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|---|---|
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Online Payments
Now Available
You can now pay your first mortgage payments online. Pay Now
Loan Servicing's
Office Address:
Loan Servicing - MS 980
P.O. Box 4034
Sacramento, CA 95812-4034
FAQ for CalHFA Homeowners
CalHFA Is Changing Its Fee Structure
For years, CalHFA has tried to minimize the fees we charge for various services that we provide. Unfortunately, as costs have risen and the volume of services being requested has increased, it has become necessary to institute new fees and to adjust some of our old fees. As an agency of the State of California, it is our fiduciary responsibility to minimize the Agency's expenses. The new fee structure will take effect November 15, 2016.
Wherever possible we have tried to make many of these services available through our online loan accesses and in most of those cases, since individual staff time and printing is not required, those services will continue to be free. Some of the services that will continue to be free online for first loans are Amortization Schedules, limited Loan Histories, One Time Drafts, and Current Loan Information which can sometimes be used for Verification of Mortgage requests. Loan Histories and Current Loan Information are available free on the subordinate loan site.
The new fee structure will be available soon.
FIRST LOANS
Arm Loans
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 Interest Rate to change once annually after the first year with the February, May, August, or November payment, depending on your first payment due date.
- Have a Margin of 1.25%.
- And Interest Rate Caps of 1%, up or down, for each year and 5%, up or down, for the life of the loan.
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:
| 1st Payment Month> | Index Day | Rate Change Date | Payment Change Date |
|---|---|---|---|
| Oct, Nov, Dec | Dec 2 | Jan 1 | Feb 1 |
| Jan, Feb, Mar | Mar 2 | >Apr 1 | May 1 |
| Apr, May, Jun | Jun 1 | Jul 1 | Aug 1 |
| Jul, Aug, Sept | Sept 1 | Oct 1 | Nov 1 |
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.
Credit Reporting
CalHFA is committed to creating opportunity for our borrowers. On time payments reflect on your credit file in a positive way and give you an opportunity to build or establish credit.
CalHFA reports to Equifax, Experian, Innovis and TransUnion credit bureaus.
CalHFA reports on all first (primary) loans which have required monthly payments. Some first loans may be temporarily restricted from reporting due to modifications, transfer, or other issues.
CalHFA does not report on any of their subordinate (secondary) loans because no monthly payments are required.
CalHFA reports to the credit bureaus on the 5th of each month or the first working day after if the 5th falls on a weekend or holiday. The individual credit bureaus may not update their files for anywhere from days to weeks after we have transmitted our reports.
CalHFA reports the following information to the credit bureaus:
Type of Account – Mortgage, line of credit, consumer, etc.
Loan Type – FHA, VA , Conventional
Date Opened
Credit Limit
Original Loan Amount
Loan Term
Payment Frequency – Monthly, quarterly, annual, etc.
Monthly Payment
Payment Rating – Current, 30-59 days past due, etc.
Payment History – Up to last 24 months
Current Balance
Amount Past Due
Date Closed
Date of Last Payment
Interest Type – Fixed or variable
Last Name
First Name
Middle Name
Social Security Number
Mailing Address
Yes, you may dispute any information CalHFA reports to the credit bureaus. To file a dispute you must contact the credit bureau directly:
TransUnion
P.O. Box 1000
Chester, PA 19022
www.transunion.com
Experian
P.O. Box 2104
Allen, TX 75013
www.experian.com
Equifax Credit Information Services, Inc
P.O. Box 740241
Atlanta, GA 30374
www.equifax.com
Innovis Consumer Assistance
P.O. Box 1358
Columbus, OH 43216-1358
For additional information on submitting your issue in writing to the credit bureau click here
Escrow
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.
Property Accessed Clean Energy (PACE), also known by CaliforniaFirst, HERO, mPOWER, Ygrene and other names, is a financing mechanism provided through your county tax collector that allows property owners to install energy (solar, etc.) and water efficiency retrofits and renewable energy systems and add the financed amount to your property tax bill over a number of years.
How does this affect your loan with CalHFA? The increase in your property tax bill will result in an increase in your monthly payment and could, if not handled properly, create a very large escrow shortage in the first tax year causing an even larger payment increase. This could potentially affect your ability to afford your monthly house payment.
What should I do if I am considering or have already entered into a PACE agreement? As soon as possible after you have decided to use a PACE program, you should contact our Loan Servicing property tax personnel by calling 1.800.669.1079 or write us at servicing@calhfa.ca.gov or the address below.
What will I need to provide? Initially you will need to provide the estimated annual amount that will be added to your property tax bill, the tax year the increase should begin, and a written request to adjust your monthly payment to prepare for the anticipated increase. Ultimately you will need to provide a copy of the final payment schedule provided in your documentation once the financing agreement is completed.
For questions regarding any PACE program in your area, visit www.pacenation.us/pace-programs. If you have additional questions regarding the effect on your CalHFA loan payment, please contact our Loan Servicing tax personnel at 1.800.669.1079.
California Housing Finance Agency
Loan Servicing – Property Tax – MS 980
500 Capitol Mall, Suite 400
Sacramento, CA 95814
Hazard Insurance
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
Loan Servicing - MS 980
P.O. Box 4034
Sacramento, CA 95812-4034
Fax: 916.326.6420
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 servicer, 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 Loan Servicing - MS 980, P.O. Box 4034, Sacramento, CA 95812-4034, 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.
IRS Forms and Year End Statements
Depending upon various factors regarding your loan CalHFA could issue a number of IRS Forms as described below. All forms are issued during January of each year for the prior year's activity. Questions regarding the use of any IRS Forms must be directed to a tax professional. CalHFA cannot answer tax related questions.
- 1098 – Mortgage Interest Statement. The 1098 is issued if you paid interest during the tax year being reported. Each payment is made up of principal and interest, and sometimes escrow funds. The interest portion is reportable for tax purposes. CalHFA reports any interest paid to the borrower; however, the IRS requires us to only report amounts in excess of $599.99, lesser amounts are not reported to the IRS. Accrued interest is not reportable. 1098 forms for first loans for the most recent three years, if they existed are available Online.
- 1099-INT – Interest Income. The 1099-INT is issued if you were paid $10.00 or more in interest. California law requires CalHFA to pay interest on the funds held in your escrow account. The interest is paid on the last working day of each year or when the final escrow balance is disbursed after a loan is paid in full. The IRS does not require us to report amounts less than $10.00.
- 1099-A – Acquisition or Abandonment. The 1099-A is issued if a loan is removed as the result of a foreclosure, or deed-in-lieu.
- 1099-C – Cancellation of Debt. The 1099-C is issued if a loan is removed as the result of a short sale or negotiated reduction of debt. For subordinate loans the 1099-C is also issued if the loan is eliminated due to the foreclosure of the first loan.
- 1099-MA – Mortgage Assistance Payments. CalHFA does not issue 1099-MA's. The 1099-MA is issued if you have received assistance to make your loan payments, reduce your principal balance, or receive assistance to move from a property to surrender the home to the servicer. If you received assistance on your loan, the agency that issued the assistance will issue the 1099-MA, such as a Section 8 Housing Authority, or Keep Your Home California. If you have questions regarding a 1098- MA, you need to contact the issuing entity.
- 1099-MISC – Miscellaneous Income. The 1099-MISC is issued when payment is made to an individual or corporation for a service rendered. CalHFA issues these forms to companies that perform services on properties we service during any foreclosure process or during proceeds disbursements of insurance claim funds to contractors. Typically a borrower would never receive a 1099-MISC.
All IRS Forms which CalHFA issues are issued in January of each year following the year the reporting activity occurred. The forms are sent as earlier in the month as we are able to audit, print, and mail them. Typically most are issued and mailed by the 15th of January but they may be issued as late as the last week of January.
The 1098 for first loans for the last three years, if appropriate and after they have been issued, are available Online in a printable form from January through September online for loans serviced by CalHFA. After September the document that is three years old is dropped.
If after January 31 you have not received your 1098 or 1099(s), you can contact our offices at 1-800-669-1079 or email us at Servicing@calhfa.ca.gov, and request a copy.
The 1098 for first loans for the last three years, if appropriate and after they have been issued, are available Online in a printable form from January through September online for loans serviced by CalHFA. After September the document that is three years old is dropped.
A number of reasons could cause your interest to be higher than the prior year.
- In the prior year you paid fewer payments than in the most recent year. Review your loan histories to determine.
- Due to a modification adjustment your interest rate increased during the period covered by the two statements.
- Due to a modification we have reported deferred interest in the most recent year but none or less in the prior year. Review the bottom of the Statement of Mortgage Account to determine the makeup of your interest amount.
- Due to an adjustment your interest was modified. Review the bottom of the Statement of Mortgage Account to determine the makeup of your interest amount.
- The prior year did not cover a full year of servicing by CalHFA.
If these possibilities do not cover your circumstances, please feel free to contact us our offices at 1-800-669-1079 or email us at Servicing@calhfa.ca.gov.
A number of reasons could cause your interest to be lower than the prior year.
- In the prior year you paid more payments than in the most recent year. Review your loan histories to determine.
- Due to a modification adjustment your interest rate decreased during the period covered by the two statements.
- Due to a modification we have reported deferred interest in the prior year but none or less in the most recent year. Review the bottom of the Statement of Mortgage Account to determine the makeup of your interest amount.
- Due to an adjustment your interest was modified. Review the bottom of the Statement of Mortgage Account to determine the makeup of your interest amount.
- The most recent year did not cover a full year of servicing by CalHFA.
If these possibilities do not cover your circumstances, please feel free to contact us our offices at 1-800-669-1079 or email us at Servicing@calhfa.ca.gov.
Deferred interest is interest that was not paid when it was accrued and is added to the principal of the loan. When this "principal" is paid, we can report it as interest paid. There are loans which CalHFA does not purchase that create deferred interest on a regular basis, such as Graduated Payment Mortgages and Negative Amortization Loans. CalHFA has deferred interest on some loans as the result of modifications.
When a loan is modified and the payment date is brought forward without payments being applied, the accrued interest, the unpaid escrow funds for each payment, and any fees may be added to the principal balance of the loan. The interest portion of this principal addition is identified as "deferred interest". As the borrower begins making payments on the modified loan the principal portion of each payment may be reported as interest on the borrower's 1098 at year end until the full amount of the deferred interest is paid.
If a loan had $1,000.00 of interest added to the principal, that addition would be defined as deferred interest. As each payment is made the principal portion of each payment up to the first $1,000.00 would be reported as interest at year end of the year in which the payment is made.
There are usually only two reasons interest paid is not reported.
- If your loan is a buydown loan and the buydown funds were provided by a third party, you cannot claim the interest that was covered by the buydown portion of the payment. Review the bottom of the Statement of Mortgage Account to determine the makeup of your interest amount.
- If you paid payments in the most current year that will be accrued in future years, you cannot claim the future interest and it is not reported on the 1098. It will be reported in the future year when it has been earned.
For instance, in December 2014 you pay the January, February and March 2015 payments in advance. The interest for the January 2015 payment will be reported on the 2014 1098 because interest is paid in arrears and the January 2015 payment pays the December 2014 interest. However, the February and March 2015 payments will not be reported on the 2014 1098 because the interest is not accrued until 2015. The interest on the February and March 2015 payments will be added to the 2015 1098 issued in January 2016.
Loan Modification / Loss Mitigation
Loss Mitigation is an effort by the loan holder or its servicer to negotiate a new agreement with the borrower to help prevent a loss to the holder as a result of foreclosure or other adverse actions. Examples of loss mitigation are, Special Forbearance (a repayment plan that allows for no payments or reduced payments for a set period of time based on income), Loan Modifications, a short sale where the loan holder accepts less than due upon sale of the property, or a Deed-in-Lieu of foreclosure.
A loan modification is a formal agreement that a loan holder or its servicer and the borrower enter into to change various portions of the original loan agreement (Note). Some of the items that may be changed are, but not limited to, the monthly principal and interest payment, the loan term (length), the interest rate, and the maturity date.
Many Loan Modifications are the result of Loss Mitigation efforts.
In order to be considered for a modification, you must be experiencing or have experienced a financial hardship. The party requesting the modification must be able to document a loss of income or an increase in expenses and the property must be owner occupied. An underwriting review is completed to determine the affordability of your payment and whether or not you meet all the criteria for a loan modification.
You must include a complete financial package including the following items:
(Financial Package Instructions: English and Spanish)
- A completed Uniform Borrower Assistance Form (Form 710)
- A completed Letter of Hardship providing detailed information regarding the dates and causes for the hardship.
- Copies of your most recent two pay stubs and/or any other documentation related to sources of income (e.g., disability, unemployment, SSI, child support, alimony, etc.) If employment is new, provide start date.
- Copies of the last two years Federal tax returns for all borrowers on the loan. These must be complete tax returns including all schedules and K-1s including your W2’s. If you own a business, we also need copies of the business tax return and the annual profit and loss statements for the last two years.
- Copies of your two most recent bank statements for all checking and savings accounts.
- If you own a business, copies of all business bank statements for all accounts (business tax returns and a profit and loss statement may be required).
- Copies of two months of your most current gas/electric, sewer, water, garbage, cable, cellular phone and/or landline telephone bills.
- A copy of your current Homeowners Association bill, if applicable.
In addition to the documents listed in the Loss Mitigation process section above the following documents must be provided:
- A copy of the purchase offer signed by all parties...
- A copy of the listing agreement showing you are actively marketing the property.
- An Estimated HUD-1 or settlement statement.
- A preliminary title report.
- A Comparative Market Analysis (CMA) or Broker's Price Opinion (BPO) that must include comparative values.
CalHFA will evaluate a borrower for "home retention" loss mitigation options before considering "non-home" retention options such as a short sale. Be sure that your hardship letter speaks to why you are unable to keep your home.
Mail completed packages to:
California Housing Finance Agency
Loan Servicing - MS 980
P.O. Box 4034
Sacramento, CA 95812-4034
Fax: 916.326.6422
Assistance: 800.669.1079
It may take up to 90 days to complete the loss mitigation process.
Mortgage Insurance
The IRS has once again extended the deductibility of mortgage insurance for some borrowers whose loans closed after December 31, 2006, and appropriate amounts will be reported in Box 4 of the 2014 IRS Form 1098. You should consult a tax preparer before taking this deduction.
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 after December 31, 2006, and before January 1, 2015, 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.
- 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.
- 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. 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:
California Housing Finance Agency
Loan Servicing - MS 980
ATTN: PMI Department
P.O. Box 4034
Sacramento, CA 95812-4034
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 qualified borrower becomes involuntarily unemployed.
Program Details & FAQs
Name Changes
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:
California Housing Finance Agency
Loan Servicing - MS 980
P.O. Box 4034
Sacramento, CA 95812-4034
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.
Payments
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:
California Housing Finance Agency
Loan Servicing - MS 980
P.O. Box 4034
Sacramento, CA 95812-4034
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:
California Housing Finance Agency
Loan Servicing - MS 980
500 Capitol Mall
Sacramento, CA 95814
Using the federal ACH drafting system, you can make a payment over the phone through our offices during regular business hours and it will usually be applied to your account the same day by using our One Time Draft system. The funds must be in your bank account on the day the funds are drafted or the draft will be refused by your bank and fees may be assessed. To make your payment today call us at 800.669.1079. Calls must be received before 5:00 p.m. Pacific Time to be processed the same day, especially 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”.
Payoff
Before requesting a payoff notice, please read carefully the name of the Lender of Record. California Housing Finance Agency ("CalHFA") and California Housing Finance Agency Mortgage Assistance Corporation ("CalHFA MAC") are two separate entities. CalHFA MAC is the nonprofit organization that administers Keep Your Home California.
If you wish to order a payoff notice for CalHFA MAC loan click here
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.
If you have a written payoff quote from CalHFA and it has been less than 30 days from the date on the payoff letter, the payoff quote is still valid; however, to ensure the accuracy of your payoff, we recommend that you call 800.669.1079 for verification of the correct payoff amount.
If a written payoff statement has not been issued by CalHFA or more than 30 days has elapsed since your payoff statement was issued, then verification of the payoff amount will not be possible as the payoff quote expires after 30 days. You must either call 800.669.1079 to request a new written payoff statement or log-on to your online account access to request a payoff statement through our website. If you have a valid written payoff statement, an updated payoff statement can also be obtained through your online account access.
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:
California Housing Finance Agency
Loan Servicing - MS 980
ATTN: Payoff Department
500 Capitol Mall
Sacramento, CA 95814
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. Once the Deed of Reconveyance has been prepared, it will be forwarded to the county recorder’s office for the county in which the property resides. Once the document is recorded and indexed it will be mailed to you by the recorder’s office. The time frame varies from county to county and you should contact the recorder’s office for a current time frame.
Principal Payments
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.)
Property Taxes
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:
US Mail:
California Housing Finance Agency
Loan Servicing - MS 980
ATTN: Tax Department
P.O. Box 4034
Sacramento, CA 95812-4034Overnight:
California Housing Finance Agency
Loan Servicing - MS 980
ATTN: Tax Department
500 Capitol Mall
Sacramento, CA 95814
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.
SUBORDINATE FINANCING (Second and Third Loans)
General Information
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.
IRS Forms and Year End Statements
All IRS Forms which CalHFA issues are issued in January of each year following the year the reporting activity occurred. The forms are sent as earlier in the month as we are able to audit, print, and mail them. Typically most are issued and mailed by the 15th of January but they may be issued as late as the last week of January.
If after January 31 you have not received your 1098 or 1099(s), you can contact our offices at 1-800-669-1079 or email us at Servicing@calhfa.ca.gov, and request a copy.
A number of reasons could cause your interest to be higher than the prior year.
- In the prior year you paid fewer payments than in the most recent year. Review your loan histories to determine.
- The prior year did not cover a full year of servicing by CalHFA.
If these possibilities do not cover your circumstances, please feel free to contact us our offices at 1-800-669-1079 or email us at Servicing@calhfa.ca.gov.
A number of reasons could cause your interest to be lower than the prior year.
- In the prior year you paid more payments than in the most recent year. Review your loan histories to determine.
- The most recent year did not cover a full year of servicing by CalHFA.
If these possibilities do not cover your circumstances, please feel free to contact us our offices at 1-800-669-1079 or email us at Servicing@calhfa.ca.gov.
Payoff demands
You can send a request in writing to CalHFA, Loan Servicing - MS 980, P.O. Box 4034, Sacramento, CA 95812-4034. 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.
If the subordinate lien is with Keep Your Home California (KYHC) or CalHFA Mortgage Assistance Corporation (CalHFA MAC), go to www.KeepYourHomeCalifornia.org/payoff.htm or contact Keep Your Home California at 888.954.5337 for instructions on how to request a payoff.
Payments
Yes. Payments can be made by sending a check or money order to the California Housing Finance Agency, Loan Servicing - MS 980, P.O. Box 4034, Sacramento, CA 95812-4034. 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 an Activity Statement, and we will mail one out.
Payments can be mailed to the California Housing Finance Agency, Loan Servicing - MS 980, P.O. Box 4034, Sacramento, CA 95812-4034. Your loan number should be referenced on the payment.
Subordination
Yes, effective January 29, 2015,CalHFA is pleased to announce a streamlined subordination process for all CalHFA junior loans. This streamlined subordination process will allow homeowners the opportunity to refinance their first mortgage loans, in order to take advantage of lower interest rates and reduced FHA mortgage insurance premiums, without being forced to pay off their existing CalHFA junior loan(s) in full or declare a hardship.
See the new loan, borrower, and property requirements below.
The minimum requirements are:
- The loan must be underwritten and approved by the new lender in accordance with loan programs that refinance the unpaid principal balance of the existing first mortgage loan (no-cash-out refinance).
- The new first loan must lower the borrower’s monthly mortgage payment or replace an existing loan with a more stable product.
- Borrower must have insufficient funds to pay off the existing CalHFA junior loan(s).
- The property must continue to be the borrower's principal residence.
Eligible CalHFA junior loans include the following:
- California Homebuyer's Downpayment Assistance Program (CHDAP)
- CalHFA Housing Assistance Program (CHAP)
- High Cost Area Home Purchase Assistance Program (HiCAP)
- Extra Credit Teacher Program (ECTP)
- Homeownership in Revitalization Area Program (HIRAP)
- Zero Interest Program (ZIP) & (ZIP Extra)
Complete subordination process requirements, procedures and forms can be found on our website at www.calhfa.ca.gov/homeownership/programs/subordination.pdf
If the subordinate lien is with Keep Your Home California(KYHC) or CalHFA Mortgage Assistance Corporation (CalHFA MAC), go to www.KeepYourHomeCalifornia.org/payoff.htm or contact Keep Your Home California at 888.954.5337 for the subordination requirements.
Homeowners with a Keep Your Home California (KYHC) junior loan should contact KYHC directly at 888.954.5337 or go to www.KeepYourHomeCalifornia.org/payoff.htm for complete subordination requirements.
For questions about this process, please contact CalHFA Single Family Lending by phone at 916.326.8033; or email us at sflending@calhfa.ca.gov, with a subject of "Subordination Request".
Information Access
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, press 1 then 5 to be connected to a subordinate loan Customer Service Representative.
Assumptions
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.
Interest calculations and Statements
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.
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.
RECAPTURE TAX
All comments are subject to tax law interpretation and should be confirmed by a tax consultant.
General Information
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.
Other Recapture questions?
Call us toll free at 877-922-5432, or send questions to "Contact Us".
Call toll free: 800.669.1079
Email: servicing@calhfa.ca.gov
