CalHFA Mortgage Assistance Corporation

Transcription

1 CalHFA Mortgage Assistance Corporation Financial Statements as of September 30, 2011 and 2010, and for the Year Ended September 30, 2011, and for the Period from May 21, 2010 (Inception Date) to September 30, 2010, and Independent Auditors Report

2 INDEPENDENT AUDITORS REPORT To the Board of CalHFA Mortgage Assistance Corporation We have audited the accompanying statements of financial position of the CalHFA Mortgage Assistance Corporation ( CalHFA MAC or the Corporation ) as of September 30, 2011 and 2010, and the related statements of activities and changes in net assets and of cash flows for the year ended September 30, 2011, and for the period from May 21, 2010 (inception date) to September 30, These financial statements are the responsibility of the Corporation s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Corporation as of September 30, 2011 and 2010, and the changes in its net assets and its cash flows for the year ended September 30, 2011, and for the period from May 21, 2010 (inception date) to September 30, 2010, in conformity with accounting principles generally accepted in the United States of America. January 23,

3 CalHFA MORTGAGE ASSISTANCE CORPORATION STATEMENTS OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2011 AND 2010 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 187,452,032 $ 17,111,959 Accounts receivable 1,574 Prepaid expenses 103,507 5,433 Other current assets 12, Total current assets 187,569,677 17,117,842 PROPERTY, PLANT, AND EQUIPMENT Net of accumulated depreciation 1,156, ,804 TOTAL ASSETS $ 188,726,473 $ 17,548,646 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable and accrued expenses $ 3,065,634 $ 1,299,651 Deferred revenue 185,583,755 16,248,995 Other liabilities 32,640 Total current liabilities 188,682,029 17,548,646 OTHER LONG-TERM LIABILITIES 35,360 Total liabilities 188,717,389 17,548,646 UNRESTRICTED NET ASSETS 9,084 TOTAL LIABILITIES AND NET ASSETS $ 188,726,473 $ 17,548,646 See notes to financial statements

4 CalHFA MORTGAGE ASSISTANCE CORPORATION STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED SEPTEMBER 30, 2011 AND FOR THE PERIOD FROM MAY 21, 2010 (INCEPTION DATE) TO SEPTEMBER 30, 2010 Period from May 21, 2010 (Inception Date) to 2011 September 30, 2010 REVENUE: Government contract $ 30,665,240 $ 1,241,005 Return of homeowner assistance 10,034 Interest income 9,084 Total revenue 30,684,358 1,241,005 EXPENSES: Program transaction-related expenses: Recording fees 130,158 Multilanguage services 10,772 Processing expenses 504,224 Program disbursements 16,102,611 Total program transaction-related expenses 16,747,765 - Operating administrative expenses: Program administrative fees 1,526,495 Salaries and wages 7,797, ,788 Accounting fees 125,295 3,190 Selling, general, & administrative expenses 4,230, ,776 Depreciation expense 248,006 8,251 Total operating administrative expense 13,927,509 1,241,005 Total expenses 30,675,274 1,241,005 CHANGE IN NET ASSETS $ 9,084 $ - NET ASSETS: Beginning unrestricted net assets $ - $ - Ending unrestricted assets $ 9,084 $ - See notes to financial statements

5 CalHFA MORTGAGE ASSISTANCE CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2011 AND FOR THE PERIOD FROM MAY 21, 2010 (INCEPTION DATE) TO SEPTEMBER 30, 2010 Period from May 21, 2010 (Inception Date) to 2011 September 30, 2010 OPERATING ACTIVITIES: Increase in net assets $ 9,084 $ - Depreciation 248,006 8,251 Changes in assets and liabilities: Decrease in accounts receivable (1,574) Decrease in prepaid expenses (98,074) (5,433) Decrease in other current assets (12,114) (450) Increase in accounts payable and accrued expenses 1,747, ,596 Increase in deferred revenue 169,334,760 16,248,995 Net cash provided by operating activities 171,227,292 17,111,959 INVESTING ACTIVITIES Purchase of property, plant and equipment (857,299) FINANCING ACTIVITIES Payments of capital leases (29,920) NET INCREASE IN CASH 170,340,073 17,111,959 CASH AND CASH EQUIVALENTS Beginning of year 17,111,959 CASH AND CASH EQUIVALENTS End of year $ 187,452,032 $ 17,111,959 SUPPLEMENTAL INFORMATION Purchases of property, plant and equipment through capital leases $ 97,920 $ - Purchases of property, plant and equipment through accounts payable and accrued expenses $ 18,780 $ 439,055 See notes to financial statements

6 CalHFA MORTGAGE ASSISTANCE CORPORATION NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2011 AND 2010, FOR THE YEAR ENDED SEPTEMBER 30, 2011 AND FOR THE PERIOD FROM MAY 21, 2010 (INCEPTION DATE) TO SEPTEMBER 30, ORGANIZATION CalHFA Mortgage Assistance Corporation ( CalHFA MAC ) was created on May 21, 2010, as a California not-for profit corporation to implement programs utilizing $1.97 billion dollars in Hardest Hit Fund (HHF) Program Assistance from the U.S. Department of Treasury. Programs established to utilize HHF assistance will be available to provide assistance to struggling low-to-moderate California homeowners to prevent avoidable foreclosures and stabilize the California housing markets. In June, 2010 CalHFA MAC entered into a housing finance agency participation agreement (HPA) between the U.S. Department of Treasury, California Housing Finance Agency (CalHFA) and CalHFA MAC. The agreement calls for the HHF to end no later than December 31, 2017, or sooner, depending on the expenditure of program funds, at which time any remaining funds from the program would be returned to the U.S. Department of Treasury. The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ( generally accepted accounting principles ). Management has evaluated subsequent events during the period from September 30, 2011 to January 23, 2012, the date the financial statements were available to be issued. 2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basis of Accounting The financial statements are prepared on the accrual basis of accounting, whereby revenue is recognized when earned and expenses are recognized when incurred. Cash and Cash Equivalents CalHFA MAC considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Property, Plant, and Equipment Property, plant, and equipment consists of office furniture, office equipment, and computers. Property, plant, and equipment are stated at cost. Depreciation on property, plant, and equipment is calculated using a straight-line basis over estimated useful lives of three to five year. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. In the opinion of management, no impairment existed at September 30, 2011 and Return of the property, plant and equipment at the end of the HPA to the U.S. Department of Treasury is not required

7 Revenue Recognition Federal revenue received is deferred until expenses are incurred against it. Expenses are incurred when the program assistance is disbursed or when administrative expenses are incurred. CalHFA MAC utilizes a third-party service provider, Springboard Services, LLC, for processing, approving, and disbursement of program expenses. CalHFA MAC has four separate programs under the HPA to provide assistance to homeowners: Unemployment Mortgage Assistance Program (UMA) UMA provides mortgage payment assistance to eligible homeowners who have experienced an involuntary job loss and are receiving California EDD unemployment benefits. Benefit assistance through UMA can be up to $3,000 per month and can last up to nine months. The maximum assistance per household is $27,000. Mortgage Reinstatement Assistance Program (MRAP) MRAP provides assistance to eligible homeowners who, because of a financial hardship, have fallen behind on their payments and need help to reinstate their past-due first-mortgage loan. Benefit assistance through MRAP can be a one-time payment of up to $15,000 to cover principal, interest, taxes and insurance, as well as any homeowner s association dues. Principal Reduction Program (PRP) PRP provides assistance to eligible homeowners who have experienced an economic hardship coupled with a severe decline in the home s value. Homeowners who qualify for the PRP could be eligible for up to $50,000 in assistance. The PRP requires a dollar-fordollar match from the homeowners lender, for a total amount of reduced principal up to $100,000. Transition Assistance Program (TAP) TAP provides one-time funds to help eligible homeowners relocate into a new housing situation after executing a short sale or deed-in-lieu of foreclosure program. The TAP can provide up to $5,000 in transition assistance per household. CalHFA MAC issues a noninterest bearing subordinate note receivable secured by a lien recorded against the homeowner s property in the amount of the total benefit received for the MRAP, PRP, and TAP programs. At the conclusion of three years, the subordinate loan will be forgiven. Due to the unlikely collection of these notes, management has determined that the entire amount is uncollectible and as such has fully allowed for the $16,025,611 in note receivables as of September 30, No subordinate note receivables were issued in the period from May 21, 2010 (inception date) to September 30, Income Taxes The Internal Revenue Services has granted CalHFA MAC an exemption from income taxes under Section 501(c)(3) of the Internal Revenue Code. Net Assets CalHFA MAC classifies net assets into two categories: Unrestricted and temporarily restricted. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor or grantor. Unrestricted net assets are contributions without a donor/grantor imposed time and/or program restriction

8 3. RELATED PARTY TRANSACTIONS CalHFA MAC entered into an administrative agreement with CalHFA for support services, which include an allocation of CalHFA staff to provide program oversight, administrative and legal support, and direct reimbursement for goods and services of outside vendors. Due to its status as a state governmental agency, CalHFA enjoys the benefit of discounts for goods and services with strategic business partners. The administrative agreement enables CalHFA MAC to leverage these discounts by providing for CalHFA to purchase goods and services during program implementation and ongoing operations. CalHFA MAC reimburses CalHFA for these items at the actual cost expended. CalHFA MAC had liabilities to CalHFA of $532,046 and $453,848, for the year ended September 30, 2011, and the period from May 21, 2010 (inception date) to September 30, 2010, respectively. These amounts were composed of accounts payable and accrued expenses resulting from unbilled vendor invoices for materials and services. Additionally, actual cash reimbursements paid to CalHFA totaled $2,113,840 and $378,041 for the year ended September 30, 2011 and the period from May 21, 2010 (inception date) to September 30, 2010, respectively. CalHFA MAC also leases office space from the CalHFA under an operating lease with a term of four years and five months that expires April 31, A schedule of the lease payments is available in Note PROPERTY AND EQUIPMENT AND ACCUMULATED DEPRECIATION Property, equipment, and accumulated depreciation at September 30, 2011 and 2010, are as follows: Computers and equipment $ 495,567 $ 179,303 Furniture and fixtures 135,009 17,212 Leasehold improvements 70,048 25,250 Software 712, ,290 Gross property, plant, and equipment 1,413, ,055 Less accumulated depreciation (256,257) (8,251) Property, plant, and equipment net $ 1,156,796 $ 430,

9 5. COMMITMENTS As of September 30, 2011, CalHFA MAC has reserved $1,219,446 of deferred revenue for post-program funding administrative support. It is estimated these funds will be utilized for continued program compliance and reporting. The unused portion of these funds will be returned to the U.S. Department of Treasury no later than December 31, Program reservations to homeowner assistance as of September 30, 2011, are as follows: Administrative reservation- post program funding $ 1,219,446 Program reservation UMA 34,355,665 Program reservation MRAP 40,410,925 Program reservation PRP 21,015,289 Program reservation TAP 140,000 Total program reservations $ 97,141,325 No commitments were outstanding as of September 30, Reservations to homeowner assistance may change if the homeowner s circumstances change or the homeowner fails to perform as stated in the agreement. 6. LEASES CalHFA MAC entered into a sublease for office space from CalHFA in October Total rental expense recorded for year ended September 30, 2011, approximated $15,437. The future minimum lease payments for the operating leases are as follows: Years Ending September $ 15, , , ,968 $ 58,800 CalHFA MAC entered into a capital lease for office equipment in November Total lease expense recorded for year ended September 30, 2011, approximated $29,920. The future minimum lease payments for the capital lease are as follows: Years Ending September $ 32, , ,720 ****** $ 68,