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chfa downpayment assistance

CHFA Loans – Connecticut Housing Finance Authority Mortgage Assistance

CHFA Mortgage Assistance for Connecticut Home Buyers

The Connecticut Housing Finance Authority, or CHFA, provides mortgage assistance programs to homebuyers in Connecticut. To receive CHFA mortgage assistance, you must be a first-time homebuyer or buying a home in a revitalization zone and qualify for CHFA assistance based on income. CHFA offers both low interest rate loans as well as downpayment assistance.

CHFA mortgages can be used to purchase single family homes, condos, multi-family homes, and even some mobile homes.

The current CHFA interest rate is 3.5% for government insured mortgage loans and 3.75% for non-insured mortgage loans.

CHFA First-Time Homebuyer Mortgages

Under the CHFA, first-time homebuyers and those who have not owned a home in over three years qualify for the First-Time Homeowner program. The Buyer, or borrower, must also mee

There are also income limits as well as property value limits for CHFA mortgages. The Buyer, or borrower, must make less than a certain amount, which is $87,800 for a home of 1 to 2 people, and $100,970 for a home of three or more people. There are also some income limit differences depending on the town you are looking to purchase in. The property value limits also vary by town. The income and property value limits for specific towns are listed here: CHFA Income & Value Limits by Town.

CHFA Down Payment Assistance

As a separate service from its low interest mortgage loans for low-income households, CHFA also offers downpayment and closing cost assistance. Down Payment Assistance is offered to borrowers who can afford to pay both loans but lack the savings to make the downpayment (less than $10,000.00 total household savings).

The minimum for Down Payment Assistance loan amount is $3,000, with the maximum being the minimum downpayment amount for the actual CHFA mortgage. In most cases, the Down Payment Assistance interest rate will match the CHFA mortgage interest rate, but it can vary and could be up to 6%.

CHFA Revitalization Zones

CHFA also offers mortgage assistance for homebuyers looking to purchase homes in certain areas marked for revitalization. These are areas where the Federal Government has determined would benefit from and increase in home ownership.

In the CHFA Revitalization Zones, the first-time homebuyer requirement is suspended, 1/4% reduction in CHFA published interest rate, income limits do not apply unless also seeking downpayment assistance, and mortgage insurance may be suspended.

In Connecticut, these revitalization areas include Ansonia, Bridgeport, Danbury, Derby, East Hartford, Groton, Hartford, Manchester, Mansfield, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Stamford, Torrington, Windham and Waterbury.


The Lender you choose can give you more information about the details, costs, benefits and downsides of a CHFA mortgage. Click for a List of Participating CHFA Lenders

Multi-Family Disclosure

New Connecticut Fair Housing Notice Disclosure for Purchase or Sale of Multi-Family Real Estate

CT Multi-Family Purchase Disclosure Requirement

Connecticut Creates Mandatory Disclosure Place Buyers of Multi-Family Real Estate On Notice of Equal Opportunity Housing Laws

We live in a heavily regulated legal landscape. Often we perform a task we think is relatively simple, but it may expose us to a host of legal issues, some of which we may not even be aware of. However, as the old saying goes, “ignorance of the law is no excuse”.

In an attempt to weed out some of the lack of understanding in housing laws, the Connecticut Senate passed Public Act No. 16-16, AN ACT CONCERNING THE DISCLOSURE OF HOUSING DISCRIMINATION AND FAIR HOUSING LAWS, which went into effect on September 1st, 2016.

The law creates a mandatory disclosure that must be PROVIDED BY THE SELLER and SIGNED BY THE BUYER any time a multifamily property is bought/sold.

What is a Multi-Family Property?

A multifamily property is any piece of residential real estate containing two or more units. These are very popular in cities and big towns such as Danbury, Waterbury, Stamford, Norwalk, etc. They are often bought by real estate investors who rent the individual units out to tenants.

What is in the Multi-Family Disclosure?

The disclosure places the Buyer on notice of State and Federal fair housing laws. It notifies the Buyer that race, color, national origin, ancestry, sex, creed/religion, disability, family status, source of income, sexual orientation, gender identity and expression, age and marital status are all Protected Classes for which it is illegal to discriminate against in the housing market.

Further, it gives examples of fair housing violations based on those protected classes:

  1. Refusing to rent, sell or show the dwelling;
  2. Steering towards certain neighborhoods;
  3. Increasing security deposits;
  4. Requiring “employment” when other legal sources of income exist;
  5. Failure to negotiate or refusal of rent based on source of income;
  6. Refusing to waive “no pet” policies for tenants with disabilities; and
  7. Refusing to allow tenants with disabilities to build a ramp.

What needs to be done with the Multi-Family Disclosure?

Idealy, the Multi-Family Disclosure will be attached by the Seller to the Purchase and Sale Agreement, Exchange Agreement, or Lease with Option to Buy. The Multi-Family Disclosure is then signed by the Buyer when signing the agreement/contract. However, the Public Act specifically protects the validity of Agreements where the Seller does not attach the Multi-Family Disclosure; those contract with still be enforceable.

If the Multi-Family Disclosure is not attached to the contract, it must be signed before or at closing on the multi-family property.

Where Can Realtors and Sellers get a copy of the Multi-Family Disclosure?

The Multi-Family Disclosure can be found on the Commission for Human Rights and Opportunities website, and is also attached hereto in JPEG format.

foreclosure defense attorney

Right to Foreclosure Mediation Extended to Divorcees and Surviving Spouses – Connecticut Public Act No. 15-124

Right to Foreclosure Mediation for Divorcees and Surviving Spouses

Connecticut Public Act 15-124 – An Act Extending The Foreclosure Mediation Program

One of the benefits of being in a multi-partner law firm is the overlap between our different practice areas, allowing us to better help our clients in difficult situations. Since our firm represents divorce clients, probate clients, and foreclosure clients, Connecticut Public Act no. 15-124 is going to allow us to help clients better solve their foreclosure issues when relating to residential real estate property that was part of divorce or probate proceedings.

The Problem Was Standing

Perhaps you are a divorcee. You just finished the long and stressful process of divorce. Part of the Court ordered Divorce Decree is that your ex-spouse execute a quitclaim deed transferring a house or condominium to your ownership. The deed is drafted and recorded on the land records and as far as you are concerned the property is now yours.

Perhaps your spouse recently passed away. You just finished the extremely complicated probate process. In their will your spouse left you residential real estate property. The Executor of your spouse’s estate drafted an Executor’s Deed, which was approved by the probate court and recorded on the land records, transferring title in the property to you.

In either case, let’s assume there was a mortgage on the property. Either your ex-spouse had not been making payments or the probate estate had not been making payments and the mortgage is in default. Or, even if the payments are current, the mortgage has a “due on transfer” clause, which states that if the property is ever transferred from the ownership of the borrower under the mortgage, the entire outstanding amount is due and payable in full. As is common, the collateral on the mortgage is the property itselfThe bank is now foreclosing on the property.

As the new owner, you want to enter foreclosure mediation so that you can find a way to keep your family home; through mortgage modification or refinance. Until October 1, 2015, YOU COULDN’T!

The issue was standing! Since you were not a party to the mortgage, you had no “privity of contract”, and therefore no standing to challenge the foreclosure in court. The foreclosure would proceed and the bank would be allowed to either repossess or sell your property to pay off the money owed to them.

The Connecticut Legislature Solves The Problem

The Connecticut Legislature saw the issue of removing spouses from the family home without letting them be heard when a court order had given them possession of the residential real estate property. After all, how is it fair to completely stonewall the new owner of the property from mediating a solution to the foreclosure?

Therefore, Public Act No. 15-142 has extended the foreclosure mediation process to include spouses who became “successors in interest” due to divorce, separation, or death of the other spouse.

What this means for our clients

The new law allows the divorcee or decedent’s spouse to stand in the shoes of the previous owner, at least as far as defending against foreclosure of the property is concerned. This means that we can now offer assistance to our foreclosure clients who became owners through divorce or death of their spouse. Previously, we would have had to turn these people away as there was no legal procedure available for us to resolve their problem. It is not guaranteed that the successor-in-interest spouse will be allowed to keep the property, but at least now they have a fighting chance.

ct real estate title law

Title Search and Title Insurance When Purchasing or Refinancing Residential Real Estate

Title Search and Title Insurance in a Purchase or Refinance of Residential Real Estate

Lender Requirements and Buyer Protections

When you are buying residential real estate, you are paying money in exchange for title to the property. It is in the interests of the buyer, and the lending institution giving the buyer a mortgage, to make sure that title is clear and “marketable”. The buyer wants to make sure they are actually being buying the property rights as promised by the seller. The lender wants to make sure that the collateral on the mortgage is as promised; the property has marketable title and is clear of other encumbrances, such as mortgages or liens. So, how do the buyer and lender make sure that title is clear and marketable?

Title Search

The buyer will need to hire a real estate attorney to perform and/or review a title search. A title search reviews the history of the property by looking at the land records. The title search will provide the legal description of the property, showing exactly what the buyer is buying.

For purchases, all conveyances, mortgages, liens and releases are reviewed going back 40 years (called the “chain of title”). By reviewing the title search, the real estate attorney for the buyer will be able to tell if the seller owns the property, how the seller or sellers hold title, do they have the right to sell it, are there any liens or mortgages on the property that must be paid off to make title marketable, and if there are any relevant powers of attorney relating to the property.

The Buyer may also choose to do a municipal search, which reviews all zoning and building permit for compliance with local laws.

For a refinance, only a current owner search is necessary. Through a current owner title search, the real estate attorney performing the refinance closing will be able to see if the borrower is truly the owner, and what mortgages and liens must be paid off to give the new lender first priority.

Title Insurance

Lenders are not willing to rely on title searches and attorney opinion when it comes to making sure they have actual collateral when making mortgage loans. Therefore, Title Insurance was invented to cover losses in the case that a title defect is discovered after the closing on the property. Title insurance is available to protect both the Lender and the Buyer from title defects that could result in loss of property value, or even loss of ownership of the property. In Connecticut, real estate attorneys act as title insurance agents and will prepare and secure the policy on the Buyer’s behalf.

For a purchase, the Lender will demand that the Buyer purchase title insurance to cover the Lender. The Buyer will also have the option to purchase additional coverage that will protect their interest in the property.

For a refinance, the Lender will similarly demand title insurance to cover their interest, but no Buyer policy is necessary. The homeowner will still be covered by the title insurance from their purchase. It should be noted that even if the refinance mortgage lender is the same as the purchase mortgage lender, a new title insurance policy will need to be purchased.

What does title insurance cover?

  1. Insures against anyone else making a claim that he or she is the owner of all or part of the property;
  2. Insures against liens or other encumbrances that were missed by the title search or misindexed by the town clerk;
  3. Can offer protection of ownership even where defects in title marketability exist (such as old unreleased mortgages);
  4. Insures a legal right of access (though this may be just by foot);
  5. Insures against violations of government regulations, but only those violations listed on the land records;
  6. Insures against the exercise of eminent domain in certain situations;
  7. Insures against fraudulent conveyances in the chain of title;
  8. Any defect in title that arises from the date of the policy (the closing date) and the date the deed and mortgage are recorded;
  9. For the Lender, it insures the enforceability of their lien created upon the title of the property by the mortgage;
  10. For the Lender, it insures the priority of their insured mortgage lien against other liens or encumbrances;
  11. For the Lender, it insures the priority of their mortgage lien against liens for services, labor or materials for work done on the property (in conjunction with an Owners Affidavit signed by the Seller);
  12. For the Lender, it insures the assignment and assignability of any mortgages that are assigned to and assumed by the Buyer;
  13. Pays attorneys fees and costs of defending title and the insured mortgages.

There is also available an expanded title insurance policy; which is a good idea for Buyers and may be necessary for the Lender in certain situations. In addition to the protections of a standard title insurance policy, the expanded title insurance policy also covers:

  1. Correcting or removing existing violations of restrictive covenants;
  2. The inability to obtain building permits due to existing violation of subdivision regulations;
  3. Removal of existing structures that were built without proper building permits;
  4. Removal of existing structures due to non-compliance with zoning laws;
  5. If the property cannot be used as a single family home due to zoning regulations;
  6. Removal of an existing structure that is then found to encroach upon the land of a neighbor;
  7. If a neighbor builds a structure that encroaches upon the property of the insured;
  8. For one to four family homes that have a valid certificate of occupancy and no recent boundary line changes, offers survey coverage even without a survey.

What does title insurance not cover?

  1. Government regulations for which a violation was not recorded on the land records;
  2. Rights of eminent domain where a notice of exercise was not recorded on the land records;
  3. Defects, liens or encumbrances that:
    1. were created or agreed to by the insured;
    2. known by the insured but not disclosed to the title insurance company;
    3. that do not result in any loss to the insured;
    4. were created or attached after the date of the policy;
    5. resulting from the Buyer’s lack of “bona fide purchaser” status.
  4. For the Lender, enforceability issues created by the Lender’s inability to meet Connecticut business practices requirements;
  5. For the Lender, enforceability issues created by the Lender’s lack of compliance with consumer protection or truth in lending laws;
  6. Any liens for services, labor or materials for work performed after the date of policy and not paid for by mortgage proceeds;
  7. Any claim arising from bankruptcy or other creditors’ rights laws.

How much does title insurance cost?

The cost of title insurance is set by statute and controlled by the legislature. With that said, title insurance premium are set increase beginning January 1, 2016 for the first time in decades.

With that said, we will look at the pricing structure at the time of the writing  of this article, even though we are only weeks away from the increase.

Let’s use the example of a house that will cost $200,000 (the amount of Owner coverage) and where the mortgage will be for $170,000 (the amount of Lender coverage). A standard lender title insurance policy will cost $607.00. If the Buyer decides to purchase a standard owner policy in addition to the standard lender policy, the total for both is $750.00. Expanded coverage for both Buyer and Lender would cost $825.00 for both policies. This is money well spent for the Buyer, as the title policy remains in effect until the property is sold.

In a refinance, there is no need for an owner policy as the owner is not conveying the property and will be covered by the title insurance policy from their purchase. The Lender policy will need to be purchased to cover the new mortgage, even if the refinance lender is the same as the purchase lender. The good news is that policy is discounted so that a $170,000 lender policy for a refinance would only cost $400.00.

At any time you can get a title insurance quote from the Connecticut Attorneys Title Insurance Company on CATICulator.com.

The Bottom Line on Title Insurance

The title search and title insurance are sometimes unanticipated and unwelcome expenses when the Buyer is presented with their closing costs. However, the Lender policies are required by the mortgage companies and banks, and the Owner policy is a relatively cheap addition that provides a lot of protection. Expanded policies offer buyers the peace of mind that they will not have to incur costs of compliance with violations that were not discovered before the purchase, and even some issues that arise after the purchase. If the Lender MANDATES title insurance to cover its investment, shouldn’t the Buyer similarly protect themselves?

 

buyers real estate closing attorney

Occupancy Affidavit When Buying a House – The What, Why, and So What?

Occupancy Affidavits When Buying a Residential Property

What is an Occupancy Affidavit? Why is it required? What can happen if it’s not honored?

When you buy a residential property, your bank will require you to sign an Occupancy Affidavit or Occupancy Agreement. This document will be signed under oath and notarized at closing.

What is an Occupancy Affidavit? This agreement will represent to your bank (the Lender) that you (the Buyer) will move into the property within the next 30 days, and usually require the Buyer to live there for a certain period of time, for example 1 year. There is no standard occupancy affidavit, and each Lender generates their own agreement, so the exact terms and language will vary from one Lender to the other.

Why Do Lenders Require Occupancy Agreements? The necessity of the occupancy agreement is due to the difference between loan packages for personal residences and investment properties. Residential loan packages come with lower interest rates while investment loan packages have higher interest rates, due to higher risk factors with investment properties that will be rented out. If the Lender is going to be giving the Buyer a personal residence loan package, they want an assurance that they will in fact be living there.

So What? What If the Buyer Does Not Honor the Occupancy Affidavit? Since the Affidavit is signed under oath and notarized, and since its terms are clear or “unambiguous,” it will be fairly easy for the Lender to enforce their rights in court. Failure to honor an occupancy affidavit is considered mortgage fraud. The most likely result is that the Lender, upon discovering a misrepresentation, can immediately call the entire outstanding amount of the mortgage note. There may also be additional civil and criminal penalties. How would the bank find out? New “Risk Management” software can help Lenders use your credit card bureau information (public records) and and tax documents (which you agree to provide as part of any closing) to determine your primary residence and check it against the property you purchased, quickly and easily.

When buying real estate property you should always seek the expertise of an experienced real estate closing attorney. Part of your attorney’s job is to evaluate your goals for the property and make sure you are getting the proper loan package.