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Archive of Lender Tips

Helpful Tips for Originating SONYMA Loans

To provide Lenders with helpful tips and information regarding SONYMA financing, we've compiled the below list. We will continue to add to the list on an as-needed basis.

Date: Tip:


Question: What is the difference between SONYMA Compliance Income and Credit Qualifying Income?

SONYMA IRS Compliance Income and Credit Qualifying Income are two separate and distinct calculations:

IRS Compliance Income is the income used to determine if a household (persons occupying the subject property) meets IRS-imposed requirements and is "eligible" for SONYMA financing based upon the county, program, number of occupants and applicable Income Limits. It is the combined income of all household members age 18 or older. This income includes overtime; bonuses; alimony; child support and other recurring income. See pages 7-10 of the Submission of Pre-Closing Application Files Training Module, dated August 2012 to determine other sources of income to include or allowable exemptions. Compliance income is entered on Lender Online when reserving a loan and on the Recapture Notification and Mortgagor's Affidavit. It is also entered on the SONYMA Loan Transmittal when submitting a pre-closing loan file to SONYMA.

Credit Qualifying Income is the "underwriting" income used to determine housing and debt- to- income ratios and is based on our income underwriting guidelines as stated in the SONYMA Credit & Property Underwriting Notes found on the Loan Officer page of our website. This income is entered on the 1003, 1008 and if applicable, DU/LP.


Question: The SONYMA Loan Pre-Closing Application File Checklist requests a photocopy of documentation in the file (i.e., award letter) verifying the subsidy provider(s), subsidy amount(s), and how funds are being distributed. If the contract of sale states the amount and source of the subsidy, does this satisfy the requirement?

If the contract of sale identifies all of the following information then an award letter or its equivalent is not required:

  1. dollar amount of each subsidy received;
  2. provider or source of each subsidy; and
  3. how the funds are to be applied (i.e. closing costs, down payment or repairs*) for each subsidy.

In addition, whenever a copy of the subsidy Note is used as documentation, it must contain the actual subsidy amount(s). A blank Note will not suffice.

*Note: Some subsidy funds are used for repairs or improvements.


Question: Why are SONYMA's interest rates currently higher than conventional and FHA rates?

SONYMA makes its mortgage funds available through the sale of tax-exempt municipal housing bonds. Since 2008, uncertainties in the global markets and US policies to support the economy have kept U.S. Treasury bond rates at historic lows. Municipal bond rates have not held their typical rate advantage during this extended period of volatility, and therefore SONYMA has struggled to keep rates below conventional and FHA rates. SONYMA did benefit from a program designed exclusively for state housing finance agencies (like SONYMA) which provided a significant reduction in our borrowing costs for a limited amount of funds and consequently, SONYMA was able to offer mortgage rates lower than conventional and FHA. However, earlier this year, SONYMA exhausted its allocation of this low cost funding vehicle and its cost of funds has risen significantly. The continued decline of 10-year treasury yields has caused SONYMA's rates to once again lag behind conventional rates.


Question: I have a potential Borrower who owns a single-wide manufactured home located in a mobile home park that is not permanently affixed to the land and where he pays lot rent. He has occupied the manufactured home as his primary residence for the past 3 years and owns no other residential property. Would this Applicant be considered a first-time homebuyer for SONYMA purposes?

Yes, as long as the applicant does not take a mortgage interest deduction on his tax return for any interest paid on a mobile home installment loan, if applicable. For credit qualifying purposes, the monthly lot rent and loan payment (if applicable) must be included in the Applicant's total debt-to-income ratio if the Applicant doesn't sell the manufactured home prior to loan closing.

Question: Under what circumstances would the owner of a manufactured home NOT be considered a first-time homebuyer?

If the manufactured home is the Applicant's primary residence, the Applicant holds title to the land or has a lease with a term in excess of 5 years, and the manufactured home is permanently affixed the Applicant would not be considered a first-time homebuyer for SONYMA purposes.


Question: Under what circumstances can a SONYMA Borrower use cash-on-hand as an asset?


Up to $1,000 cash-on-hand may be counted as an asset, but it CANNOT be used to meet the Borrowers' minimum contribution requirement (1% minimum for 1-2 family homes; 3% minimum contribution for co-ops and 3-4 unit homes). Lenders are not required to document the "source" of the cash; however the cash MUST be deposited prior to the loan application date and verified in a bank account or other acceptable non-traditional savings arrangement.


Question: Can a "non-applicant" household member hold title to a property purchased with SONYMA financing?


Yes, a "non-applicant" household member may be a title holder (aka Mortgagor); however, for SONYMA purposes:

  • The title holder's (Mortgagor's) name must appear on the contract of sale.
  • Unless the requirement is waived, the title holder (Mortgagor) must be a first-time homebuyer and submit copies of his or her last three (3) year's Federal tax returns or equivalent.
  • The title holder's (Mortgagor's) name must appear on the 1003 under "title will be held in what names".
  • The title holder's (Mortgagor's) name must appear on page 1 of the Recapture Notification & Mortgagor's Affidavit and the title holder (Mortgagor) must sign this affidavit at time of application and at time of the loan closing. The title holder (Mortgagor) must also sign the SONYMA DPAL Recapture Notification (if applicable). The title holder's (Mortgagor's) name must appear as a "purchaser" on the Property Seller's Affidavit.
  • The title holder (Mortgagor) must sign the Mortgage at the time of loan closing. (the title holder (Mortgagor) does not sign the Note)
  • The title holder's (Mortgagor's) income must be verified and included in the combined household income calculations which may not exceed the applicable income limits based on the program, household size; location or property and property type.


Question: What are the most common reasons a loan is suspended by the Pool Insurer?


  1. Appraisal report does not contain color photos of the subject property and comparable sales.
  2. Homebuyer Education Certificate is omitted.
  3. Repayment information is missing, in conjunction with a Subsidy or Grant.
  4. Project Questionnaire is omitted or incomplete.
  5. The bank statements do not support adequate funds to close.
  6. Credit report is missing and/or has expired.


Question: Does SONYMA maintain a list of approved Subsidy/Grant providers?

No. In order to be eligible, subsidy or secondary financing programs must be sponsored by a federal, state, or local government agency or another source acceptable to SONYMA and its pool insurer. The subsidy/grant must be subordinate to the SONYMA first mortgage with a Down Payment Assistance Loan (DPAL), if applicable.

Loan submission files must include:

  • Award Letter reflecting the amount of Subsidy/Grant
  • Closing Costs and/or fees netted from Subsidy/Grant
  • Repayment Terms (Copy of Subsidy Note/Mortgage if repayment terms do not appear in Award Letter)
  • Breakdown of how subsidy funds will be used. What portion will be applied to down payment? What portion will be applied to closing costs? What portion, if any, will be used for renovations/improvements?

Note: SONYMA has no CLTV requirement. The borrower's required minimum cash contribution (1% or 3%) is based on the net contract purchase price (Contract price less the sum of all down payment subsidies/grants the borrower is expected to receive).


Question: What is SONYMA's minimum credit score?

SONYMA does not impose a minimum credit score. We do, however, require that the "primary" borrower (the borrower with the most credit qualifying income) have at least 3 credit references established for a period of 18 months. The credit references may be traditional, non-traditional, or a combination of the two. However, non-traditional credit may not be used to counteract the presence of derogatory traditional credit. For more information regarding SONYMA's minimum credit score requirement, see page 9 of June's "Monthly Lender Notice."

It's important to note that while there is no minimum credit score requirement, all borrowers must have a satisfactory payment history. As a rule, a borrower's credit profile should reflect no accounts 30 days past due within the past 12 months, no accounts 60 days past due within the past 24 months and no prior pattern of delinquent credit without a sufficient recovery period.


Question: Are Lenders required to submit a copy of the NYS Property Condition Disclosure Statement to SONYMA?

Yes. Unless the transaction is exempt, Lenders must provide SONYMA and its Pool Insurer with a copy of the NYS Property Condition Disclosure Statement. The Disclosure must be completed in full and signed by both the Property Seller(s) and the Buyer(s). In the event the Property Seller elects to credit $500 to the buyer at loan closing in lieu of completing the disclosure, this credit must be noted in the purchase offer or in an addendum to the offer. Should the Disclosure (or the appraisal) identify an environmental, structural, mechanical or material defect, an inspection by a qualified professional is required. Any necessary repairs must be completed prior to loan closing. Lenders have the option to establish an escrow hold-back in an amount equal to 150% of the cost to complete the repairs. Please be aware that SONYMA will not purchase the loan until the work has been completed nor will it consider requests that involve major structural, mechanical or environmental deficiencies. All hold-back requests must be submitted to Marie Cammarata at


Question: My wife is a full-time student and is employed part-time. Does she qualify for the full-time student "exception" for compliance income purposes?

No. While the exception applies to dependents who are 18 years or older and are classified as full-time students, SPOUSES ARE EXCLUDED. The compliance income for eligible dependents age 18 or older with full-time student status should be calculated as follows:

If the student's compliance income is calculated to be less than $480 annually, count all the income. If the income exceeds $480, count only $480 and exclude the amount that exceeds $480.

SONYMA requires verification of full-time student status in the form of a formal school document or a verification on school letterhead. Such documentation includes, but is not limited to: copies of recent transcripts, letters from school counselors/advisors, verifications from the office of registrar, etc.


Question: How does the SONYMA loan application process work?

Typically, the Lender pre-qualifies or pre-approves the borrower for a SONYMA loan. The borrower shops for a home and enters into a fully executed Contract of Sale (or binder). The Lender reserves the loan with SONYMA within 7 days (from the date of the 1003) via Lender Online (LOL). The loan is rate locked at time of reservation for 120 or 240 days depending on property type and program. The Lender processes the application and simultaneously submits the completed loan file to SONYMA for IRS Compliance approval and to Genworth or MIF (depending on the program) for credit approval. The Lender prints the final approval from LOL. The Lender closes the loan and submits the closed loan package to SONYMA for purchase consideration. To avoid penalty, SONYMA must approve the post-closing file within thirty-five (35) days of the closing date.


Question: Is a Verification of Rent (VOR) required on all SONYMA loans?

No. A VOR is not required for loans approved by LP or DU unless the Findings Report requires one. A VOR, however, is required for manual underwrites when the primary borrower(s) does not have the required number of traditional credit references. In these cases, the VOR is necessary to establish a sufficient non-traditional credit history.


Question: What information does the Lender Online (LOL) Loan Status screen provide?

The LOL Loan Status screen provides detailed information based upon the current "Status" / "Stage" of the SONYMA loan review process. Lenders should refer to this screen frequently to determine if a loan has been pended, approved, extended, cancelled, or rejected. By viewing this status screen, Lenders can then identify any conditions or exception items that may be holding up the pre- or post-closing compliance review process, including any documents that remain outstanding.


Question: What are "excess" gift funds and how do they impact a SONYMA mortgage transaction?

From time to time, gift donors provide borrowers with more funds than are necessary to complete the mortgage transaction as requested. The "excess" (or additional funds) is generally intended for the borrower's personal use (i.e. purchasing furniture) rather than for loan-related purposes (i.e. down payment and/or closing costs, pay down of installment debt, pay off of collection accounts, or for required repairs).

Excess gift funds must be used to reduce the loan amount unless the excess is returned to the gift donor, with the transfer of funds documented in the loan file.


Question: May SONYMA Lenders obtain Mortgage Insurance from any MI provider?

At the present time, the only acceptable mortgage insurers are Genworth, SONYMA's Mortgage Insurance Fund (MIF) and United Guaranty. It's important to note, however, that while United Guaranty is an acceptable primary mortgage insurer, SONYMA's Pool Insurer must also approve the loan. Since Genworth performs contract underwriting on behalf of the Pool Insurer for all Achieving the Dream and Low Interest Rate Program loans, any loan file sent to United Guaranty for primary mortgage insurance must also be sent to Genworth.


Question: Does SONYMA accept properties with "Second Kitchens"?

If a second kitchen is not located in a legal accessory apartment, it must be removed unless it meets the criteria of a summer kitchen. Summer kitchens must be located in a basement and should be common and customary to the neighborhood, as noted on the appraisal. The area containing the summer kitchen cannot be set up or partitioned off for use as a separate apartment or living quarters.

If a second kitchen does not meet the above parameters, it must be removed prior to loan closing. Removal would include all cabinets, appliances, sinks, and the capping of all pipes inside the relevant wall(s).


Unless the first-time homebuyer requirement is waived, for reservations with a residential loan application date of April 15, 2011, or later SONYMA will require a copy of each Mortgagor's Federal tax return for 2010. In addition, as of this date, all self-employed Mortgagors must submit a year-to-date profit and loss statement (P&L) for 2011.

If a Mortgagor filed an extension for the 2010 tax year, a copy of the signed 2010 extension request form must be submitted along with signed Federal tax returns for 2007, 2008 & 2009. Self-employed Mortgagors who filed for a 2010 extension must also provide a P&L for the year 2010 along with a year-to-date P&L for 2011.

P&L statements must be prepared and signed by a tax preparer on his/her letterhead unless the Mortgagor prepared his/her own tax return. In this case, the Mortgagor may also prepare the P&L. It must, however, be accompanied by a notarized affidavit from the Mortgagor(s) stating that the numbers are true and accurate.


Question: Under what circumstances can a qualified Guarantor be added to the loan application?

If a borrower does not have the minimum number of credit references (either traditional or acceptable non-traditional) but otherwise meets SONYMA underwriting guidelines, a qualified Guarantor with an acceptable credit history may be added to the loan to provide additional security.

  • The Guarantor may not have an ownership interest in the property.
  • The Guarantor's income MAY NOT be used for credit qualifying purposes nor will it be included in the compliance income calculation.
  • The Guarantor may not be a spouse and must be a blood relative.
  • Lenders must submit a complete credit package for the Guarantor (i.e. 1003, credit report, income verification).
  • The Guarantor will sign the Note at loan closing and is required to sign the Mortgagor's Affidavit at both application and loan closing.
  • A Guarantor may provide gift funds to the Borrower(s).
  • Loan file must be manually underwritten.


Question: How do I complete the Recapture Notification and Mortgagor's Affidavit?

For step by step instructions on how to complete the Recapture Notification and Mortgagor's Affidavit found at the following link:

Question: What are the most common errors made when completing this form?

The most common errors found in recent loan submissions are: (a) in the Acknowledgement Section, on Page 9, the names of the Purchaser(s) who appeared before the Notary Public are missing ; (b) the Acquisition Cost of the Residence, on page 6, is missing the pro rata portion of the underlying mortgage allocable to cooperative units on line 1a; (c) the Acquisition Cost does not reflect the presence of DPAL and/or subsidy funds. Line #1 should reflect the "net sales price" which is the sales price less the total DPAL amount and/or less the dollar amount of any subsidies applied to down payment (if applicable). The DPAL amount and the dollar amount of any subsidies applied to down payment (if applicable) must then be entered on Line 2. The sum of all entries should be entered on Line 7; and (d) the total household income on page 7, line 14, is missing or does not include income from all household members.


Question: Can "gift of equity" funds be applied to both down payment and closing costs/pre-paid expenses?

No. All gifts of equity funds must be applied to down payment.

Question: Are Borrowers required to meet the minimum contribution requirement (1% for 1-2 units; 3% for co-ops and 3-4 units) when a gift of equity results in an 80% or lower LTV?

No. SONYMA will waive the requirement when a cash gift, a gift of equity, or a gift of land results in an 80% or lower LTV.


Change in pricing for loans with down payment assistance loans

Effective for reservations made as of the date of this Bulletin and until further notice, SONYMA is reducing the interest rate differential for loans with a Down Payment Assistance Loan ("DPAL") from 0.5% to 0.375% and increasing the maximum DPAL amount from $10,000 to $15,000. SONYMA is making this change after getting feedback from the SONYMA Advisory Council that the rate differential was the primary reason for the downward trend in the use of the DPAL product over the last few years.

Please be reminded that DPALs must be in a second lien position for SONYMA to be legally able to purchase the DPAL.


Question: Can an individual be named on title and not be a Mortgagor?

No. Anyone who executes the purchase contract will be reflected on the property title/deed and must be a Mortgagor. All titleholders must occupy the SONYMA financed property, will be subject to all IRS eligibility guidelines, and must execute all IRS compliance documents (i.e. Recapture Notification and Mortgagor's Affidavit, etc.). SONYMA requires that at least one Mortgagor execute the note. Those titleholders who do not execute the note are not used in credit qualifying and are not listed on the 1003 as a borrower (instead he/she should be listed on the 1003 as a titleholder). Reminder: Income from all Household Member(s) is included in the income limit calculation and must be considered for any person that will occupy the financed property, age 18 or older, regardless of whether they are a Mortgagor(s).


Question: How do I determine if a Pre-Closing (Compliance) Loan File has been suspended for Outstanding Conditions/ Exceptions and to whom do I send the documentation to clear the condition(s)?

The "Stage/Status/Date" section of Lender Online's (LOL) Loan Status screen will indicate: SONYMA Reviewed/Pending on M/DD/YYYY, and the "Conditions/Exceptions" section will list any outstanding items necessary to make a final decision on the loan. Lenders should receive an email notification from a SONYMA Loan Analyst when there has been a change in loan status. If you have not received a change of status email within 48 hours, check LOL to make sure the loan has been updated (refer to the upper right corner of the Loan Status Details page, it will display the date and time the loan was updated). By checking LOL frequently, you can verify the most up-to-date status. The Loan Analyst assigned to the loan file will be identified in the Origination Reviewer field on LOL. The table below will assist you in identifying the Loan Analyst. Our Loan Analysts are available to answer any questions you have regarding the Compliance review. Refer to our Lender Online (LOL) User Guide for further information on how to navigate our LOL system.


Question: What are the 5 most common reasons a loan is suspended for Compliance Review?


  1. Recent pay stubs are required for all persons who expect to occupy the SONYMA-financed property and are often omitted. Persons age 18 or older and who plan to occupy the residence (regardless of whether they will be on the mortgage application) must supply income documentation (i.e. pay stubs, award letters, settlement agreements, etc.) Pay stubs must be computer generated and contain year-to-date earnings. A VOE is acceptable in lieu of paystubs.

  2. Interest Rate Option Form (Form D3/9-09) is incomplete, has incorrect interest rate or is an outdated form. Our Loan Officer page on the SONYMA website has a complete list of currently required documents.

  3. Notarized Profit & Loss Statement Self-Employed Borrower(s) must provide a YTD Profit and Loss Statement (P&L) prepared by a tax preparer on his/her letterhead. SONYMA will accept a P&L from the borrower(s) if they prepare their own returns. The P&L must state that these numbers are true and accurate and must be notarized. Note: SONYMA will not require a P&L for the first quarter of 2011 but will accept the previous year's Federal tax returns to determine the Borrower(s) income for the current year. If the Borrower(s) has not yet filed a Federal tax return for the previous year, then SONYMA will require a P&L for that tax year.

  4. Recapture Notification and Mortgagors Affidavit (Form 211/3-11) does not accurately reflect the pro-rata share for cooperatives or the correct sales price for subsidized housing. Click here for detailed instructions on how to complete this form for all types of loans, including cooperatives and loans with grants and subsidies.

  5. Information on the Residential Loan Application (1003) and the Transmittal Summary Form (1008) does not match (i.e. different loan amounts, different sales prices, etc.)


Question: When are Mortgagors required to provide their 2010 Federal tax returns for IRS compliance purposes?

For reservations with a residential loan application date between January 1 and April 14, 2011, SONYMA does not require 2010 Federal tax returns. If Mortgagors have not yet completed their Federal tax return for 2010, then Federal signed tax returns for 2007, 2008 & 2009 are acceptable.

For reservations with a residential loan application date of April 15, 2011 or later, SONYMA will require a copy of the Federal tax return for 2010. If a Mortgagor filed an extension for the 2010 tax year, a copy of the signed 2010 extension request form must be submitted along with the signed Federal tax returns for 2007, 2008 & 2009.


Question: What is the importance of the SONYMA Pre-Closing Application File Checklist?

Paying close attention to the detailed instructions on the SONYMA Pre-Closing Application File Checklist (Form 225/12-09) is the best way for processors to ensure an accurate and complete compliance loan file submission. Lenders must utilize this form to determine that all documentation, as required by SONYMA, is completed and submitted in the appropriate format. In addition, Lenders certify to SONYMA that the loan is being submitted in accordance with SONYMA guidelines. It is very important that the Contact Person listed is the individual that is most familiar with the loan file, as questions and communications from SONYMA will be directed to this person. The checklist, if used properly, will greatly reduce the possibility of SONYMA rejecting or suspending the loan file.


Question: Is the Seller's Affidavit required when the property seller is a decedent's estate?

Yes. The Executor/Executrix who signed the purchase contract must also sign the Seller's Affidavit. There are only two transactions that do NOT require a Seller's Affidavit:

1) Foreclosed properties sold by the foreclosing Lender or Investor.

2) New construction where the owner of the land and the builder are different individuals or entities.


When I send a Pre-Closing Loan Submission file to SONYMA, how can I be sure it was received?

You can access our Lender Online system 24/7 for up to date information on the status of your loan. On the day SONYMA receives a Pre-Closing Loan file submission, the "Status" changes from "Lender Review" to "SONYMA Received." Lender Online will reflect the date received as well as the initials of the Loan Analyst to whom the file has been assigned. Currently our turnaround time for loan review is 24-48 hours. If you do not see a change in status after 48 hours you can contact the Loan Analyst or Lou Germanakos at 212-872-0407 or for loan status.


Question: Where can a Loan Officer find a list of required SONYMA documents?

The SONYMA website contains a special "Information for Loan Officers" webpage. This webpage was designed to provide loan officers with the necessary information and tools needed to successfully originate SONYMA loans. It contains the list of required forms and documents:




On the first business day of each week Lenders are required to submit a report to SONYMA identifying each mortgage loan closed during the prior week. The report should contain at minimum the SONYMA loan number, mortgagor's name and the closing date. Sample report "Closed Loan Report, Form #246 12/10" can be used for this purpose. Fax this report to the attention of Lou Germanakos at 917-274-0407 or email this report to



Question: Who is required to complete a homebuyer education course?

Homebuyer Education is required for all Borrowers in any of the following instances:

  • If less than 5% of the Borrower's own cash is contributed to the transaction;
  • If the LTV is greater than 95%;
  • If the CLTV is greater than 100%, where subsidies are being utilized;
  • For all loans reserved under the Achieving the Dream, Remodel New York, and Habitat for Humanity Programs (regardless of the LTV or cash contribution).
  • For all borrowers receiving Section 8 Assistance. In this instance, the Borrower must complete a homebuyer education course administered by an organization approved by HUD to provide Section 8 Homeownership Counseling.

Unless otherwise noted, the source of counseling must be approved by either the PMI insurer/Fannie Mae/Freddie Mac/or HUD. Evidence of course completion must be sent to the PMI/Pool Insurer with the credit underwriting file.



Required Lien Position for Down Payment Assistance Loans:

Lenders are reminded that SONYMA's Down Payment Assistance Loan ("DPAL") is required to be in a second lien position (subordinate only to SONYMA's first mortgage). It has recently come to our attention that some DPALs have closed in a lower than second lien position. (This may occur in cases where secured subsidies are part of the home purchase transaction.) SONYMA has no legal authority to purchase other than first and second mortgages. In the event a DPAL is lower than second position, lenders will be advised to amend the lien positions so that the DPAL is in second position. If the second lien holder refuses to subordinate its mortgage to the DPAL, SONYMA WILL NOT PURCHASE THE DPAL. When closing loans with a DPAL that involve other subsidies, Lenders must be sure that the other mortgage providers are aware that their lien will be in a third or lower lien position.

As a reminder, DPALs may be used in conjunction with any available SONYMA program. The DPAL amount must be at least $1,000 and cannot exceed the greater of $3,000 or 3 percent (3%) of the home purchase price, but in no event, shall the DPAL exceed $15,000. For more information on this program enhancement, please click the following links:



Question: How do I get a quick approval and closing on a SONYMA loan?

As we enter December, it seems that everyone's attention shifts to closing loans. SONYMA and its Pool Insurers review and decision a loan within 24-48 hours of receipt. An approved loan can typically close immediately thereafter. On the SONYMA compliance side, paying close attention to the detailed instructions on the SONYMA Pre-Closing Application File Checklist (Form 225/12-09) is the best way for processors to ensure an accurate and complete loan file submission. Our Loan Officer web page ( contains a wealth of information for loan officers including a list of required SONYMA forms and documents. Instructions on how to complete these forms can be found in the Submission of Pre-Closing Application Files Training Module (March 2010). The Loan Officer's webpage also contains Income and Purchase Price Limits, program guidelines, list of targeted areas, tips for originating loans, a staff directory, credit and property underwriting notes, examples of how to complete the SONYMA Recapture Notification, FAQs, condo/co-operative guidelines and more. Our staff and Relationship Managers are also ready and available to assist you.



Question: The Loan Processor (LP) that was originally assigned to my loan has changed subsequent to the loan reservation being entered on Lender Online (LOL). How do I change the processor's name for this loan?

Complete and submit the LOL Data Entry Change Request Form (Form L1/5-08) to the fax number listed at the top of the form. Lenders must also complete this change request form when changing any other data relating to the loan reservation (i.e. loan amount; loan term; program; correction to the spelling of an applicant's name; etc.). As a reminder, all changes of a material nature must also be reported to the Pool/PMI Insurer for approval and issuance of a new certificate, if applicable.



Child Support Payments:

For credit underwriting purposes only, monthly child support payments are deducted from the applicant's gross monthly income rather than counted as a monthly liability. The table below illustrates the favorable impact this has on the applicant's total debt-to- income ratio.

  $600 Counted as
Monthly Liability
$600 Deducted from
Gross Monthly Income
Gross Monthly Income $4,000 $3,400
Proposed Housing Expense (PITI) $1,000 $1,000
Total "Other" Monthly Debt $1,000 $400
Housing Expense to Income Ratio (Maximum 40%) 25% 29.41%
Total Debt-to-Income Ratio (Maximum 45%) 50% 41.18%
Debt-to-Income Ratio Guideline Met? No Yes


Question: Unless the first-time homebuyer requirement is waived (i.e., eligible military veterans and purchasers of homes located in a target area), are all household members required to be first-time homebuyers?

No. Only "Mortgagors," defined as any borrower, co-borrower, or anyone holding title to the subject property, must meet SONYMA's definition of a first-time homebuyer. The name of each Mortgagor must appear on the purchase contract, the Recapture Notification & Mortgagor's Affidavit (Form 211/1-10), Property Seller's Affidavit (Form 210/5-09) and on the residential loan application (in the titleholder section). In addition, Mortgagors must submit copies of their last 3 year's federal income tax returns. It is important to remember, however, that while only Mortgagors are required to be first-time homebuyers, the income of all household members age 18 and older must be included in the household income calculation.



Child Support Income:

When calculating household income for IRS compliance purposes, income from child support must be included. While a borrower may not have disclosed child support income for income qualifying purposes, the Lender is required to make inquiries as to whether any borrower or household member, with dependent children, receives child support income. For a borrower or household member receiving child support, a copy of a court ordered document (i.e. separation agreement or settlement agreement) is required. These documents must disclose the dollar amount of the child support, which is annualized and included in the household income calculations. If a borrower or household member receives less child support than specified in the court ordered document, the child support received, year-to-date, must be documented and annualized for income eligibility purposes. In this instance, a notarized affidavit from the borrower or household member is required attesting to the reduction of the agreed upon child support payments. If a borrower or household member has a court order to receive child support payments, however, is not currently receiving payments and has not received it for the three months immediately preceding the loan application date, the child support income may be excluded from the compliance income calculation. In this instance, a notarized affidavit from the borrower or household member attesting to the non-receipt of child support payments is required.



Federal Recapture Tax to Borrowers & SONYMA's Reimbursement Policy

Households who finance the purchase of their home with a mortgage provided by SONYMA (which is funded from the proceeds of tax-exempt mortgage revenue bonds) may, in rare cases, be required to pay a Federal Recapture Tax. This Federal tax is due ONLY IF ALL three of the following events occur: (a) a home is sold within the first 9 years of the purchase; (b) the borrower's household income has increased above "adjusted income levels" (in most cases, the income must increase substantially); and (c) the home is sold at a "gain". The Federal Recapture Tax should NOT be confused with the recapture associated with a CCAL or DPAL. A state law signed in 2007 allows SONYMA to reimburse any borrower who obtained a SONYMA mortgage on or after July 17, 2007, and who paid a Recapture Tax to the IRS in conjunction with their Federal income tax return. More details, as well as "FAQ's" are available on our website.



SONYMA Loans and Lender Repurchase Risk

SONYMA loans carry very little repurchase risk for Lenders. In fact, SONYMA's repurchase rate is less than 0.5%. Why? All loans are pre-reviewed and approved by SONYMA and the Pool Insurer prior to loan closing. As a result, it is rare that a Lender is required to repurchase a loan. Repurchases are usually due to a Lender not closing a loan on the correct forms, etc. and such deficiency could not be cured.



Question 1: Why was my loan reservation canceled? How do I request that the loan reservation be reinstated?

Loan reservations are canceled after 75 days or more of inactivity. We suggest you run a cancellation report from the Lender Online (LOL) system after the 1st of every month to determine which loans were canceled during the prior month. Review this report and complete and fax either (1) the Commitment Extension Request Form (#235/5-08) to reinstate and extend any active loans that have expired or (2) the Reservation Cancellation/Request for Lock-in Fee Waiver (#244/5-08) to avoid billing of the 1% lock-in deposit for those loans that will not close.



Question: Is the borrower's minimum contribution requirement reduced when a Down Payment Assistance Loan (DPAL) is used?

Yes. When a DPAL is used, the borrower's minimum contribution requirement is based upon the "net purchase price" which is the purchase price less the DPAL amount.

Example 1: If the purchase price is $100,000 and the DPAL is $3,000, then the 1% cash requirement (for 1-2 unit properties, condos and PUDs) would be $97,000 x 1% or $970; not $1,000 ($100,000 x 1%).

Example 2: Co-operatives, 3- and 4-family properties: If the purchase price is $100,000 and the DPAL is $3,000, then the 3% cash requirement would be $2,910 ($97,000 x 3%); not $3,000 ($100,000 x 3%).



Topic: When the subject property is a cooperative unit, how do I determine if the property qualifies under SONYMA's Purchase Price/Acquisition Cost Limits?

The total acquisition cost of a residence is compared to the Purchase Price/Acquisition Cost Limit for the county in which the property is located. For cooperative units, the "total acquisition cost" is determined by adding the pro-rata share of the underlying mortgage (total number of shares allocated to the unit divided by the total shares in the project and multiplied by the outstanding balance of the underlying mortgage) to the contract Purchase Price.


  • Numbers of shares allocated to the subject unit = 418
  • Number of shares in the Project + 36,521
  • Outstanding Balance of underlying mortgage - $1,536,000
  • Calculation: (418/36,521) x 1,536,000.00 = $17,580.24

The pro-rata share of the cooperative unit is entered on Line 1(a), in Part III of the Recapture Notification and Mortgagor's Affidavit and is added to the purchase price of the unit. If Line 7 in Part III (Total Acquisition Cost) exceeds the current applicable SONYMA Purchase Price/Acquisition Cost Limits, at either the time of the application or loan closing, the mortgagor(s) is not eligible for this program. This total acquisition amount must also equal the figure indicated on Item 2 on the Property Seller's Affidavit.



Topic: Why is the Interest Rate Option Form required and when should this document be delivered to SONYMA?

The Interest Rate Option Form (D3) should be completed by the applicant regardless of whether he/she is opting for a Down Payment Assistance Loan (DPAL). This document serves as the applicant's acknowledgment and acceptance of the interest rate. It is the Lender's responsibility to reserve the loan in a timely fashion in order to lock-in the appropriate interest rate. The applicant much check the appropriate box to indicate if he/she does or does not accept DPAL and must also indicate the interest rate and the lock-in period (either 100 or 240 days) selected.

In the compliance (pre-closing) loan file, the lender may include either the original, completed and executed Interest Rate Option Form or a photocopy. When the post-closing loan file is delivered to SONYMA, the original document must be included if a photocopy was accepted by SONYMA at commitment.

Borrowers are also given a "Change Option" relative to accepting or declining DPAL but must do so prior to SONYMA approval. The "Change Option" can be found at the bottom of the Interest Rate Option form.



Topic: Inheritance Transactions

SONYMA will finance a property in which the applicant has inherited a share of the ownership interest in a home and wishes to buy out the remaining inheritors. To determine the maximum financing allowable, deduct the proportionate share of the applicant's ownership interest from the lower of the sales price or the appraised value of the property.

Example: Purchase price and appraised value are $100,000 and applicant's share is one quarter or $25,000. $100,000 less $25,000 is $75,000. The maximum loan amount on this transaction is $75,000 and the loan-to-value ratio will be 75%. Provided the borrowers have at least 20 percent total equity in the transaction, PMI insurance will not be required. It should also be noted that while the remaining inheritors of the estate may provide the borrower with a gift of equity, they are not eligible as standard cash gift donors (cannot provide an additional cash gift). A copy of the Last Will and Testament is required and the sales contract should list the estate as the seller. A gift letter is required only if the gift of equity (share of ownership interest) is not specifically stated in the sales contract.



Topic: My borrower's rate expired and SONYMA's rates are now lower. Will my borrower get the lower rate?

No. SONYMA's commitment extension policy is as follows: if the original commitment has expired, and SONYMA has approved a commitment extension, the loan must close at the higher of: (a) the initial locked-in interest rate, or (b) the interest rate available on the loan closing date. Please note that SONYMA only extends the commitment period and does not extend the interest rate.



Topic: Why did SONYMA keep rates higher than conventional and FHA rates for months and then suddenly lower rates significantly?

SONYMA makes its mortgage funds available through the sale of tax-exempt municipal housing bonds. Since 2008, municipal bond rates have generally lagged behind US Treasury rates and as such, SONYMA has struggled to keep rates below conventional and FHA rates. In December 2009, the US Treasury, recognizing the value of state housing finance agencies (like SONYMA) to the first-time homebuyer market, created a program where Fannie Mae and Freddie Mac would purchase the bonds we issue. The result was a significant reduction in our borrowing costs and consequently, SONYMA was able to offer mortgage rates lower than conventional and FHA. However, the continued decline of 10-year treasury yields caused SONYMA's rates to once again lag behind conventional rates. In keeping with the spirit of the program launched last December, the US Treasury announced in late August that state HFAs could re-lock their borrowing rate. This enabled SONYMA to significantly reduce its mortgage interest rates.



Topic: Will SONYMA execute an Assignment of Mortgage if a borrower wants to refinance their SONYMA loan so they can avoid the payment of the New York State mortgage tax?

SONYMA will not execute assignments for this purpose. The loan must be satisfied. The mortgage tax is our Mortgage Insurance Fund (MIF)'s primary funding source and as such, executing an assignment would lower MIF's revenue and possibly, their ability to insure our mortgage programs.



Topic: CCAL or DPAL recapture in the event of a refinance

SONYMA loans with a CCAL or DPAL are subject to recapture if refinanced.

The CCAL/DPAL recapture is triggered upon the refinance of a SONYMA loan within ten years from the date of purchase. The "actual" recapture cannot be determined until the new appraisal associated with the refinance is complete. Until that time, lenders may calculate the "maximum" recapture by calculating the remaining CCAL/DPAL balance after taking into account the amount forgiven each month (1/120th of the initial CCAL/DPAL) prior to loan payoff.

Once the new appraised value is available, a second calculation will determine the "net profit." The "actual" recapture will equal the LESSER of the two calculations - the "remaining CCAL/DPAL balance" or the "net profit." Refer to the CCAL or DPAL Recapture Notification for details.



Topic: List of Approved Project Set-Asides

Click here to download SONYMA's Project Set-Aside Approval List. This list is designed to provide you with certain information pertaining to SONYMA's approved condominium and cooperative projects. When reserving loans on our Lender Online (LOL) system, lenders must select the appropriate project name from the drop-down list in the "Project" field. If the project does not appear on the LOL drop-down, please contact our Project Set-Aside Director, Marie Cammarata, at 212-872-0401 for assistance. If you see that the number of units are near the allotted loans available for SONYMA financing, we strongly recommend that you contact us to see if any units remain available for financing. If our project approval has expired, please fax (917-274-0401) or e-mail ( the following documents to us for review: any amendments filed since the project was approved; a recent appraisal; and an updated Project Set-Aside Builder/Developer/Sponsor Information form.



Topic: Pre-Closing Loan File Review

To improve the pre-closing loan file review turnaround time, SONYMA encourages lenders to submit pre-closing compliance files to SONYMA for review simultaneously when submitting files for Pool/PMI insurance approval. This will enable SONYMA to perform its compliance review; allow lenders time to address compliance issues concurrently with Genworth/MIF; and reduce automatic cancellations for non-receipt of submission packages.