Bridging the Gap: Combining Financing Sources

Transcription

1 Bridging the Gap: Combining Financing Sources 2013 OHFA Housing Summit April 4, 2013 Presented by: Michele Carter HCD Community Programs & Outreach Manager

2 Homeownership Set-aside Program (HSP) Rural First time Homebuyer Program (RFHP) Provides down payment, closing cost and rehabilitation assistance to first time homebuyers earning at or below 80% of the area median income for households purchasing or constructing homes in rural areas of Colorado, Kansas, Nebraska or Oklahoma. Important Reminders - Recipient may not own or be an investor in another residence - Must be household s primary residence - Must meet FHLBank definition of First-time Homebuyer (definition is in 2013 AHP Implementation Plan located on our website) 2

3 2012 HSP Participating Members by State AHP 60 CICA HSP 40 JOBS CO 2012 KS 2012 NE 2012 OK 3

4 2012 HSP Allocations Per State Colorado - $47,215 = 12 units Kansas - $817,669 = 205 units Nebraska - $802,125= 203 units Oklahoma - $227,146 = 57 units Total 2012 Allocation - $1,894,155 = 477 units 4

5 Homeownership Set-aside Program (HSP) Total available March 1 is $2.4 million Up to $5,000 subsidy per eligible household Funding is on a first-come first-served basis Limited to $250,000 per member for the time period March 1 through May 1. Funds remaining after May 1 shall be allocated with no limitation on the amount any single member can request. Program closes November 29,

6 HSP Eligible Uses Down payment Closing costs Homebuyer Education fees up to $500 Rehabilitation costs associated with the purchase of a home Single-family homes, mobile homes, condominiums and cooperatives Allowed in combination with Secondary Market Mortgage Insurance Non-FHLBank subsidy FHLBank Community Housing Programs discounted advance to fund first mortgage loans to homebuyers Cannot be used with AHP for the same household 6

7 Rural Location Rural Definition: A location in an area designated as rural in the Am I Rural tool. To determine if a location is rural, use this link: Enter the address, city, state and ZIP code in the appropriate fields. Select Next 7

8 Rural Location (continued) Select Display common rural definitions for your location under Common Rural Definitions. Click on Am I Rural? 8

9 Rural Location (continued) The lookup returns a page of common rural definitions for the location entered. Locations identified as rural or urban cluster qualify as rural. 9

10 HSP: How It Works $2.4 million available in HSP funds in 2013 Up to $5,000 per homebuyer 480 homebuyers may benefit this year FUNDING AVAILABLE MARCH 1 Members can initially receive up to $250,000 in funds ($5,000 per homebuyer) MAY 1 The $250,000 per member limit is removed after May 1, subject to availability of funds Funding is available on a first-come, first-served basis 10

11 Review of HSP PROCESS Registration Reservation Disbursement Closing Post Closing STEP 1: Member Registration begins February 1 STEP 2 Reserve funds Begins March 1 STEP 3: Allow 15 business days for processing STEP 4: Funds Disbursmt. Funds must be drawn down and used within 60 days after disbursement STEP 5: Closing and Retention Documents Submitted Within 90 days from the date funds are disbursed 11

12 STEP 1: MEMBER REGISTRATION FHLBank notifies member banks of funds available. Complete HSP agreement Will need to be signed by an authorized representative of member. Members must submit the HSP agreement in order to register and be eligible to submit disbursement requests. HSP agreements will be accepted any time during the program year. All forms are available at 12

13 STEP 2: Reservation of HSP Subsidy Funds may be reserved beginning March 1. Reservations may be cancelled at any time without penalty. Submit the Disbursement Request Form (1 page) This must be signed by an authorized representative of the member. There is a drop down box at the top of the page to indicate reservation only or funding request and documents. FHLBank will acknowledge approved reservations. Requests must be faxed or mailed. s are no longer acceptable due to Personally Identifiable Information (PII). Request to receive funds Disbursement Request Form and all other documentation must be submitted to FHLBank within 90 days after the reservation. 13

14 STEP 3: Disbursement Request Requests are generally funded within 15 business days after submission of disbursement request and required documentation. Incomplete request or requests requiring correction/clarification may take longer. Request must be signed by an authorized bank officer listed on FHLBank Topeka credit authorization/resolution. HSP household may not receive cash back at closing in excess of $250. This is separate from the minimum down payment requirement. If the household does receive cash back at closing, the total amount of the owner down payment/poc s less the cash back at closing must be at least $500. Any amount in excess of $250 must be used to reduce the principal of the mortgage loan. 14

15 Disbursement Request Required Documents Completed HSP funds request form (complete ICW first and some fields will carry over to funds request form) Third-party income verification (VOE, pay stubs, etc.) Income Calculation Worksheet (must be consistent with income documentation submitted). If using a pay stub we will need two consecutive pay stubs. Draft closing/settlement statement Documentation of rehab expenses if applicable Draft HSP note/subordinate mortgage Homebuyer education certificate Truth in lending statement (TIL) 15

16 Cost Reasonableness Standards If the front ratio exceeds 38% an explanation must accompany the request. FHLBank may choose to grant an exception in certain circumstances. Cost per unit: Must be within the maximum FHA Limits Mortgage rate: Freddie Mac fixed rate plus 2%; ARMS allowable will use Freddie Mac ARM rate plus 2% if applicable 2 nd Mortgage rate: Freddie Mac fixed rate plus 4% Mortgage term: up to 40 years Owner down payment/poc: $500 Education/Counseling fees: $500 maximum Loan discount fees cannot exceed 2 points Lenders fees (borrowers and sellers) must not exceed 3% (i.e. orig fee, processing fee, etc.) 16

17 $500 Down Payment or Equivalent Down payment Equity contribution -lot on which new house was built -sweat equity contributed through a self-help housing program or Habitat for Humanity Costs paid outside of closing Provide documentation of cost of appraisal, loan application, inspections, etc. If POC s are not shown on the HUD 1 Gifts cannot be used as part of the $500 down payment 17

18 Mandatory Homebuyer Education Provide certificate of completion. If using an online class, the certificate must be signed by the homebuyer Homebuyer Education provider must be on FHLBank s list of acceptable homebuyer education providers HSP funds maybe be used to pay for counseling costs only when: Incurred in connection with counseling of homebuyers who purchase an HSP-assisted unit Costs have not been covered by another source, including the member bank 18

19 Full-time Students & Co-signers Full-time students who have secured future employment and who have a reasonable expectation or knowledge upon graduation they shall have income above the applicable income limits may be denied eligibility. Full-time students required to fill out the Zero Income/Full-time Student Certification form. Co-signers are permitted but additional information may be required upon request by FHLBank. If the co-signer has an ownership interest or uses the home as a primary residence, the co-signer must be included in the determination of the households income. 19

20 STEPS 4 and 5: Funds Disbursed; Closing & Retention Documents Submitted Funds are credited to member demand-deposit account (DDA). FHLBank requires the original signed AHP note and original recorded (or certified copy) AHP mortgage within 90 days after funds have been disbursed* to the FHLBank member. The final Truth-in-Lending disclosure and the final signed settlement statement are due to FHLBank immediately after closing, due to finance agency reporting requirements. These required documents may be faxed. FHLBank will not fund pending HSP disbursements until all delinquent retention documentation is received. * Note: Not 90 days after closing 20

21 Loan Closing HSP funds may not be used for home purchases that were closed prior to the first date that disbursement requests are accepted each round. Further, members are discouraged from submitting requests for disbursement of funds after closing. EXAMPLE: If an HSP request is submitted to FHLBank for review after closing and found ineligible by HCD staff, the request for the funds will not be approved. The entity that disbursed the funds before FHLBank approval will be responsible for recovering their funds. The funds may not be recovered from the homebuyer. 21

22 Retention Period 5-year retention secured by deed restriction requires: Notice of any sale or refinancing of the unit during that period. If sold, repayment of a pro rata share of the subsidy upon sale, reduced by 1/60 per month for every month the HSPassisted borrower owned the unit or sale to an HSP-qualified buyer. If refinanced, FHLBank will subordinate its position to the first lender. The obligation to repay the HSP to FHLBank terminates after any foreclosure. A deed in lieu of foreclosure may terminate the obligation to repay the HSP subsidy. 22

23 Other Helpful Information Check FHLBank Topeka website for income documents: income calculation guidelines, disbursement request form and income calculation worksheet (combined this year) and instructions. It is very important to read the income calculation guidelines. Contact HCD if you have questions. In order to ensure prompt funding, please refer to the HSP Disbursement Request Instructions to become familiar with our new and improved forms. Be sure to pull all forms from our website to ensure you have the most recent version. Outdated forms will be returned for correction. 23

24 New for 2013 HCD staff cannot edit or correct your submitted disbursement request form; however, we can assist you in completing the form by reviewing unsigned draft copies. Unsigned draft copies of the Income Calculation Worksheet are acceptable during initial review. Disbursement request form and Income Calculation worksheet are now linked. Complete the Income Calculation Worksheet First The program enrollment date is the date the full disbursement request is submitted. The date must be on or after March 1, Member DDA# is required on the Disbursement Request Form. We only need the first 4 digits. 24

25 New for 2013 (continued) Subsidy per unit is increasing from $4,000 to $5,000. Rural Disaster Related Assistance (RDRA) and Targeted Ownership Program (TOP) have been discontinued. Submit final closing documents to FHLBank within 90 days of funds disbursement to member. The final TIL and the final signed settlement statement are due to FHLBank immediately after closing due to finance agency reporting requirements. 25

26 Public Outreach New emphasis on public outreach in 2013 Technical assistance for all HCD programs Contact: Michele Carter, HCD Community Programs & Outreach Manager or 26

27 What questions do you have about the FHLBank Homeownership Set-aside Program? 27

28 HSP INFORMATION IS AVAILABLE ONLINE AT 28

29 CONTACT US WITH PROGRAM QUESTIONS Utika Scales HCD Disbursement Specialist Kansas and Oklahoma Joan Lickteig HCD Disbursement Specialist Nebraska and Colorado