Refinancing and subordination

For lenders

Can MOHCD borrowers use any lender to refinance?

For FRDALP, DALP, City 2nd, BMR, PIC and TND:

• No. Homeowners with these MOHCD loans MUST work with lending officers on our "Authorized Lender List."  This applies to funding lenders as well when borrowers are working with a mortgage broker. This requirement is for the benefit of homeowners. Those on the list have attended our workshops on City Loan Programs. They are aware of City requirements, and therefore able to expedite the refinance process. This requirement was implemented starting April 1, 2009.

For Rehab loans, Lead Grants and Condo Conversion Liens:

• For properties that carry ONLY Rehab loans (e.g. CHRP, CalHome, CERF), LEAD grants, or Condo Conversion liens borrowers are not required to work with an "authorized lending officers" when refinancing. However, for properties that carry another MOHCD loan (e.g. BMR, FRDALP, DALP, City 2nd, MALP, TND or PIC) in addition to the Rehab/Lead/Condo Conversion liens, borrowers will be required to work with an “approved lending officer."
   

Is there an "Approved Lending Officer" requirement for former SFRA borrowers?

• Yes, starting July 1, 2012, former SFRA borrowers need to work with one of our "Approved Lending Officers" when they refinance. We will decline a subordination request if the lending officer is not on our approved list.

Will MOHCD provide a "BMR Reprice Amount" for Refinance purposes?

• Starting April 2012, MOHCD will stop providing repricing letters on its BMR units for refinance purposes. Repricing will be done during resale of the BMR unit. Please be informed that we do not require appraisal reports for subordination review purposes on MOHCD BMR units; however, for borrowers and lenders who want to know what value MOHCD will use in its subordination review purpose, we have created an Estimated Valuation for MOHCD BMR Units (for Refinance Use Only) calculator.

Fees

Is there a processing fee to request subordination?

• Yes, there is an administrative fee to process a subordination request.

Is the administrative fee refundable? What are the acceptable payment forms? Who should it be addressed to?

• The admin fee is non-refundable. We accept only cashier or escrow checks. Personal checks will not be accepted. The admin fee checks should be addressed to: "City and County of San Francisco." The fee must be delivered to our office by mail or in person within 48 hours of the subordination submittal. We do not accept personal checks. See fees at bottom of the page.

Can a borrower pay the admin fee after the refinance is approved and closed?

• No, the processing fee needs to be received before starting our subordination review. The fee must be delivered to our office by mail or in person within 48 hours of the subordination submission in the DAHLIA system. Incorrect fees will not be accepted, thus causing processing delays.

What is the Admin Fee amount if the property has another MOHCD loan on a BMR unit? (For example: DALP in a BMR unit)

• There will be only one admin fee charge to process both of the subordination requests on the same property.

Subordination requests

Can MOHCD rush the subordination request? How long will it take MOHCD to process the subordination request?

• No, at this time, due to high volume, MOHCD cannot process any rush requests. Each request will be processed in the order when it was received. Generally, it takes 7-10 business days after we receive a complete subordination package. Lender arrangement must be made to allow for its processing period.
   

How should the subordination request be submitted?

• Starting September 1, 2016, the subordination application package must be submitted by the lender electronically through the DAHLIA Housing Portal system. The admin fee check shall be delivered by mail or in person to the MOHCD office located at 1 South Van Ness Ave, 5th Floor, San Francisco, CA 94103. The fee must be received by our office within 48 hours of the subordination submittal.

What type of the first mortgage loans are allowed during refinance?

• The first mortgage loan must be fixed rate mortgage, and the payment must be fully amortized. The City will not consider nor approve the following loans or terms: reverse mortgages, stated income, adjustable rate mortgage (ARM), interest-only, negative amortizing, and balloon payments. MOHCD reserves the right to identify additionally prohibited loan characteristics.
• Borrowers with CalHome Rehab loans: the term of the new senior lien must be at least for the period of time remaining on the CalHome loan. It must mature concurrently or after the CalHome lien, due to Program restrictions.

Will MOHCD allow cash equity withdrawals (cash out from the amount resulting from the principal paid) in a refinance?

• Cash equity withdrawals from properties with City cash loans are not allowed (e.g. DALP, City 2nd, PIC, TND, Rehab etc.). Requests for cash equity withdrawals from properties with City cash loans will most likely be denied and may require full repayment of the cash loan prior to or at the refinance loan settlement.
• Cash equity withdrawals on BMR properties are only allowed for special circumstances: capital improvements, educational expenses, medical costs and fund required to implement a marriage dissolution settlement. Documentation supporting the expense will be required. However, under no circumstances can the new loan amount exceed the original loan amount. If borrowers have another city cash loan, such as a DALP in a BMR unit, the City will require full repayment of the cash loan prior to or at the refinance loan settlement.
   
• Borrowers are allowed to take up to 3% of the new first mortgage amount as cash out to cover the customary costs of the refinance.

Can changes be made to the original request after subordination submission?

• No changes shall be allowed after a Subordination Agreement has been issued to the refinance lender or Title Company unless requested within the first ninety (90) days of the issuance of Subordination Agreement. After 90 days, a new subordination package and fee will be required for any change. Additionally, if the borrower is switching from one lender to another participating lender after the subordination approval, a new subordination package and fee will be required.

What if the borrower has a Mortgage Credit Certificate (MCC) on the unit?

• If you want to keep your MCC tax credit, you must apply for a Re-Issue MCC (RMCC). There is a separate fee to process RMCC. Please visit our RMCC webpage for more details.

What is MOHCD's policy about Home Equity Line of Credit (HELOC)?

• MOHCD does not allow Home Equity Line of Credit (HELOC). This policy is in place to protect homeowners with MOHCD loans and liens. HELOCs typically involve variable rather than fixed rate. A variable-rate loan financing is not allowed by MOHCD.

What is MOHCD's policy regarding "Home Equity Loan" on BMR units?

• Owners of BMR units administered by MOHCD must contact MOHCD and receive approval, before applying for a home equity loan. The BMR homeowner must attend a Post-Purchase Counseling class from a participating HUD-approved non-profit housing counseling agency prior to applying for such a loan. MOHCD may consider home equity loan requests for the following reasons: capital improvements to the home; educational expenses of a household member, medical expenses of the owner or the owner's immediate family member; and funds required to implement a marriage dissolution agreement or domestic partnership dissolution agreement. All other MOHCD underwriting guidelines must be met, including debt-to-income and loan-to-value ratios.

Where can I read the official subordination policy for MOHCD units?

• The specific subordination guidelines can be found on page 2 of the MOHCD Subordination Request Package.