Frequently Asked Questions (FAQs)

An ARM loan is an Adjustable Rate Mortgage and sometimes referred to as a Variable Rate Mortgage or VRM. An ARM's Interest Rate automatically adjusts at specific intervals during the life of the loan based upon a predetermined formula that is stated in your loan documents.

At this time, CalHFA does not purchase ARM loans, but CalHFA does service previously purchased ARM loans. In the past, CalHFA accepted FHA, VA, and Conventional ARM loans. All CalHFA ARM loans had provisions that required:

The Margin on an ARM loan is the percentage amount added to the Index to cover the Investors administrative costs and "profit".

The Index on an ARM loan is the "base" interest rate used in the Note's formula to determine the new Interest Rate at the appropriate time. The Margin is added to the Index, which is then usually rounded to the nearest tenth or eighth of a percent, to arrive at the new Interest Rate. There are many Indexes that are used in the mortgage industry. Two of the most popular are the 11th District COFI (Cost of Funds Index) and the One Year Treasury Constant Maturity. CalHFA uses the One Year Treasury Constant Maturity on all of its ARM loans.

The Interest Rate Cap on an ARM loan prevents very rapid movements in the loan's interest rate. From one year to the next, the interest rate marketplace can change dramatically. This feature, which is now mandated on all ARM loans by Federal law, limits the amount by which the Interest Rate can change from year to year, and for the life of the loan. CalHFA limits the rate change from year to year to 1%, and to 5% for the life of the loan. It is important to remember that this limitation is in both directions and if the Index rate goes down significantly, the reduction in the Interest Rate on the loan will not be reduced by more than 1%.

CalHFA ARM Interest Rates are changed every 12 months, with the possible exception of the first change. Since CalHFA only allows Interest Rates to change on one of four dates during the year, the first change can occur with the 13th, 14th, or 15th payment. Thereafter, the Interest Rate will change every year on the same date as the first change.

CalHFA ARM Interest Rates can only change with the February, May, August, or November payment, depending on your first payment due date. If the first payment due on your loan is in October, November, or December, your loan will change each year with the February payment. If the first payment due on your loan is in January, February, or March, your loan will change each year with the May payment. If the first payment due on your loan is in April, May, or June, your loan will change each year with the August payment. If the first payment due on your loan is in July, August, or September, your loan will change each year with the November payment. Because interest is paid in arrears, the interest rate actually changes the first of the month prior to the payment change date.

The new Interest Rate on CalHFA ARM loans are determined by adding the available index percentage on the Index Day to the Margin (1.25%) and rounded to the nearest one-eighth of one percent. Because CalHFA has only four change dates per year, the Index Day is limited to 4 days during the year, March 2, June 1, September 1, and December 2. Your Index Day will be approximately two months prior to your Payment Change date. The Index Day is always 30 days prior to the Interest or Rate Change Date, which is one month prior to the Payment Change Date. The following schedule should help:

Treasury Indexes are issued each Monday except for when that day is a holiday and the Index is then issued the first working day after. To find the Index for a loan, you would find the last Index release date equal to your Index Day or the first Index Release Date prior to your Index Day. If your Index Day is a holiday, you must use the last Index Issuance Day prior to your Index Day. For instance, if September 1 were Labor Day, you would need to use the index that was issued on August 25 of that year.

The Index is listed on CalHFA's web site at ARM Index, or you can see all of the index releases from the Federal Reserve at http://www.federalreserve.gov/releases/h15.

An escrow account is an account held by the servicer, into which you make monthly payments for property taxes, insurance and special assessments. The servicer disburses these funds as they become due. This type of account is sometimes known as an 'Impound Account.'

Projected Activity (next 12 months):
Bills CalHFA expects to receive and pay from your escrow account. The monthly deposit required from you to cover the bills we pay on your behalf.

Historical Activity (last 12 months):
The bills actually paid for you during the last year by CalHFA.
The total of bills paid during the year, divided by 12 (your new minimum monthly escrow deposit).

Your escrow/impound account is like a budget. Each month, a specified amount is set aside for payment of property taxes and/or insurance premiums. With this account, you can be assured that payment of your tax and/or insurance premiums will be made in a timely manner. You can view your escrow balance by signing onto the Customer Service Center.

We are required to analyze your escrow/impound account annually to determine if the monthly deposit is sufficient to meet the annual requirements for taxes and insurance premiums. We will provide you with an analysis that explains the changes to your monthly escrow payment.

Your escrow/impound account earns interest on the average balance at the rate 2% per annum. The interest is deposited into your escrow account each year on the last working day. If your loan pays off during the year, the interest will be calculated and deposited when the final refund is prepared.

Your escrow deposit is equal to 1/12th of the total bills we anticipate paying on your behalf during the next year plus 1/12th of any shortage. In addition, there is a minimum escrow account balance that is permitted by federal law and your mortgage document. This deposit is based on the way your mortgage terms are written. Your mortgage terms allow for a minimum escrow balance equal to zero, or, equal to one or two months of your monthly escrow deposit. CalHFA requires a one-month minimum balance.

CalHFA will review your escrow account at least annually.

There are several things that can occur which can cause an increase or decrease to your escrow payments:

A property tax increase or decrease
A homeowners insurance premium increase or decrease
A mortgage insurance increase or decrease
A shortage of funds
A surplus of funds
An increase or decrease in other bills we pay for you

If your loan account is not delinquent, and the surplus exceeds $50, CalHFA will automatically send you a check refunding the surplus. If the surplus is less than $50, your monthly payment will be temporarily reduced until the surplus is used up.

If your escrow account balance is less than the minimum balance required at the time of your analysis, your escrow account has a shortage of funds. Your options are:

Repay the total shortage immediately. This reduces your monthly payment by 1/12th of the amount repaid.
Repay the shortage over the next 12 months. This option is interest-free but increases your monthly payment. You do not need to contact us to choose this option; it is always done automatically.

In the event you believe our calculations are incorrect or you have access to better estimates from a taxing authority or insurance provider, please contact us immediately. We will use your documented information to perform a new analysis, possibly resulting in a lower escrow and monthly payment amount.

IMPORTANT: Only your taxing authority or insurance company can change the amount of the bill we pay on your behalf. You must contact them directly.

No. CalHFA requires escrow accounts on all of its loans.

As a homeowner, you take the risk that fire, water damage from pipes, or other catastrophes (excluding floods, wind, earthquakes, etc.; separate riders or policies are needed for these coverages) can occur. Hazard insurance protects you from these risks and usually repairs the damage at little cost to you.

The insurer must be licensed to do business in the State of California and have a current Best's Insurance Guide rating of BV1 or better. The policy must have a deductible of no more than $1,000 or 1% of the face amount, whichever is higher; or $2,000 or 2% of the face amount, whichever is higher, if wind coverage is included; and in an amount equal to, but not exceeding, the replacement value of the structural improvements with endorsements for code upgrades, or the outstanding principal balance, whichever is less.

Hazard Insurance covers losses from fire and other catastrophes.

Providing evidence of continuous insurance coverage is a part of your contractual agreement. This also applies when you renew your insurance coverage or change carriers. Insurance information should be sent to:

California Housing Finance Agency
1040 Riverside Parkway Suite 110
West Sacramento, CA 95605

Fax: 916.376.1884

It is your responsibility to maintain insurance on your property at all times. The insurance coverage must be an amount at least equal to the replacement cost of the improvements on your property (the home itself) or the outstanding principal balance of your loan, whichever is less. Adequate flood coverage is required if your property is located in a special flood hazard area.

If we do not receive proof of insurance, we will obtain an insurance policy for dwelling coverage only (not additional contents or liability). As the lender, we do this to protect our interest in your property. The premium will be charged to your escrow account. You will be given written notice that we have obtained this insurance, which is authorized by your Mortgage. If we obtain this insurance, we will cancel it when you provide us with proof of coverage on your own policy. There will be a premium charge for the insurance policy obtained by CalHFA for any days that your insurance was not in effect. The coverage provided by the insurance policy ordered by CalHFA will be different and more expensive than your expired coverage.

CalHFA pays insurance premiums off bills received from your agent or insurance company. If the billing is late, sent to you, or sent to your prior servicer, the bill will not be paid timely. CalHFA regularly checks for loans on which the insurance has expired and tries to resolve them by contacting the insurance company and obtaining a bill. Should you receive the bill directly, you should forward it to us. If it is a copy and the Lender Loss Payable is not to CalHFA at 1040 Riverside Parkway Suite 110, West Sacramento, CA 95605, forward the bill to us and notify your agent to add us to the policy.

We accept coverage from most insurance companies (see requirements above). If you choose to replace your current coverage, please send your replacement policy, along with your written authorization, to our office so that it arrives at least 30 days prior to the expiration of your current policy.

Please keep in mind that if you change policies before your current policy expires, you may not receive a full refund from your current insurance company and you may be required to pay the initial year's premium.

Please notify your insurance agent and CalHFA immediately when there is damage to your property. Insurance company claim proceeds are in check form and will normally require our endorsement.

Because claims are handled differently, depending on the check amount and the loan type (i.e., FHA, VA or Conventional), you will need directions from us as to the proper procedure that must be followed. Please contact a Hazard Insurance Representative at 800.669.1079 for assistance in handling your claim.

The Internal Revenue Service has issued new instructions regarding the deductibility of mortgage insurance premiums for the year 2007. CalHFA STRONGLY RECOMMENDS THAT YOU CONSULT WITH A TAX PREPARER TO DETERMINE IF YOU MEET THE REQUIREMENTS TO DEDUCT ANY MORTGAGE INSURANCE PREMIUMS PAID DURING 2007.

If your loan closed in 2007 and mortgage insurance premiums were paid on your behalf by CalHFA, the mortgage insurance premiums paid will be added to Block 4 of your 2007 year end IRS Form 1098; however, this does not necessarily mean the amount is tax deductible. You or your tax preparer will need to determine the deductibility.

Prepaid mortgage insurance premiums might also be deductible. CalHFA did not originate your loan, therefore, we would not be able to report any prepaid premiums you may have paid at closing or subsequent to closing. If your loan closed in 2007 and you prepaid a mortgage insurance premium, you will need to get that information from your originating lender.

You can obtain additional information at the IRS web site, www.irs.gov.

The Mortgage Forgiveness Debt Relief Act of 2007 has modified the mortgage insurance deductibility provision as follows, “The provision extends the deduction for private mortgage insurance to amounts paid or accrued after December 31, 2007, but only with respect to contracts entered into after December 31, 2006, and prior to January 1, 2015."

CalHFA is unable to delete the mortgage insurance requirement for FHA loans because they are collateral for tax exempt bonds. There are advantages to having an FHA insured loan. With FHA loans, customers are eligible for the temporary mortgage assistance payment plan and other programs. If you have a FHA loan and would like more information on the FHA insurance, please review your closing paperwork.

If a borrower has less than a 20% down payment for the property they wish to purchase with a conventional loan, the lender may require the borrower to carry Private Mortgage Insurance (PMI). Private Mortgage Insurance is a type of insurance that protects the lender in the event the borrower defaults on the payment of the loan. Agreeing to carry Private Mortgage Insurance allows the lender to accept lower down payments, and a lower down payment may help the borrower qualify for a loan.

On July 28, 1998, President Clinton signed into law the "Homeowners Protection Act of 1998". This Act describes the provisions under which mortgagors with conventional loans can request cancellation of Private Mortgage Insurance. The Act also describes disclosures and notices that are required for lenders to automatically terminate PMI on conventional loans. This Act applies only to residential mortgages secured by single-family, single-unit, owner-occupied dwellings closed on or after July 29, 1999. Mortgage loans closed before July 29, 1999, or mortgage loans secured for vacation or second homes, by 2-4 family dwellings or other multifamily dwellings, or by investment properties are not covered by the Act.

However, for purposes of PMI cancellation, CalHFA has chosen to treat all conventional loans originated before July 29, 1999, the same as those originated on or after July 29, 1999.

A loan-to-value ratio can be expressed as the current principal balance divided by either the original property value (the original appraised value or sales price, whichever is less), or based on a new appraisal. For example, if the current principal loan balance is $148,000, the original property value is $190,000, and the sales prices was $189,000, then the current LTV is equal to:

Current Balance / Original Property Value = LTV

$148,000 / $189,000 = 78.31%

You are required to have a good payment history in order to request cancellation of your Private Mortgage Insurance. For most loan types, a good payment history is defined as:

No payments 30+ days past due in the last 12 months, AND No payments 60+ days past due in the last 24 months. (Beginning with your 1st payment to CalHFA)

A LTV based on the original property value takes into consideration your current principal balance and all subordinate loan(s) compared to the original property value. For example, if your principal balance(s) are currently $148,000 and the original property value was $189,000, then your current LTV based on the original property value is:

Current Balance / Original Property Value = LTV

$148,000 / $189,000 = 78.31%

A LTV based on a new appraisal takes into consideration increases in property value that may have been realized since the loan was originated. For example, if your principal balance(s) are currently $148,000 and the home you originally bought for $189,000 has increased in value to $242,000, then your current LTV based on the property's new appraised value is:

Current Balance / New Appraised Value = LTV

$148,000 / $242,000 = 61.16%

In order to validate the current property value, a new appraisal obtained at the expense of the borrower must be performed by a CalHFA approved appraiser. You will be required to contact CalHFA Loan Servicing to schedule an appraisal.

In order for us to consider cancellation of your mortgage insurance (MI), you will need to submit your request in writing and meet the following criteria:

Cancellation Based on the Original Value (subject to confirmation value has not decreased):

• Loan-to-value (LTV) requirement: 80.0% (70.0% if subordinate liens other than CalHFA or Local CalHFA Partners subordinate loan(s) created at closing are present)
• Provide a current title search or property profile
• Loan is at least 2 years old
• Payment record: No payment 30 days or more past due in the last 12 months and no payment 60 days or more past due in the past 24 months. (Beginning with your 1st payment to CalHFA)
• Occupancy status: Must be owner occupied
• Appraisal requirement: Yes, original (subject to confirmation that values have not decreased or will need to use Current Value method)
• All fees due are paid.
• Lines of credit will be considered as if fully funded regardless of the current balance.

Cancellation Based on Current Value:

• Loan-to-value (LTV) requirement: 80% (70% if subordinate liens other than CalHFA or Local CalHFA Partners subordinate loan(s) created at closing are present)
• Provide a current title search or property profile
• Loan is at least 2 years old
• Payment record: No payment 30 days or more past due in the last 12 months and no payment 60 days or more past due in the past 24 months. (Beginning with your 1st payment to CalHFA)
• Occupancy status: Must be owner occupied
• Appraisal requirement: Yes - The appraisal must be obtained through our office at your cost. We will not accept an appraisal that is not ordered through CalHFA Loan Servicing.
• Appraisal fee: $360.00 (approximately)
• All fees due on loan are paid.
• Lines of credit will be considered as if fully funded regardless of the current balance.
  

The requirements referenced are for single-family primary residences. The requirements do not apply for investment or rental properties. Note: the calculation of the loan to value (LTV) ratio is: current principal balance(s) divided by either the original appraised value of the property, or the current appraised value of the property. These requirements are subject to Federal, State and investor guidelines and are subject to change without prior written notice. If your loan meets one of the above outlined criteria, please submit your request in writing to the following address:

CalHFA
ATTN: PMI Department
1040 Riverside Parkway Suite 110
West Sacramento, CA 95605

For certain conventional loans (single-family, single-unit, owner-occupied dwellings), CalHFA will automatically terminate PMI when the loan balance reaches 78% of the original property value (based on the loan's original amortization), or at the midpoint of the life of the loan, if the loan is current, and no fees are due.

HomeOpeners is designed to make up to six monthly mortgage payments if the qulified borrower becomes involuntarily unemployed.
Program Details & FAQs

To change a name of record due to a legal name change, we will need a copy of the legal documents creating the change. If the borrower’s name that is being changed is the first borrower listed, we must have a copy of the new Social Security card issued in the new name. Upon receipt of these items, we will amend our records. Please mail to the following address:

CalHFA
1040 Riverside Parkway Suite 110
West Sacramento, CA 95605

In order for a borrower or all parties on the loan to be removed from liability, a formal assumption is required. A formal assumption would apply for the following situations; divorce, death of sole borrower (owner), and a transfer or sale of the property. Similar requirements would apply to add an individual to the loan. Please keep in mind that to assume CalHFA loans the new borrowers must meet CalHFA’s loan requirements. CalHFA seconds can not be assumed.

A good payment record is essential to maintaining a good credit rating. If you encounter problems that could affect the timeliness of your payment, please call a representative at 800.669.1079. Prompt notification allows our representatives sufficient time to work with you to resolve issues. Your loan number, which can be found on your coupon, should be written on all payment checks. Your number serves as your identification and allows us to reference your loan information quickly. Regular payments should be made in the amount stated on your coupon, or in the Current Loan Information page, which you can find through our web site at our Customer Service Center. If you send additional funds, please indicate on the payment coupon whether the funds should be applied to principal balance, escrow/impound account, late fees, other fees or future full payments. Please do not send any correspondence with your home loan payments. Our regional payment processing center is designed specifically for processing payments quickly and efficiently. Please use the address provided on the back of your coupon book if you need to write or send documents to us. Reference your loan number on all correspondence. You can also Contact Us.

Send your monthly payment and coupon to the address printed on the back of your coupon book. Use the labels provided in your coupon book, or mail them to:

CalHFA
P.O. Box 13819
Sacramento, CA 95853

Coupons are not required to make payments. They are a customer convenience only. If you run out, you may forward your payment to the above address without the coupon. Please make sure that either the loan number, or your name and property address are on your check, money order, or other payment type.

Payments being sent via overnight services can be sent to:

CalHFA
1040 Riverside Parkway Suite 110
West Sacramento, CA 95605
Phone: 800.669.1079

Using the check drafting payment system, you can make a payment over the phone and it will usually be applied to your account the same day or the next business day. To make your payment today call us at 800.669.1079. Calls must be received before 4:30 p.m. Pacific Time to be processed the same day on the Late Charge Day, or the last working day of a month.

The Late Charge Day is the last day a payment can be applied without the assessment of a late charge. Late charges are assessed the night of the 16th of each month; or, if the 16th is not a workday, the first working day after the 16th.

Yes, CalHFA has ACH drafting which we call CAMP Service. For more information and an application form, please click on this link, “ACH Drafting”.

Statements are usually mailed or faxed in 5 to 10 business days, depending upon volume.

A payoff statement fee of $30.00 is charged on conventional loans only.

Interest is calculated to the payoff statement expiration date. A per diem (per day) interest amount will be included for all loans. Unlike most investors, CalHFA does not require interest through the end of the month on FHA loans. Interest is charged through the date of receipt of funds on all loans.

FHA mortgage insurance is paid in arrears and the amount paid this month is for last month's coverage. When the payoff demand is prepared, the monthly amount of the FHA Mortgage Insurance included in your monthly payment is collected for the current month, which will be paid next month; if the current month's premium has not been paid at the time the payoff demand is generated, that monthly premium will be collected; and, if the through date on the demand is in the next month, that monthly premium will also be collected. Accordingly, the demand could collect between one and three monthly premiums.

Any escrow funds advanced by CalHFA to pay your bills because there were insufficient funds in your escrow account will be collected at the time of payoff.

Any accumulated late charges will be added to the amount due. This includes late charges for any payments that are past due at the time of payoff. Therefore, it is important that you continue to make your monthly payments until the day your loan payoff funds are received by CalHFA. CalHFA regularly notifies their borrowers of their late charge balance and will not consider a rush in the investigation of disputed late charges because a payoff is pending. However, if the borrower disputes the late charges and, if CalHFA agrees to waive some or all of them, CalHFA would refund any waived amount submitted with the payoff.

CalHFA loans do not have prepayment penalties. In some cases, a loan may be subject to a federal recapture tax. For more information see Recapture Tax.

The amount due will change if payments were posted to or removed from the account after the payoff statement was issued; if escrow disbursements have now caused an escrow advance; and other reasons. You or your agent should contact us at 800.669.1079 on the day of closing to verify the payoff figures.

The figures in the Payoff Statement may be based upon payments that were received but have not yet cleared your bank. If one of these payments is returned unpaid after the loan is paid off, CalHFA reserves the right to adjust the payoff figures. Interest will continue to accrue on the loan until CalHFA has received all amounts due.

A certified check or a cashier's check are the only acceptable forms of payment for loan payoff. Personal checks are not acceptable and will delay the payoff process. When the payoff funds are sent, include your name and loan number, the name and address of the check remitter (if different), and a copy of the Payoff Statement. Title companies and attorneys' offices may send any of the following:

Trust account check
Check drawn from attorney's office account
Check drawn from closing agent's business account

Make the check payable to California Housing Finance Agency and send it to:

CalHFA
ATTN: Payoff Department
1040 Riverside Parkway Suite 110
West Sacramento, CA 95605

Payoffs can only be processed at the address above.

Any funds remaining in escrow will be released to you within 15 days of payoff. If any deposits to or disbursements from your escrow account were made after the date of the payoff statement, your escrow balance will be different from the amount on the payoff statement. Remember to notify us of any mailing address change to avoid delays in receiving the escrow balance.

After we receive your payoff funds, we will notify your tax collector and insurance company that CalHFA is no longer responsible for payment of the bills. If you still own the property, and did not refinance your loan, contact your tax collector and insurance agent to have the bills sent to you. This would also apply if you refinanced but, are now responsible for paying the tax and/or insurance bills.

You may be entitled to a refund for unearned mortgage insurance premiums if you had an FHA loan and a one-time premium was paid at the inception of your loan. We will notify HUD (The Department of Housing and Urban Development) of the payoff of your mortgage. If you are eligible for a refund, HUD will calculate the refund amount and send it to you. Please allow 6 to 8 weeks.

After the loan is paid off, the Deed of Reconveyance will be prepared in accordance with the provisions of your loan. The release document states that the loan has been paid in full and may be discharged from the public records.

Yes, you may prepay your principal at anytime without penalty. Principal payments on your first loan must be made with a regular monthly payment and the additional principal must be clearly identified on your coupon or your payment. Principal payments in excess of two times your regular monthly payment must be made in certified funds (money order or certified check). Principal payments on subordinate loans of over $1,000.00 must be in certified funds. Payments including principal payments not meeting these conditions will be returned. (All amounts that pay the loan in full, regardless of the dollar amount, must be paid in certified funds.)

CalHFA obtains your real estate tax amounts and pays the taxes as they become due. To determine when CalHFA last paid your taxes and the amount paid, log on to the Customer Service Center.

CalHFA obtains and pays regular secured real-estate tax bills. You should pay any other supplemental bills, or non-real estate bills you receive, such as solid waste or water/sewer bills.

CalHFA pays your taxes in the amount billed by your tax collector and does not determine the amount of your taxes. Please contact your local tax collector for information pertaining to tax amounts such as: increases or decreases, homeowner's exemptions, assessed values, tax rates and copies of your tax receipts. The County Tax Collector will be listed in your phonebook under "County Offices".

You may be billed by one tax collector or by several tax collectors, such as county, city and school.

If you have an escrow account, CalHFA pays your real estate tax bills. We receive the bill amount in various ways:

The tax collector forwards a computerized tape to our tax service, which contains the billing information for properties that are covered by CalHFA. In most cases the actual tax bills are sent to the homeowners for their records.
The tax collector forwards a list to CalHFA, which contains the billing information for properties that are covered by CalHFA. In most cases the actual tax bills are sent to the homeowners for their records.
The tax collector sends the tax bill directly to CalHFA.
The tax collector sends the tax bill to the homeowner. The homeowner, in turn, forwards the bill to CalHFA.

We will send you a written request for your tax bill if we need it. Please send us the bill only upon our request.

Call your tax collector to find out if you qualify and how to apply. If you qualify and have applied by the deadline, the tax amount we receive will include the exemption, and you do not have to notify us. If you receive a bill marked corrected, adjusted, or certificate of error, call our Loan Servicing Department immediately to advise us not to pay the regular bill. Then mail, or fax, the new bill to:

CalHFA
ATTN: Tax Department
1040 Riverside Parkway Suite 110
West Sacramento, CA 95605

Please include your loan number with this mailing, or fax.

Please keep the notice for your records. If you do not agree with the assessed value for your property indicated on the notice, contact the assessor's office for further information. If your assessment notice is received in our office, we will forward it to you. If you do not receive an assessment notice, please contact your assessor's office to request a copy.

California tax bills cover a fiscal year that runs from July 1 through June 30 of the following year. The taxes paid during a calendar year are the second installment of one tax bill and the first installment of the next tax year. CalHFA does not report tax amounts to the IRS. The IRS obtains tax amounts directly from your tax treasurer's office. For more information on tax disbursements made from your account on your behalf, please look at your account transactions on the "Transaction History" page of the My Account Information section of the CalHFA web site.

CalHFA mails IRS form 1098 to all customers no later than January 31st of the new year. If you need this tax information before the end of January, you can use the 1098 information in the Customer Service Center.

CalHFA cannot advise you regarding the preparation of your income tax returns. Any question about the preparation of your annual tax returns should be answered by your personal tax advisor.

You can find more tax information on the Internal Revenue Service web site: http://www.irs.gov/ .

You will receive two(2) IRS form 1098’s by January 31st of the new year. Each mortgage servicer, including CalHFA, will provide information for the period of time your loan was serviced. Mortgage servicers are not required to report to the IRS if the total interest paid by you is less than $600.

Yes; you signed both a Note and Deed of Trust. CalHFA subordinate financing {second and third loan(s)} is secured by a recorded lien on the property. If you pay off the first by selling the property, refinancing the first mortgage, or at maturity of the first mortgage, transfer title to the property, or allow others to assume the first mortgage, the subordinate financing becomes due and payable. These loans are not forgivable, nor do they go away after a period of time.

(Special conditions exist for a reduction of, and possibly the elimination of, the interest on Extra Credit Teacher second loans only.)

Your second (and third) loan is referred to as "Silent" because there are no monthly payments required. While you can make payments on the loan to reduce accrued interest, or principal, no payments are required until the loan is called due, at maturity of the first, sale of the property, transfer of title, a refinance or assumption of the first.

You can send a request in writing to CalHFA, 1040 Riverside Parkway Suite 110, West Sacramento, CA 95605 or fax a request to 916.326.6421. Include borrower's name, property address, and loan number, if available. We do not give payoff quotes over the phone. We require borrower's authorization if the request is from other than the borrower (escrow company, title company, another lender, etc.). Our normal turn around time is 5 to 10 business days.

Yes. Payments can be made by sending a check or money order to the California Housing Finance Agency, 1040 Riverside Parkway Suite 110, West Sacramento, CA 95605. Make sure your name, property address, and loan number are on the payment instrument so that we can apply it to the correct loan(s). Payments of more than $1,000.00 on subordinate loans must be in certified funds (money orders or certified check). Any payment of any amount which pays the loan in full must be in certified funds. Payments not meeting these conditions will be returned.

Since these loans are "Silent" (no payments required) we do not issue coupons. You can call us or "Contact Us" and request for an Activity Statement, and we will mail one out.

Most subordination requests are the result of a refinance of the first. The language in CalHFA second Notes ties the loan to certain events that can occur on the first (maturity, sale, refinance) and the Notes do not otherwise have maturity dates of their own and cannot stand once the first is gone; therefore these loans cannot be subordinated. The California Homebuyer's Downpayment Assistance Program (CHDAP) loan program has an exception to this rule under certain conditions which are explained in the document at http://www.calhfa.ca.gov/homeownership/programs/chdap-subordination.pdf.

The second most popular reason for requesting subordination is to allow additional financing where the new lender does not wish to be in third position. The loan programs under which the CalHFA subordinate loan(s) are created require the loans to remain in the position they originally held at closing and cannot be subordinated to other financing.

Even though some CalHFA second Notes require approval of additional financing, that approval is readily given. CalHFA does not restrict the existence of additional financing (thirds, fourths, etc.).

Yes, you may register and access your loan by clicking here, or accessing the web site https://wp12.calhfa.ca.gov/SubordinateLoanInquiry.

No. The voice response unit is only tied to information on first mortgages serviced by CalHFA. When calling in using the toll free "800" number, do not make a selection, your call will automatically be forwarded to a Customer Service Representative.

No. If an eligible borrower assumes the first mortgage, the subordinate loan(s) must be paid off prior to the assumption or as part of that process.

CalHFA subordinate loans are calculated on a simple interest basis. This is accomplished by multiplying the current principal balance times the interest rate of the loan, divided by 365, and times the number of days since the last payment was applied (or the original disbursement date if no payments have been made). Example: If your $3,500 second at 5% was disbursed on March 15, 2002, you have made no payments, and a $100.00 payment is received on June 30, 2002; the interest would be $51.30 [$3,500 times 5% divided by 365 times 107]. The payment would be applied first to interest and then to principal, i.e., $51.30 to interest, $48.70 to principal, with the next interest due from date June 30, 2002, and based on a principal balance of $3,451.30.

If you make payments on your subordinate loan(s), CalHFA will issue IRS Form 1098 by January 31st for interest paid in the preceding year.

CalHFA routinely sends out two items to all our borrowers. When CalHFA purchases your loan from the originating lender, we send out a "Welcome" letter at the beginning of the month following the purchase. This letter is required by federal regulations and informs the borrowers that CalHFA purchased the loan and gives them information on how to contact us and where to send payments if they choose to make payments. CalHFA also sends out an "Annual Status Notice", in the month after your anniversary month, informing each borrower of the current unpaid principal balance and accrued interest on their loan(s) and serves as a reminder that this loan is still active. On occasion, other correspondence may be sent as needed.

The CalSTRS seconds are not true seconds. True second loans have a separate Note and Deed of Trust. The CalSTRS silent second loan is a Note only and shares the Deed of Trust with the first, which is serviced elsewhere. Because both Notes are associated with the same Deed of Trust, both loans must be paid off at the same time, similar to CalHFA.

The CalSTRS second loan must be paid off when the first is refinanced.

The CalSTRS silent seconds are at the same interest rate as the CalSTRS first. On the Zero Down Preferred Program (95/5) the interest is calculated on a simple interest basis for the first 15 years and then compounded annually thereafter. The interest on the 80-17 Program second loan is calculated on a simple interest basis for the life of the loan.

No, CalSTRS does not allow assumption of their loans.

Payments can be mailed to the California Housing Finance Agency (CalHFA), 1040 Riverside Parkway Suite 110, West Sacramento, CA 95605. Your loan number should be referenced on the payment.

You, or the title company handling the payoff, can send a request for payoff information to California Housing Finance Agency (CalHFA), 1040 Riverside Parkway Suite 110, West Sacramento, CA 95605, or fax a request to 916.376.1884, along with a borrower authorization. Our turnaround time is 5 to 10 business days.

A Federal tax that the borrower may have to pay if they sell or transfer title of their home during the first nine years of ownership. Recapture applies only to homes financed with tax-exempt bonds on or after January 1, 1991.

No. Because all comments are subject to tax law interpretation, CalHFA's staff cannot assist you in determining the exact amount of the Tax.

Any Recapture Tax due is to be submitted with your individual tax return for the year in which you sold the property. For instance, if you sold the property in 2001, the Recapture Tax, if any, along with IRS Form 8828, must be submitted with your 1040 form for your income. For the year 2001, these forms would normally have been due no later than April 15, 2002.

We strongly recommend that you obtain the services of a tax preparer for the tax year the Recapture Tax form is required to be submitted.

No, however, it does not eliminate the Recapture Tax either. If you refinance your loan and then sell your home within the first 9 years of ownership, the potential for a Recapture Tax still exists. If you refinance during the first four years of ownership and then hold the property for more than 18 months, any potential Recapture Tax will be reduced. See the IRS Form 8828.

Not usually. A gain is required for a Recapture Tax to be assessed; however, the amount of the gain can only cause the Recapture Tax to be reduced, never increased. The formula looks at 50% of the gain to see if it is less than the calculated Recapture Tax, and, if it is, you pay that lower amount.

The Federal Tax provision did not want a borrower to pay more in taxes than they gained on the sale of the property. The Recapture Tax is limited to the lesser of the amount of the calculated tax, or 50% of your gain on sale. So, if half (50%) of the gain is less than the calculated Recapture Tax, you will pay that lower amount. For example, you could have a $100,000 gain and the Recapture Tax would still never be more than 6.25% of your original loan amount, and that is only in the fifth year of ownership.

You will need the closing statement from when you purchased the home, the closing statement from when you sold the home, the closing statement from the first of any refinances, and the Recapture Notice you would have received when the loan originally closed.

To help you find the Recapture Notice, you may wish to review the example at Recapture Notice. If you cannot locate your original Recapture Notice, e-mail us "Contact Us" , and request a reconstructed letter. Recreated letters will usually be mailed within three business days.

Three conditions must exist for you to be assessed a Recapture Tax. If any of the following three factors are not true, there is no Tax.

• You must have sold or transferred the home during the first nine (9) years of ownership.
  
  
• You must have had a gain on the sale of the home.

• Your total "Adjusted Gross Income" from your Federal 1040 Form, less any taxable gain included and plus any non-taxable interest excluded, must exceed the "Adjusted Qualifying Income" for your current family size in the year of ownership you sell the home as shown on page 3 of your "Recapture Notice" letter.

The most critical question is the income. If your family's income is less than the Adjusted Qualifying Income shown in table on page 3 of your Recapture Notice, there will be no Tax. When you submit your federal tax return (1040) for the year in which you sold the home, you will still need to submit the IRS Form 8828, which will calculate your Tax to be zero.

If your income exceeds the Adjusted Qualifying Income, you will need to complete the IRS Form 8828, to calculate your Tax.

The IRS Form 8828 is available at http://www.irs.gov/. Type "8828" in the "Keyword/Search Terms" field in the upper right hand corner and click on the "Search" button. Then download or print the current year’s "Instructions for 8828" and "Form 8828".

If the sale or transfer occurs within the first nine years of ownership, the original borrower pays the recapture tax due by them and a new nine-year period begins for the purpose of applying a new Recapture Tax to the assuming purchaser.