NATIONAL FORECLOSURE MITIGATION PROGRAM

Transcription

1 APRIL NATIONAL FORECLOSURE MITIGATION PROGRAM State Project/Program: NATIONAL FORECLOSURE MITIGATION COUNSELING PROGRAM Neighborhood Reinvestment Corporation (DBA) NeighborWorks America Federal Authorization: PL : 95X1350 North Carolina Housing Finance Agency Agency Contact Person-Program Address Confirmation Letters To: Rich Lee Bobby Waring (919) North Carolina Housing Finance Agency PO Box Agency Contact Person-Financial Raleigh, NC Bobby Waring (919) The auditor should not consider the Supplement to be safe harbor for identifying audit procedures to apply in a particular engagement, but the auditor should be prepared to justify departures from the suggested procedures. The auditor can consider the supplement a safe harbor for identification of compliance requirements to be tested if the auditor performs reasonable procedures to ensure that the requirements in the Supplement are current. The grantor agency may elect to review audit working papers to determine that audit tests are adequate. Auditors may request documentation of monitoring visits by the State Agencies. I. PROGRAM OBJECTIVES The intent of the National Foreclosure Mitigation Counseling (NFMC) funding is to expand and supplement counseling opportunities available to American families facing delinquency and foreclosure. II. PROGRAM PROCEDURES 1. General. The North Carolina Housing Finance Agency (NCHFA) invited HUD approved housing counseling agencies and other organization that met or exceeded the standards required for HUD approval to be part of the NFMC Program. Subgrantees were selected based on the applicant s demonstrated experience, capacity and the ability to deliver counseling services to help families prevent a foreclosure (see page 8 of the subgrantee s NFMC training manual for additional information) as well as their financial and organizational B

2 stability. Subgrantees are contracted through a NFMC Service Agreement, as amended, to operate the program within their service areas in accordance with Program Guidelines outlined in the NFMC Training Manual, which was provided to them at their initial training/orientation, and any subsequent amendments to the Program Guidelines. As part of their Service Agreement, subgrantees agree to provide NCHFA with the following documents: (1) a copy of their fidelity bond coverage or honesty insurance with NCHFA named as an additional insured, and (2) a copy of their authorization and privacy forms. Program funds may be used to support the following eligible activities: (1.) Counseling services and (2.) Program-related support activites and expenses. The amount of funds budgeted for each subgrantee is based on: The total projected number of NFMC counseling sessions to be completed with a maximum amount of $ disbursed for each eligible client (see pages of the NFMC training manual for additional information). Plus an allocation for Program-related activites equal to 17.5% of the subgrantee s budget for counseling sessions to be completed. For additional information, please see Exhibit G Disbursement Schedule of the subgrantee s Service Agreement. Any subgrantee that receives and expends $ 500, or more in federal funds during the fiscal year must comply with OMB A-133 requirements. In addition, subgrantees that are non-profit organizations will be subject to the administrative requirements of the OMB Circular A-110 as it may be amended and A-122. Finally, subgrantees that are non-governmental organizations must also submit compliance reports required by the North Carolina Statue 143C-6-23 (For additional information, please see Section IV of the subgrantee s NFMC Service Agreement). 2. Monitoring of Subgrantees by NCHFA NCHFA monitors subgrantees progress in meeting projected housing counseling session goals by regularly reviewing data submitted to the Agency s NFMC web-based reporting system and by reviewing monthly invoices submitted for counseling sessions completed and program-related support expenses incurred. Appropriate documentation is required for all program-related support expenses charged to NFMC. In addition, NCHFA conducts site visits with a sample of subgrantees to verify that counseling services provided by the subgrantee are properly documented in each client file. NCHFA randomly selects a number of client files for review (For additional information, see NFMC Audit Procedures Manual available from NCHFA). III. COMPLIANCE REQUIREMENTS A. Activities Allowed or Unallowed As previously stated, NFMC funds may only be used to support the following eligible activities: (1.) housing counseling services and (2.) program-related support activities, Counseling can include a range of activities depending on the client s financial situation and the severity of the mortgage delinquency. NeighborWorks America has developed a three-tiered structure for defining and estimating the cost of counseling activity, as described below. Level One counseling has been set at $ 150, Level Two at $ 200, and Level Three at $ 350. Level Three activities combine those offered under Levels One and Two. B

3 Level One Counseling: To qualify for a level one payment ($150), a counseling agency will be required to complete all four of the following steps: 1. Organization must conduct an intake including client name and address, basic demographic information, lender and loan information, and reason for delinquency. The National Industry Foreclosure Counseling Standards provide guidance on what should be included in an Intake Form. It is recommended, but not required, that contact information for one additional person is collected at intake in the event that client moves or is otherwise unable to be reached following initial intake. 2. Organization shall collect a signed authorization form from the client or have other legally permissible client authorization on record that will allow organization to: a. submit client-level information to the data collection system for this grant b. open files to be reviewed for program monitoring and compliance purposes c. follow-up with client related to program evaluation between intake and June 30, Organization must also allow client access to its privacy policy statement. Level Two Counseling: To qualify for a level two payment ($200), a counseling agency will be required to complete the following four steps: 1. Engage in budget verification during which the counselor reviews documented evidence provided by the client to establish true debt obligations (credit report), monthly expenses (monthly bills and banks statements) and spending patterns, and realistic opportunities for income (tax returns and pay stubs). 2. If not already on file, organization shall collect a signed authorization form from the client or have other legally-permissible client authorization on record. 3. Steps to obtain a solution outlined in the written Action Plan are taken and documented using counseling notes that indicate date counseling occurred. This could include but is not limited to the following: Draft and submit to the servicer a hardship letter that describes for the servicer the situationof the client, reason for delinquency, factors that should be considered when developing a workout plan, and an estimate of the housing cost the client can afford to pay. Document attempts to contact the servicer or lender and, if a workout is possible, fill out and submit forms required by the servicer to move forward with a workout plan, loan modification or other available program. NeighborWorks will endeavor to post contact information for servicers who have made such available on the web page so documentation of attempts to reach servicers is easily captured. Complete and submit application for local resource options including refinance programs or rescue funds. Assist in situations where client elects to pursue sale options. 4. Close-out documentation is completed. Level Three Counseling: Level 3 counseling can be billed ($350) when all necessary documentation for Levels 1 and 2 are completed in succession by the same agency. Program-Related Support Subgrantees are allocated 17.5% of their counseling award for program related support (refer to Exhibit G in the Service Agreement). Eligible uses of Program-Related Support are: 1. Establishing a triage system that makes more effective and efficient use of counseling time so counselors are not scheduling and reserving time and sessions with clients seeking help with situations not related to mortgage and home foreclosure. Triage can also ensure that clients are better prepared for the counseling session they have gathered documents and information, for example. B

4 2. Outreach to delinquent clients, especially in areas of greatest need. The earlier a delinquent homeowner reaches out for assistance, the more probable the success. Outreach strategies to encourage delinquent homeowners to come in for assistance well before the foreclosure notice is received are encouraged. Group orientation and education sessions to help use counseling time more effectively as well as registering attendees, preparing for and delivering these sessions, are all eligible uses. (For additional information, please see NFMC Service Agreement, Section III Scope of Work, Exhibit B - Counseling Level Checklist, and the NFMC training manual). Suggested Audit Procedure For counseling sessions completed, review client files to verfiy that appropriate documentation for counseling level invoiced is provided. For Program-related support, review program invoices to verify that appropriate documentation has been included (See Exhibit I of the subgrantee s NFMC Service Agreement). B. Allowable Costs/Cost Principal As previously stated, the NFMC program compensates subgrantees based on the type of counseling session completed (Level 1, 2 or 3) based on the following fee structure: Level 1 Counseling = $ Level 2 Counseling = $ Level 3 Counseling = $ Recognizing that the NFMC fees may not be sufficient to cover the toal cost of providing level 1, 2 or 3 counseling, subgrantees are allowed to use funds from other sources to cover documented costs above the NFMC fee. However, if a counseling agency receives payment from another source for a NFMC client, the total fees should not exceed an additional 50% beyond the NFMC counseling level fee paid (see page 14 of subgrantee s NFMC Training Manual for additional information). Duplicate billing for the same Eligible Client at each counseling level is not permitted. Duplicate billing for the same Eligible Client to multiple sources of funds in addition to the Program funds is also not permitted (see Section IV - subsection H of NFMC Service Agreement, and page 15 of the NFMC Training Manual). Funds received from HUD Housing Counseling program should not be used to underwrite the same counseling services provided to the same client counseled under the NFMC grant (see page 15 of the NFMC Training Manual). No funds made available under the NFMC Program may be provided directly to lenders or homeowners to discharge outstanding mortgage balances or for any other direct debt reduction payments. Suggested Audit Procedure: Review housing counseling invoices submited to other funding sources and crosscheck them with NFMC invoices to verify that any NFMC client billed to another source does not exceed the additional 50% beyond the NFMC counseling level fee paid. For any subgrantees receiving HUD Housing Counseling grant funding, crosscheck HUD Housing Counseling invoices with NFMC invoices to ensure no clients have been billed to both programs. C. Cash Management B

5 NCHFA advances funds to the Subgrantee. The initial advance is provided upon execution of the Service Agreement with the Agency and receipt of other required documents. Subsequent advances are paid as the subgrantee meets a pre-determined number of counseling sessions (*see Exhibit G Disbursement Schedule attached to subgrantee s NFMC Service Agreement). Subgrantee agrees to maintain a separate budget for its foreclosure prevention counseling program and further agrees that all Program funds will be used solely to fund subgrantee s foreclosure counseling program and related expenses (see NFMC Service Agreement, Section IV - subsection H). Any unused Program funds will be remitted back to the Agency at the end of the NFMC Service Agreement term or when the NFMC Service Agreement is terminated by either party, whichever comes first. Suggested Audit Procedue: Compare NFMC invoices submitted by the subgrantee with NFMC payments received from NCHFA to verify that services and expenses incurred were equal to funds received. D. Davis-Bacon Act Not Applicable E. Eligibility NFMC assisted clients must be owner-occupants of single-family (one to four units) properties who are delinquent on their mortgages, and are at risk of default and foreclosure. In addition, Subprime mortgage holders at risk of a default/foreclosure are also eligible clients. F. Equipment and Real Property Management Any equipment purchased wholely or in part with NFMC Program-related expenses must be used to support NFMC counseling services provided. The subgrantee must maintain appropriate documentation to verify use of said equipment. NFMC funds cannot be used for Real Property Management. G. Matching, Level of Effort, Earmarking There is no match requirement for the Sub-Grantees. Level of effort is monitored through monthly submitted reports. Failure to meet projected housing counseling session goals may result in a recapture of funds. H. Period of Availability Originally, subgrantees were to provide program services through December 31, Because NCHFA projected NFMC funds would not be fully expended by then, the Agency requested and was granted an extension to complete program services by June 30, Subgrantee service agreements were extended by NCHFA to reflect this new end date. Any funds not expended by June 30, 2009 are subject to recapture by NCHFA. B

6 I. Procurement and Suspension and Debarment Not applicable. J. Program Income Subgrantee agrees not to charge fees (service fees, membership fees or otherwise) to Eligible Clients in exchange for foreclosure counseling services. If NFMC funds are in an interest bearing account, the subgrantee must document that any interest generated has been used to support NFMC program services and/or program-related expenses. Any unexpended interest must be remitted to NCHFA at the end of the NFMC Service Agreement or when the NFMC Service Agreement is terminated by either party, whichever comes first. Suggested Audit Procedure Review subgrantee s bank statements to verify if NFMC funds were deposited into an interest bearing account. If so, review documentation that any interest earned on NFMC funds was spent on Program services and/or support services. K. Real Property Acquisition and Relocation Assistance Real Property Acquisition is not an eligible activity for the NFMC grant nor is permanent Relocation Assistance. L. Reporting The subgrantee is required to provide specified reports in a format acceptable to the Agency on the seventh business day of every month throughout the term of their NFMC Service Agreement, as it may be amended or extended. Agency staff reviews monthly reports to verify clients are not duplicated and appropriated documentation for program related support expenses has been provided. M. Subgrantees Monitoring NCHFA monitors Subgrantee progress in meeting projected housing cousenling session goals by regularly reviewing data submitted to the Agency s NFMC web-based reporting system and by reviewing monthly invoices submitted for counseling sessions completed and program-related support expenses incurred. Appropriate documentation is required for all program-related support expenses charged to NFMC. In addition, NCHFA conducts site visits with a sample of Subgrantees to verify that counseling services provided by the subgrantee are properly documented in each client file. NCHFA randomly selects a number of client files for review (for more information, please see NFMC Audit Procedures Manual available from NCHFA). N. Special Test and Provisions Not applicable. B