will not:

      1. Subdivide or otherwise sell any of the real property on which the residence is or is to be
         located, except in conjunction with a future sale of the residence;

      2. Seek any variance from applicable zoning, minimum lot size or set-back requirements.

  E. Computing Acquisition Cost of Land & Dwelling. The acquisition cost of the residence, including
     any improvements, must not exceed the maximum sales price applicable to the residence as
     stated in the Schedule of Maximum Sales Price Limits (Appendix 2). Acquisition cost of the land
     and dwelling includes amounts paid or to be paid by the mortgagors or anyone acting on the
     mortgagor’s behalf, to or for the benefit of the sellers or related parties to the seller. ADDI funds
     may not be used to pay off construction loans or bridge loans or any other form of interim
     financing unless approved by AHFA after reviewing the situation.

  F. Leased Land. If the residence is located on leased land, provide a copy of the lease showing a
     term no less than 99 years.

  G. Foreclosures. Any foreclosed properties with Rights of Redemption remaining may be financed
     under the ADDI program with prior approval by AHFA’s Single-Family Administrator with the
     understanding that if the property is redeemed, the ADDI funds will be recaptured.



SECTION V - RESERVATION PROCEDURES
  A. Online Reservation Procedure. Subject to the funding restrictions and applicable reservations,
     applications for ADDI funds will be accepted in all of the lending offices of each Originator in the
     state. This will be on a first-come, first-served, fair and equal basis irrespective of race, color,
     religion, national origin, age, or sex.

      Prior to making a reservation of funds, the Originator must have taken a mortgage loan
      application from a potential eligible mortgagor. The mortgagor furnishes the Originator an earnest
      money sales agreement or construction contract entered into by the seller/builder of a residence
      and the eligible mortgagor. Originators are responsible for making a preliminary determination to
      see if the potential eligible mortgagor will qualify for the mortgage loan and ADDI assistance.

      The program processing is designed to compliment the Originator’s regular credit and
      underwriting procedures.

      The following steps are for the reservation and loan processing process:

      1. The eligible mortgagor has applied for mortgage financing through a participating Originator.

      2. The Originator has determined if a loan applicant is eligible for the ADDI program based on
         preliminary information obtained on annual income, acquisition cost, prior home ownership,
         and other factors.

      3. All first mortgage loans must be originated in compliance with, and must conform to the
         provisions of all applicable rules, regulations and limitations of FHA, VA, RD, GNMA, and
         Fannie Mae, as appropriate.



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      Each Originator is to assign user names and passwords to designated employees responsible for
      making requests for Reservations of Funds. There will be no restrictions as to the total number of
      Reservations of Funds issued to any Originator. Telephoned requests for reservations will be
      accepted only if the ahfaOnline.com web site is unavailable for more than 24 hours. In that event,
      telephone reservations will be accepted temporarily until the site resumes operation.

  B. Reservation Form. Beginning on a date designated by the Authority, the participating Originators
     may request Reservations of Funds online at ahfaOnline.com. The Originator completes the
     ADDI Reservation Form (Appendix 4) and inputs the required information into the online system,
     reserving funds. Upon input of the information from the Reservation Form, the online system will
     automatically issue a commitment number and Commitment Expiration Date. The Originator
     should place this information on the Reservation Form for future reference and print a copy of the
     reservation acceptance to include with the Step 1 submission.

  C. Reservation Document Delivery. Upon completion of the reservation, each Originator must
     furnish the Authority with the Reservation Package as stated on the ADDI Transmittal Checklist
     (Appendix 3). The Authority must receive these documents within 72 hours (three working days)
     of receipt of an ADDI commitment number. Failure to deliver the requested documentation to the
     Authority within the time specified may result in cancellation of the reservation of funds.

  D. Reservation Expiration Date. The ADDI reservation is valid for 45 days. Thirty (30) day
     extensions may be allowed with approval by the Authority.

  E. Cancellation of Reservation. If it is determined that the proposed mortgagor does not qualify for
     the program, the reservation will be canceled. If the Authority determines that a mortgage loan
     application was taken by an Originator after the date the Originator submitted its request for
     Reservation of Funds, the reservation will be canceled.

      Notification must be sent to the Authority within 72 hours if it is determined that the mortgagors do
      not meet ADDI Program guidelines.

  F. Transfer of Reservation. The Authority will not allow a transfer of any Reservation of Funds from
     one eligible mortgagor to another, but may allow a loan transfer from one approved Originator to
     another pursuant to the Transfer of Allocation Form (Appendix 6). This form must be executed by
     both Originators and the Authority. Reservations of Funds may be transferred one time only.

      The Reservation of Funds committed to an eligible mortgagor may be transferred from one
      property to another with the prior approval of the Authority.



SECTION VI - LOAN PROCESSING & UNDERWRITING PROCEDURES
  A. Homeownership Counseling. As a component of the ADDI program, the Authority requires the
     homebuyers to complete a detailed homeownership counseling program such as the one offered
     through the Homeownership Consortium of Alabama or any HUD-approved housing counseling
     agency. All other homeownership counseling programs and counselors must be pre-approved by
     AHFA to insure the same high standard of counseling is offered. AHFA will preview the
     counseling material and the qualifications of the counselor before the homebuyer attends the
     session(s). The Originator will send Appendix 21 (Homebuyer’s Education Certification) and
     Appendix 28 (Homeownership Counseling Compensation Request) to the approved counselor to
     complete on behalf of the homebuyer. The counselor will send the completed forms back to the
     Originator. The Homebuyer’s Education Certification will be sent to AHFA with Step 2 and the
     Homeownership Counseling Compensation Request sent in with Step 4 of the Transmittal
     Checklist (Appendix 3).




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    The homeownership counselors must be aware that they will be compensated only when the
    homebuyer actually completes the home-buying process through closing their home loan with
    ADDI assistance. The compensation will be requested by the Originator and counselor upon the
    loan closing, using the Request for Homeownership Counseling Compensation (Appendix 28).
    Only those counseling agencies not already receiving HUD allocations of funds for counseling
    may charge for their services.

B. Homebuyer Agreement. The Originator provides the potential mortgagors with the Homebuyer’s
   Agreement (Appendix 8), that explains the program requirements. Any person signing the
   mortgage is required to sign the agreement and must qualify under the ADDI guidelines as
   established in this ADDI Procedural Manual. Non-occupant co-mortgagors are not required to
   sign the agreement but are required to sign the Co-Mortgagor/Non-Occupant Statement
   (Appendix 10).

    The Homebuyer Agreement must be completed thoroughly and agree with all applicable areas of
    the initial application and sales contract. All applicable areas are to be executed and corrections
    are to be initialed by the appropriate persons. If the Homebuyer Agreement or sales contract
    reflects an unusual seller (Banks, Resolution Trust Corp., etc.), this may imply that the property is
    a foreclosure and will require additional documentation, see Section IV. Make sure all applicable
    sections requiring notary signatures reflect commission expiration dates.

    The mortgagor completes and signs the Homebuyer Agreement containing certain certifications
    required by the Authority and federal regulations. The required certifications include, but are not
    limited to:

    1. The residence is permanently affixed and is considered “real property” and the dwelling does
       not consist of more than one dwelling unit.

    2. The property will be used as the mortgagor’s principal and permanent residence.

    3. The mortgagor will occupy the residence within 60 days after the closing of the mortgage
       loan.

    4. A principal residence has not been owned during the preceding three-year period, if
       applicable.

    5. The mortgage being acquired will not be used to replace or obtain an existing mortgage other
       than one specifically accepted and permitted by the Agreement.

    6. The annual family income does not exceed the maximum income limits.

    7. The acquisition cost of the residence does not exceed the maximum sales price limits.

    8. There is a five-year affordability period.

    9. The residence cannot be rented, leased, or transferred.

    12. The residence will not be used in a trade or business.

    13. The residence will not be used as a vacation, seasonal, recreation, or second home.

    14. The ADDI loan cannot be assumed.

C. Request for Conditional Commitment Package. The Originator performs the customary
   verifications for loan underwriting as required by the Agreement. The Originator completes the
   remainder of the mortgage application process and sends to the Authority the Request for
   Conditional Commitment Package as stated on the ADDI Transmittal Checklist (Appendix 3).
   Upon receipt of the required documentation, the package is placed in first-come, first-served


                                                 11
                                            Revised 08/09
        order and processed within 72 hours (three business days) beginning the next business day. The
        Request for Conditional Commitment package and the reservation package will be compared at
        the time the Request for Conditional Commitment package is received. The following criteria will
        help ensure accuracy and consistency in files when reviewed:

        1. Loan Amount. The amount reserved on the reservation form should always be $10,000.

        2. Initial Application. The initial application should be completed, signed, and dated by the
           mortgagors and Originator. If dated before the ADDI assistance issue, a conversion letter will
           be required. All information should agree with all applicable areas of the ADDI Reservation
           Form (Appendix 4), sales contract, and the Homebuyer’s Agreement (Appendix 8), as
           follows:

            (a) Names of the mortgagors.

            (b) Property information section.

            (c) Number of dependents.

            (d) Marital status.

            (e) Residency history.

            (f) Employment (income purposes).

            (g) Other income section (to ensure all income has been included).

            (h) Schedule of real estate owned section (to establish whether the borrowers currently own
                a home, have rental property, or own land. Additional income may be received from these
                sources).

            (i) Assets section to ensure all funds which are not a part of closing are included in the
                annual family income, i.e., interest and dividends earnings.

            (j) Declaration section reflects the mortgagors intent to occupy the property as their Principal
                Residence.

            (k) First-time home buyer requirement, if applicable.

        3. Sales Contract. For mortgagors who are responsible for making repairs on the sales contract,
           the amount of repairs must be included in the total acquisition cost and evidenced by
           receipts.

Changes in the sales price will require an amended sales contract. All changes are to be initialed by all
parties involved.

A conversion letter is the only acceptable documentation to convert a loan to an ADDI-assisted loan if the
contract is dated before the issuance of the program.

All areas of the sales contract are to be completed and properly executed by the mortgagor and seller
where applicable. The following areas should be consistent with all applicable areas of the Reservation
Form, initial application, and the Homebuyer Agreement.

            (a) Names of the mortgagors.

            (b) Sales price.

            (c) Property address.


                                                     12
                                                Revised 08/09
    (d) Loan Type: FHA, VA, RD, or Conventional.

    (e) Real estate agency’s name and address.

    (f) Number of days for the seller to surrender possession is 60 days or less after loan
        closing.

    (g) Signatures of the sellers and buyers with dates.

4. Federal Income Tax Returns. The most recent three years of federal tax returns are required
   for all ADDI-assisted loans. The tax returns must be completed with original signatures and
   applicable schedules. Loans closed after February 15 will require current-year tax
   returns. All areas should be consistent with the initial application, employment verification,
   and Homebuyer Agreement. Federal income tax forms 1040A and 1040EZ should comply
   with items a through e. Federal income tax form 1040 should comply with items a through i as
   follows:

    (a) Names of the mortgagors.

    (b) Current address.

    (c) Social Security numbers.

    (d) Filing status.

    (e) Wages for the previous year and other amounts which can produce current income.

    (f) It is imperative that Section 6, (c), page 1, of the federal return is checked thoroughly to
        ensure all dependents listed on the returns have names consistent with the mortgagors.
        Additional child support or Social Security benefits may be received if the names are
        different. Other dependents (i.e., mother, father) may be residing in property, thus
        possibly producing additional income.

    (g) Section 7, reflecting wages, salaries, and tips, and should be consistent with past year
        earnings. Watch for other income reflected in this section, i.e. a self-employed mortgagor
        with income on this line may be a corporation employee with W-2 earnings or one who
        has other sources of income.

        Note: Self-employed mortgagors are not allowed to operate any portion of their
        business from their home. See Section II for more information.

    (h) All lines must be checked to determine whether all income is considered (i.e., self
        employment, interest, dividends, capital gains, etc.).

    (i) Section 34, page 2, of the federal tax returns must be checked to ensure the mortgagors
        took the standard deduction. If not, Schedule A should be attached showing their
        itemized deductions. It is imperative that the mortgagors did not take a deduction for
        home mortgage interest or real estate taxes.

        Listed below are forms and schedules for your convenience.

        Form 1040EZ: Income Tax Return for single and joint filers with no dependents

        Form 1040A: U.S. Individual Income Tax Return - Schedule 1, Interest and Dividend
        Income

        Form 1040: U.S. Individual Income Tax Return



                                             13
                                        Revised 08/09
                Schedule A: Itemized Deductions

                Schedule B: Interest and Dividend Income

                Schedule C or C-EZ: Profit and Loss for Business (sole proprietorship)

                Schedule D: Capital Gains and Losses

                Schedule E: Supplemental Income and Loss

                Schedule F: Profit and loss from farming

        If the mortgagor is unable to produce signed federal tax returns, a copy of the tax return transcript
        may be requested from the IRS by filing IRS Form 4506T or by calling 1-800-829-1040. We will
        not accept IRS Form 8879 (IRS e-file Signature Authorization) in place of the actual returns. Self-
        employed mortgagors must provide the actual returns in all cases.

        If the mortgagors were not required to file federal income tax returns, by law, for one or
        more of the past three years, then the mortgagors must provide a statement that they were
        not required by law to file for that year. See the Income Tax Statement (Appendix 13).

        5. Copy of the Appraisal. The appraisal must be complete and signed. AHFA will review the
           appraisal to ensure the property complies with ADDI regulations.

        6. Copy of the MCA or 1008. The loan analysis must be complete and indicate that the ADDI
           assistance is being used for principal reduction only.

        7. Executed Lead-Based Paint Disclosures. These disclosures must be executed by the buyer
           and seller. If lead-based paint is indicated or identified as present on the property, lead-based
           paint abatement must occur, with documentation verifying the abatement. ADDI funds may
           not be used to “abate” the lead-based paint, nor may the buyer pay for the abatement.

        8. Displacement Certification. The seller must sign the displaced renter certification if selling a
           house that is occupied by a tenant other than the homebuyer. The seller must agree to the
           terms of the disclosure.

        9. Homebuyer Education Certificate. The homebuyers must attend and successfully complete
           homeownership counseling. The certificate must be executed by the counselor and
           homebuyers to certify their compliance with this requirement.

        10. Flood Certification Acknowledgment. The flood certification acknowledgment must be
            executed by the homebuyers to certify that they are aware that flood insurance coverage will
            be required and must be maintained if the property being purchased is determined to be
            located in a flood plain.

        11. Recapture Application Disclosure. The ADDI recapture application disclosure must be
            executed by the homebuyers to certify that they have read and understood the recapture
            provisions associated with ADDI assistance.

Upon completion of the compliance review, the Authority will issue a Conditional Commitment. If the loan
cannot be approved due to insufficient information, a Curative Request for additional information will be
issued.

    D. Conditional Commitment Expiration. The Conditional Commitment and Reservation of Funds will
       expire 45 days after the date of the reservation for all properties. Extensions are available on a
       case-by-case basis.




                                                     14
                                                Revised 08/09
   E. Curative Requests and Expiration. Closing curative requests must be satisfied and delivered to
      the Authority within two weeks of the issuance date.



SECTION VII - INCOME GUIDELINES FOR SALARIED & SELF-
EMPLOYED MORTGAGORS
A. Salaried Mortgagors

   1. Gross Monthly Income. Gross monthly income includes gross monthly pay, any additional income
      from overtime, part-time employment, bonuses, dividends, interest, royalties, pensions, Veterans
      Administration (VA) compensation, net rental income, etc.; and other income (such as alimony,
      child support, public assistance, sick pay, social security benefits, unemployment compensation,
      income received from trusts, and income received from business activities and investments, etc.)
      Overtime pay and bonuses are to be projected in an amount consistent with the earnings history.
      Income included in the calculation is derived from all persons occupying the residence.

   2. Annual Family Income. The Gross Monthly Income multiplied by 12 shall mean the 12-month
      period beginning by either:

       (a) The date of the mortgage loan application if the mortgage is executed within four months of
           the date of such application; or

       (b) The date of the execution of the mortgage if the mortgage is executed more than four months
           after the date of such application.

          The income to be taken into account in determining the gross monthly income is any person
       who is expected to live in the residence being financed.

   Persons who are not employed and do not intend to seek employment within the next 12 months will
   be required to sign a statement to such. See the Employment Statement (Appendix 11).

   3. Verifications of Employment. The mortgagor must meet the income limits as set forth in the
      Schedule of Maximum Income Limits (Appendix 1). When checking Verifications of Employment
      (VOE), all areas of the verification should be completed and executed by the employer. All
      projected raises reflected on the VOE must be included in the annual family income.

       EXAMPLE: An applicant receives a pay increase of 50 cents per hour to $7.00 per hour
       on May 1. Calculate the first four months’ income at $6.50 per hour and calculate the next
       eight months at $7.00 per hour to reflect the raise.

   Make sure all income has been derived (i.e., raises, bonuses, commissions, car allowance, etc.).
   Verify that pay stubs and verifications are consistent with one another. If they differ, an explanation
   must be provided. Previous year earnings (overtime, etc.) should be consistent with current year
   earnings. If not, it may be necessary to use only year-to-date figures depending upon the increases
   the mortgagor has received (overtime, raise, etc.). VOEs must be updated if they are more than four
   months old at the time of closing.

       EXAMPLE: John Smith works for the power company. Mr. Smith’s base income on the
       verification of employment is $35,000 with bi-weekly income of $1,346.15. Mr. Smith’s
       pay stub reflects the same base amount. We must determine if year-to-date earnings on
       his pay stub are consistent to year-to-date earnings on the verification of employment.
       Mr. Smith worked 22 pay periods @ $1,346.15 (through October 31, 1993), with year-to-



                                                    15
                                               Revised 08/09
    date earnings of $29,615.30. However, the pay stub reflects income of $33,000;
    therefore, an additional $3,384.70 is included in his year-to-date earnings. We must
    determine what this extra income is and if it is consistent with earnings received last year.
    If not consistent, use year-to-date earnings reflected by the pay stub to determine annual
    income.

When reviewing verifications, watch for certain types of employment, i.e., ministers, nurses, etc.,
which have unusual income. For example, a minister’s income usually consists of a base income,
utilities allowance, housing allowance, insurance allowance and car allowance. A nurse’s income
usually consists of a base income, overtime, and shift differentials for night and weekend pay, which
in most cases differ. Be very cautious when calculating income for these types of employment to
ensure all income has been included in the calculations.

If a letter or pay stub, etc. is used in lieu of a written VOE form, it must contain all items
covered in the written verification.

All projected raises reflected on the VOE must be included in the annual family income as of
the date of the raise.

4. Pay Stubs. Pay stubs are required on all loans. The income and employer information must be
   consistent with the verification of income and the VOE. Pay stubs must be dated within 30 days of
   submission.

5. Income History. If the prospective mortgagor has additional earned income and has a history of
   such earnings, then the income is to be included in the gross monthly income. If the income is
   earned only within the current year with no prior history, and will not continue after closing then a
   statement from the employer stating the earned income, (i.e., overtime, etc.) will not continue is
   required.

6. Alternative Documentation. AHFA allows alternative documentation for the VOE under the
   following conditions. If the Originator cannot obtain all of the items below, then standard
   employment documentation must be used.

    (a) Telephone verification including, but not limited to date of hire; current position; date of
        telephone verification; and name, title and phone number of person verifying employment.
        The statement must be executed by the person verifying information.

    (b) Pay stubs covering the most recent 30-day period which reflect the mortgagor’s name, Social
        Security number, hourly rate of pay, and number of hours worked per pay period.

    (c) Certified copies of the last two years’ W-2s which include the mortgagor’s name, Social
        Security number, company name, and total compensation.

    (d) Should an Originator be unable to acquire a VOE for an individual borrower in active or
        reserve military or civil service, AHFA will accept the borrower’s last two Leave and Earnings
        Statements (LES) and their previous year’s W-2 form in place of the VOE.

7. Averaging Income. Income is averaged for overtime, commissions, and any other income (except
   base earnings) over a period of no less than 15 months, but no more than 27 months. However, if
   income over base earnings is not consistent with past years’ earnings, or the income history is
   less than 15 months, the Authority will determine the period for income calculations.

8. Overtime Earnings. Income earned from overtime will be included if the borrower has a history of
   such income or the income was earned during the current year. The VOE form from the employer
   or the telephone verification from the Originator must explain how much overtime is expected if
   any, and at what rate of pay.



                                                 16
                                            Revised 08/09
9. Commission Employees. Commission-only employees must provide two years of federal income
   tax returns. If the mortgagor has not been employed at least two years, the most current year
   federal income tax returns are required along with year-to-date earnings. This may be obtained
   from the VOE. If commission employees file self-employment income to claim expenses, we will
   require copies of the Federal Income Tax Forms 1040 and Schedule C or CEZ along with a year-
   to-date Profit and Loss statement.

10. Bonus. The gross amount of recurring bonuses is to be included in the income calculations if:

    (a) The bonus is part of a collective bargaining agreement and must be paid; or

    (b) The bonus is included in the computation of income by the employer; or

    (c) There is a history of bonuses.

    If there is a history of bonuses but the applicant does not know if a bonus is planned, nor does
    the employer divulge its plans for a bonus or the projected amount, an average of past years’
    bonuses will be calculated as income. A bonus history for tax compliance purposes is to be
    considered for one year or more.

    The bonus is not to be included in the annual family income if there is no history of a bonus and
    the bonus is totally discretionary by the employer and wages of the applicant are the basic source
    of income. The file must be documented with a statement from the employer.

11. Rental Properties or Contract Income. Rental income and contract income are determined by
    subtracting the monthly mortgage payment from the gross rental income. Depreciation should be
    added back to net rental income where applicable. Contract income (income derived from the
    mortgagor selling property with owner financing) is to be used in calculating annual family
    income.

    The use of standard underwriting criteria to document this income is acceptable (i.e. copies of
    leases & mortgage verifications).

12. Child Support/Alimony. Child support and alimony must be included in the annual family income
    and a copy of the final divorce decree is required. If the mortgagors have not received child
    support or alimony for the past 24 months and to their knowledge, none is forth coming, a
    statement from the mortgagors is required, see the Child Support Statement (Appendix 9).

    Cases where the child support or alimony was paid through the courts, a case history showing no
    activity for the last 24 months is required including the Child Support Statement (Appendix 9).

13. Car Allowance. Income received from employers for a car allowance must be included in the
    annual family income if the mortgagors have no accounting responsibility to their company.

    EXAMPLE: If the mortgagor receives $500 per month from his employer for car
    allowance and is not required to file a mileage/expense report, then the $500 monthly
    income must be included in the annual family income. If the mortgagor files a
    mileage/expense report for $450 monthly, the $50 difference must be included in the
    annual family income.

14. Education Grants. The portion of the income from grants that is used for living expenses is to be
    added to the annual family income if this income will continue for the next 12 months.

15. Employee Benefits Program. Some companies offer an employee benefits program designed to
    let employees create their own insurance package. The monthly amount is usually shown
    separately on the pay stub, yet included in year-to-date earnings. The pay stub usually shows the
    monthly amount actually spent on this plan. A letter from the employer is needed to verify the

                                                17
                                           Revised 08/09
       actual cost of this plan year-to-date, in order to determined if the employees received funds over
       the actual cost. In this case the additional unused portion would be included in the annual family
       income.

       If the mortgagor receives monthly income for the employee benefit program and elects not to
       purchase benefits offered by the program, then the full amount will be added to the annual family
       income.

   16. Permanent Seasonal, Seasonal & Temporary Income. Include all permanent seasonal, seasonal
       and temporary earnings when calculating annual family income.

   17. Social Security/VA Benefits. Social Security income should be verified with an Awards letter
       obtained from the Social Security office. VA benefits should be verified with a benefits letter from
       the Veterans Affairs Office.

   18. Lump Sum Payments. Lump sum payments, including but not limited to, inheritance, reenlistment
       bonuses, and disbursements from insurance policies, do not have to be included in the annual
       family income. However, interest income on investments must be included and calculated at the
       current passbook rates over a 12-month period. If the income is received in any other form other
       than lump sum (i.e. monthly or annual), then it must be treated as permanent income and added
       to the annual family income.

   19. Capital Gains/Loss. Both taxable and non-taxable portions of capital gains are to be included as
       income if a history of this income exists. If the two-year average results from the tax returns is a
       gain, then it must be added to annual family income (losses cannot be used to reduce annual
       family income).

   20. Pension and Stock Withdrawals. Withdrawals of principal funds from pension or stock sources is
       not considered income. However, annuity or interest payments under a pension or stock
       investment program are considered income. Verification of benefits will be required, i.e., federal
       tax returns, statement of benefits, etc.

   21. Interest, Dividend and Royalty Income. Interest, dividend and royalty earnings are considered
       income. Current interest and dividend earnings are calculated at current passbook rates over a
       12-month period. Income calculations for royalties are calculated by net earnings and interest.
       Earnings from IRAs and 401Ks are not included. Documentation will be required to verify theses
       sources of income, i.e., federal tax returns, statement of benefits and contract agreements for
       royalties income.

   22. Exclusion from Gross Monthly Income. Gross monthly income shall not include casual, sporadic
       or irregular gifts; amounts that are specifically for or in reimbursement of medical expenses;
       inheritances; insurance payments (including payments under health and accident insurance and
       workmen’s compensation, other than payments in lieu of earnings); settlement for personal or
       property losses; amounts of education scholarships paid directly to the student or the educational
       institution and amounts paid by the government to a veteran for use in meeting the costs of
       tuition, fees, books and equipment, but in either case only to the extent used for such purpose;
       special pay to a serviceman who is exposed to hostile fire; and foster child care payments.

B. Self-Employed Mortgagors

   1. Annual Family Income. The procedure to calculate annual family income for self-employed
      mortgagors requires the following:

       (a) Depreciation and depletion is to be added back to the adjusted gross income (AGI) on all
           self-employed mortgagors.

       (b) Two years’ current signed individual federal income tax returns with all applicable schedules.


                                                    18
                                               Revised 08/09
    (c) Year-to-date Profit & Loss (if applicable).

    (d) U.S. Partnership Returns and U.S. Corporate federal income tax returns with all schedules
        and W-2 form (where applicable), with individual federal income tax returns (form 1040)

    Income must be averaged over a period of no less than 15 months, but no more than 27 months.
    Self-Employed mortgagors will need two years of federal income tax returns with a current Profit
    and Loss. After February 15 each year, the most “current year” federal income tax returns are
    required.

2. Sole Proprietorship. Sole Proprietorship is a business owned by one person. IRS form 1040—
   Schedule C or Schedule C-EZ is required. Sole Proprietorship income is detailed on Form 1040
   (Schedule C) of U.S. income tax returns. This form will list all income, depreciation, and depletion
   which is added back to the AGI.

3. General Partnership. A General Partnership is a business owned by two or more partners. Each
   partner is personally liable for all debts of the business. Each partner is responsible for all other
   partners. The following documents are required:

    (a) IRS form 1065—Schedule K-1 & Schedule E, Part II.

    (b) U.S. Partnership Returns with all applicable schedules.

    General Partnerships require income to be calculated on form 1065 of U.S. Partnership Returns,
    to determine the share of net income distributable to each partner. This is reported on Schedule
    K-1 of form 1065 and on the individual’s Schedule E, Part II; this amount is included in the AGI on
    form 1040. Note: The total depreciation and depletion will be determined by the number of the
    partners, and should be divided to determine what percentage or total dollar amount to be added
    back for each partner.

4. Limited Partnerships. Limited Partnerships are usually formed for investing money. Limited
   partners often take a loss on their investment, which reduces their taxable income. Liability is
   limited to the amount invested. The following documents are required:

    (a) IRS form 1065—Schedule K-1 & Schedule E, Part II.

    (b) U.S. Partnership Returns with all applicable schedules.

    Limited Partnerships require income to be taken from Schedule K-1 (form 1065), and the
    individual’s Schedule E, Part II; this amount is included in the AGI on form 1040.

5. S-Corp. Usually a small start-up business requiring the following documentation:

    (a) IRS forms 1120/1120S—Schedule K-1, Schedule E, II.

    (b) Verification of W-2 earnings.

    S Corporation’s income is detailed on form 1120S (US federal income tax return for an S
    Corporation). Schedule K-1 will list borrower’s percentage of ownership and ordinary income,
    depreciation and depletion from the S Corporation (this information is transferred to Schedule E,
    Section II of the individual tax returns). This income must be proportionately added back as
    determined by the percentage of ownership to the ordinary income since depreciation and
    depletion are actually non-cash expenses. The primary source of income for an owner comes
    from W-2 wages, which must be included in earnings in addition to corporate earnings.

6. Corporation. A Corporation requires a state charter and is a separate legal entity from its owners
   (stockholders). The corporation’s profits (retained earnings) are put back into the business or are



                                                 19
                                            Revised 08/09
        distributed to stockholders in the form of dividends. Stockholders are not responsible for the debts
        of the corporation. The following documentation is required to determine eligibility:

        (a) U.S. Corporation Income Tax Returns, form 1120 & Schedule L, (if applicable).

        (b) W-2 form.

        Corporations require income to be taken from the IRS form 1120, and Schedule L will show the
        current year corporate balance sheet. Income to the officers and stockholders is reported by W-2
        forms and reflected on their individual form 1040.

        Dividend earnings are reported on 1099 forms and reflected on their individual returns.



SECTION VIII - PRE-CLOSING PROCEDURES
A. Conditional Commitment. Upon issuance of the Conditional Commitment, AHFA will order a housing
   quality standards inspection of the property. Once the inspection has been completed, reviewed, and
   any deficiencies cured, the Originator may close the loan in accordance to the conditions stated on
   the Conditional Commitment. These conditions include, but are not limited to:

    1. Original ADDI Mortgage Submission Voucher and two copies (Appendix 17)

    2. Closing requirements listed on Lender Online

    3. Loans committed prior to February 15 of the current year which do not close until after February
       15 must have the current year’s signed and completed federal tax returns, and they must be sent
       to the Authority for approval prior to closing.

    4. Copy of current pay stubs or verification of income if over 120 days old as of closing. All
       verifications should be less than four months (120 days) old at the time of closing or current
       information will be required. A letter or pay stub may be used in lieu of a VOE form if it contains
       all the items covered in the original verification. Income documents more than 120 days old
       should be updated and sent to the Authority for approval before closing. Income documents
       more than 120 days old upon submission of the closed loan package could result in rejection of
       the ADDI assistance.

B. Requesting the ADDI Assistance Closing Check. After the ADDI application has been approved
   (conditional commitment issued by AHFA along with the originator’s final loan approval) and the
   housing quality standards inspection has been completed, a closing date must be established. Once
   a closing date and the closing agent have been selected, the Originator will request the ADDI
   assistance by submitting to AHFA the form shown in the Originator’s Request for Issuance of ADDI
   Check (Appendix 24). ADDI checks will be issued on Friday each week. The request for issuance
   form must be received by AHFA no later than Thursday at noon in order for the check to be
   issued that week. Closing dates should be planned with this schedule in mind. The checks will be
   made payable to the closing agent and the borrower.

C. Preparing the ADDI Closing Package. The ADDI Recapture Note (Appendix 25) and the ADDI
   Recapture Mortgage (Appendix 26) will be closed in favor of “Alabama Housing Finance Authority”
   (acting solely in its capacity as administrator for the State of Alabama) and not in the name of the
   Originator. Therefore, there will be no assignments to procure on behalf of the ADDI closing
   documents. No other note or mortgage may be substituted for the required ADDI documents,
   Appendices 25 and 26.

    The Originator’s instructions to the attorney must include instructions for the executed and recorded
    ADDI documents to be forwarded to AHFA along with the other items on the loan delivery checklist


                                                    20
                                               Revised 08/09
    (Appendix 3). The ADDI assistance must be shown as a subordinate mortgage on the HUD-
    1/Settlement Statement.

D. ADDI-Allowable Closing Fees. Only those fees charged by the attorney for document preparation and
   recording of the ADDI mortgage may be charged in regard to the ADDI assistance. The Originator
   can charge the typical and standard fees associated with the first mortgage loan, but not for the ADDI
   subordinate loan. HUD has prohibited fees such as application fees, underwriting fees, discount
   points, and/or any other such fee from being charged on the ADDI funds.

E. Power of Attorney for Sellers. A general power of attorney is acceptable for the sellers. A copy will be
   required for closing.

F. Settlement Statement Fees. The HUD-1 settlement statement will be checked to ensure no
   unallowable fees are charged for the ADDI assistance. However, in connection with the first mortgage
   loan, an Originator may charge and collect reasonable and customary charges from an eligible
   mortgagor or seller at closing. The charges may not exceed the usual and reasonable “settlement
   and financing costs,” such as title and transfer costs, title insurance, survey fees and other similar
   costs.

G. Other Certifications. Any other certifications applicable to the loan, such as the Builder’s Certification
   or the Displaced Renter(s) Disclosure, must be sent with the closing package.



SECTION IX - LOAN DELIVERY
A. Review of the Mortgage Loan. The closed mortgage loan package, as stated on the ADDI Transmittal
   Checklist, is to be received by the Authority within 10 days of loan closing.

    1. Check the closed loan package to confirm all items requested on the ADDI Transmittal Checklist
       and the Conditional Commitment are included in the package.

    2. Where applicable, use the settlement statement, appraisal and the Note as a guide to complete
       the ADDI Submission Voucher. All information listed on the ADDI Submission Voucher (Appendix
       17) should be completed.

    3. Use the ADDI Submission Voucher as your guide to check your documentation requested on the
       ADDI Transmittal Checklist. (NOTE: For all ADDI loans that are used in conjunction with AHFA’s
       Step Up or First Step programs, use the applicable program checklists when submitting the final
       closed package.)

    If the closed loan package is incomplete, a curative request will be issued. A minor curative request
    will be sent on a mortgage loan package with minor problems. A major curative request, on items that
    are considered by the Authority to be major in nature, will be subject to a $25 resubmission fee.
    Curative requests are to be corrected and delivered to the Authority within 14 days.

B. Final Documentation. The Originator is to submit the final mortgage loan documentation within 10
   days of loan closing. This includes:

    1. The ADDI Transmittal Checklist

    2. Closing requirements listed on the conditional commitment

    3. Original and one copy of the Mortgage Submission Voucher (Appendix 17)

    4. Copy of current paystub or VOE if more than 120 days old at time of loan closing

    5. Original ADDI Note

                                                      21
                                                 Revised 08/09
    6. Copy of ADDI Subordinate Mortgage

    7. ADDI Closing Reaffirmation (Appendix 16)

    8. Builder’s Certification, if applicable (Appendix 23)

    9. Final Flood Certification

    10. Copy of the HUD-1/Settlement Statement

    11. Homeownership Counseling Compensation Request (Appendix 28)

    12. Displaced Renter(s) Disclosure (Appendix 20)



SECTION X - LOAN ADMINISTRATION
A. Record-Keeping. All ADDI files will be kept for a period of 10 years after the five-year recapture
   period or from the date that the property is disposed of.

B. Privacy Notices. Privacy notices will be mailed annually on each ADDI file by the Authority to
   ascertain that the residency eligibility requirement is still being met.

C. Payoff Requests. A mortgage loan payoff will be issued by the Authority on request to show the
   recapture amount due.

D. Mortgage Satisfactions. A Mortgage Loan Satisfaction will be completed on every ADDI loan that is
   paid in full or has reached the end of the five-year recapture/affordability period.



SECTION XI - MORTGAGORS’ UTILIZATION OF ADDI ASSISTANCE
The ADDI assistance of $10,000 may be used only for principal reduction of the first mortgage loan. For
example, a homebuyer purchasing an $85,000 home would apply for a first mortgage loan of $75,000.
The ADDI assistance cannot be used for closing costs, prepaid items, or repairs to the property. Other
down payment assistance programs such as AHFA’s Step Up or First Step programs may be used in
conjunction with ADDI-assisted loans if prior approval is obtained from the Authority.



SECTION XII - MODIFICATIONS
It is the Originator’s responsibility to notify the Authority of any modifications. Expiration dates, penalties
and extensions are addressed in Section VI.

A. Reservation Expiration. If the reservation has expired, you must request an extension which is subject
   to approval by the Authority.

B. Property Address. Property address changes require approval of the Authority.

C. Income. The eligibility of a Mortgagor for a ADDI assistance is based upon the Mortgagor’s current
   projected household income. If the Mortgagor’s household income has increased since the
   submission of the Request for Conditional Commitment package, revised documentation is required
   to ensure continued compliance with income limitations as established in the Schedule of Maximum



                                                       22
                                                  Revised 08/09
    Income Limits (Appendix 1). If the Mortgagor’s income has decreased, no notification will be
    necessary.

D. Marriage. If the Mortgagor marries prior to loan closing, the spouse’s income must be included in the
   total annual family income. The Originator must obtain this information prior to closing and submit
   these documents to the Authority. The annual family income may not exceed the income limitations
   as established in the Schedule of Maximum Income Limits (Appendix 1). The spouse will also have to
   meet all ADDI requirements as established in this manual.

E. Acquisition/Sales Price. If the acquisition cost is amended prior to the loan closing, an amended sales
   contract must be forwarded to the Authority and is subject to approval. The change in acquisition cost
   may not exceed the applicable sales price limitations, as set forth in the Schedule of Maximum Sales
   Price Limits (Appendix 2), or the ADDI approval will be revoked.



SECTION XIII - RECAPTURE
The ADDI assistance provided through this program will be subject to a five-year affordability period,
beginning with the execution of the mortgage. The subject property must be occupied by a homebuyer
whose family qualifies as a low-income household, and it must remain the Principal Residence of the
homebuyer or recapture will be imposed.

The HUD recapture provision requires AHFA to recoup all or a portion of the ADDI assistance extended
to the homebuyers if (i) the property does not continue to be their Principal Residence; (ii) the property is
sold, foreclosed or title transferred by deed in lieu of; (iii) the property is rented; or (iv) the homebuyer is
found to be in non-compliance with the program during the affordability period.

The recapture of ADDI funds will be on a reducing prorated basis of 20% per complete year,
except in cases of non-compliance. If non-compliance is found at any time during the affordability
period, 100% of the assistance will be recaptured.

If within the affordability period the homebuyer becomes subject to recapture through the sale of the
property and the net proceeds are not sufficient to recoup the ADDI investment due, plus enable the
homeowner to recover the amount of their own invested down payment and any capital improvement
investment made by the homeowner since purchase, AHFA will permit the homeowner the recover their
down payment and capital improvement investment before recapture is assessed. Documentation must
be provided in order to verify the capital improvement investments and any down payment investment
made directly by the homebuyers. Net proceeds for ADDI will be defined as the sales price minus the
loan repayment (other than the ADDI assistance and closing costs). Any recaptured ADDI assistance will
be deposited in the ADDI or HOME fund to be used for down payment assistance to other qualified
households.

The recapture provision will no longer apply at the completion of the fifth year. The mortgage will be
considered satisfied and the affordability period fulfilled.




                                                       23
                                                  Revised 08/09
SECTION XIV - APPENDICES
AMERICAN DREAM DOWNPAYMENT INITIATIVE

Builder’s Certification ........................................................ Appendix 23 ..................................................... 50
Buyer’s Lead-Based Paint Disclosure ............................... Appendix 18 ..................................................... 45
Child Support Statement ................................................... Appendix 9 ....................................................... 36
Closing Reaffirmation ........................................................ Appendix 16 ..................................................... 43
Co-Mortgagor/Non-Occupant Statement .......................... Appendix 10 ..................................................... 37
Conditional Commitment Sample ..................................... Appendix 15 ..................................................... 42
Curative Request Sample ................................................. Appendix 14 ..................................................... 41
Displaced Renter(s) Disclosure......................................... Appendix 20 ..................................................... 47
Employment Statement ..................................................... Appendix 11 ..................................................... 38
Flood Insurance Acknowledgment .................................... Appendix 22 ..................................................... 49
Full-Time Student Statement ............................................ Appendix 12 ..................................................... 39
Homebuyer’s Agreement .................................................. Appendix 8 ....................................................... 34
Homebuyer’s Education Certification ................................ Appendix 21 ..................................................... 48
Homeownership Counseling Compensation Request ...... Appendix 28 ..................................................... 63
Housing Quality Inspection Notification ............................ Appendix 29 ..................................................... 64
Income Calculation Workshop .......................................... Appendix 7 ....................................................... 32
Income Tax Statement ...................................................... Appendix 13 ..................................................... 40
Inspection Request Form .................................................. Appendix 30 ..................................................... 65
Maximum Income Limits ................................................... Appendix 1 ....................................................... 25
Maximum Sales Price Limits ............................................. Appendix 2 ....................................................... 27
Originator’s Request for Issuance of ADDI Check ............ Appendix 24 ..................................................... 51
Payoff Notification ............................................................. Appendix 27 ..................................................... 62
Recapture Application Disclosure ..................................... Appendix 5 ....................................................... 30
Recapture Mortgage ......................................................... Appendix 26 ..................................................... 56
Recapture Mortgage Note ................................................. Appendix 25 ..................................................... 52
Reservation Form .............................................................. Appendix 4 ....................................................... 29
Seller’s Lead-Based Paint Disclosure ............................... Appendix 19 ..................................................... 46
Submission Voucher ......................................................... Appendix 17 ..................................................... 44
Transfer of Allocation Form ............................................... Appendix 6 ....................................................... 31
Transmittal Checklist ......................................................... Appendix 3 ....................................................... 28




                                                                       24
                                                                  Revised 08/09
                                                                                        Appendix 1




                          MAXIMUM INCOME LIMITS

                                             Persons in Household
County         1          2          3              4         5          6          7                8
Autauga     $ 31,550   $ 36,100   $ 40,600      $ 45,100   $ 48,700   $ 52,300   $ 55,900      $ 59,550
Baldwin     32,550     37,200     41,850         46,500    50,200     53,950     57,650         61,400
Barbour     25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Bibb        33,100     37,850     42,550         47,300    51,100     54,850     58,650         62,450
Blount      33,100     37,850     42,550         47,300    51,100     54,850     58,650         62,450
Bullock     25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Butler      25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Calhoun     27,700     31,700     35,650         39,600    42,750     45,950     49,100         52,250
Chambers    25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Cherokee    25,550     29,200     32,850         36,500    39,400     42,350     45,250         48,200
Chilton     27,550     31,500     35,400         39,350    42,500     45,650     48,800         51,950
Choctaw     25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Clarke      25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Clay        25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Cleburne    26,900     30,700     34,550         38,400    41,450     44,550     47,600         50,700
Coffee      27,500     31,450     35,350         39,300    42,450     45,600     48,750         51,900
Colbert     29,300     33,500     37,650         41,850    45,200     48,550     51,900         55,250
Conecuh     25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Coosa       25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Covington   25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Crenshaw    25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Cullman     27,100     30,950     34,850         38,700    41,800     44,900     48,000         51,100
Dale        26,900     30,700     34,550         38,400    41,450     44,550     47,600         50,700
Dallas      25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
DeKalb      25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Elmore      31,550     36,100     40,600         45,100    48,700     52,300     55,900         59,550
Escambia    25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Etowah      26,550     30,300     34,100         34,900    40,950     43,950     47,000         50,050
Fayette     25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Franklin    25,400     29,050     32,650         36,300    39,200     42,100     45,000         47,900
Geneva      27,500     31,450     35,350         39,300    42,450     45,600     48,750         51,900
Greene      30,300     34,650     38,950         43,300    46,750     50,250     53,700         57,150
Hale        30,300     34,650     38,950         43,300    46,750     50,250     53,700         57,150
Henry       26,650     30,500     34,300         38,100    41,150     44,200     47,250         50,300

                                              25
                                         Revised 08/09
                                                                                                              Appendix 1


                                                              Persons in Household
County                      1            2            3              4          5            6            7                8
Houston                 $ 27,500     $ 31,450     $ 35,350       $ 39,300   $ 42,450     $ 45,600     $ 48,750       $ 51,900
Jackson                  25,950       29,700       33,400         37,100     40,050       43,050       46,000         48,950
Lamar                    25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Lauderdale               29,300       33,500       37,650         41,850     45,200       48,550       51,900         55,250
Lawrence                 30,050       34,350       38,650         42,950     46,400       49,800       53,250         56,700
Lee                      34,550       39,500       44,400         49,350     53,300       57,250       61,200         65,150
Limestone                36,300       41,500       46,650         51,850     56,000       60,150       64,300         68,450
Lowndes                  31,550       36,100       40,600         45,100     48,700       52,300       55,900         59,550
Macon                    25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Madison*                 36,300       41,500       46,650         51,850     56,000       60,150       64,300         68,450
Marengo                  25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Marion                   25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Marshall                 26,600       30,400       34,200         38,000     41,050       44,100       47,100         50,150
Monroe                   26,000       29,700       33,400         37,100     40,100       43,050       46,050         49,000
Montgomery*              31,550       36,100       40,600         45,100     48,700       52,300       55,900         59,550
Morgan                   30,050       34,350       38,650         42,950     46,400       49,800       53,250         56,700
Perry                    25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Pickens                  25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Pike                     25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Randolph                 25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Russell                  27,950       31,900       35,900         39,900     43,100       46,300       49,500         52,650
Shelby                   33,100       37,850       42,550         47,300     51,100       54,850       58,650         62,450
St. Clair                33,100       37,850       42,550         47,300     51,100       54,850       58,650         62,450
Sumter                   25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Talladega                26,650       30,500       34,300         38,100     41,150       44,200       47,250         50,300
Tallapoosa               26,400       30,150       33,950         37,700     40,700       43,750       46,750         49,750
Tuscaloosa               30,300       34,650       38,950         43,300     46,750       50,250       53,700         57,150
Walker                   25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Washington               25,950       29,650       33,350         37,050     40,000       43,000       45,950         48,900
Wilcox                   25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900
Winston                  25,400       29,050       32,650         36,300     39,200       42,100       45,000         47,900


* Properties located within the city of Huntsville and the city of Montgomery are ineligible for participation in the AHFA-
administered ADDI program because those areas receive their own allocations of ADDI funds to distribute.




                                                               26
                                                          Revised 08/09
                                                                           Appendix 2




                    MAXIMUM SALES PRICE LIMITS
                     Effective on applications taken as of April 3, 2006

NEW AND EXISTING HOMES
All Areas                        $ 200,160




                                           27
                                      Revised 08/09
                                                                                          Appendix 3



                               TRANSMITTAL CHECKLIST

Lender: _____________________________________ AHFA Commitment #: ____________________
Processor’s Name:____________________________________________________________________
Phone #:___________________________________             FAX #:_________________________________
Mortgagor(s): ________________________________________________________________________

STEP 1 - RESERVATION PACKAGE (Submit to AHFA within 72 hours of reservation)
□ Reservation Acceptance Printout
□ ADDI Transmittal Checklist
□ ADDI Application/Reservation Form
□ Copy of the executed loan application
□ Copy of the executed sales contract
□ Inspection Notification Form
STEP 2 - REQUEST FOR ADDI CONDITIONAL COMMITMENT (Submit to AHFA)
□ ADDI Transmittal Checklist
□ Executed Original Homebuyer Agreement
□ Copy of most recent three years’ signed federal income tax returns for each homebuyer
□ Copy of Verification of Employment
□ Copy of pay stubs and other income documentation for all household members
□ Copy of appraisal
□ Copy of MCA worksheet or 1008
□ Original executed lead-based paint disclosure notices signed by borrower and seller
□ Original executed recapture disclosure notice
□ Original executed flood insurance acknowledgement
□ Original executed homebuyer’s education certification signed by educator and borrower
□ Completed Income Calculation Worksheet
□ Housing Quality Inspection Request Form
□ Copy of Lenders Underwriting Approval
□ Current VOD or Bank Statement
STEP 3 – REQUEST FOR ISSUANCE OF ADDI CHECK (Prior to loan closing)
□ ADDI Transmittal Checklist
□ Housing Quality Standards inspection
□ Executed request for issuance of ADDI closing funds check
STEP 4 – SUBMISSION OF ADDI CLOSING PACKAGE
□ ADDI Transmittal Checklist
□ Original Mortgage Submission Voucher
□ Closing requirements listed on LOL Conditional Commitment
□ Copy of current pay stub or VOE if more than 120 days old at the time of closing
□ Original executed ADDI recapture note
□ Copy of executed ADDI recapture mortgage
□ Copy of the HUD-1/Settlement Statement
□ Original executed builder certification, if applicable
□ Original seller executed displaced renter certification
□ Copy of the final flood certification
□ ADDI Closing Reaffirmation
□ Homeownership Counseling Compensation Request
                                                  28
                                             Revised 08/09
                                                                                                Appendix 4




                            ALABAMA HOUSING FINANCE AUTHORITY
MAILING ADDRESS                                                DELIVERY ADDRESS
P.O. Box 242967                                                7460 Halcyon Pointe Drive, Suite 200
Montgomery, AL 36124-2967                                      Montgomery, AL 36117

                               ADDI RESERVATION FORM

INSTRUCTIONS TO ORIGINATOR: When logging on to AHFAOnline.com for Reservation of Funds and
rate commitment, the information on this form will be required in order to issue a commitment number.
We must receive the reservation package within 72 hours (3 working days) of the reservation
commitment. Failure to deliver the documentation within the time period specified may result in
cancellation of the Reservation of Funds and rate commitment.

Commitment #: _______________________________________________________________________
Commitment Expires: ___________________________ Application Expires:______________________
ADDI Mortgage Amount: $10,000
1st Mortgage
Program: ____________________________________________________________________________
Loan Type: ____________________________ Lender Loan #: ________________________________
Loan Amt: _____________________________ Term: ___________________ Interest Rate: ________

Borrower
SS#: _________________________________
First Name: ________________________ MI: ___________ Last Name: ______________________
DOB: _________________              Age: _________         Ethnicity: ________________________
Marital Status: ___________________ Single Parent: ___________________ Sex: _______________

Co-Borrower
SS#: ________________________________
First Name: _____________________ MI: _____________        Last Name: ______________________
Marital Status: ___________________ Single Parent: ___________________ Sex:_______________

Property
Purchase Amt: ________________________ Acquisition Cost: _______________________________
New/Exist/Rehab:______________________________________
Year Built: ________________ No. of Units: ______________ Housing Type: ____________________

Property Address
Address: ____________________________________________________________________________
City: ______________________________________________ Zip: ____________________________
County: ___________________________________________ Census Tract: ____________________

Annual Income
Borrower Wages:_________________ Other: ___________________ From Assets: ______________
Borrower Wages: _________________ Other: ___________________ From Assets: ______________
Non-Applicant: ___________________ Total: ____________________

Household
Household Size: ___________ Prior Homeowner: ___________________________________________



                                                  29
                                             Revised 08/09
                                                                                                      Appendix 5



                        RECAPTURE APPLICATION DISCLOSURE

                 ADDI RECAPTURE: WHAT DOES IT MEAN AND WHO WILL PAY IT?

The funds you are receiving through the American Dream Downpayment Initiative have been made
available to qualifying households with the understanding that all or a portion of these funds may be
required to be repaid by the homebuyer during a designated affordability period. The designated
affordability period for this ADDI assistance is five years beginning from the date the title is transferred to
you, which is typically the closing date of the loan.

This means that if you sell, trade, transfer title or otherwise cease to occupy the home as the primary
residence within the first five years of ownership, you will be subject to the ADDI recapture provision and
must pay back the funds as deemed applicable in your situation. Any recaptured funds paid back to
AHFA must be returned to the ADDI or other HOME allocation fund and used to assist other qualifying
homebuyers.

ADDI recapture is assessed on a reducing prorated basis of 20% per complete year, except in cases of
non-compliance, which require 100% of the ADDI funds to be repaid. The term “noncompliance” for ADDI
recapture simply means that the homebuyer was not actually eligible for the ADDI funds at the time of
application. Non-compliance would result if the program criteria such as prior homeownership, family
income limits, sales price limits and occupancy of residence during the affordability period are not met
and this information was not properly disclosed.

If you do sell your home within the first five years of ownership, and the new buyer agrees to assume the
first mortgage loan, you will still be required to pay back the appropriate amount of recapture. The ADDI
subordinate mortgage is NOT assumable.

At the end of the five-year affordability period, the ADDI funds will be completely forgiven and no longer
subject to a recapture provision.

                     HOW TO CALCULATE YOUR POTENTIAL ADDI RECAPTURE

ADDI recapture is assessed on a reducing prorated basis of 20% per year.

AFFORDABILITY PERIOD                                         AMOUNT DUE
0* to 12 months                                              $10,000
13 to 24 months                                              $8,000
25 to 36 months                                              $6,000
37 to 48 months                                              $4,000
49 to 60 months                                              $2,000
No recapture after 60 months of occupancy                    $0

* Recapture is calculated on each full year of occupancy based on the actual closing date (date of
mortgage).

THE UNDERSIGNED ACKNOWLEDGES THAT I/WE HAVE READ AND UNDERSTOOD THE ABOVE
DISCLOSURE.



Date ___________________________ Applicant ___________________________________________



Date ___________________________ Applicant ___________________________________________




                                                       30
                                                  Revised 08/09
                                                                                            Appendix 6



                           TRANSFER OF ALLOCATION FORM


To:     Alabama Housing Finance Authority
        Attn: Single-Family Administrator
        P.O. Box 242967
        Montgomery, AL 36124-2967

From: ______________________________

        ______________________________

        ______________________________

        ______________________________


Date:   _______________________________

Commitment Number: ________________________

Rate: __________________________

Name of Participant-Transferor: _________________________________________________________

Name of Participant-Transferee: _________________________________________________________

Amount of Transfer: $ _________________________________________________________________


Terms, conditions, and reason for the transfer:




__________________________________________                   ______________________________________
Signature of Transferor                                      Signature of Transferee


Approved:


__________________________________________                   ______________________________________
Single-Family Administrator for                              Date
Alabama Housing Finance Authority



                                                       31
                                                  Revised 08/09
                                                                                                 Appendix 7



                             INCOME CALCULATION WORKSHEET
                                       (PRIOR TO LOAN CLOSING)

ADDI COMMITMENT: _________________________________________________________________
MORTGAGOR(S) NAME: ______________________________________________________________

____________________________________________________________________________________
NUMBER IN FAMILY: __________________             TARGET OR NON-TARGET? ____________________
MAXIMUM INCOME LIMIT: _____________________________________________________________
Reflect the annual income based on the current income of the mortgagor(s). If the verification documents
are more than four months (120 days) old at the time of closing, update the verification documents. Note:
These documents must comply with the Authority’s ADDI Assistance Program Guidelines. (See Section
VII for income guidelines in the ADDI Procedural Manual.)

MORTGAGOR’S INCOME:                    (ANNUALIZED)
Wages, salary, and tips         FULL-TIME                        PART-TIME
Hourly/weekly/monthly rate      $______________________          $______________________
No. of hours/weeks/months       X______________________          X______________________
Base Salary                     $______________________          $______________________


Overtime pay rate               $______________________          $______________________
Average No. of hours/months     X______________________          X______________________
Monthly Overtime Pay (*)        $______________________*         $______________________*


Average Bonus for 2 years (*)   $______________________*         $______________________*
If consistent to last year


CO-MORTGAGOR’S INCOME:
Wages, salary, and tips         FULL-TIME                        PART-TIME
Hourly/weekly/monthly rate      $______________________          $______________________
No. of hours/weeks/months       X______________________          X______________________
Base Salary                     $______________________          $______________________


Overtime pay rate               $______________________          $______________________
Average No. of hours/months     X______________________          X______________________
Monthly Overtime Pay (*)        $______________________*         $______________________*


Average Bonus for 2 years (*)   $______________________*         $______________________*
if consistent to last year
Interest and/or Dividend Income (averaged)                       $______________________**
Net Rental Income                                                $______________________**



                                                    32
                                               Revised 08/09
                                                                                              Appendix 7

Royalties, partnerships, estates, and/or trusts                   $______________________**

Pensions, VA, and/or                                              $______________________**
Unemployment Compensation

Social Security Benefits                                          $______________________**

Alimony and/or Child Support                                      $______________________**

Business Income                                                   $______________________**

Other Income (List type and provide verification)
____________________________________                              $______________________**
____________________________________                              $______________________**

Total Gross Monthly Income                                        $______________________
Add all the lines designated by *                                 $______________________
Add all the lines designated by **                                $______________________
                                                                  X 12
Total Annual Income                                               $______________________


Does the annual income exceed the maximum income limit shown on page 1?        □ Yes □ No
NOTE: INCOME MUST BE DERIVED FROM ALL SOURCES, TAXABLE AND NON-TAXABLE.
IF INCOME WILL NOT CONTINUE, EVIDENCE MUST BE PROVIDED.



__________________________________________________                ________________________________
Signature of Originating Lender                                   Date




                                                       33
                                                  Revised 08/09
                                                                                                   Appendix 8



                                HOMEBUYER’S AGREEMENT

The person or persons who sign this Homebuyer’s Agreement below as the “Homebuyer” and “Additional
Homebuyer” are called the “Homebuyer.” The Homebuyer has applied through the originating lender to
receive downpayment assistance from the Alabama Housing Finance Authority, a public corporation and
instrumentality of the State of Alabama (“AHFA”) acting solely in its capacity as Administrator of the State
of Alabama’s American Dream Downpayment Initiative Program.

AHFA has agreed to provide the downpayment assistance to the Homebuyer (the “ADDI Assistance”)
with funds that were provided to AHFA by the United States Department of Housing and Urban
Development (“HUD”) through the American Dream Downpayment Initiative component of the HOME
Investment Partnerships Program, 24 C.F.R. Parts 91 and 92, Interim Rule (the “ADDI Regulations”).

This Agreement requires the Homebuyer to confirm the truth of certain information and to do certain
things for the next five years in order to receive the ADDI Assistance. By signing this Agreement, the
Homebuyer confirms that information and agrees to do those things. In order to get the ADDI Assistance,
the Homebuyer is also signing in favor of AHFA a Recapture Mortgage Note (the “Note”) and a Recapture
Mortgage (the “Recapture Mortgage”). This Agreement, the Note and the Recapture Mortgage will be
called the “ADDI Program Documents.” The purposes of this Agreement, the Recapture Mortgage Note
and the Recapture Mortgage are described below.

AHFA is providing the ADDI Assistance to the Homebuyer in the form of a loan. The loan will be in the
amount of $10,000 and will not bear interest. If the Homebuyer does the things required in the ADDI
Program Documents, the Homebuyer will not have to repay the loan. Instead, AHFA will forgive one-fifth
of the loan each complete year that Homebuyer does those things, so that the entire loan will be forgiven
in five years. If the Homebuyer does not do the things required in the ADDI Program Documents, AHFA
will require the Homebuyer to repay some or all of the ADDI Assistance.

The purpose of the Note is to establish Homebuyer’s obligation to repay some or all of the ADDI
Assistance if Homebuyer does not do the things required by the ADDI Program Documents. The purpose
of the Recapture Mortgage is to put a mortgage on the property that the Homebuyer purchased, in part,
with the ADDI Assistance. The Recapture Mortgage secures the Homebuyer’s obligation to repay some
or all of the ADDI Assistance if and when required by the Note.

In order to meet the requirements to receive the ADDI Assistance, the Homebuyer hereby confirms and
promises to AHFA that the following factual information is true and correct:

1. The Homebuyer is a “first-time homebuyer” for purposes of the ADDI Program, which means
   Homebuyer is an individual and his or her spouse who have not owned a home during the three-year
   period prior to the purchase of a home with the ADDI Assistance. This includes an individual who is a
   displaced homemaker or single parent and who, even if while a homemaker or married, owned a
   home with his or her spouse or resided in a home owned by the spouse.

2. The sales price of the property being purchased with the ADDI Assistance does not exceed
   $200,160, and the home will be occupied by the Homebuyer within 60 days of closing as the
   Homebuyer’s primary and principal residence.

3. The annual total of all income received in the Homebuyer’s household does not exceed 80% of the
   area median income as determined by the HUD HOME Program income limits, adjusted for family
   size (Appendix 1 of Program Guidelines). By signing this Agreement, the Homebuyer and
   undersigned originating lender both confirm and agree that the originating lender reviewed these
   guidelines with the Homebuyer, including the income limits.

4. The Homebuyer has successfully completed homeownership counseling administered by a
   homeownership counselor who is certified by the Homeownership Consortium of Alabama, Inc., or
   certified as an approved housing counseling agency by HUD, or is otherwise approved in writing by
   AHFA.


                                                     34
                                                Revised 08/09
                                                                                                     Appendix 8
5. The property purchased with ADDI Assistance is single-family housing that is located wholly within
   the State of Alabama.

6. The Homebuyer will occupy the property as their principal and permanent place of residence and will
   not rent or lease the property.

7. The Homebuyer will not use the residence in a trade or business. No portion of the residence is
   specifically designed for any commercial use. There will be no deduction of any portion of the cost of
   the Residence as a home business expense on the Mortgagor’s individual or joint federal income tax
   returns.

8. The property purchased with ADDI assistance meets all ADDI property requirements based on HUD’s
   Housing Quality Standards.

The Homebuyer acknowledges and understands that the Homebuyer and the Property must meet the
requirements of the ADDI Program for a period of five calendar years following the date of the Note
executed in connection with the ADDI Assistance. In general, Homebuyer will be required to repay some
or all of the ADDI Assistance to AHFA if any of the following events occurs:

1. The property ceases to be the principal residence of the Homebuyer at any time during the five-year
   affordability period.

2. The property is sold, foreclosed upon, or title transferred, including by deed in lieu of foreclosure, or
   rented to a tenant.

3. The Homebuyer is found to be in non-compliance with ADDI Program Requirements (other than as
   described in items 1 or 2 above) during the affordability period.

The specific requirements for when Homebuyer will be required to repay the ADDI Assistance are in the
Note. Homebuyer is encouraged to read and understand the Note before signing this Agreement.

Further, the Homebuyer acknowledges and agrees that:

1. The property being purchased is (a) a one-unit, single-family home or (b) an attached site-built home,
   and the property must meet all applicable state and local housing quality standards and code
   requirements, and if there are no such standards or code requirements, the housing must meet the
   housing quality standards in 24 C.F.R. 982.401.

2. On houses built prior to 1978, a lead-based paint certification must be signed and, if applicable, lead
   paint abatement is required.

3. Flood insurance will be required if any portion of the property is located in a designated flood plain.



________________________________                   _____________________________________________
Date                                               Signature of Homebuyer

________________________________                   _____________________________________________
Date                                               Signature of Additional Homebuyer, if any

________________________________                   _____________________________________________
Date                                               Print Name of Participating Originator

                                                   By: __________________________________________
                                                       Originator Representative




                                                      35
                                                 Revised 08/09
                                                                                                   Appendix 9




                              ALABAMA HOUSING FINANCE AUTHORITY
                                 7460 Halcyon Pointe Drive, Suite 200
                                      Montgomery, Alabama 36117
                                Mailing Address: Post Office Box 242967
                                  Montgomery, Alabama 36124-2967
                                            (334) 244-9200

                               CHILD SUPPORT STATEMENT


AHFA Commitment #: ________________________________

Mortgagor(s): ________________________________________________________________________

              ________________________________________________________________________

Property Address: ____________________________________________________________________

                    ___________________________________________________________________


I hereby certify that I have not received child support in the last 24 months and to my knowledge none is
forthcoming for the following children:


______________________________________                ________
Child’s Name (please print)                           Age


______________________________________                ________
Child’s Name (please print)                           Age


______________________________________                ________
Child’s Name (please print)                           Age




______________________________________                __________________________________________
Mortgagor                                             Co-Mortgagor


______________________________________                __________________________________________
Date                                                  Date


Mortgagor understands that it is a federal offense punishable by a maximum of $10,000 fine, two years
imprisonment, or both, to knowingly make a false statement in this affidavit (title 18, United State Code,
section 10140). Mortgagor has read information carefully to be sure information contained herein is true
and complete before signing. Mortgagor understands that the information given by mortgagor in this
affidavit is subject to verification by the Alabama Housing Finance Authority.


                                                     36
                                                Revised 08/09
                                                                                                    Appendix 10




                               ALABAMA HOUSING FINANCE AUTHORITY
                                  7460 Halcyon Pointe Drive, Suite 200
                                       Montgomery, Alabama 36117
                                 Mailing Address: Post Office Box 242967
                                   Montgomery, Alabama 36124-2967
                                             (334) 244-9200


                   CO-BORROWER/NON-OCCUPANT STATEMENT


AHFA Commitment #: ________________________________

Mortgagor(s): ________________________________________________________________________

              ________________________________________________________________________

Property Address: ____________________________________________________________________

                     ___________________________________________________________________


I am acting in a capacity only to provide additional security for this mortgage loan. I have no intention of
occupying, becoming a permanent resident, or taking title to the above-referenced property.


______________________________________                 __________________________________________
Non-Occupant Co-Borrower                               Non-Occupant Co-Borrower


______________________________________                 __________________________________________
Date                                                   Date


Mortgagor understands that it is a federal offense punishable by a maximum of $10,000 fine, two years
imprisonment, or both, to knowingly make a false statement in this affidavit (title 18, United State Code,
section 10140). Mortgagor has read information carefully to be sure information contained herein is true
and complete before signing. Mortgagor understands that the information given by mortgagor in this
affidavit is subject to verification by the Alabama Housing Finance Authority.




                                                      37
                                                 Revised 08/09
                                                                                                   Appendix 11




                              ALABAMA HOUSING FINANCE AUTHORITY
                                 7460 Halcyon Pointe Drive, Suite 200
                                      Montgomery, Alabama 36117
                                Mailing Address: Post Office Box 242967
                                  Montgomery, Alabama 36124-2967
                                            (334) 244-9200


                          EMPLOYMENT/INCOME STATEMENT

AHFA Commitment #: ________________________________

Mortgagor(s): ________________________________________________________________________

              ________________________________________________________________________

Property Address: ____________________________________________________________________

                     ___________________________________________________________________


I, _____________________________________, am presently unemployed and do not receive income
of any type. I do not intend to pursue employment, full or part-time, or anticipate receiving any other type
of income for the next twelve months.



_______________________________________               __________________________________________
Mortgagor                                             Co-Mortgagor


_______________________________________               __________________________________________
Date                                                  Date


Mortgagor understands that it is a federal offense punishable by a maximum of $10,000 fine, two years
imprisonment, or both, to knowingly make a false statement in this affidavit (title 18, United State Code,
section 10140). Mortgagor has read information carefully to be sure information contained herein is true
and complete before signing. Mortgagor understands that the information given by mortgagor in this
affidavit is subject to verification by the Alabama Housing Finance Authority.




                                                     38
                                                Revised 08/09
                                                                                                  Appendix 12




                              ALABAMA HOUSING FINANCE AUTHORITY
                                 7460 Halcyon Pointe Drive, Suite 200
                                      Montgomery, Alabama 36117
                                Mailing Address: Post Office Box 242967
                                  Montgomery, Alabama 36124-2967
                                            (334) 244-9200


                            FULL-TIME STUDENT STATEMENT


AHFA Commitment #: ________________________________

Mortgagor(s): ________________________________________________________________________

              ________________________________________________________________________

Property Address: ____________________________________________________________________

                    ___________________________________________________________________



I, _______________________________________, am presently a full-time student and intend to be a
full-time student for the next twelve months. My anticipated graduation date is ____________________.



______________________________________                __________________________________________
Student                                               Relationship to Mortgagor


______________________________________
Date


Mortgagor understands that it is a federal offense punishable by a maximum of $10,000 fine, two years
imprisonment, or both, to knowingly make a false statement in this affidavit (title 18, United State Code,
section 10140). Mortgagor has read information carefully to be sure information contained herein is true
and complete before signing. Mortgagor understands that the information given by mortgagor in this
affidavit is subject to verification by the Alabama Housing Finance Authority.




                                                     39
                                                Revised 08/09
                                                                                                     Appendix 13




                               ALABAMA HOUSING FINANCE AUTHORITY
                                  7460 Halcyon Pointe Drive, Suite 200
                                       Montgomery, Alabama 36117
                                 Mailing Address: Post Office Box 242967
                                   Montgomery, Alabama 36124-2967
                                             (334) 244-9200


                                   INCOME TAX STATEMENT


AHFA Commitment #: ________________________________

Mortgagor(s): ________________________________________________________________________

               ________________________________________________________________________

Property Address: ____________________________________________________________________

                     ___________________________________________________________________


I hereby certify that I was not required by law to file a federal income tax return for the following year(s)
________________________________.



_______________________________________                 _________________________________________
Mortgagor                                               Co-Mortgagor


_______________________________________                 _________________________________________
Date                                                    Date


Mortgagor understands that it is a federal offense punishable by a maximum of $10,000 fine, two years
imprisonment, or both, to knowingly make a false statement in this affidavit (title 18, United State Code,
section 10140). Mortgagor has read information carefully to be sure information contained herein is true
and complete before signing. Mortgagor understands that the information given by mortgagor in this
affidavit is subject to verification by the Alabama Housing Finance Authority.




                                                       40
                                                  Revised 08/09
                                                                                             Appendix 14




                                    CURATIVE REQUEST

Please note: Lenders are responsible for monitoring the status of their loans on AHFAOnline.com, which
includes checking for the posting of curative requests as shown below.




          SAMPLE



                                                  41
                                             Revised 08/09
                                                                                             Appendix 15




                              CONDITIONAL COMMITMENT

Please note: Lenders are responsible for monitoring the status of their loans on AHFAOnline.com, which
includes checking for the posting of conditional commitments as shown below.




          SAMPLE



                                                  42
                                             Revised 08/09
                                                                                                Appendix 16




                             ADDI CLOSING REAFFIRMATION

The mortgagor(s) has reviewed all of the representations and warranties heretofore made with respect to
the mortgage loan being obtained on this date and does hereby reaffirm that all of the foregoing
representations and warranties previously made are true and correct.



________________________________                 _____________________________________________
Date                                             Mortgagor

                                                 _____________________________________________
                                                 Co-Mortgagor



State of Alabama, County of _________________________

I, the undersigned, a notary public in and for said county, in said state, hereby certify that
________________________________ signed the foregoing affidavit and known to me, acknowledged
before me on this day that, being informed of the contents of the foregoing affidavit, executed the same
voluntarily on the day the same bears date.

Given under my hand and official seal this ______ day of ______________________, 20___.

(Seal)                          Notary Public _______________________________________________

                                My commission expires: ______________________________________



I, as attorney or closing agent for the mortgagors named herein, have explained the contents of this
reaffirmation to each of the mortgagors.

_________________________________                ____________________________________________
Date                                             Signature of Attorney or Closing Agent




                                                    43
                                               Revised 08/09
                                                                                                Appendix 17




                             ALABAMA HOUSING FINANCE AUTHORITY

                          MORTGAGE SUBMISSION VOUCHER

Commitment Number: _________________________                   Date: ______________________________
Originator’s Loan Number: ______________________________________________________________
Originator’s Name: ____________________________________________________________________
Mortgagor: ___________________________________ SS#: __________________                   Age: ________
Co-Mortgagor: ________________________________ SS#: __________________                   Age: ________
Annual Income: __________________ # in Household: ____________ Marital Status: _____________

First-Time Home Buyer?   □Yes □ No
Property Address: _____________________________________________________________________
____________________________________________________________________________________
County Code: ______     County: ______________________________            Congressional District: ______

Property Type:          □ Single-Family Detached
                        □ Single-Family Attached
                        □ Condominium or PUD
                        □ “de minimus PUD”

Property Status:        □ New (less than 1 year old and never occupied)           □ Existing
Age: ___________        Purchase Price: $ ___________          Appraised Value: $ ____________
Square Feet: ________ Number of Bedrooms: ________             Number of Baths: _____________
Loan Application Date: ___________________________             Loan Amount: $ ______________________

Date Loan Closed: ______________________________               Loan Type: □ FHA   □ RD □ Conv □ VA

Contact person for Notification of Curative Requests:
Name: _____________________________________               Phone: ________________________________
Email: _____________________________________              Fax: __________________________________
Address: ____________________________________________________________________________




                                                    44
                                               Revised 08/09
                                                                                                  Appendix 18




                     BUYER’S LEAD-BASED PAINT DISCLOSURE

Borrower(s): _________________________________________________________________________

Property Address: _____________________________________________________________________

____________________________________________________________________________________


Every purchaser of any interest in residential real property on which a residential dwelling was built prior
to 1978 is notified that such property may present exposure to lead from lead-based paint that may place
your children at risk of developing lead poisoning. Lead poisoning in young children may produce
permanent neurological damage, including learning disabilities, reduces intelligence quotient, behavioral
problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to provide the buyer with any information on
lead-based paint hazards from risk assessments or inspections in the seller's possession and notify the
buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based
paint is recommended prior to purchase.

□   I have received a copy of the EPA pamphlet entitled Protect Your Family From Lead in Your Home

□   I □ would like / □ waive the opportunity to conduct lead-based paint risk assessment or lead-based
    paint inspection.

□   I was made aware on ________________ that the above-noted property tested positive for lead-
    based paint. I have received copies of the lead-based paint assessments provided by the seller. The
    following reports were included in the information I received:

    a._______________________________________________

    b._______________________________________________

    c._______________________________________________

    d._______________________________________________

I have reviewed the information above and certify, to the best of my knowledge, that the information is
true & accurate.



Buyer: ____________________________________                Date:__________________________________



This form must be signed at the time the contract is executed if not disclosed as a part of the real
estate contract.




                                                     45
                                                Revised 08/09
                                                                                                  Appendix 19




                    SELLER’S LEAD-BASED PAINT DISCLOSURE

Seller(s): ____________________________________________________________________________

Property Address: _____________________________________________________________________

____________________________________________________________________________________


Every purchaser of any interest in residential real property on which a residential dwelling was built prior
to 1978 is notified that such property may present exposure to lead from lead-based paint that may place
your children at risk of developing lead poisoning. Lead poisoning in young children may produce
permanent neurological damage, including learning disabilities, reduces intelligence quotient, behavioral
problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to provide the buyer with any information on
lead-based paint hazards from risk assessments or inspections in the seller's possession and notify the
buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based
paint is recommended prior to purchase.

□   I am not aware of any form of lead-based paint hazards in the above-noted property.

□   I am aware of lead-based paint hazard in the above noted property. I certify that the risk
    assessment/lead-based paint inspection provided to all parties involved in this purchase transaction
    on ______________ is all the information I have concerning the lead-based paint hazards in the
    home. The report/record(s) provided to the Buyer include:

    a._______________________________________________

    b._______________________________________________

    c._______________________________________________

    d._______________________________________________

□   If I receive any additional information concerning lead-based paint, I understand I am required to
    share it with all parties involved.



Seller: _____________________________________              Date:_________________________________



This form must be signed at the time the contract is executed if not disclosed as a part of the real
estate contract.




                                                     46
                                                Revised 08/09
                                                                                                    Appendix 20




                          DISPLACED RENTER(S) DISCLOSURE

Seller:_______________________________________________________________________________

Property:____________________________________________________________________________

Date: _______________________________________________________________________________



I, _____________________________________ (Seller), certify that I will follow the requirements of the
Uniform Relocation Assistance and Real Estate Property Acquisition Polices Act of 1970 which details my
responsibility as a displacing agent. According to the Act, any person who moves from real estate as a
direct result of a written notice of intent to acquire or the acquisition of such real estate property in whole
or in part for a program or project undertaken by a Federal agency or with Federal financial assistance is
a displaced person. It is the responsibility of the displacing agent, the seller, to ensure that all provisions
of the Uniform Relocation Assistance and Real Estate Property Acquisition Polices Act of 1970 are in
compliance.



Seller’s Signature: __________________________________              Date:___________________________



This form must be signed and dated at the time of contract execution.




                                                      47
                                                 Revised 08/09
                                                                                      Appendix 21




                    HOMEBUYER’S EDUCATION CERTIFICATION

I certify that ____________________________________________________ completed the required
homebuyer’s education course for participation in the American Dream Down Payment Assistance
Initiative:
□   through at least six to eight hours in group training; or
□   through at least two hours in individual training.


Homebuyer Educator (Print Name): _______________________________________________________

Signature:___________________________________________________________________________

Agency Name: _______________________________________________________________________

Address: ____________________________________________________________________________

Phone: _____________________________________________________________________________

Curriculum Used: _____________________________________________________________________



Borrower Signature: ___________________________________________________________________

Co-Borrower Signature: ________________________________________________________________

Date:_______________________________________________________________________________




                                                      48
                                                 Revised 08/09
                                                                                                Appendix 22




                      FLOOD INSURANCE ACKNOWLEDGMENT

Borrower(s): _____________________________________________

Property Address:________________________________________

City/Zip: ________________________________________________


If the property is determined to be located in a flood zone according to a Federal Emergency
Management Agency Standard Flood Hazard Determination Certification, I acknowledge that I am
required to maintain flood insurance in addition to my homeowner’s policy for the life of the loan.



Borrower: _______________________________________________

Co-Borrower: ____________________________________________

Date: ____________________________________________________




                                                    49
                                               Revised 08/09
                                                                                                 Appendix 23




                                BUILDER’S CERTIFICATION

I hereby certify that the property located at ______________________________________ was
constructed in accordance with all applicable state and local housing quality standards and code
requirements. I further certify that the property also meets all housing standards as noted in 24 CFR
982.401.


Builder: ____________________________________

Date:______________________________________




                                                    50
                                               Revised 08/09
                                                                                    Appendix 24




           ORIGINATOR’S REQUEST FOR ISSUANCE OF ADDI CHECK

Date: _______________________________________________________________________________

ADDI Reservation #: ___________________________________________________________________

Borrower(s) Name: ____________________________________________________________________

Amount:      $10,000

Scheduled Closing Date: _______________________________________________________________

Closing Attorney’s Name and Address: ____________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________


Contact Person: _________________________________       Phone #: ___________________________


Requested By: _______________________________________________________________________




                                             51
                                        Revised 08/09
                                                                                                Appendix 25




                             RECAPTURE MORTGAGE NOTE

__________________________              _____________________________________, __________
(DATE)                                  (CITY AND STATE OF EXECUTION)



THIS NOTE IS SIGNED BY:

                          __________________________________________
                                     (Print Name of Borrower)

                          __________________________________________
                              (Print Name of Additional Borrower, if any)


The person or persons who sign this Note are called “the Borrower.”

The Borrower has received Ten Thousand Dollars ($10,000) (the “ADDI Assistance”) from the Alabama
Housing Finance Authority (“AHFA”), a public corporation and instrumentality of the State of Alabama
acting solely in its capacity as Administrator of the State of Alabama’s American Dream Downpayment
Initiative. AHFA has furnished the ADDI Assistance to the Borrower under the laws and regulations that
govern the American Dream Downpayment Initiative component of The United States Department of
Housing and Urban Development’s HOME Investment Partnerships Program (the “ADDI Regulations”). If
the Borrower wants to look at the ADDI Regulations, they can be located at 24 C.F.R. Parts 91 and 92,
Interim Rule.

This Note requires the Borrower to do certain things in order to receive the ADDI Assistance. By signing
this Note, the Borrower agrees to do those things. This Note requires the Borrower to repay some or all of
the ADDI Assistance if Borrower does not do the things required by this Note.

In order to receive the ADDI Assistance, the Borrower is also signing a Recapture Mortgage (the
“Recapture Mortgage”) and a Homebuyer’s Agreement (the “Homebuyer’s Agreement”). This Note, the
Recapture Mortgage and the Homebuyer’s Agreement will be called, all together, the “ADDI Program
Documents.”

FOR VALUE RECEIVED, the undersigned Borrower hereby promises (a) to pay to AHFA the principal
sum of Ten Thousand Dollars ($10,000), (b) to pay any other amounts that the Borrower was supposed to
pay under the ADDI Program Documents (as defined later in this Note) but did not pay when due, and (c)
to do the things required by this Note.

1. SECURITY FOR THIS NOTE

As security for the Borrower’s obligation to pay the amounts due under this Note and to perform the
promises contained in this Note, the Borrower is signing and delivering a Recapture Mortgage in favor of
AHFA. The Recapture Mortgage grants to AHFA a mortgage lien and security interest in the land,
buildings and improvements that were purchased, in part, with the ADDI Assistance (all together, the
“Property”). The Property is described in more detail in the Recapture Mortgage. The street address of the
Property is ___________________________________________________________________________

___________________________________________________________________________________.

                                                                                     ___________ initials



                                                    52
                                               Revised 08/09
                                                                                                    Appendix 25



2. BORROWER’S OBLIGATIONS

A. The Borrower agrees that he/she received ADDI Assistance in an amount equal to the principal
   amount of this Note.

B. No interest shall be charged on the ADDI Assistance under this Note.

C. The Borrower understands and agrees that the Property must be owned and occupied by an “eligible
   household” for a period of five (5) calendar years after the date of this Note (the “Affordability
   Period”). This is required by the ADDI Regulations. An “eligible household” is a household (which
   means the person or persons occupying the Property) that meets all of the following requirements:

    (1) The household’s total annual income does not exceed eighty percent (80%) of the median
        income for the area in which the Property is located;

    (2) The household’s purchase price for the Property does not exceed ninety-five percent (95%) of the
        median purchase price for the area as defined by the Housing and Urban Development’s FHA
        203(b) loan limits; and

    (3) The household qualifies as a first-time homebuyer as defined in §24 C.F.R. 92.2 Interim Rule.

    All other definitions of terms shall be in accordance with the definitions provided in the ADDI
    Regulations.

D. AHFA is providing the ADDI Assistance to Borrower in the form of a loan. The loan does not bear
   interest. If the Borrower does the things required in this Note, the Borrower will not have to repay the
   loan. Instead, AHFA will forgive the loan in equal parts over five years. If the Borrower does not do
   the things required in this Note, AHFA will require the Borrower to repay some or all of the ADDI
   Assistance. Here is how Borrower must repay this Note:

    (1) A PORTION OF THIS NOTE WILL BE FORGIVEN FOR EACH COMPLETE YEAR THAT
        BORROWER MEETS ALL ADDI PROGRAM REQUIREMENTS. If no Prorated Recapture Event
        or Full Recapture Event has happened, as described below, and AHFA has not already
        accelerated the amounts due under this Note or otherwise exercised its remedies under the ADDI
        Program Documents, the principal amount of this Note shall be deemed paid in the amount of
        $2,000 for each complete calendar year, calculated from the date of this Note, in which the
        Property is used in accordance with the provisions of the ADDI Program Documents and the
        ADDI Regulations. No partial forgiveness will be allowed for any year in which a Prorated
        Recapture Event or Full Recapture Event occurs.

    (2) THIS NOTE WILL BE FORGIVEN IN FULL IF BORROWER MEETS ALL ADDI PROGRAM
        REQUIREMENTS FOR ENTIRE AFFORDABILITY PERIOD. If the Borrower uses the Property in
        accordance with the provisions of the ADDI Program Documents and the ADDI Regulations for
        the entire Affordability Period, this Note will be deemed satisfied in full and Borrower shall be
        entitled to require AHFA to release the Recapture Mortgage from the Property.

    (3) THIS NOTE MUST BE REPAID IN PART IF A PRORATED RECAPTURE EVENT HAPPENS. If
        a Prorated Recapture Event happens, then this Note shall become immediately due and payable
        in the full amount of the ADDI Assistance, less any amounts already deemed paid under Section
        2.D.a. of this Note. A “Prorated Recapture Event” means:

        (i) a sale, foreclosure or transfer in lieu of foreclosure of the Property occurring prior to the end
            of the Affordability Period; or

        (ii) if the Borrower ceases to occupy the Property for any reason prior to the Affordability Period.

                                                                                         ___________ initials



                                                      53
                                                 Revised 08/09
                                                                                                       Appendix 25



        Amounts due to AHFA following a Prorated Recapture Event must be paid from any net gain
        realized from any sale or disposition of the Property, after deduction for sales expenses.

    (4) THIS NOTE MUST BE REPAID IN FULL IF A FULL RECAPTURE EVENT HAPPENS. If a Full
        Recapture Event happens, then this Note shall become immediately due and payable in an
        amount equal to one hundred percent (100%) of the ADDI Assistance. A “Full Recapture Event”
        means that the Borrower is not complying with the ADDI Regulations or the Property is not being
        used in the ways required by the ADDI Regulations (for reasons other than a Prorated Recapture
        Event) at any time during the Affordability Period. Amounts due to AHFA following a Full
        Recapture Event must be paid from any net gain realized from any sale or disposition of the
        Property, after deduction for sales expenses.

E. The Borrower must notify AHFA in writing not less than 30 days before the occurrence of any
   Prorated Recapture Event or Full Recapture Event. The Borrower will send this notice to AHFA at
   2000 Interstate Park Drive, Suite 408, Montgomery, Alabama 36109, Attention: ADDI Program.

F. The Borrower must notify AHFA in writing if Borrower becomes delinquent or otherwise in default
   under the terms of any first mortgage loan on the Property (or any other mortgage on the Property
   approved by AHFA in accordance with the Recapture Mortgage), and will give AHFA the right to cure
   such delinquency or default (although AHFA has no obligation to cure delinquencies or defaults). The
   Borrower will send this notice to AHFA at 2000 Interstate Park Drive, Suite 408, Montgomery,
   Alabama 36109, Attention: ADDI Program.

G. The ADDI Program Documents and the related documents that the Borrower has signed or may sign
   in connection with the ADDI Assistance have been or will be signed willingly and properly by the
   Borrower. The Borrower understands that those documents are, or when signed, will be valid and
   legally binding obligations of the Borrower, enforceable against the Borrower in accordance with their
   terms.

3. APPLICABLE LAW AND SEVERABILITY

This Note shall be governed by the laws of the United States and, to the extent federal law adopts or
defers to state law, the laws of the State of Alabama (excluding, however, the conflict of laws of such
state). The provisions of this Note are severable, which means that if any part of this Note conflicts with
applicable law, the other parts of this Note that can be given effect without the conflicting provision will still
be in effect.

4. NO WAIVER OF RIGHTS; AMENDMENTS

No action by AHFA or failure to act by AHFA shall mean that AHFA has waived any of its rights or
remedies under this Note unless such waiver is in writing and signed by AHFA. No delay, mistake or
failure by AHFA in exercising any of AHFA’s rights under this Note or under any of the other ADDI
Program Documents shall be viewed as changing any ADDI Program Document, agreeing to new terms
for the ADDI Program Documents, or waiving or preventing AHFA from later exercising any or all of its
rights under the ADDI Program Documents. To the full extent not prohibited by law, the Borrower
expressly waives the benefit of any statute or rule of law or equity that would produce a different result.
No extension of the time for the payment of this Note or any installment due hereunder, made by
agreement with any person now or later liable for the payment of this Note, shall operate to release,
discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in
part, unless AHFA agrees otherwise in writing.

5. TIME IS OF THE ESSENCE

It is essential that the Borrower comply with all of the terms, provisions and conditions of this Note on the
dates and at the times required under this Note.

                                                                                           ___________ initials


                                                       54
                                                  Revised 08/09
                                                                                              Appendix 25



IN WITNESS WHEREOF, the undersigned Borrower signs this Note on the day and year indicated in the
notary acknowledgement below.

WITNESS:

By: _______________________________________              By: ___________________________________
    Signature of Borrower                                    Signature of Additional Borrower, if any

__________________________________________               ______________________________________
(Print Name of Borrower)                                 (Print Name of Additional Borrower, if any)



                                     [Notary Block for Borrower]

STATE OF ALABAMA                       )

COUNTY OF __________________           )

I, the undersigned authority, a Notary Public in and for said county in said state, hereby certify that
___________________________________, whose name is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the contents of said
instrument, he/she executed the same voluntarily on the day the same bears date.

Given under my hand and official seal this the _______ day of _____________________, _________.

                                               _____________________________________________
                                               Notary Public

AFFIX SEAL                                     My commission expires: _________________________



                            [Notary Block for Additional Borrower, if any]

STATE OF ALABAMA                       )

COUNTY OF __________________           )

I, the undersigned authority, a Notary Public in and for said county in said state, hereby certify that
___________________________________, whose name is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the contents of said
instrument, he/she executed the same voluntarily on the day the same bears date.

Given under my hand and official seal this the _______ day of _____________________, _________.

                                               _____________________________________________
                                               Notary Public

AFFIX SEAL                                     My commission expires: _________________________




                                                   55
                                              Revised 08/09
                                                                                                   Appendix 26




                                   RECAPTURE MORTGAGE

NOTE TO PROBATE JUDGE: This Recapture Mortgage in favor of the Alabama Housing Finance
Authority, a public corporation and instrumentality of the State of Alabama, acting solely in its capacity as
Administrator of the State of Alabama's American Dream Downpayment Initiative, is exempt from
payment of mortgage recordation taxes in the State of Alabama by act of legislature codified at Ala. Code
§24-1A-12 (1992).



STATE OF ALABAMA

COUNTY OF ______________________________



                              THIS MORTGAGE IS A SUBORDINATE LIEN

THIS RECAPTURE MORTGAGE (“this Mortgage”) is given on this ______ day of _______________,
20_______ and is signed by

                           __________________________________________
                                      (Print Name of Borrower)

                           __________________________________________
                               (Print Name of Additional Borrower, if any)

The person or persons who sign this Mortgage will be called the “Borrower.”

The Borrower has granted this Mortgage in favor of the Alabama Housing Finance Authority (“AHFA”), a
public corporation and instrumentality of the State of Alabama, acting solely in its capacity as
Administrator of the State of Alabama’s American Dream Downpayment Initiative, a component of the
HOME Investment Partnerships Program, 24 C.F.R. Parts 91 and 92, Interim Rule, and the regulations
promulgated thereunder (the “ADDI Regulations”) and administered by AHFA for the State of Alabama,
(collectively, the “ADDI Program”), and whose address is 7560 Halcyon Pointe Drive, Suite 200,
Montgomery, Alabama 36117, Attention: ADDI Program, in order to secure the Borrower’s obligations to
AHFA under this Mortgage and the Note described below.

I.   RECAPTURE MORTGAGE NOTE

The Borrower has received Ten Thousand Dollars ($10,000) (the “ADDI Assistance”) from AHFA. AHFA
provided the ADDI Assistance to the Borrower under the ADDI Program. In order to receive the ADDI
Assistance, the Borrower has signed and delivered a Recapture Mortgage Note (the “Note”) in a principal
amount equal to the amount of the ADDI Assistance. The Borrower has promised in the Note to do the
things required by the Note and to pay any amount due under the Note. This Mortgage secures the
Borrower’s obligations under the Note.

II. GRANT OF MORTGAGE LIEN AND SECURITY INTEREST

As security for the Borrower’s payment obligations and other promises under this Mortgage and the Note,
the Borrower grants, bargains, sells and conveys to AHFA a mortgage and security interest in all of the
following property:




                                                     56
                                                Revised 08/09
                                                                                               Appendix 26



1. The land owned and occupied by the Borrower that is described in Exhibit A hereto. The land is
   located in the County of ______________________________, State of Alabama. The street address
   for the land is ____________________________________________________________.

2. All buildings and other improvements that are now or will be located on the above land.

3. All fixtures and equipment that are now attached to or used with the above land, buildings and
   improvements.

All of the above items together are called the “Property.”

III. BORROWER’S REPRESENTATIONS

The Borrower confirms to AHFA that the Borrower lawfully owns the Property and rights that are pledged
to AHFA under this Mortgage, that the Borrower has the right to pledge all of the Property to AHFA, and
that the Property is not subject to any liens, easements or other encumbrances, except those already
recorded against the Property on the date of this Mortgage. The Borrower agrees to protect and defend
AHFA’s rights to the Property against anyone else who tries to claim rights against the Property, except
those claiming under the first lien mortgage described in Section XII or under other items already
recorded against the Property on the date of this Mortgage.

IV. BORROWER’S PROMISES

In consideration for the benefits received as aforesaid, the Borrower agrees as follows:

1. The Borrower understands that the Property that is subject to this Mortgage must be used in ways
   that meet the requirements of the ADDI Regulations. The Borrower has executed the Note and a
   Homebuyer’s Agreement between the Borrower and AHFA (the “Homebuyer’s Agreement”) that
   contain those restrictions.

2. The Borrower agrees to do everything that is required by the Note, the Homebuyer’s Agreement and
   this Mortgage (all together, the “ADDI Program Documents”). If the Borrower fails to do those things,
   the Borrower agrees that it must repay to AHFA some or all of the ADDI Assistance. If that happens,
   AHFA will refer to the Note to determine the amount of ADDI Assistance that the Borrower must
   repay to AHFA.

3. The Borrower shall pay when due all liens, taxes, assessments and other governmental charges
   made against the Property. Any money that the Borrower spends for taxes or any other purposes on
   the Property do not count toward reduction or repayment of the ADDI Assistance. The ADDI
   Assistance may be repaid or reduced only as permitted under the Note.

4. The Borrower shall keep the Property in good repair and will not damage or abandon it, except for
   normal wear and tear. The Borrower will allow AHFA or its authorized representative to inspect the
   Property upon reasonable notice.

5. The Borrower shall use the Property in compliance with all applicable laws, ordinances and other
   requirements of any governmental authority.

6. The Borrower shall keep the Property insured against fire and other casualty (including flood
   insurance if Property is in a designated flood zone) in an amount acceptable to AHFA. The insurance
   policies for the Property must name AHFA as a mortgagee, loss payee and additional insured
   thereon, as its interest may appear. The Borrower will provide a Certificate of Insurance to AHFA
   each year showing that this insurance is in effect.

7. The Borrower hereby waives all rights of homestead exemption in the Property and relinquishes all
   rights of curtesy and dower in the Property.




                                                     57
                                                Revised 08/09
                                                                                                 Appendix 26



V. AFFORDABILITY PERIOD

The requirement of the ADDI Program Documents and ADDI Regulations will apply to the Property for a
period of five calendar years, calculated from the date of the Note (the “Affordability Period”). The ADDI
Program Documents and ADDI Regulations establish restrictions on how the Borrower can use, transfer,
sell or rent the Property during the Affordability Period.

VI. RIGHTS GIVEN TO AHFA

The Borrower, by giving the Mortgage on the Property to AHFA, gives to AHFA those rights described in
this Mortgage and all rights given by law to persons who hold mortgages in the State of Alabama, but
subject to any limits or requirements created by the ADDI Program. The rights given to AHFA and the
restrictions upon the Property are covenants running with the land. The rights, terms and restrictions in
this Mortgage shall bind the Borrower and all subsequent purchasers and owners of the Property, and the
heirs and assigns of all of them. Upon performance of the promises contained in the Note and Mortgage,
AHFA will cancel this Mortgage at its expense.

VII. DEFAULT

AHFA may declare the Borrower in default under this Mortgage if:

1. The Borrower fails to comply with the provisions of the Note;

2. The Borrower fails to make any recapture payment required by the Note or this Mortgage;

3. The Borrower fails to keep any other promises made in this Mortgage;

4. The Borrower sells or transfers the Property to anyone else for any reason without compliance with
   the terms of the Note and this Mortgage;

5. The Borrower fails to comply with the terms of any other note or mortgage on the Property;

6. The holder of any lien on the Property starts to foreclose on the Property; or

7. Bankruptcy, insolvency or receivership proceedings are started by or against the Borrower.

VIII. AHFA’S RIGHTS UPON A DEFAULT OR EVENT OF NONCOMPLIANCE

If AHFA declares a default under this Mortgage, all sums due and owing to AHFA under the Note and
under this Mortgage shall be immediately due and payable. AHFA shall have all rights and remedies
described in Article VI of this Mortgage, but subject to the rights of prior mortgagees.

IX. NOTICES

All notices must be given in writing and personally delivered or sent by certified mail, return receipt
requested, to the addresses given in this Mortgage. Notices to AHFA must be sent to the mailing address
given for AHFA on the first page of this Mortgage. AHFA will send all notices to the Borrower to the
mailing address given for the Borrower in Section II of this Mortgage. Either Borrower or AHFA may
change its address for notices by sending written notice to the other party.

X. NO WAIVER BY AHFA

AHFA may exercise any right under this Mortgage or under any law, even if AHFA has delayed exercising
that right or has agreed in an earlier instance not to exercise that right. AHFA does not waive its right to
declare the Borrower in default just because AHFA may have made payments or incurred expenses on
behalf of the Borrower.




                                                     58
                                                Revised 08/09
                                                                                                Appendix 26



XI. EACH PERSON LIABLE

This Mortgage is legally binding upon the Borrower and all who succeed to the Borrower’s responsibilities
(such as heirs and executors) as well as any subsequent owner or purchaser of the Property. AHFA may
enforce any of the provisions of the Note and this Mortgage against any Borrower who signs this
Mortgage or against any subsequent purchaser or owner of the Property.

XII. SUBORDINATE MORTGAGE

The lien of this Mortgage is subordinate to and subject only to the terms and provisions of any first lien
mortgage used to buy the Property and that is signed at the same time or before this Mortgage, including
any subsequent refinancing of said first lien mortgage loan by the Borrower. This mortgage is also
subordinate and subject to any other prior lien approved in advance in writing by AHFA.

XIII. NO ORAL CHANGES

This Mortgage can be changed only by a written agreement signed by both the Borrower and AHFA.

XIV. SIGNATURES

The Borrower agrees to all terms of this Mortgage by signing below.

XV. ACKNOWLEDGEMENT

The Borrower acknowledges receipt of a true, correct and complete photocopy of this Mortgage upon the
execution hereof and at no charge to the Borrower.

                               [Remainder of this page intentionally blank.]




                                                    59
                                               Revised 08/09
                                                                                               Appendix 26



IN WITNESS WHEREOF, the undersigned Borrower signs this Mortgage on the day and year indicated in
the notary acknowledgement below.

WITNESS:

By: _______________________________________                 By: ___________________________________
    Signature of Borrower                                       Signature of Additional Borrower, if any

__________________________________________                  ______________________________________
(Print Name of Borrower)                                    (Print Name of Additional Borrower, if any)



                                         [Notary Block for Borrower]

STATE OF ALABAMA                           )

COUNTY OF __________________               )

I, the undersigned authority, a Notary Public in and for said county in said state, hereby certify that
___________________________________, whose name is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the contents of said
instrument, he/she executed the same voluntarily on the day the same bears date.

Given under my hand and official seal this the _______ day of _____________________, _________.

                                                  _____________________________________________
                                                  Notary Public

AFFIX SEAL                                        My commission expires: _________________________



                            [Notary Block for Additional Borrower, if any]

STATE OF ALABAMA                           )

COUNTY OF __________________               )

I, the undersigned authority, a Notary Public in and for said county in said state, hereby certify that
___________________________________, whose name is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the contents of said
instrument, he/she executed the same voluntarily on the day the same bears date.

Given under my hand and official seal this the _______ day of _____________________, _________.

                                                  _____________________________________________
                                                  Notary Public

AFFIX SEAL                                        My commission expires: _________________________


This instrument prepared by:

Alabama Housing Finance Authority
2000 Interstate Park Drive, Suite 408
Montgomery, Alabama 36109
Attention: Single-Family Administrator


                                                      60
                                                 Revised 08/09
                      Appendix 26



   EXHIBIT A

(Legal Description)




        61
   Revised 08/09
                                                                                                Appendix 27




                                   PAYOFF NOTIFICATION

AHFA #: ____________________________________________________________________________

Borrower(s): _________________________________________________________________________

Property Address: _____________________________________________________________________

The above-reference borrower(s) received ADDI down payment assistance from the Alabama Housing
Finance Authority (AHFA).

A second or third mortgage was recorded against the property. The second or third mortgage is a single
pay note due upon sale or transfer of payment in full of the first mortgage within a five-year period.

The total amount due to pay the ADDI mortgage in full is $______________________________.
Applicable recording fees necessary to satisfy the mortgage should be collected and held
pending receipt of the Satisfaction of Mortgage.

The check must be made payable to Alabama Housing Finance Authority in certified funds only.

Please remit the ADDI mortgage payoff funds to:

                                   Alabama Housing Finance Authority
                                        Attn: Accounting Division
                                            P.O. Box 242967
                                      Montgomery, AL 36124-2967

Upon receipt of these funds, AHFA will forward to you the executed Satisfaction of Mortgage. Alabama
Housing Finance Authority will not assume the responsibility for recording the Satisfaction of Mortgage.

Any questions regarding the payoff should be directed to the Alabama Housing Finance Authority’s Loan
Administrator Supervisor at 334/244-9200.




                                                    62
                                               Revised 08/09
                                                                                           Appendix 28




       HOMEOWNERSHIP COUNSELING COMPENSATION REQUEST

ADDI Commitment Number:_____________________________________________________________

Homeowner(s) Name(s):________________________________________________________________

Property Address: _____________________________________________________________________

____________________________________________________________________________________

Confirmed Closing Date: ________________________________________________________________

Counselor’s Name and Organization: ______________________________________________________

____________________________________________________________________________________



Did the counselor or the HUD-approved counseling agency receive any form of grant or HUD assistance
to perform their counseling services? □ Yes   □ No
________________________________________________               ________________________________
Counselor’s Signature                                          Date



If YES, no compensation is due. If NO, proceed.

Amount Due: $300

PAYABLE TO:

Name of Certified Counselor: ____________________________________________________________

Name of Agency: _____________________________________________________________________

Address: ____________________________________________________________________________

____________________________________________________________________________________




AHFA USE ONLY

Date check issued: ____________________________________________________________________

Date ADDI expense funds reconciled: _____________________________________________________




                                                    63
                                               Revised 08/09
                                                                                                 Appendix 29




                 HOUSING QUALITY INSPECTION NOTIFICATION

The funds being applied for by ________________________________________________________ are
provided through the American Dream Downpayment Initative (ADDI). This program requires that each
property receive a housing quality inspection prior to loan closing. This inspection will be ordered after
the Conditional Commitment has been issued by AHFA and the lender has issued its final approval. A
closing date should not be scheduled prior to the notification to the lender from AHFA concerning the
status of the inspection. Any deficiencies found during the inspection must be cured prior to loan closing.
ADDI funds may not be used to cure the deficiencies.



This inspection does not constitute a property inspection nor is it an appraisal. Any renegotiation
of the contract shall be between the Seller, Buyer and Lender.



Commitment #: __________________________________



Mortgagor: __________________________________________________________________________



Mortgagor: __________________________________________________________________________



Date: ______________________________________________________________________________




Seller: ______________________________________________________________________________



Seller: ______________________________________________________________________________



Date: _______________________________________________________________________________




                                                    64
                                               Revised 08/09
                                                                                                       Appendix 30




                                INSPECTION REQUEST FORM

Date: ________________________

AHFA ADDI PROGRAM                                            AHFA COMMITMENT #: __________________
Suite 200
7460 Halcyon Pointe Drive
Montgomery , Alabama 36117

Property Address:    __________________________________

                     __________________________________

This is a formal notification to perform an on-site inspection of the above-listed site. Prior to performing
said inspection, the inspector will need the following information and criteria completed by your office in
order to insure an accurate and expeditious Inspection report. Please fill out the requested information
below and return to AHFA as soon as possible so an appointment may scheduled for an on-site
inspection.
1. Is this an existing property?   □Yes □ No       If yes, give age (in years): ________________

2. Is this property presently involved in or a result of any litigation?   □Yes □ No
3. Is this property presently occupied?    □Yes □ No
4. Are their any pets/animals present on the property?      □Yes □ No
5. Are the utilities—sewer, water, electricity, gas, etc. operable on the property?    □Yes □ No
6. Please list the Owner-approved personnel that will accompany the CCC Inspector while on site. All
   Inspections will require the presence of an Owner-approved representative presence during the entire
   Inspection time period. No equipment or appliance will be operated by CCC personnel due to liability
   restrictions while on site.
    ____________________              ________________________             _____________________________
    Name                              Company                              Phone

    ______________________________                 ________________________            ___________________
    Address                                        FAX                                 Email Address

7. What is the requested date of the Inspection? ________________________

8. Is this property presently secured (locked)? □Yes      □ No
9. Will Owner Representative have key/access?        □Yes □ No
10. Is a plot plan available of the property?   □Yes □ No
11. Is the property listed with a Real Estate agent and/or Mortgage Company and have they been notified
    of the AHFA inspection requirement?      □Yes □ No
Upon receipt of the above following information, CCC will contact the Owner representative and schedule
a mutually acceptable Inspection time and will by return correspondence notify AHFA of the intended
inspection schedule.

Upon completion of the inspection, Clearwater Construction Consultants, L.L.C. will forward a full report
to AHFA electronically followed closely by one (1) hard copy through regular mail.


                                                       65
                                                  Revised 08/09

				
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