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Homeowner's Equity Recovery Opportunity (HERO) Loan Program

Program Overview

HERO Expansion is a mortgage program designed to support neighborhood stabilization by providing first mortgage financing to encourage first-time homebuyers and existing homeowners to purchase and/or purchase and rehabilitate foreclosed or abandoned properties including properties conveyed by deed in lieu of foreclosure or short sale. Your lender can determine whether or not the abandoned property meets the requirements for the HERO Expansion Program. These mortgages will be underwritten in conjunction with existing FHA Mortgage Insurance program guidelines.    

Follow the links below for more information regarding the HERO Expansion Program.  

 


 

Who can apply for a HERO Expansion Program loan?

Eligible homeowners include first-time homebuyers or existing homeowners who agree to occupy the home purchased through the HERO Expansion Program as their primary residence.  

  • Existing homeowners are not required to sell their current residence to purchase a home through the HERO Expansion Program.  However, they must occupy the property they purchase with HERO Expansion funds as their primary residence. 

  • Deed restrictions will be placed on the property for a period of 5 years.  Any homeowner wishing to sell or transfer their ownership interest within 5 years of purchase must seek CHFA approval.
  • Guidelines for Existing Homeowners:
    •  An existing homeowner may keep their current property (or previous home) and purchase a new home through the HERO Expansion Program.  Borrowers are allowed to rent their current property (or previous home).  CHFA will count 85% of the net rental income from the current property (or previous home) in the borrower(s) qualifying income if the borrowers can provide the following:
      •  A copy of a fully executed lease agreement for the property
      •  Evidence of receipt and deposit of the 1st months rent
      •  Evidence of receipt and deposit of tenant(s) security deposit funds into an escrow account in compliance with State rental law. (Borrower(s) will be required to collect a minimum of 1 months rent for a security deposit)
      • Borrowers that are not able to rent their current property (or previous home) prior to closing on the subject property will be required to certify that the property will be vacated within 30 days of the loan closing and must qualify with 100% of the PITI for the property included in liabilities. Total Housing Payment to Income ratio of 31% and a Total Debt to Income ratio of 43% will still apply.

 

Where can you purchase a home that has been foreclosed, abandoned, conveyed by deed in lieu, or short sale?

The program is available statewide including federally targeted urban areas


 

What types of property can you purchase with a HERO Expansion Program loan?

    • Eligible Properties include: FHA-approved condominiums and PUD’s, Single Family Detached Properties, 2-4 Family Detached Properties.  All properties must be the owner-occupied primary residence of the borrower.  
    • Ineligible Properties include:  Cooperatives; homes that have never been completed; homes that have been completely demolished, including the foundation.

 

What is an abandoned property?

“Abandoned property” means any real property on which there is a vacant structure and on which (1) real property taxes have been delinquent for one-year or more and orders have been issued by the municipality’s fire official, building official or health official and there has been no compliance with  those orders within the prescribed time given by such official or within ninety days, whichever is longer, (2) the owner has declared in writing to the building official that his property is abandoned or (3) there has been a determination by the municipality in accordance with an ordinance adopted under subparagraph (H)(xv) of subdivision (7) of subsection (c) of section 7-148, that the vacant structure contributes to housing blight.


 

What if the home being purchased needs repairs?

A full 203 K rehabilitation loan will allow borrowers to purchase a house in need of repair or modernization with the HERO Expansion mortgage loan that includes both the cost of acquisition and rehabilitation. The maximum mortgage amount cannot exceed the applicable loan-to-value ratio and maximum dollar amount limitation prescribed for the HUD Maximum Mortgage Limits.   

The interest rate is the same rate as the HERO Expansion Program loan, however the borrower will be required to pay additional points.  

OR  

The FHA 203(k) Streamline Program is a limited repair program that will allow borrowers to obtain a HERO Expansion mortgage loan that includes the cost of acquisition and up to an additional $35,000 that can be used to complete moderate rehabilitation or modernization repairs to the property prior to moving in.  The maximum mortgage amount cannot exceed the applicable loan-to-value ratio and maximum dollar amount limitation prescribed for the HUD Maximum Mortgage Limits.    

The interest rate is the same as the HERO Expansion Program loan, however the borrower will be required to pay additional points.


 

Are there sales price limits?

HERO Expansion does not have sales price limits like CHFA’s regular homebuyer programs, but will follow the maximum financing available as set by FHA Maximum Mortgage Limits.&nbsThere are no income limits for the HERO Expansion Program, unless a borrower is utilizing the CHFA Downpayment Assistance Program (DAP).


 

Will you have to pay Federal Recapture Tax if I sell before 9 years and have a capital gain on the sale?

There is not a Federal Recapture Tax associated with the HERO Expansion Program.


 

Is Counseling required with the HERO Expansion Program?

Yes, counseling requirements are identified below:  

    • All borrowers approved for a HERO Expansion mortgage loan must attend financial fitness counseling with a CHFA-approved counseling agency prior to closing the loan.
    • All borrowers purchasing 2-4 family properties must also attend Landlord Counseling with a CHFA-approved counseling agency prior to closing the loan. 
    • Homebuyers utilizing DAP must also attend a 3-hour Homebuyer Education class with a CHFA-approved counseling agency prior to closing the loan.
    • Borrowers renting their current or previous home must attend Landlord Counseling.

 

Where can you get more information on the HERO Expansion Program?

You may contact the following Participating Lenders Campbell Mortgage at 800-290-3521, McCue Mortgage Co. at 800-382-0017, Norcom Mortgage at 860-676-8003, Real Estate Mortgage Network Inc. at 800-386-3791, or The Savings Institute Bank and Trust at 860-423-4581 or 800-423-0142. 


 

Related DocumentsThe Savings Institute Bank and Trust at 860-423-4581 or 800-423-0142. 


 

Related Documents

The following documents are related to the HERO Expansion Program.  To open and view the document, click on the document title. 

Related Documents Found: 5  matches     Displaying: 1 - 5 
FileSizeType
054 Homeowner Equity Recovery Opportunity (HERO) Declaration of Restrictive Covenants-003-1110HERO Rev 7-14
This document certifies the borrower's acknowledgment of the owner-occupancy, sale or transfer of the property rights stipulated by the terms and conditions of this loan Program.
86Kpdf

056 Homeowner Equity Recovery Opportunity (HERO) Deed Restriction Disclosure - 001-1110HERO Rev 7-14
This disclosure document certifies the borrower's acknowledgement of the terms of the deed restriction that will be placed on the property when the HERO loan is closed.
17Kpdf

058 Homeowner Equity Recovery Opportunity (HERO) Homeowner Certification - 002-1110HERO Rev 7-14
This document must be completed by the existing homeowner's who maintain an ownership interest in any other real estate at the time of closing on the new property that is being financed under this Program.
87Kpdf

Counseling Class Schedule - 3 Hour Pre-Closing Education Class - 3Q 2015
This chart list the 3rd quarter schedules for the Pre-Closing Education classes. These classes are available to homebuyers who are getting a Downpayment Assistant loan and have a reservation number for a CHFA loan.
105Kpdf

Income and Sales Price Limits rev. 8-14-2015
This document details the income and sales price limits that are in effect in different geographic regions of the state.
277Kpdf
FileSizeType
Found: 5  matches     Displaying: 1 - 5