FAQ for CalHFA Homeowners

Yes; you signed both a Note and Deed of Trust. CalHFA subordinate financing is secured by a recorded lien on the property. If you pay off the first by selling the property, refinancing the first mortgage, or at maturity of the first mortgage, transfer title to the property, or allow others to assume the first mortgage, the subordinate financing becomes due and payable. These loans are not forgivable, nor do they go away after a period of time.

(Special conditions exist for a reduction of, and possibly the elimination of, the interest on Extra Credit Teacher second loans only.)

Your CalHFA Subordinate Loan is referred to as "Silent" because there are no monthly payments required. While you can make payments on the loan to reduce accrued interest, or principal, no payments are required until the loan is called due, at maturity of the first, sale of the property, transfer of title, a refinance or assumption of the first.

No. If an eligible borrower assumes the first mortgage, the subordinate loan(s) must be paid off prior to the assumption or as part of that process.

The CalSTRS seconds are not true seconds. True second loans have a separate Note and Deed of Trust. The CalSTRS silent second loan is a Note only and shares the Deed of Trust with the first, which is serviced elsewhere. Because both Notes are associated with the same Deed of Trust, both loans must be paid off at the same time, similar to CalHFA.

The CalSTRS second loan must be paid off when the first is refinanced.

The CalSTRS silent seconds are at the same interest rate as the CalSTRS first. On the Zero Down Preferred Program (95/5) the interest is calculated on a simple interest basis for the first 15 years and then compounded annually thereafter. The interest on the 80-17 Program second loan is calculated on a simple interest basis for the life of the loan.

CalSTRS does not allow assumption of their loans.

No. The program does not apply to those that already have a loan with CalHFA.

Loans that you already have with CalHFA cannot be converted to the Forgivable Equity Builder Loan program.

No. The Forgivable Equity Builder Loan is separate from other CalHFA loan programs.

Our subordinate, "silent second" loans are not forgiven, unless they are issued through the Forgivable Equity Builder Loan Program. Although we do not require monthly payments, the loans are always due when the first mortgage is paid off. If you’d like a copy of the note that you signed at the loan closing to your property address, please email us at servicing@calhfa.ca.gov so that you can review the terms of the loan.

The outstanding principal balance of the subordinate "silent second" loan will be fully forgiven after five years (if you stay in the home for less than five years, the principal balance will be reduced by 20% each year) unless you default on your first mortgage. Once the loan is forgiven, CalHFA will send a reconveyance to the county recorder to remove the lien on your property.

No. Payments are required unless you default on your mortgage. However, you have the right to make payments on the principal balance at any time before the loan is due by notifying CalHFA in writing. You can make a full prepayment or partial prepayments without paying a prepayment penalty.

The terms of the loan state that once the property is sold or otherwise transferred, the loan accelerates, and payment is due unless it has been at least five years since your loan originated. If you stay in the home for less than five years, the principal balance on the forgivable portion is reduced each year on the anniversary date by 20%.

The principal balance is reduced each year by 20% on the anniversary date until it is fully forgiven after five years. The amount of debt that is cancelled/forgiven reduces the original principal balance and is reportable to the IRS. You should seek the advice of your tax advisor. CalHFA suggests that prospective borrowers wishing to participate in the Forgivable Equity Builder Loan Program seek the advice of their tax advisor before applying for this loan.

Yes, first-time homebuyers with income less than 80% AMI can use this Forgivable Loan for down payment and closing cost assistance.

Yes, although all borrowers must occupy the property as their primary residence within sixty days of loan closing. Non-occupant co-borrowers are not allowed. Non-occupant co-signors are not allowed. You would also need to let CalHFA’s Loan Administration division know of the change.

No.

Yes. CalHFA will sent you annual reminder letters that will describe the status of your loan and show you the amount, if any, that has been forgiven to date, and the current balance of your loan. The letter will also show you the upcoming proration/forgivable dates with the amount to be forgiven and the loan balance that remains.

If the borrower(s) occupy the home for five years, the full amount of the Forgivable Loan is forgiven. Any Forgivable Loans paid off prior to the five-year term will be forgiven on an annual prorated basis of 20% per year. The event anniversary date must occur prior to any prorated forgiveness. For example, if the anniversary date falls on Saturday, 10/15/2022, the 20% forgivable loan proration will not occur until Monday, 10/17/2022, (the next business day). Any payoff made prior to the event date of 10/15/2022, must be made for the full balance of the loan plus any fees (e.g, payoff demand fee, loan reconveyance fee, recording fee, expedited service fee).

Yes, you may register and access your loan by clicking here.

CalHFA subordinate loans are calculated on a simple interest basis. This is accomplished by multiplying the current principal balance times the interest rate of the loan, divided by 365, and times the number of days since the last payment was applied (or the CalHFA purchase date if no payments have been made). Example: If your $3,500 second at 5% was disbursed on March 15, 2002, you have made no payments, and a $100.00 payment is received on June 30, 2002; the interest would be $51.30 [$3,500 times 5% divided by 365 times 107]. The payment would be applied first to interest and then to principal, i.e., $51.30 to interest, $48.70 to principal, with the next interest due from date June 30, 2002, and based on a principal balance of $3,451.30.

CalHFA routinely sends out two items to all our borrowers. When CalHFA purchases your loan from the originating lender, we send out a "Welcome" letter at the beginning of the week following the purchase. This letter is required by federal regulations and informs the borrowers that CalHFA purchased the loan and gives them information on how to contact us and where to send payments if they choose to make payments. CalHFA also sends out an "Annual Status Notice", in the month after your anniversary month, informing each borrower of the current unpaid principal balance and accrued interest on their loan(s) and serves as a reminder that this loan is still active. On occasion, other correspondence may be sent as needed.

Depending upon various factors regarding your loan CalHFA could issue a number of IRS Forms as described below. All forms are issued during January of each year for the prior year's activity. Questions regarding the use of any IRS Forms must be directed to a tax professional. CalHFA cannot answer tax related questions.

If after January 31 you have not received your 1098 or 1099-C, you can contact our offices at 1-800-669-1079 or email us at servicing@calhfa.ca.gov, and request a copy.

A number of reasons could cause your interest to be higher than the prior year.

A number of reasons could cause your interest to be lower than the prior year.