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Masters of Underwriting Smoothing out the Home Saver Underwriting Process.

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Presentation on theme: "Masters of Underwriting Smoothing out the Home Saver Underwriting Process."— Presentation transcript:

1 Masters of Underwriting Smoothing out the Home Saver Underwriting Process

2 Mississippi Annual Affordable Housing Conference Home Saver Program Guidelines Compliance Pipeline Management Site Visits/Audits

3 Here We Come to Save the Day……..

4 Summary of HHF Policy Guidelines Home Saver Program Goal Unemployed Underemployed Reinstatement Only Mortgage Assistance with Education Option Maximum Assistance Terms of Assistance

5 Unemployed To bridge eligible applicants across a period of unemployment and allow them to stay current on their mortgage.

6 UNDEREMPLOYED To bridge eligible applicants across a period of underemployment and allow them to stay current on their mortgage.

7 REINSTATEMENT ONLY To bring eligible applicants current after a brief interruption or reduction in income.

8 MORTGAGE ASSISTANCE WITH EDUCATION OPTION Applicants are eligible for an additional twelve (12) months of assistance If an applicant enters an educational program that leads to a certification or degree from Regionally Accredited College, University or online degree programs If the applicant lives in a distressed county, an additional six (6) months will be added (not to exceed the maximum assistance.

9 MAXIMUM ASSISTANCE Applicants are eligible for up to $50, of arrearage assistance which must include a minimum of twelve (12) months of mortgage payments. A cap of $50, is the maximum amount permitted for the mortgage assistance regardless if the education option is included or not.

10 TERMS OF ASSISTANCE Non recourse 0% interest, non-amortizing, forgivable loan secured by a subordinate lien on the subject property. Forgiven over a five (5) year period at a rate of 20% per year. If the property is sold or refinanced prior to the loan termination date, funds will be recovered should sufficient equity be available from the transaction.

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12 ELIGIBLE APPLICANTS UNEMPLOYED: One or more applicants must be receiving unemployment, be eligible to receive or must have exhausted unemployment compensation benefits. UNDEREMPLOYED: Applicant that can show a reduction in income by 15% or more since the hardship event. REINSTATEMENT ONLY: Applicants who have fallen behind but are now re-employed and can now sustain the mortgage.

13 ELIGIBLE APPLICANTS REINSTATEMENT ONLY: Applicants must show that they experienced a hardship with either a 15% reduction in income or a job loss. If the hardship was a job loss the applicant must have been eligible for unemployment benefits. Mortgage debt to income ratio must be 35% or below. Applicants that are eligible for the option may not participate in any other options.

14 ELIGIBLE APPLICANTS Military Deployment – Members of the U.S. Armed Forces who have experienced ANY drop in income due to deployment will now be eligible for the Home Saver Program. This applies to all personnel in regular and reserve components of the Army, Navy, Air Force, Marines & Coast Guard.

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16 INELIGIBLE APPLICANTS Active Bankruptcy. Disabled & permanently unable for full-time employment. Loss of employment or reduction in income due to medical reasons. Part-time employment (unless eligible for unemployment)

17 INELIGIBLE APPLICANTS Temporary/Seasonal employment. Permanent/intermittent work is seasonal and does not apply (ex: farm workers) Contract work is not considered permanent work and does not apply. Death of spouse, catastrophic medical expenses and/or divorce.

18 INELIGIBLE APPLICANTS Self-inflicted financial hardship Poor debt management Stripping the equity from their home for non-essential purpose Mismanagement of their personal budget. Home has already been foreclosed on. Already received home saver assistance. An applicant can only apply for HHF assistance one time.

19 INELIGIBLE APPLICANTS Teachers or other employees cannot claim a hardship due to a decrease in income from a nine-month pay cycle. Rental income will be regarded as investment income and cannot be used to calculate a hardship based on loss of income.

20 ELIGIBLE EXISTING MORTGAGES Fixed rate Fixed term Balloon term ARM Fully amortizing Unpaid principal loan balance cannot exceed $271, Home equity line of credit – closed to future advances

21 INELIGIBLE EXISTING MORTGAGES Second Mortgage Loans Chattel Mortgages without Deed of Trust Interest Only Loans Negative Amortizing Loan Open End Mortgage/Future Advance Clause Loan Held by non-participating servicer

22 INELIGIBLE EXISTING MORTGAGES Seller Financed Contract for Deed Lease with Option to Purchase Home Equity Line of Credit – Open to future advances Construction to Perm Loan – not modified to permanent financing Second Homes or Investment Properties

23 PROPERTY TYPES Single Family (attached or detached) Condominium Unit 1 – 5 unit properties where the applicant is living in one of the units

24 PROPERTY TYPES Manufactured Home on a foundation permanently affixed or real estate owned by the borrower. Title to manufactured home must be surrendered and the manufactured home must be taxed as real property (must supply documentation to support mobile home is taxed as real property) Must have a Deed of Trust

25 MINIMUM ELIGIBILITY CRITERIA Applicant must have a monthly mortgage payment that they cannot afford due to unemployment or at least a 15% reduction in income. The unpaid principal balance of first mortgage cannot exceed $271, Job loss had to occur on or after January 1, 2008.

26 MINIMUM ELIGIBILITY CRITERIA Mortgage must have been made prior to the hardship event. Unemployed applicants must be eligible to receive, currently receiving or have exhausted unemployment benefits. Self employed applicants must be able to document a 15% reduction in income with minimum two (2) years tax returns.

27 MINIMUM ELIGIBILITY CRITERIA Self employed applicants must have been self employed for a minimum of two (2) years. All documentation must be current and within 60 days of approval. Servicer must be a participating servicer or be willing to sign up as a new participating servicer.

28 MINIMUM ELIGIBILITY CRITERIA Applicant must be a resident of the State of Mississippi. Applicant must owner occupy the home as their primary residence. The applicant with the hardship must be on at least one of the following: 1) Note 2) Deed of Trust 3) Warranty Deed 4) Quit Claim Deed

29 REQUIRED DOCUMENTATION

30 REQUIRED DOCUMENTATION: UNEMPLOYED Copy of most recent Utility Bill Copy of DL or Photo ID (all parties involved) Copy of SS Card (all parties involved) Copy of Unemployment Benefit Letter, (applicant may supply) However, underwriter will pull from the MDES website on each file.

31 REQUIRED DOCUMENTATION FOR UNEMPLOYED Copy of most recent Mortgage Statement (if the name of the applicant is not on the mortgage statement, you must provide one of the following additional mortgage documents which does include the applicant’s signature) 1) Note 2) Deed of Trust 3) Warranty Deed 4) Quit Claim Deed

32 REQUIRED DOCUMENTATION: UNDEREMPLOYED & REINSTATEMENT ONLY Current Mortgage Loan Statement Copy of Original Signed Note Copy of Original Signed Deed of Trust Most Recent Pay Stubs (if employed) Most Recent Two (2) Years W2’s or 1099’s Most Recent Two (2) Years Federal Tax Returns

33 REQUIRED DOCUMENTATION: UNDEREMPLOYED & REINSTATEMENT ONLY Self Employed – Two (2) years most recent Business and Personal Federal Tax Returns (all schedules) Self Employed – YTD Profit & Loss Statement (signed by preparer) Self Employed – Most recent Two (2) months Business and Personal Bank Statements

34 REQUIRED DOCUMENTATION: UNDEREMPLOYED & REINSTATEMENT ONLY Current SSI Awards Letter (if applicable) Copy of DL or Photo ID (all parties involved) Copy of Social Security Card (all parties involved) VOE’s Current Employment Previous Employment

35 ADDITIONAL DOCUMENTATION THAT MAY BE REQUIRED Divorce Decree or Court Ordered Document Quit Claim Deed (Divorce or Separation) Doctors Release authorizing full-time employment (Disability) Additional Tax Returns prior to most recent 2 years (Hardship) Bankruptcy Discharge Papers

36 SOURCES OF INCOME NOT CONSIDERED IN DETERMINING ELIGIBILITY Foster Care Family Contributions Food Stamps Medicaid Child Support Veteran’s Administration Educational Benefits Social Security/Disability Benefits Retirement Income

37 MISCELLANEOUS Bankruptcy: Bankruptcy Must be Discharged or Dismissed. Income Limits: Does not apply. Maximum Delinquency: MHC will allow up to 6 months prior to hardship (included within the $50, maximum assistance) to cover payments that precede the hardship event date.

38 COMPLIANCE

39 Quarterly Reporting Pipeline Management Site Visits/Audits

40 Quarterly Reporting Mortgage Payment Assistance (MPA) Mortgage Payment Assistance Continuing Education Option (MPACE)

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42 Quarterly Reporting Documentation MHC monitors every 90 days for continued eligibility Documentation required to determine continued eligibility: Copy of most recent Pay Stub Hire date required if re-employed Self Employed - Quarterly Profit and Loss statement Current years tax returns & W2’s (if you have not already provided them) or statement if you did not file MDES statement, if unemployed Copy of most recent utility bill

43 Quarterly Reporting Documentation ELIGIBILITY RECERTIFICATION: The individual who experienced the hardship that qualified the household for Home Saver assistance must complete the following: Verify primary residence Verify the homeowner is unemployed and am available for work If employed, verify they have obtained employment (must provide recent paystub ).

44 Education Option In order to maintain eligibility under the Education Option the homeowner who experienced the hardship must submit required documentation that reflect academic progress. The Academic Plan and supporting documentation must be received within 90 days after the date of your first payment. Within 180 days after the date of your first payment, a signed verification of enrollment from your school’s registrar’s office must be submitted to MHC.

45 Education Option The Homeowner who experienced the hardship must take a minimum of 12 hours for a full-time student or 6 hours for a graduate student Upon the completion of each semester, an official transcript must be submitted to MHC from the school’s registrar’s office reporting the progress of the most recent semester completed. If we do not receive these completed documents, the homeowner is at risk losing the additional 12 months of assistance.

46 Education Option Documentation Required documents for education option: Signed Academic Plan cover page and the completed written plan with course description Official Verification of enrollment from your school signed by the registrar’s office Official Transcript from School showing grades from most recent semester completed Must be requested and sent from registrar’s office to us directly. Cannot be a copy

47 WHAT DOES REGIONAL ACCREDITATION MEAN? Regionally accredited institution of higher education means a community college, college, or university which is a candidate for accreditation or is accredited by one of the following regional accrediting bodies: Middle States, Association of Colleges and Schools New England Association of Schools and Colleges North Central Association of Colleges and Schools Northwest Commission on Colleges and Universities Southern Association of Colleges and Schools Western Association of Schools and CollegesWestern Association of Schools and Colleges; Accrediting Commission for Community and Junior Colleges Accrediting Commission for Community and Junior Colleges

48 Quarterly Reporting Assistance Please encourage clients to seek assistance in completing the Quarterly Report if needed. If you assist the client in completing the Quarterly Report, make sure that all required documentation is included and the report is signed.

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50 AT RISK If applicant is not compliant by the due date of the quarterly review MHC will send out an At Risk letter to applicant about possible loss of assistance. The applicant will have ten days to respond and submit all missing supporting documentation. Documentation not received, the client’s assistance will be terminated due to non- compliance

51 Program Removal Transition: completed the terms of their Home Saver assistance and will be responsible for their next mortgage payment. Income ineligibility – No longer considered under employed or their mortgage is deemed sustainable Failure to submit required documentation Fraud

52 Pipeline Management Assign client files Follow up with clients Check failed applications Remove Duplicates Change status Notes

53 Site Visits & Audits Site visits are available for technical assistance & training Agency Audits A letter will be sent to the agency with the audit date Audits will can take up to 2 days to complete depending on location and size of potential audit Compliance & Single Family reps will be present for the audit Staff will review files based on pre-selected applicant listing generated from Counselor Direct Research on applicant lists will be done prior to site visit to determine if the applicant file would be an eligible file ex: applicant is still under step 1 and is not considered an actual file or it is a duplicate file Audit findings should be completed within 30 business days from the date of audit completion.

54 Agency Audits Staff will review files based on pre-selected applicant listing generated from Counselor Direct Research on applicant lists will be done prior to site visit to determine if the applicant file would be an eligible file ex: applicant is still under step 1 and is not considered an actual file or it is a duplicate file Audit findings should be completed within 30 business days from the date of audit completion. Pipeline restrictions may occur

55 Any Questions?

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