FAQ for CalHFA Homeowners

We eliminated our resubordination program 7/1/2019. Your loan(s) must be paid in full through your refinance or before your refinance is complete.

To request a payoff demand, please log into your account.

https://www.calhfa.ca.gov/myaccount/login.htm

You can also submit a request in writing (using our Payoff Request Form) to CalHFA, Loan Administration, 500 Capitol Mall, Ste. 1400 (MS955), Sacramento, CA 95814 or via fax to 916.326.6420. If request is coming from a third party (escrow company, title company, another lender, etc.) please include our Third Party Authorization Form. Our normal turnaround time is 7 to 10 business days. Your request can be expedited for a fee of $50 per occurrence, please allow 24-48 hours processing time.  This request must be faxed to 916.326.6422. 

You can submit a request in writing to CalHFA, Loan Administration, 500 Capitol Mall, Ste. 1400 (MS955), Sacramento, CA 95814 or via fax to 916.326.6420. If request is coming from a third party (escrow company, title company, another lender, etc.) please include our Third Party Authorization Form. Our normal turnaround time is 5 to 10 business days. The fee for requesting a VOM is $25.00 per occurrence.

No, your silent second (subordinate loan) becomes due and payable at the time of the refinance.

Homeowners with a Keep Your Home California (KYHC) junior loan should contact KYHC directly at 888.954.5338 or go to www.keepyourhomecalifornia.org/for-title-companies/ for complete subordination requirements.

A Federal tax that the borrower may have to pay if they sell or transfer title of their home during the first nine years of ownership. Recapture applies only to homes financed with tax-exempt bonds on or after January 1, 1991.

No. Because all comments are subject to tax law interpretation, CalHFA's staff cannot assist you in determining the exact amount of the Tax.

Any Recapture Tax due is to be submitted with your individual tax return for the year in which you sold the property. For instance, if you sold the property in 2001, the Recapture Tax, if any, along with IRS Form 8828, must be submitted with your 1040 form for your income. For the year 2001, these forms would normally have been due no later than April 15, 2002.

We strongly recommend that you obtain the services of a tax preparer for the tax year the Recapture Tax form is required to be submitted.

No, however, it does not eliminate the Recapture Tax either. If you refinance your loan and then sell your home within the first 9 years of ownership, the potential for a Recapture Tax still exists. If you refinance during the first four years of ownership and then hold the property for more than 18 months, any potential Recapture Tax will be reduced. See the IRS Form 8828.

Not usually. A gain is required for a Recapture Tax to be assessed; however, the amount of the gain can only cause the Recapture Tax to be reduced, never increased. The formula looks at 50% of the gain to see if it is less than the calculated Recapture Tax, and, if it is, you pay that lower amount.

The Federal Tax provision did not want a borrower to pay more in taxes than they gained on the sale of the property. The Recapture Tax is limited to the lesser of the amount of the calculated tax, or 50% of your gain on sale. So, if half (50%) of the gain is less than the calculated Recapture Tax, you will pay that lower amount. For example, you could have a $100,000 gain and the Recapture Tax would still never be more than 6.25% of your original loan amount, and that is only in the fifth year of ownership.

You will need the closing statement from when you purchased the home, the closing statement from when you sold the home, the closing statement from the first of any refinances, and the Recapture Notice you would have received when the loan originally closed.

To help you find the Recapture Notice, you may wish to review the example at Recapture Notice. If you cannot locate your original Recapture Notice, e-mail us "Contact Us" , and request a reconstructed letter. Recreated letters will usually be mailed within three business days.

Three conditions must exist for you to be assessed a Recapture Tax. If any of the following three factors are not true, there is no Tax.

• You must have sold or transferred the home during the first nine (9) years of ownership.
• You must have had a gain on the sale of the home.
• Your total "Adjusted Gross Income" from your Federal 1040 Form, less any taxable gain included and plus any non-taxable interest excluded, must exceed the "Adjusted Qualifying Income" for your current family size in the year of ownership you sell the home as shown on page 3 of your "Recapture Notice" letter.

The most critical question is the income. If your family's income is less than the Adjusted Qualifying Income shown in table on page 3 of your Recapture Notice, there will be no Tax. When you submit your federal tax return (1040) for the year in which you sold the home, you will still need to submit the IRS Form 8828, which will calculate your Tax to be zero.

If your income exceeds the Adjusted Qualifying Income, you will need to complete the IRS Form 8828, to calculate your Tax.

The IRS Form 8828 is available at http://www.irs.gov/. Type "8828" in the "Keyword/Search Terms" field in the upper right hand corner and click on the "Search" button. Then download or print the current year’s "Instructions for 8828" and "Form 8828".

If the sale or transfer occurs within the first nine years of ownership, the original borrower pays the recapture tax due by them and a new nine-year period begins for the purpose of applying a new Recapture Tax to the assuming purchaser.