Chapter 2: DCA Loan Process

The loan process described in this Chapter allows DCA to manage the Georgia Dream Homeownership Program pipeline and provide DCA Lenders with information about the loans in the pipeline.  It is critical that Lenders maintain correct information and take timely action to ensure loans meet our deadlines.

201 General

As a DCA Lender, it is your responsibility to ensure each loan submitted to DCA complies with Program requirements and the requirements of the Mortgage Insurer or GSE.  As a DCA participating Lender you must assist eligible borrowers throughout the loan process.

DCA will review the Lender’s submitted Underwriting Packages, clear DCA placed underwriting conditions as applicable, and review Purchase Packages on a first-come, first-served basis. Lenders should submit complete Underwriting Packages and Purchase Packages as early as possible to allow sufficient time for DCA to review each package and for the Lender to address any issues. 

202 Funds Availability

Generally, DCA expects to make funds for the Program available to Lenders on an ongoing basis. DCA must, however, comply with certain State and Federal laws relating to the geographic allocation of its funds.  Therefore, we reserve the right to select Reservations that meet those requirements and hold other Reservations for a later date if sufficient funds are not available for all Reservation requests.  

In the unlikely event that funds are not available for all expected Reservations, DCA will post notification on the Rate Sheet, Lender Portal, and notify the Program Contacts by email.

203 Loan Origination

DCA recognizes there are procedural variations among Lenders. Therefore, the procedures outlined in this section only suggest the sequence of events for loan origination:

  1. The Lender is encouraged to provide Applicants who inquire about the Program with a Georgia Dream Homeownership Program information and answer any questions the Applicant may have regarding the Program, eligibility requirements and the loan process;
  2. The Lender advises the Applicant to attend homebuyer education through a HUD approved housing counseling agency and provide evidence of completion in the Underwriting Package;
  3. The Lender takes a formal application and determines if the Applicant is eligible for the Program based on information received for Household Annual Income, Acquisition Cost, prior homeownership, and other relevant information. If the Applicant appears eligible, the Lender obtains completed and signed copies of the Program documents required at application,
  4. The Lender reserves funds pursuant to the Reservation procedures outlined in this Chapter,
  5. The Lender fully and completely underwrites the application for credit approval based on the requirements of the Mortgage Insurer or GSE and determines if the loan complies with DCA’s guidelines, and
  6. Once the Lender’s underwriter has completely approved the loan and completed its review, an underwriting package is submitted to DCA for a compliance underwriting review.

203.1 Completion of Forms    

Lender must submit fully completed and signed Georgia Dream documents at time loan is submitted to the Lender Portal for review.  If required forms are not included in the loan file, review of the loan file may be suspended until documents are uploaded to the Lender Portal.

Georgia Dream Documents which have been signed with borrower’s electronic signature must be accompanied by the borrower(s) Electronic Signature Authorization.  If unable to provide, all forms must be wet signed.

The Note and Deed must continue to be signed by the borrower(s) at closing.

204 Issuance of Reservations

To request a Reservation for the Program, Lender must enter the required information via the Lender Portal. Lender should select the correct category for the loan.

If the Reservation request meets Program requirements and funds are available, Lender will receive a Reservation Number via a “Reservation Accepted” response from the Lender Portal.  The “Reservation Accepted” screen must be printed and uploaded in the Underwriting Package in eDocs.

Lender must make note of the DCA Reservation Number and make it accessible to all personnel involved with the loan.  The Reservation Number must be included in all verbal and written communication with DCA to facilitate accessing information about the loan.

If any information needs to be changed (property address, income, purchase price, loan amount, etc.) after a Reservation Number has been issued, Lender must complete the Reservation Change Form (SF-7) and email it to [email protected]. DCA will make the changes upon receipt of the Reservation Change Form and notify Lender once the changes have been made.

If the Reservation Period expires, the loan will be cancelled unless Lender requests an extension in accordance with this Chapter. 

DCA does not allow substitution of a borrower on any Reservation.

204.1 First Mortgage Loan Interest Rates

The interest rate for Georgia Dream First Mortgage loans is the rate that is effective at the time the reservation is received by DCA and is attached to the property.

DCA will notify Lenders of the interest rate and the effective period for the rate each Thursday or as necessary. A reserved loan is not subject to increases or decreases based on market fluctuation.
 
If Thursday is not a Business Day, then DCA will send the Rate Sheet on the previous Business Day.  As such, DCA will deliver a Rate Sheet by email every Thursday afternoon before 5:00 p.m.  Interest rates are also available 24 hours a day on the Lender Portal and by dialing the Lender Information Line at (404) 679-0581.

205 Reservation Period

The Reservation Period is the period the Lender must submit the Underwriting Package to DCA for approval, close the loan, and submit the Purchase Package to DCA for funding. The Reservation Period is 75 calendar days.  

Lender must periodically review the status reports available on the Lender Portal to monitor and notify DCA of any cancellations or extensions needed.

205.1 Reservation Period Extension

Lender may request an extension of the Reservation Period by submitting Form (SF-5) to [email protected].

With payment of an Extension Fee, Lender may request an extension of any Georgia Dream loan reservation for the number of days in section 205.2, Extension Fees.

For FHA 203K loans, Lender may request up to two 30-day extensions with no Extension Fee and one additional 30-day extension with payment of an Extension Fee.

Within our discretion, we may grant an additional 30-day extension for any Georgia Dream loan reservation if we have completed our underwriting review.

Within three (3) Business Days of receipt of an Extension Form (SF-5), DCA will notify Lender by email of the approval or denial of the request for extension. If approved, the approval will show the new Expiration Date and the total Extension Fee due.

After the expiration of any approved extension period, the reservation will be cancelled.  The Lender may send a written request to make a second reservation, which is within the sole discretion of DCA whether to approve.

205.2 Extension Fees

The Extension Fee will be a flat fee based on the number of days of extension.  For a 7 day extension, the fee is $50.00, for 15 days the fee is $150.00, and for 30 days the fee is $250.00.  Extension Fees will not be pro-rated.

Extension Fees are not refundable and may not be charged to the borrower. The Extension Fee will be deducted from the net purchase amount when we purchase the loan.  

206 Cancellation of Reservation

Immediately upon learning that a loan with an active Reservation will not be presented for purchase, Lender must complete a Reservation Cancellation (Form SF-6) requesting cancellation of the Reservation and send via email to [email protected].

Loans may not be cancelled and re-reserved to obtain a lower interest rate. A reservation made within six (6) months of a previous reservation for the same borrower and the same property will result in the higher of the current or previous interest rate.

207 Underwriting

The credit decision on each loan is made by the Lender in accordance with this Chapter. Each loan submitted to DCA must also meet the Program requirements and the applicable Mortgage Insurer’s requirements as determined by the Lender’s underwriter.  DCA will underwrite loans for compliance with Program requirements prior to issuing an underwriting decision to the Lender.

207.1 Compliance Underwriting

Lenders are required to review the file for compliance with Program requirements prior to submitting the Underwriting Package to DCA for compliance underwriting, but DCA reserves the right to require further information to insure compliance with Program requirements and/or Mortgage Insurer or GSE requirements.

In the absence of specific guidance within this Seller Guide on underwriting requirements, DCA will default to the Mortgage Insurer’s or applicable GSE current underwriting requirements at the time of DCA’s purchase to include but not limited to, FHA 4000.1, VA Lender Handbook, USDA HB-1-3555, Fannie Mae/Freddie Mac Selling Guides, Mortgagee Letters, Circular Letters, and/or Lender Letters.

DCA’s compliance underwriting decision will be based on, but not limited to, a review whether the documentation in the Underwriting Package demonstrates satisfactory compliance with the following criteria:

  1. Applicant meets the first time homebuyer requirements;
  2. Applicant’s total Household Annual Income meets Program requirements; 
  3. Acquisition Cost of the subject property is within the published Acquisition Cost limits for the county in which the property is located;
  4. DCA required forms are complete and accurate; 
  5. Loan proceeds are utilized for purchase only transactions;
  6. Complete and accurate information is provided prior to loan closing and all underwriting approval conditions are satisfied and adequately documented; and
  7. Collateral assessment of the subject property meets Program requirements and the requirements set forth by the Mortgage Insurer.

207.2 Credit Underwriting

Lenders must follow the underwriting guidelines set forth by DCA and/or the Mortgage Insurer, Lender’s credit underwriting must evaluate the creditworthiness of each Applicant.  Approved loans are then submitted to DCA for compliance underwriting.

Lender’s Underwriter assumes full responsibility for compliance with the    insurer’s credit underwriting requirements.        

All Underwriting Packages submitted to DCA must include the appropriate Mortgage Insurer or GSE approval documents:

  1. FHA loans will require a copy of the Mortgage Insurance Certificate, FHA Loan Underwriting and Transmittal Summary (92900LT) and Conditional Commitment both completed with signature and dated by the Direct Endorsement Underwriter;
  2. USDA/RD loans will require a signed Conditional Commitment form (USDA Form 3555-18E) by the Lender’s underwriter;
  3. VA loans will require a completed Loan Analysis (VA form 26-6393) fully executed and signed by the Lender’s VA automatic underwriter, and an executed Notice of Value (NOV) by the Lender’s VA LAPP/SAR underwriter; 
  4. Conventional loans will require a completed and signed Uniform Underwriting and Transmittal Summary (Fannie Mae form 1008/Freddie Mac form 1077) by the Lender’s underwriter. 
  5. Lender Appraisal Processing Program approval must be in the Underwriting Package.

207.3 Credit Report & Fraud Report

Lender must submit to DCA a complete copy of the Residential Mortgage Credit Report (RMCR) or a tri-merged credit report.  A credit report utilized by an Approved Automated Underwriting System may also be accepted. The credit report may not be older than one hundred and twenty (120) days at the time of final underwriting approval.  Lenders are expected to continuously run undisclosed debt monitoring (UDM) through the date of funding to ensure the borrower has incurred no new debts after the initial credit report run date.  Any undisclosed debts discovered by the Lender or DCA will subject the loan to additional underwriting and program eligibility requirements.  

Lender must also submit a fraud data verification report, including liens and judgments, with the complete underwriting package. The report must come from an acceptable vendor (i.e., Fraudguard, Drive, Lexus Nexis, Corelogic).

207.4 Automated Underwriting

For all loans underwritten by an Automated Underwriting System (DU, LP or GUS), AUS approval will not be accepted unless the Housing Expense ratio meets the following requirements 1,2:

Credit ScoreHousing Expense Ratio DTI Ratio
700+Per AUS approvalPer AUS approval
640-699<45% <45%

If a borrower does not meet these requirements, the Lender’s Underwriter may request an exception. Exceptions for ratios are limited to two points over the maximum allowable ratio for the credit score.  After the complete submission has been reviewed, DCA may, in its discretion, grant an exception to the ratio requirements if no negative indicators of credit are present and there are compensating factors including but not limited to:

  1. The borrower has successfully demonstrated the ability to pay housing expenses greater or equal to the proposed monthly housing expenses for the new mortgage over the past 12-24 months;
  2. The borrower has substantial documented cash reserves of at least 2 months after closing demonstrating an ability to save; or
  3. The borrower receives documented compensation or income that is not reflected in effective income but directly affects his/her ability to pay the mortgage.

As part of the Underwriting Package, Lender must submit to DCA all documentation used or required by the Approved Automated Underwriting System in determining the credit recommendation. DCA will accept the streamlined documentation required by the Approved Automated Underwriting System, with the exception of the Appraisal. The information provided on the loan application, source documents and verifications prior to loan closing must conform to the information contained in the AUS approval and all conditions must be satisfied and adequately documented.  

The Georgia Dream Peach Select Veterans Assistance Loan Program maximum DTI is per AUS findings with a minimum 640 score. 

Manufactured homes require a minimum 660 middle credit score for all borrowers

207.5 Manual Underwriting

DCA will only accept manually underwritten loans when a credit score does not exist on government loans (FHA, VA, and USDA/RD).  Conventional loans are not eligible for manual underwriting.  Alternative credit is acceptable. DCA will not accept manually underwritten loans when derogatory credit or high ratios exist. FHA and VA loans must comply with the manual underwriting requirements as set forth in HUD 4000.1 or the VA Lender Handbook.

For all manually underwritten loans, the maximum Housing Expense ratio may not exceed 28% and the total Debt to Income ratio may not exceed 36% on both the Georgia Dream Standard and Georgia Dream Peach Plus programs. For a manually underwritten Georgia Dream Peach Select program the maximum total debt-to-income ratio may not exceed 41%.  

207.6 Minimum Credit Score Requirements for FHA, VA, USDA/ RD, & Conventional Uninsured Loans

All FHA, VA, USDA/RD and Conventional uninsured loans must have a minimum middle credit score of at least 640 using the lowest score of all credit qualifying borrowers.  Manufactured homes require a minimum 660 middle credit score for all borrowers.

Applicants with no credit scores that meet FHA’s non-traditional credit policy as outlined in the HUD 4000.1 will continue to be accepted as meeting the minimum 640 credit score requirement, but the Housing Expense ratio may not exceed 28% and the total Debt to Income ratio may not exceed 36%.  Manufactured homes require a minimum 660 middle credit score for all borrowers

207.7 Underwriting Package Format

The Underwriting Package must include at least the items listed on the Underwriting Package Checklist in this Guide and the documents must be arranged in the order listed on the checklist.  If not arranged in the order listed, the package will be suspended.

The Lender must insure the Underwriting Package includes all documentation that was deemed necessary to obtain credit underwriting approval, including all documentation required to clear any credit underwriting conditions.   The loan must be fully approved by Lender’s underwriter prior to submission of the Underwriting Package.

The documents in the Underwriting Package must be uploaded and submitted through eDocs into the Underwriting Package, accessible on the Lender Portal.

207.8 Incomplete Underwriting Package

Lender will be notified via email or phone if the Underwriting Package is substantially incomplete. When the requested documentation is received by DCA, the Underwriting Package will be considered complete and will be placed into underwriting on that date.  If after 15 calendar days any requested documentation has not been received, DCA will cancel the loan reservation.

207.9 DCA's Underwriting Period

Upon receipt of a complete Underwriting Package, DCA will notify Lender of the initiation of underwriting review within five (5) Business Days. In periods of unusually heavy activity or due to circumstances beyond our control, it may be necessary for DCA to extend the time required for underwriting review beyond ten (10) Business Days.  

The Lender must consider the DCA underwriting period when planning to close a loan. Loans submitted with less than ten (10) business days from the closing date will require an executed contract extension by all parties to allow DCA sufficient time to perform the compliance underwriting review.  Lenders may check the status of DCA’s underwriting turnaround time by calling the Lender Information Line at (404) 679-0581 or viewing the turnaround times within the Lender Portal.

207.10 Exceptions

Exception Request Policy and Process

The Georgia Department of Community Affairs (DCA) Homeownership Division may consider exceptions to standard program requirements on a case-by-case basis to support sustainable homeownership while maintaining program integrity and compliance.

Eligibility for Exception Requests:

  1. Exception requests must be submitted by a participating lender.
  2. Exceptions will only be considered when the request demonstrates a compelling hardship or extenuating circumstance that does not compromise loan quality, borrower sustainability, or adherence to program requirements.
  3. Exceptions will not be granted for requirements dictated by mortgage insurer or government sponsored entity guidelines (e.g., FHA, VA, USDA, Fannie Mae, or Freddie Mac).

Submission Process:

  1. The lender must submit their own version of an exception request entitled "Exception Request Form" with full details of the exception being sought, including:
    1. Borrower name and DCA loan number
    2. Specific program guideline for which the exception is requested
    3. Rationale for the request and all relevant supporting documentation
    4. Compensating factors supporting the request, to include but not limited to the ability to accumulate savings, strong reserves, long-term stable employment, minimal housing payment shock, or a history of timely housing payments
  2. Exception requests must be included directly behind the Underwriting Package Checklist when the lender uploads their underwritten loan file into the Lender Portal.
  3. DCA will review the request and issue a deferral letter requesting any additional documentation, which will serve as the formal exception approval.

Approval Authority:

Exceptions must be approved by the Compliance Underwriting Manager, who may escalate to the Division Director for final determination, depending on the complexity of the request.

Recordkeeping:

Approved exceptions will be tracked and monitored by the Compliance Underwriting Team to ensure consistency, identify patterns, and manage program risk.

208 Underwriting Decision

Lender will be sent an approval, deferral or rejection letter by email as outlined in this section.

208.1 Underwriting Approval Letter

If approved, an underwriting approval letter will be sent to Lender stating it is a "Firm Commitment".  The underwriting approval letter will identify any conditions which must be satisfied, documentation of which must be included in the Purchase Package.

208.2 Underwriting Deferral Letter

A deferral letter may be issued stating an underwriting decision cannot be made until receipt of listed documentation. Upon receipt of the requested information, the Underwriting Package will be reviewed again with results of the review being uploaded in eDocs.

208.3 Underwriting Rejection Letter

A rejection letter is sent when DCA determines a loan does not meet the guidelines for the Program.  The letter will include the reason the loan is being rejected for delivery to DCA. The Reservation will be cancelled unless the Lender notifies DCA within ten (10) Business Days from the date of the rejection that it wishes to attempt to "cure" the rejection. If an Extension of the Reservation Period is needed, Lender must request an Extension in accordance with the procedures outlined in this Seller Guide.

209 Clearing Conditions

To clear conditions or to respond to a deferral or rejection, Lender must upload the requested information to the Underwriting Package in eDocs. Partial conditions submissions are not allowed and all DCA conditions are expected to be submitted once. The DCA underwriter will typically review within 24 hours of receipt and will respond by emailing Lender and uploading either (1) a new letter to the Underwriting Package in eDocs if the underwriting decision changes or (2) the previous letter with an indication of which conditions have been cleared.  DCA volumes may impact the review time.  Lenders are encouraged to access the Lender Portal for daily underwriting turn times.  

210 Closing

The loan closing must occur in enough time to allow for the delivery of the loan to DCA prior to the expiration of the Reservation Period.

The Underwriting Approval Letter contains the terms under which the loan has been underwritten and the loan must close in accordance with these terms.  

The Underwriting Approval Letter is DCA’s commitment to purchase the loan after closing as long as it is closed in accordance with: 

  1. any conditions or instructions contained in the Underwriting Approval Letter;
  2. the provisions of this Guide and the loan Seller Agreement; and
  3. applicable Federal, State and local laws and regulations.

210.1 Power of Attorney

The use of a Power of Attorney is not allowed unless: 1) the borrower is active personnel in the United Military and is currently deployed overseas; or 2) permitted under other extraordinary circumstances, as determined at DCA’s sole discretion. Only then may a specific Power of Attorney be used by the approved agent designated in the Power of Attorney. In any circumstance, the Power of Attorney may not be an interested party to the transaction.  This requirement does not apply to the seller.

211 Loan Purchase

Lenders must submit purchase packages to DCA within 15 calendar days after loan closing. Lender must also submit the required servicing package described in this Guide.

DCA purchases loans two (2) times each week. All Purchase Packages that are complete as of 12:00 p.m. on Tuesday will be funded on Wednesday. All Purchase Packages that are complete as of 12:00 p.m. on Thursday will be funded on Friday.

DCA reserves the right to periodically amend this purchase schedule due to State holidays, domestic or foreign bank holidays, acts of God and/or any circumstances which, in our opinion, warrant a change.

211.1 Purchase Deadline

If DCA has not received a Purchase Package for a loan within the Reservation Period, the Reservation will expire and will be cancelled (unless the Reservation Period is extended in accordance with this Chapter).

211.2 Contents of Purchase Packages

Purchase Packages must include the items listed on the Purchase Package Checklists in this Guide. The documents in each Purchase Package must be arranged in the order listed on the checklist. The Purchase Package must be uploaded and submitted through eDocs, accessible on the Lender Portal.

211.3 Purchase Package Review and Purchase Delay Penalty Fees

Generally, DCA will review Purchase Packages within three (3) Business Days of receipt. Lender will be notified by email of any missing or incorrect items and is responsible for submitting or correcting all deficiencies in the Purchase Package within 15 Business Days.  DCA typically purchases loans on Wednesdays and Fridays of each week except for the last week of each month.  

If missing or incorrect items are not provided or corrected within 15 Business Days of closing, DCA will begin charging a Purchase Delay Penalty Fee of $25.00 per business day.  The Purchase Delay Penalty Fee will be subtracted from the loan Purchase Price for the applicable Georgia Dream First Mortgage loan.

If the Reservation is cancelled after Purchase Delay Penalty Fees have accrued or the loan is not purchased, the Purchase Delay Penalty Fees due may be invoiced to the Lender.  If the invoice remains unpaid 90 days after invoice date, DCA may place Lender on Limited Participation as described in Chapter 1 of this Seller Guide.

211.4 Incomplete Purchase Packages

DCA will notify Lender if any Purchase Package is determined to be substantially incomplete or uploaded incorrectly.  A substantially incomplete package will not be considered to have met the deadline requirements during the Reservation Period.

211.5 Loan Purchase Price

At the time of funding, the amount disbursed to Lender will be the original principal balance, plus or minus any adjustments for accrued interest, earned servicing fees, extension fees, and Purchase Delay Penalty Fees at time of purchase. Funds will be wired using the wiring instructions provided on the lender application, unless written notification of any change is sent to DCA.

The Servicing Release Premium (SRP) for loans will be as follows:

Credit ScoreSRP
720+1.125% of the loan amount
680-719 1.0% of the loan amount
<680 or manually underwritten loans with no scores0.75% of the loan amount

State Home Mortgage will wire funds for the SRP after deducting the current tax service fee of $81.00.

211.6 Non-Purchase of Closed Loan

If documentation is requested during the purchase review and is not provided within 60 days, DCA may elect not to purchase the loan.  The Reservation will be cancelled, and the loan will be transferred back to the Lender.  

211.7 Non-Purchase of Delinquent Loan

If a Loan is delinquent (calculated from the first of the month), we will not purchase the loan until the loan payment is made.  If the loan becomes 45 calendar days or more delinquent, we will not purchase the loan even if the loan subsequently becomes current.  The Reservation will be cancelled, and the loan will be transferred back to the Lender.  

211.8 Mortgage Record Changes in FHA Connection

Within 15 days of our purchase of the loan, the Lender must submit a Mortgage Record Change in FHA Connection to change the holder of record to Georgia Housing and Finance Authority, FHA Holder #09497.   Any loan not transferred to Georgia Housing and Finance Authority within the 15-day period will be subject to repurchase by the Lender.

After the Loan is purchased, DCA will email a letter listing the final documents required for the Loan.  These documents include those listed on the Checklists in this Guide and may include other items.  The failure to include a document from the Final Document or Purchase Package Checklist in the letter does not relieve Lender of the requirement to provide the document.

211.9 Early Payoff Policy

An early payoff exists when a mortgage loan is paid in full or when a curtailment in excess of 30% of the original principal balance occurs within 180 days after the funding date of such mortgage loan. For mortgage loans that become the subject of an early payoff, the Lender shall promptly reimburse DCA within 30 calendar days of payoff the original Servicing Release Premium paid by DCA.

212 Final Documents

All Final Documents must include the Final Documents Checklist and the items listed within this Seller Guide. The documents in each Final Document Package must be arranged in the order listed on the checklist. The Final Documents Package must be uploaded and submitted through eDocs, accessible on the Lender Portal.  Overnighted or mailed documents are not acceptable.  

All requested Final Documents must be provided to DCA within 90 days of our purchase of the loan or the loan will be subject to repurchase in accordance with the loan Seller Agreement.

Lender must provide a properly executed Form SF-60 Lender Certification dated after all documents have been correctly recorded.

213 Quality Control

DCA requires each Lender to maintain a quality control plan which provides for a comprehensive review of a selection of loans in accordance with either the applicable Mortgage Insurer, GSE, or guarantor guidelines.   Lender’s review must include a minimal amount of loans purchased by DCA.  DCA may request and Lender must provide a copy of their selection lists and any reviews conducted of loans purchased by DCA.

DCA reserves the right to conduct a quality control review following purchase on any loan as deemed necessary.

214 Loan Servicing - State Home Mortgage

The servicing rights to all Georgia Dream First Mortgage loans are sold to State Home Mortgage.  Loans released to State Home Mortgage for servicing should not be “set-up” on Lender’s servicing system but must be transferred immediately after closing to State Home Mortgage.

Servicing Packages must include the items listed on the Servicing Package Checklist in this Guide. The documents in each paper Servicing Package must be delivered to State Home Mortgage at the address below, along with the escrow check within 15 calendar days after closing.

60 Executive Park South, N.E.
Atlanta, GA  30329
Attn: New Loans Department

All first payments are due and payable to State Home Mortgage. If any payments from the borrower are received by Lender, the payments must be forwarded to State Home Mortgage upon receipt.

DCA services all Georgia Dream Second Mortgage loans.  However, we do not require a Servicing Package for such loans.