227 North Bronough Street, Suite 5000
Tallahassee, Florida 32301
850.488.4197 • 850.488.9809 Fax
www.floridahousing.org
Lender Training for Loan Originators, Processors, Underwriters, Closers and Post Closers
2015-2016
Mortgage Credit
Certificate (MCC)
Lender Training
We, at Florida Housing, have created this online training for you, the lender, to have a firm grasp on exactly what a Mortgage Credit Certificate is and the steps you take in originating an MCC with your first mortgage loan. Our team is dedicated to helping our lending partners in every way possible to ensure that each eligible Florida resident interested in the MCC program is able to receive it.
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Training Time
• Don’t hesitate to take notes as you review the material and use them as a point of reference.
• This training will take approximately 35 minutes.
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Training Agenda
What is a MCC?
Your Role in the MCC Process
Navigating the Reservation System
Review & Testing
Systems Access
Need to Know Information
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What is a Mortgage Credit Certificate (MCC)?
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An MCC is …
A Mortgage Credit Certificate (MCC) is a tax credit which accompanies your lender first mortgage product. Borrower eligibility is determined by IRS established income and purchase price guidelines and First Time Homebuyer status.
The Mortgage Credit Certificate is a tax “credit” not a tax “deduction”, which results in a dollar for dollar tax benefit to the borrower.
The credit is calculated at 50% of the mortgage interest earned over the life of the loan with an annual cap of $2000.
This credit can be claimed annually or monthly through your borrowers adjustment of their W-4 thereby increasing their net or “take home” earnings.
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Key Content
The MCC product is built on a set of core guidelines as mandated by the IRC. Florida Housing strongly suggests making note of key content and reviewing the MCC Lender Guide located on our webpage. It is the lender responsibility to determine borrower eligibility based on the following five (5) requirements. Additional details are available in the Lender Guide specific to determining household income, eligible loan products and properties, etc.
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Key Content – Total Household Income Limits
The first of the five core requirements for the Mortgage Credit Certificate Program is the Total Household Income. Florida Housing maintains a list of the total household income thresholds on its website as well as within the MCC Program Wizard. These income thresholds are broken down by county and household size. When considering eligibility, loan officers will review gross annual income for all adults (18+) projected to live in the household.
Please keep in mind that the higher income limits for “targeted areas” may only be used for predetermined areas as designated by the census tract information. The lender should compare the census tract information noted on the appraisal with that listed on the Florida Housing Census Tract list in order to determine if a property is eligible for the higher limits.
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Key Content – Total Household Income Limits
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Key Content – Property Purchase Price Limits
The second of the five core requirements for the Mortgage Credit Certificate Program is the Purchase Price Limit. Florida Housing maintains a list of the purchase price thresholds on its website as well as within the MCC Program Wizard. These income thresholds are broken down by County. When considering eligibility, loan officers will consider the total acquisition cost and not the loan amount.
Please keep in mind that the purchase price limits for “targeted areas” may only be used for predetermined areas as designated by the census tract information. The lender should compare the census tract information noted on the appraisal with that listed on the Florida Housing Census Tract list in order to determine if a property is eligible for the higher limits.
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Key Content – Property Purchase Price Limits
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Key Content – Borrower First Time Homebuyer Status
The third of the five core requirements for the Mortgage Credit Certificate Program is the borrower first time homebuyer status. Lenders must verify that the borrower (and applicable spouse) have not owned a home within the previous three (3) years. This clock starts from the closing date and works backwards. Per Florida Housing guidelines, borrowers must both own and occupy the property as a primary residence in order to be considered a homeowner.
When considering eligibility, lenders will want to ensure that the borrower name does not appear on the deed for any other real property.
Please keep in mind that eligible veterans (all statuses except dishonorably discharged) are exempt from Florida Housing first time homebuyer requirements. Lenders will submit a valid DD 214 along with the post closing packages to Florida Housing for review.
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Key Content – Homebuyer Education
The fourth of the five core requirements for the Mortgage Credit Certificate Program is the borrower completion of First Time Homebuyer Education. The HUD website has a complete listing of approved educators that borrowers can reach out to regarding homebuyer education schedules and training locations.
Borrowers may also pursue online homebuyer education options through approved educators or mortgage insurance companies. Lenders should reach out to Florida Housing for a list of approved online educators.
Upon completion, borrowers are provided a completion certificate. This certificate must be included in the post closing package in order to meet compliance requirements.
Please keep in mind that eligible veterans (all statuses except dishonorably discharged) are exempt from Florida Housing first time homebuyer education requirements. Lenders will submit a valid DD 214 along with the post closing packages to Florida Housing for review.
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Key Content – Tax Liability
The fifth of the five core requirements for the Mortgage Credit Certificate Program is the borrower having sufficient tax liability. Tax liability is measured by the amount of income the borrower has given to the government over the course of the tax year. Tax liability is clearly indicated on borrower tax transcripts and is generally notated on line 64 of borrower 1040 tax documents.
Lenders will want to ensure that the borrower does not receive a credit (refund) of more than what was paid in. This will determine sufficient levels of tax liability.
Please keep in mind that other credits (earned income credit, etc.) directly take away from borrower tax liability.
Future projections are allowed for borrowers who do not foresee using additional tax credits for a period not to exceed 5 years from the date of closing. Future liability may also be used for borrowers who may currently be college/studies where upon graduation tax liability will immediately increase.
Please keep in mind that retired borrowers who are receiving social security income at time of closing will not meet the tax liability requirement as they do not initially pay enough taxes to have garnered a liability,
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Key Content
The following requirements are non negotiable. If your borrower does not satisfy these requirements, they will not be issued the MCC by Florida Housing.
1) All names listed on warranty deed must sign Florida Housing documents.
2) Tax documents (returns or transcripts) are reviewed by Florida Housing to ensure A) non previous home ownership & B) no credits for home ownership or mortgage interest were claimed by borrower and/or spouse within previous three (3) years.
3) Every file submitted MUST contain the appraisal to determine targeted/non targeted designations.
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Key Content
Keep in mind…
1) The Florida Housing Mortgage Credit Certificate is an accompanying product to your lender first mortgage. As such, there are no FICO requirements
2) The MCC is a Federal Government tax credit. As such lenders cannot combine the MCC with any Florida Housing Government first mortgage products.
3) The MCC program does not allow for non occupying co borrowers. All borrowers must be listed on deed and take permanent residence.
4) Borrowers are required to complete Homebuyer Education Counseling. They must refer to www.hud.gov for a list of approved education providers by county.
5) Florida Housing defines previous home ownership as individuals who have owned and occupied over the last three years. Borrowers who have not owned and occupied during that time period are considered First Time Homebuyers.
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MCC Issuance Process & Your Role
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Compliance & Your Role
The Florida Housing 60 day issuance timeline has been designed to expedite the MCC issuance process.
Florida Housing has broken down the MCC issuance process into four (4) segments, each of which are designed to assist you in meeting all compliance guidelines and providing a seamless transition of all information required.
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Loan Officers & Processors
The MCC Program is designed for eligible First Time Homebuyers in the state of Florida. The program does allow for two exceptions for eligible borrowers looking to participate in the program. Veterans and borrowers purchasing in a federally designated targeted area are exempted from the first time homebuyer requirements. Loan Officers should compare the census tract information listed on the property appraisal to the targeted areas census tract found in the Lender Guide to determine if your borrower would be exempted from the first time homebuyer requirement.
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Loan Officers & Processors
Loan officers are responsible for determining borrower eligibility and reserving the MCC. The MCC should be reserved to as close to the closing date as possible. This will assist in maintaining the timeline structure. Florida Housing recommends that loan officers reserve the MCC with the borrower present to discuss all qualification concerns. Upon completion, loan officers will print the reservation form and Notice to Buyer and provide the borrower with Recapture Tax Information. Notice to Buyer should be signed at reservation.
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Loan Officers & Processors
Ask yourself
1) Based on purchase price, total household income, and First Time Homebuyer status, is this borrower eligible for the MCC program?
2) Does this borrower have a tax liability (current or projected) in which to claim the credit?
3) Did I go over the recapture tax information with the borrower? Any borrower selling the property within nine (9) years of purchase is subject to recapture tax.
4) Are there any additional household members over the age of 18 residing in the home? Income eligibility is determined by ALL adult members of the household.
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Underwriting
Underwriter’s are responsible for reviewing information entered into the reservation system by loan officers and certifying that all information is correct.
Income calculation is a large part of the underwriter role. Please reference the Florida Housing Lender Guide for tips on income calculation.
Post underwriter certification is when documents such as the Mortgagor Affidavit, Seller Affidavit and Underwriter Certification are generated. These documents will be signed at closing and submitted to Florida Housing after closing.
All MCC reservations must be underwriter certified prior to the loan closing.
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Underwriting
Ask yourself
1) Is the information entered into the reservation form accurate and consistent with loan data reflected in lender’s origination system? The underwriter is responsible for the accuracy of the information provided to Florida Housing. The loan information will reflect on the MCC that borrowers will reference when claiming the credit on their tax return.
2) Has the borrower/household income been calculated correctly? The MCC is issued based on total household gross annual income. Income which is consistent and likely to continue should be counted towards the borrower’s total income.
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Post Closers
Post Closers are responsible for generating and collecting all applicable documentation for submitting the complete compliance file to Florida Housing.
The reservation system is available to Post Closers for documentation generation only. Post Closers must keep in mind that only ORIGINAL Florida Housing documentation will be accepted. Photocopies or true copies of Mortgagor Affidavits or Seller’s Affidavits will not be accepted for compliance review and will delay the issuance process. Please work closely with your title company and closing partners to ensure that the correct documentation is submitted.
Post closing compliance packages should be received by Florida Housing no later than 10 days after the closing has been completed.
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Post Closers
Ask yourself
1) Do I have all of the items required as outlined on the Compliance Checklist? 8 out of 10 pended reservations are pended for missing documentation only.
2) Do the Mortgagor Affidavit and Seller Affidavit contain original signatures? Documents which required original signatures or notarization will not pass compliance review and delay issuance of the MCC.
3) Has the spouse, if applicable, signed all Florida Housing documentation? All Florida Housing MCC documents are to be executed by parties listed on the warranty deed. Each individual listed on the warranty deed is require to sign all documentation and satisfy first time homebuyer eligibility income requirements.
4) Has the $500 issuance fee been collected, noted on the HUD and included in the compliance file?
Remember, tax transcripts can be used in lieu of the tax returns for borrowers and/or spouse.
Secondarily, remember, if the $500 issuance fee is not noted on the HUD, the lender will not be allowed to charge the borrower and as a result, the lender will be required to pay the issuance fee from a lender drawn account.
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Managers
Managers are responsible for the basic oversite of the program from the lender perspective. Managers will receive notifications from Florida Housing regarding reservations that have deficiencies that must be resolved prior to issuance. They have two main functions as it relates to the Florida Housing MCC Program.
1) Overall pipeline management, adherence to program timelines.
2) End of year tax reporting generation.
Managers do not have access to reserving or certifying MCCs.
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Managers
Ask yourself
1) Are there any reservations in the system that are nearing the Florida Housing MCC timeline expiration dates. It is vital that all reservations meet each of the timeline requirements.
2) Does my internal staff have adequate access to the program? Keep in mind that processors are required to maintain a separate user profile from that of the loan officer for whom they assist.
3) Do I have all of the documentation that I need in order to complete the IRS tax form 8329?
Remember, management of the MCC Program pipeline is a responsibility of the lender.
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Compliance Review / Issuance
The Florida Housing Compliance Team will issue MCCs to eligible borrowers based on review of the closed loan files and approval of all required documentation.
Florida Housing has 20 days from receipt of the compliance loan file to issue the MCC or notify the lender of any pending deficiencies.
Each MCC has a reservation history attached. An email from Florida Housing’s Compliance Team will be sent to each manager assigned to that specific lender.
Florida Housing will make every effort to work with lenders to resolve deficiencies.
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Lender Cancellation Process
Each Florida Housing MCC Reservation may be cancelled by the loan officer/processor or underwriter anytime prior to reservation certification.
Reservations can be cancelled by selecting the “cancel reservation” button located within the borrower MCC reservation.
If a reservation should be cancelled, but has already been underwriter certified an email should be sent to the Florida Housing Compliance team to request cancellation.
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Lender Cancellation Process
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Reservation Extension Process
Lenders must contact Florida Housing prior to the reservation expiration in order to request an extension.
Extension requests must be submitted to the Florida Housing Compliance Team via the tool provided in the Lender Portal.
Upon acceptance of the extension request, Florida Housing will allow the lender an additional time as needed in which to satisfy all deficiencies noted on the file before any further action is taken.
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Reservation Extension Process
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Reservation Extension Process
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Reservation Extension Process
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Florida Housing Cancellation Process
It is imperative that the lender maintains the established timeline provided for each MCC reservation entered into the system.
Keep in mind, all MCC reservations will be systematically cancelled on the 61st day after it has been reserved.
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Cancellation Process
Reservations that have expired may be reactivated per lender request at Florida Housing discretion.
There is a reactivation fee of $250 made payable to Florida Housing Finance Corp which must be submitted prior to the compliance staff reviewing any applicable information towards resolution.
The reactivation fee must be issued from a lender drawn account, must not be shown on the closing document or loan estimate, and must not be charged to the borrower under any circumstances.
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Florida Housing Reservation System
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Florida Housing Reservation System
All MCC reservations are accessed through the Florida Housing online reservation system which is located on the webpage listed below.
www.floridahousing.org/mcc
Located on the left of the MCC page are all applicable links regarding the MCC Program including the Lender Portal where MCC reservations are created.
Take special note to the link at the bottom of the page labeled Program Updates. Here you will find all recent program updates and announcements.
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Reservation System Log In
The Florida Housing log in page is where you will login to reserve MCCs, certify reservations and obtain program closing documents.
Your username will always be your business email address.
This page is also used to register as a new user with the program. The link “click here to register.” is used for first time users ONLY after they’ve received a notification from Florida Housing that their user profile has been created.
This page is also where you reset your password.
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First Time Users Only
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MCC Lender Pipeline
The Florida Housing Lender Pipeline is where all MCC reservations are housed.
This page is not only where you will locate the status of each file your lender is currently working on, but also where each loan officer and processor will come to create new MCC reservations.
Noted to the right of the borrowers name is the reservations expiration date and the current status of the reservation. This information assists with internal lender pipeline management.
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Reservation Form
The Florida Housing reservation form is the tool used in which to reserve MCCs.
As you complete your reservation, keep in mind that all fields must be completed in the reservation screen. Error messages will prompt you for corrections when applicable.
As a security feature, if your reservation is not saved within three (3) minutes, it will automatically cancel.
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Queue Management
Every MCC reserved by loan officers will immediately be sent into the underwriter queue for certification. Reservation forms will populate based on the reservation queue.
Loan Officers can print program documents (Notice to Buyer, Recapture Brochure, and Reservation Form) as needed.
Underwriters will review the reservation and select one of the three options available (certify this loan, return to originator, or cancel).
Remember! Underwriters MUST certify all MCC reservations prior to closing.
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Reservation Edits
Located in the MCC reservation, both the loan originator and Underwriter have the ability to edit any reservation as they see fit.
If edits are required, the dark gray tab labeled “Reservation Form” can be selected. Changes can be made to the initial reservation and saved.
Underwriters have the option to “Return to Originator” any reservation for corrections or updates by the loan officer if required, or “Cancel the Reservation” if they determined the borrower is not eligible for the program. If a reservation requires editing after underwriter certification, please contact Florida Housing for assistance.
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Reservation Edits
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Reservation Certification
Once the underwriter has reviewed the reservation form and certified that the information entered is correct, the MCC reservation is queued to Florida Housing for compliance review upon receipt of the closed loan file.
Note that after the reservation has been certified, three additional documents auto populate in the reservation forms field.
The underwriter will print the Mortgagor Affidavit and Seller Affidavit which will be signed at closing. The underwriter will also print the underwriter confirmation which will be signed by the underwriter and included in the post closing compliance loan package. This package is sent to Florida Housing for review, approval and issuance of the MCC.
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Compliance Loan File Review
The lender’s post closing team works directly with the Florida Housing Compliance Team to clear any deficiencies noted by Florida Housing upon review of the closed loan file.
Post closers must keep in mind that all Florida Housing affidavits must contain original signatures and are notarized, as required. Failure to adhere to the compliance guidelines will lead to delayed issuance of the MCC or non issuance of the MCC.
By clicking once on the “View Selected Form” tab to the right of the reservation forms available, users will have access to all pre-filled Program documents. Using the Compliance Checklist in conjunction with this screen decreases the likelihood of missing documentation.
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MCC Refinance
Effective October 1, 2015, borrowers who have previously been issued a Florida Housing MCC can now maintain the certification in the event that they refinance their first mortgage loan.
This option is reserved for new refinances only and cannot be backdated.
There is a reissuance fee of $250 made payable to Florida Housing Finance Corp which must accompany the documents illustrated on the Refinance Compliance Checklist.
Please refer to the MCC Program Guide as to the six (6) very strict guidelines which must be adhered to in order for the reissuance to take place.
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MCC Reissue Reservation Form
The borrower is required to present the loan officer/processor with the original Florida Housing issued MCC.
Loan officers/Processors will complete the reservation form in the same manner as a normal MCC, ensuring that all fields are completed as required.
All information entered into the system will be based on the new refinanced loan, except where noted on the reservation form.
It is imperative that Loan officers/Processors select the reissue radio button and enter the corresponding MCC number.
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Reissued Mortgage Credit Certificates
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MCC Reissuance
Once the underwriter has reviewed the re issue reservation form and certified that the information entered is correct, the MCC reservation is queued to Florida Housing for compliance review upon receipt of the closed loan file.
Note that after the reservation has been certified, two additional documents auto populate in the reservation forms field.
The underwriter will print both the Owner Occupancy Certification and Underwriter Certification. The underwriter confirmation will be signed by the underwriter and included in the post closing compliance loan package which is sent to Florida Housing for review, approval and issuance of the MCC.
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MCC Fees
Effective October 1, 2015, Florida Housing charges two additional fees that you must be aware of.
Reissuance Fee of $250 for all MCCs that have been refinanced.
Reactivation Fee of $250 for all MCC reservations which have expired due to an elapsed timeline or have been cancelled due to non compliance by the lender.
These fees MUST be charged to the lender only and can never be charged to the borrower.
Please note that these payments should NOT be listed on the HUD-1 or disclosed to the borrower on the Good Faith Estimate.
Please make sure the check is made payable to
“ Florida Housing”.
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MCC End of Year Reporting
Florida Housing will provide lenders with online access to all end of year IRS reporting documents. This is a change from previous years where MCC Compliance Staff sent hard copies of the required forms to each lender.
Lender assigned managers will have immediate access to
• IRS Tax Form 8329
• Issuance Report
These forms will be available only during a specific time beginning January 1 of each calendar year and closing no sooner than April 15 of each calendar year.
Please keep in mind, the IRS requires lenders to file their f8329 no later than January 31 of each tax year. Extensions can be requested with the IRS directly.
Managers are responsible for logging into the lender portal and printing both pieces of available information. Managers will note that the Florida Housing information required for section II of the F8329 will be prefilled to avoid confusion.
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MCC End of Year Reporting
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MCC End of Year ReportingForm 8329
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MCC End of Year Reporting Issuance Report
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Testing and Systems Access
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Lender Testing & User Registration Process
Final 3 Steps!
Testing: In order to finalize your system access, lenders are required to take a 12-20 question test. The links provided on the next page are not live links. Please copy and paste the applicable link into a separate internet browsers. Test scores will be sent directly to the Florida Housing Compliance Staff.
Profile Creation: Upon completion of the Testing phase, please send an email to [email protected] with the information requested on page 68 of this training with the email header “MCC User Access.”
User Registration: Florida Housing will create your user profile from this requested information and provide user access to the reservation. Please allow 24-48 hours for Florida Housing to respond to all systems access inquiries.
Your access will not be granted without following these exact steps. Please do NOT attempt to register prior to receiving notification from Florida Housing.
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Step 1 - Lender Testing Links
Click one (1) of the three links below to complete the testing phase of the training. These links are position specific.
https://www.classmarker.com/online-test/start/?quiz=egk561d416523918
https://www.classmarker.com/online-test/start/?quiz=d7x561d03740aec6
https://www.classmarker.com/online-test/start/?quiz=f96561d28d2a04f6
PROCEED TO PAGE 68 AFTER YOU HAVE COMPLETED THE ONLINE TRAINING.
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Underwriters
Loan Officers and Processors
Post Closers
Step 2 -System Registration Email
The information requested below must be sent to the Florida Housing MCC Program general email box at [email protected] so that access can be granted. Upon receiving notification from Florida Housing that your profile has been completed, you will immediately register at the Florida Housing webpage as directed in Florida Housing’s email notification of approval.
Profile Information
Full name Email Address
Business Phone Position
Full Business Address Top 5 Counties Serviced ONLY
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Need to Know Information
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Lender Guide
We strongly urge you to review the MCC Lender Guide, which provides more specific information regarding purchase price &
property requirements, income requirements & guidance in calculating income as well as requirements for borrowers in
satisfying first time homebuyer eligibility. It is located at
http://www.floridahousing.org/MCC/ProgramGuide.pdf
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Main Points of Contact
Any program questions should be directed to the contacts
listed below.
Charles Jones Jr., MCC Compliance Manager
Michelle Nix MCC Compliance Specialist
MCC Inquiries for general Program inquiries
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CONGRATULATIONS
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