Masters of Underwriting Smoothing out the Home Saver Underwriting Process

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Masters of UnderwritingSmoothing out the Home
Saver Underwriting Process
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Mississippi Annual Affordable Housing Conference

• Home Saver Program Guidelines
• Compliance
• Pipeline Management
• Site Visits/Audits

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Here We Come to Save the Day..

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Summary of HHF Policy Guidelines

• Home Saver Program Goal
• Unemployed
• Underemployed
• Reinstatement Only
• Mortgage Assistance with Education Option
• Maximum Assistance
• Terms of Assistance

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Unemployed

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

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UNDEREMPLOYED

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

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REINSTATEMENT ONLY

• To bring eligible applicants current after a
  brief interruption or reduction in income.

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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.

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MAXIMUM ASSISTANCE

• Applicants are eligible for up to 50,000.00 of
  arrearage assistance which must include a minimum
  of twelve (12) months of mortgage payments.
• A cap of 50,000.00 is the maximum amount
  permitted for the mortgage assistance regardless
  if the education option is included or not.

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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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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.

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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.

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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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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)

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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.

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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.

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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.

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ELIGIBLE EXISTING MORTGAGES

• Fixed rate
• Fixed term
• Balloon term
• ARM
• Fully amortizing
• Unpaid principal loan balance cannot exceed
  271,000.00
• Home equity line of credit closed to future
  advances

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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

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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

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PROPERTY TYPES

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

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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

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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 271,000.00.
• Job loss had to occur on or after January 1, 2008.

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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.

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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.

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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

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REQUIRED DOCUMENTATION
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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.

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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 applicants signature)
• 1) Note
• 2) Deed of Trust
• 3) Warranty Deed
• 4) Quit Claim Deed

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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 W2s or 1099s
• Most Recent Two (2) Years Federal Tax Returns

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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

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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)
• VOEs
• Current Employment
• Previous Employment

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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

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SOURCES OF INCOME NOT CONSIDERED IN DETERMINING
ELIGIBILITY

• Foster Care
• Family Contributions
• Food Stamps
• Medicaid
• Child Support

• Veterans Administration
• Educational Benefits
• Social Security/Disability Benefits
• Retirement Income

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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 50,000.00 maximum
  assistance) to cover payments that precede the
  hardship event date.

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COMPLIANCE
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COMPLIANCE

• Quarterly Reporting
• Pipeline Management
• Site Visits/Audits

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Quarterly Reporting

• Mortgage Payment Assistance (MPA)
• Mortgage Payment Assistance Continuing Education
  Option (MPACE)

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Quarterly ReportingDocumentation

• 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 W2s (if you have not
  already provided them) or statement if you did
  not file
• MDES statement, if unemployed
• Copy of most recent utility bill

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Quarterly ReportingDocumentation

• 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).

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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 schools registrars office must be
  submitted to MHC.

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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
  schools registrars 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.

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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 registrars office
• Official Transcript from School showing grades
  from most recent semester completed
• Must be requested and sent from registrars
  office to us directly.
• Cannot be a copy

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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 Colleges
  Accrediting Commission for Community and Junior
  Colleges

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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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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 clients
  assistance will be terminated due to
  non-compliance

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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

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Pipeline Management

• Assign client files
• Follow up with clients
• Check failed applications
• Remove Duplicates
• Change status
• Notes

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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.

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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

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• Any Questions?

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