. Hmewnership Opprtunities Prgram (HOP) Guidelines Cntents: 1: Prgram Descriptin 2: Member Participatin and Registratin 3: Funding Use, Limits, and Availability 4: Member Requirements 5: Recipient Requirements 6: Match Requirements (Nn-Member First Mrtgage Lender) 7: Settlement/Clsing Statement 8: Real Estate Retentin Perid 9: Disbursement Prcess 10: Pst-Disbursement Dcumentatin Requirements 11: Mnitring, Reprting, and Dcumentatin 12: Husing Cunseling Requirements 13: Incme Guidelines (see Attachment D) PUBLIC Page 1 f 8
1: Prgram Descriptin FHLBank Indianaplis 2018 AHP Implementatin Plan The Hmewnership Opprtunities Prgram (HOP) is part f the Hmewnership Initiatives Prgrams allcatin. HOP helps first-time hmebuyers whereby the husehld is at r belw 80% f area median incme (AMI) with dwn payment and clsing cst assistance and imprves their eligibility fr mrtgage financing. The maximum subsidy that can be requested per unit is as fllws: $8,000, if a Federal Hme Lan Bank f Indianaplis ( FHLBI r the Bank ) member is riginating the first mrtgage lan (NO match required) $4,000, if a nn-member is prviding the first mrtgage lan (Match required) The financing terms must be cnsistent with market rate f interest, pints, fees and ther charges fr lans f similar maturity, terms and risk charged by the lender fr all transactins whether r nt the lan is riginated by a Bank member. Fr transactins where a nn-member is the first mrtgage lender, matching funds are required at a 3:1 rati. The HOP subsidy will nly match funds fr the purpse f prviding dwn payment r clsing cst assistance. HOP matches ther funds t increase a hmebuyer s ttal surce f funds t purchase a hme. See the Match Requirements sectin f this dcument fr mre infrmatin. Each member shall determine the rati (nt t exceed 3:1) f the Bank matching funds it will prvide t recipients. Up t $150 f the HOP subsidy may be used tward husing cunseling fr hme purchases. HOP may be amended at any time with input frm the FHLBI Cuncil and apprval by the FHLBI Bard. Funding annuncements may be revked by the Bard withut ntice. The Bank reserves the right t allcate funds amng prgrams t meet prgram demand and t ensure utilizatin f all funds. All funds allcated t the set aside prgrams are available n a first-cme, first-served basis. 2: Member Participatin Requirements Institutins that are current members f and eligible t brrw frm the Bank may participate in HOP. The Bank des nt accept applicatins frm institutins with pending applicatins fr membership in the Bank. A list f eligible members may be btained frm a directry at https://www.fhlbi.cm/ A. Registratin: All members must sign and submit a Hmewnership Initiatives Master Agreement and Registratin and Certificatin Frm, which allws participatin in all Bank Hmewnership Initiative Prgrams. Members will be respnsible fr all terms and cnditins cntained in the Hmewnership Initiatives Master Agreement and Registratin and Certificatin Frm, including, but nt limited t, the requirements utlined in this dcument. B. Training: All NEW users f the prgram will be required t participate in training that presents infrmatin and instructins n prgram guidelines, disbursements, and dcumentatin requirements. NEW users are defined as thse member wh have never participated in the prgram r thse wh have nt received a disbursement in the prir tw years. At a minimum, either the member s Primary r Secndary cntact is required t participate in the training. C. Submitting Disbursement Requests: Upn apprval f the Hmewnership Initiatives Master Agreement, Registratin and Certificatin Frm and cmpletin f required training, members will receive a Starter Kit with all f the infrmatin and frms needed t start requesting disbursements. PUBLIC Page 2 f 8
3: Funding Use, Limits, and Availability FHLBank Indianaplis 2018 AHP Implementatin Plan Funding fr HOP is part f the ttal Hmewnership Initiatives Prgrams allcatin. Thrughut the prgram year, the remaining amunt f funds available will be published n the Bank s Web site at least bi-weekly. HOP funding may g twards dwn payment and clsing csts as required by 1291.2(a)(1), the Bank must make available at least ne-third f the aggregate annual Hmewnership Initiatives Prgrams allcatin t prgrams that assist first-time hmebuyers. Each participating member will be limited t $500,000 in HOP funds, unless such limitatin is waived by the Bard. Hmewnership Initiatives Prgrams funding will be annunced in the spring. Funds will be made available n a first-cme first-serve basis until all funds are exhausted. As required by 1291.6(c)(7), Financing Csts: The rate f interest, pints, fees, and any ther charges fr all lans that are made fr the prject in cnjunctin with the subsidy shall nt exceed a reasnable market rate f interest, pints, fees, and ther charges fr lans f similar maturity, terms and risk. The purchase price f the prperty must be supprted by an appraisal cmpleted nt mre than 90 days in advance f clsing. 4: Member Requirements The member is respnsible fr structuring the purchase transactin in a manner that cmplies with all applicable laws, regulatins and this Plan. Members must enrll each husehld in a Federal Hme Lan Bank f Indianaplis Hmewnership Initiatives Prgram. The enrllment date is defined by the Bank as the date n which the member issues a qualificatin r ther such lan cmmitment r enrlls the husehld in a Bank Hmewnership Initiatives Prgram. Members must submit a disbursement request t the Bank within 30 days after enrllment f the husehld int a Bank Hmewnership Initiatives Prgram. Member may nt request the HOP subsidy fr transactins invlving the member s real estate-wned (REO) prperties. Members must prvide subsidy nly t hmebuyers wh meet the incme guidelines as described in Attachment D f the current Affrdable Husing Prgram Implementatin Plan (Plan). Members must prvide subsidy nly t hmebuyers that cmplete a husing cunseling prgram as described in these guidelines. Members must ensure that HOP-assisted units are subject t a Retentin Agreement prvided by the Bank that meet requirements f 1291.9 f the Regulatin. See Attachment E f the Plan fr sample retentin language. Members must cmply with Bank requirements t prvide cpies f retentin agreements, settlement statements and ther dcumentatin as described in this dcument. Members must maintain prject files with all applicable infrmatin fr all grant recipients. The Bank may cnduct n-site cmpliance reviews. Members may nt charge fees t prvide subsidy t any hmebuyer. Member must certify that the recipient(s) and the prpsed transactin meet all eligibility requirements fr HOP funds. PUBLIC Page 3 f 8
5: Recipient Requirements FHLBank Indianaplis 2018 AHP Implementatin Plan HOP funds may nly be made available t a first-time hmebuyer. The member must maintain a first-time hmebuyer affidavit in the prject file. In rder t be cnsidered a first-time hmebuyer, a hmebuyer must be in ne r mre f the fllwing categries: An individual and his r her spuse wh has had n wnership in a principal residence during a threeyear perid ending n the date f the purchase f the prperty. An individual wh is a displaced hmemaker and has nly wned a hme with a spuse, wh has nt wrked full-time, full-year in the labr frce fr mre than tw years and during that perid, wrked primarily withut remuneratin t care fr a hme and family. A single parent wh has nly wned a hme with a frmer spuse while married and has 1 r mre minr children fr whm the individual has physical custdy r jint physical custdy as rdered by the state authrity n child supprt, guardianship r custdy rder r divrce decree. If physical custdy is nt frmally established, the primary residence f the child must be dcumented by third-party dcumentatin. An individual wh has nly wned a principal residence nt permanently affixed t a permanent fundatin in accrdance with applicable regulatins. An individual wh has nly wned a prperty that was nt in cmpliance with state, lcal r mdel building cdes, r ther applicable cdes, and cannt be brught int cmpliance with such cdes fr less than the cst f cnstructing a permanent structure. The hmebuyer(s) must cmplete a cunseling/educatin prgram prir t the lan clsing. (Refer t Husing Cunseling Prgram sectin f this dcument). The hmebuyer(s) must cntribute a minimum f $1,000 in persnal cash funds tward the purchase f the hme. The hmebuyer(s) has husehld incme that is equal t r less than 80% f the area median incme (AMI) adjusted fr family size as published annually by HUD (see the Bank s Web site fr current charts) The primary husehld members with earned incme shuld demnstrate at least ne full year f cntinuus emplyment. The hmebuyer(s) must be wner-ccupants f the hme t be purchased (must be primary residence). Transactins that require r invlve nn-ccupying c-brrwers, c-wners, csigners, r nn-ccupying lan guarantrs are nt eligible. Duplexes are eligible as lng as the hmebuyer will ccupy ne-half as the primary residence and 75% f the prjected incme generated frm the ther unit(s) is included in the HOP incme calculatin. Prjected incme must be included in husehld incme whether r nt hmebuyer intends t rent the ther unit(s). Lease/purchase arrangements and land cntracts are nt eligible wnership structures. All prperties must be titled as real estate and be permanently affixed t a permanent fundatin. All individuals in title t the prperty must ccupy the prperty fr which the subsidy is being prvided and must sign retentin dcuments as described belw in Sectin 8: Real Estate Retentin Perid. The hmebuyer(s) must prvide all dcumentatin t the member institutin as required fr participatin in the prgram. The hmebuyer(s) may nt receive mre than $250 cash back at clsing. Any funds in excess f the apprved mrtgage amunt, clsing csts and cash back t the hmebuyer shall be used as a credit t reduce the principal f the mrtgage r as a credit tward the husehld s mnthly payments n the mrtgage lan. PUBLIC Page 4 f 8
FHLBank Indianaplis 2018 AHP Implementatin Plan The husehld s mnthly husing expense, including principal, interest, taxes, insurance, and hmewner s dues may nt exceed 35% f the husehld s grss incme at clsing. The hmebuyer s mrtgage lan term and amrtizatin perid may nt be less than 5 years and 15 years, respectively. The hmebuyer may nt utilize a cnstructin t permanent lan prduct t finance the purchase f the prperty. The prperty must be an existing dwelling. The hmebuyer may nt acquire the prperty under the terms f a cash purchase. An amrtizing mrtgage must be transacted t purchase the prperty. The hmebuyer may nt purchase the prperty under a nn-arm s length transactin whereby the transactin s parties are related by bld r marriage. Purchase transactins requiring funds t be escrwed fr prperty rehabilitatin r repairs are nt eligible unless the rehabilitatin/repair escrw is paid utside f clsing r by a third party at clsing as evidenced by either the HUD-1 Settlement Statement/Clsing Disclsure r ther dcumentatin. The hmebuyer(s) may nt be students with part-time r n incme while in schl wh rdinarily wuld have a reasnable prspect fr a substantial increase in incme exceeding the AHP incme eligibility limit upn entering the wrkfrce full-time. In determining an applicant s eligibility, the Bank will cnsider factrs including but nt limited t the applicant s current student status, number f hurs currently enrlled, anticipated date f graduatin and field f study. Supprting dcumentatin will be required. The hmebuyer cannt receive fr the same prperty mre than ne Federal Hme Lan Bank f Indianaplis grant f any kind, r mre than ne grant frm any Federal Hme Lan Bank, unless prir grants have been repaid r retentin perid has expired. 6: Match Requirements (Nn-Member First Mrtgage Lender) The HOP subsidy will nly match funds fr the purpse f prviding dwn payment r clsing cst assistance fr hme purchases (existing r new cnstructin) fr first-time hmebuyers. Each member shall determine the rati f the Bank matching funds it will prvide t recipients nt t exceed 3:1. Fr example, if a hmebuyer has $1,500 in matching funds, the member may request up t $4,500 in HOP subsidy, giving the hmebuyer a ttal f $6,000 fr qualified uses. HOP subsidy per husehld shall be n less than $1,000. As stated in the Recipient Requirements sectin, a minimum f $1,000 must be frm the hmebuyer s wn cash funds. The remaining matched funds may cme frm grants (i.e., CDBG, HOME r USDA funds), gifts, frgivable lans, expenses paid utside clsing by the hmebuyer r sweat equity. Allwable sweat equity hurs are thse cmpleted by the husehld members n the subject prperty nly, valued at the current rate as published n www.independentsectr.rg. Sweat equity hurs wrked by ther parties r extended family are nt eligible as match. Nte: Seller cntributins r paid clsing csts are NOT an eligible surce f match. 7: Settlement/Clsing Statement The HOP subsidy must be used fr dwn payment r clsing cst assistance and must be reflected as a line item n the current HUD apprved HUD-1 Settlement Statement/Clsing Disclsure. Please see the definitin f Clsing Csts in the Attachment A, Definitins sectin f the Implementatin Plan. The apprpriate grant amunt received frm the Bank must be clearly identified. Other guidelines are as fllws: Previusly clsed lans must have clsed within 60 days f the Bank s receipt f the disbursement request. PUBLIC Page 5 f 8
FHLBank Indianaplis 2018 AHP Implementatin Plan The cntributin frm the hmebuyer in the amunt f at least $1,000 shuld be clearly reflected n HUD-1 Settlement Statement/Clsing Disclsure. Part r all f the $1,000 can be met thrugh depsit r earnest mney, cash brught t clsing and/r expenses paid utside f clsing (such as insurance, appraisals, etc.). The Bank, in its sle discretin, will determine the eligibility f items paid utside f clsing. If matching funds are required and are received frm ther surces such as additinal grants r gifts, they shuld be clearly reflected n the HUD-1 Settlement Statement/Clsing Disclsure. Hmebuyers may nt receive mre than $250 in cash back at clsing. Any funds in excess f the apprved mrtgage amunt, clsing csts and cash back t the hmebuyer shall be used as a credit t reduce the principal f the mrtgage r as a credit tward the husehld s mnthly payments n the mrtgage lan. 8: Real Estate Retentin Perid All subsidies t be repaid r returned must be calculated using the Retentin Agreement Guide and Subsidy Repayment Wrksheet (Wrksheet), which can be fund n the Bank s Web site. The Wrksheet utlines the specific repayment prvisins and calculatins fr repayment r return f subsidy in accrdance with the Real Estate Retentin Agreement r in the event the subsidy is unused. A husehld must repay a pr-rated amunt f the funds if it sells r refinances the unit during the five-year retentin perid UNLESS ne f the fllwing exceptins applies: In the case f a sale, the purchaser is very lw-, lw- r mderate-incme; In the case f a refinancing, the husehld agrees t cntinue t be subject t a Retentin Agreement, deed restrictin r ther legally enfrceable retentin mechanism as described in 1291.9(a)(7) after the refinancing fr the balance f the riginal retentin perid; r The husehld had btained a permanent mrtgage funded by an AHP subsidized advance and nt a direct subsidy. The husehld nly repays the subsidy frm the net gain frm either a sale r a refinancing. If there is n net gain, the husehld des nt repay any subsidy. If the net gain is greater than the pr-rated amunt f the subsidy, the husehld must repay the pr-rated amunt f the subsidy. If the net gain is less than the pr-rated amunt f the subsidy, then the husehld must repay nly the net gain amunt. These terms als apply t any future, subsequent refinancing(s) during the retentin perid unless the Retentin Agreement has therwise terminated. The net gain is defined as the sales price f the hme, r the amunt f the new first mrtgage after the refinancing f the hme, minus the riginal purchase price, purchase-related clsing csts and the csts assciated with the sale (including seller cncessins) r refinancing f the hme. If the husehld made substantive imprvements t the prperty, which add t the prperty s basis, then the csts f thse imprvements must als be deducted. This infrmatin is included in the Wrksheet. In the event the subsidy has been prvided t the member, is unused and is nt prvided t the husehld, the Bank des nt cnsider the subsidy disbursed t the husehld and the subsidy must be returned. Once the Wrksheet has been cmpleted, it shuld be printed and returned alng with the HUD-1 Settlement Statement/Clsing Disclsure fr the current sale f the prperty, t the Bank with instructins t the Bank t withdraw the funds frm the member s Federal Hme Lan Bank f Indianaplis CMS accunt, assuming funds are wed r unused. The lien securing the subsidy must be released. 9: Disbursement Prcess T request funds, members must submit the fllwing fr each husehld: PUBLIC Page 6 f 8
FHLBank Indianaplis 2018 AHP Implementatin Plan 1) Federal Hme Lan Bank f Indianaplis Disbursement Authrizatin frm (in Excel wrkbk). The Disbursement Authrizatin Frm must be signed by a Bank-authrized signatry and must accmpany each disbursement. If members require assistance identifying an authrized signatry, please call 1-800-688-6697. Because riginal signatures are required, we cannt accept requests via facsimile. 2) Federal Hme Lan Bank f Indianaplis Husehld Qualificatin Frm (in Excel wrkbk) 3) Federal Hme Lan Bank f Indianaplis Fund Manager (in Excel wrkbk) 4) Federal Hme Lan Bank f Indianaplis Incme Calculatin Wrksheet and crrespnding incme dcumentatin as utlined in Attachment D, Incme Guidelines 5) Zer Incme Affidavit, if applicable During times f nrmal vlume, disbursement requests shuld be reviewed and/r apprved within ten business days. Upn apprval, the funds will be credited t the member s Federal Hme Lan Bank f Indianaplis CMS accunt. The member must pass the entire amunt f the AHP subsidy t the husehld. 10. Pst-Disbursement Dcumentatin Requirements All lans must be clsed within 30 days f the disbursement. Immediately fllwing the lan clsing, the fllwing dcuments must be submitted t the Bank: a) Final Executed HUD-1/Clsing Disclsure with all transactinal funds identified; and b) Federal Hme Lan Bank f Indianaplis Husehld Qualificatin Frm cmpleted with the pst-clsing mrtgage infrmatin. Extensins will be reviewed n a case-by-case basis. N substitutins f husehlds will be allwed. 11: Mnitring, Reprting, and Dcumentatin Semi-annually, the Bank will request dcumentatin fr a selected sample f husehlds. The dcumentatin requested may include any f the dcuments that members are required t maintain in their files. Members have 30 days t submit the requested dcumentatin. If dcumentatin is nt received within 30 days, the Bank reserves the right t deem the member t have vilated the terms f the award and debit the member s CMS accunt fr the apprpriate amunt. The member will then need t reapply fr funding fr the particular husehld, subject t funding availability. At a minimum, members shuld maintain (in their files) the dcuments described belw fr every HOP recipient: (1) A cpy f the final HUD-1 Settlement Statement/Clsing Disclsure executed by hmebuyer. (2) A cpy f the disbursement request and all dcumentatin btained and used t qualify the husehld at enrllment. (3) A cpy f the fully executed and recrded retentin dcument. (4) Evidence f cmpletin f husing cunseling prir t the lan clsing. (5) First-time Hmebuyer affidavit. (6) Evidence f required recipient s $1,000 cash cntributin. (7) Evidence f ther required matched funds. On-Site Mnitring At the discretin f the Bank, participating members may be selected fr an n-site mnitring review. During reviews, which are held at the member s place f business, the Bank reviews the member s plicies PUBLIC Page 7 f 8
FHLBank Indianaplis 2018 AHP Implementatin Plan and prcedures fr administering HOP and a sampling f the grant recipient files. The Bank reserves the right t review all files if sampling indicates cmpliance issues. 12: Husing Cunseling Requirements Members may nly prvide HOP funds t husehlds that cmplete an apprved hmebuyer cunseling prgram. Apprved Cunseling Prgrams Husing cunseling must be prvided by an rganizatin certified and recgnized as experienced in husing cunseling by HUD r a state Husing Finance Agency delivered by face-t-face tutrial, classrm r wrkshp sessin. Online Cunseling In the event a face-t-face cunseling prgram is unavailable, a Bank-apprved nline husing cunseling prgram may be cmpleted, alng with a fllw-up ne-n-ne sessin with a member representative via face t face r telephne. The member and hmebuyer must certify t cmpleting the ne-n-ne review sessin. All ther Bank-apprved cunseling prgrams can be fund in a Cunseling Resurce Guide n the Bank s Web site. HOP funds may be used t pay up t $150 fr husing cunseling and the fee must be clearly dcumented n the HUD-1 Settlement Statement/Clsing Disclsure. Cunseling must take place befre clsing and generally nt mre than ne year earlier than the enrllment date. T help prevent grant recipients frm later becming targets f predatry lending, the Bank recmmends that financial literacy and predatry lending be given emphasis as part f the training. 13: Incme Guidelines (see Attachment D) All members must use the Incme Guidelines as utlined in Attachment D f the current Plan. Husehlds must have incmes at r belw 80% f the median incme fr the area at the time the husehld is accepted fr enrllment by the member. PUBLIC Page 8 f 8