Updates to Policies and Procedures for Participating Lenders

Effective Programs: All Programs

Effective Date: July 1, 2024

This bulletin provides details to updates made to the Policies and Procedures (Seller Guide) for NJHMFA Participating Lenders. The updated Seller’s Guide is available to review on the Agency’s website. The updated version of the Seller’s Guide will take effect for new reservations on July 1, 2024, and will apply to all loans reserved on or after this date.

Loans reserved prior to July 1, 2024 will be reviewed in accordance with the version of the Seller’s Guide dated December 11, 2023. This retired version will remain available on the Agency’s website for use with pipeline loans reserved prior to July 1, 2024.

The following highlights key changes that impact Participating Lenders. For the full list of changes, see the Introduction Section of the Guide. 

• Credit/Tradelines: A minimum of two (2) tradelines with twelve (12) months of established history is required. The accounts included cannot have been closed no more than six (6) months prior to loan application. Rental housing payments are acceptable as a 2^nd tradeline if there is at least one (1) established tradeline on the credit report. Lenders must comply with GSE/Insurer guidelines if more stringent.
• Income/Employment: Return to work after temporary absence. “Borrower must return to work prior to approval. Participating Lender must provide one (1) paystub for one full pay cycle prior to NJHMFA loan approval."
• DPA Usage: Limited to one per person per lifetime. NJHMFA may consider approving a second DPA, at the sole discretion of NJHMFA. A letter of explanation will be required with the reason for DPA consideration. NJHMFA will review for performance history, date of the first loan, type of program, payoff date, and circumstances related to the payoff.
• DPA Eligibility: Borrowers are not eligible for NJHMFA DPA funds if they have ever had a foreclosure or deed in lieu of foreclosure.
• DPA Asset Test: Borrowers with liquid assets over 20% of the sales price are not eligible for DPA. Exclude business assets marked in business accounts from calculation, unless those assets are being used toward the home purchase
• Earnest Money Deposit: Borrowers seeking to recover all or a portion of their Earnest Money Deposit in excess of the Agency's maximum allowable reimbursement for eligible expenses paid directly by the borrower ($3,000) must have a fully executed sales contract/addendum that reflects a loan amount that matches the loan amount on the Lender's Underwriting Transmittal.
• First-Time Home Buyer Program maximum allowable lender origination fee: Fee increased from $1,200 to $1,350.
• First-Time Home Buyer Program sources of income: Added language to document existing policy. All sources of income must be included when calculating the compliance income on the first mortgage. If income is disclosed on any of the documentation sent to the agency, NJHMFA will include the income as part of the income limit calculation unless there is sufficient documentation verifying that the income will not continue in the future.
• First-Time Home Buyer Program compliance income: Added language to document existing policy. Annualized gross monthly income for all borrowers and non-borrowing spouses and legal domestic partners verifying all income from all sources.
• Acting as Real Estate Agent and Loan Originator: The loan officer is not permitted to act as either the listing or selling agent, or receive dual compensation as a lender and real estate agent on any NJHMFA transaction.
• Revised Recapture Tax Form: The new form requires additional information to be completed. The form must be completed and executed at the first underwriting submission and again at closing.
• Condominium Document Requirements: Condo Documentation requirements have been updated. See guide for full detail.
• Power of Attorney: Added clarification as to when a Seller POA is necessary.

• Loans reserved prior to July 1, 2024 that need additional flexibility offered under the updated Seller’s Guide in order to qualify should not re-reserve loans for qualification purposes. If an exception is needed for the POA requirement, Lenders may escalate to NJHMFA Single Family leadership via email to SFLenders@njhmfa.gov for possible loan level allowance to use the new guidelines.

All loans must meet all underlying GSE/Insurer requirements.

A summary of the full list of new changes for 2024 can be accessed directly here.

The updated version of the 2024 Seller’s Guide is available under our Lender’s Resource Tab or directly here.