Download - HILP
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HILP
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NE legislature created the Nebraska Mortgage Finance Fund (NMFF), in 1978
In 1983, NE legislature created NIFA by combining the NMFF & two other finance funds
NIFA sells tax-exempt Mortgage Revenue Bonds to private investors
Financing NIFA
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NIFA uses $ from bond sales to purchase guaranteed or insured mortgages for home purchase/repair
NIFA lenders – banks and mortgage companies – originate the loans
The loans are packaged into Mortgage Backed Securities
Financing NIFA
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Financing HILP Participating lenders act as NIFA
agents, lending to homeowners at 6.5% interest
City of Lincoln, Urban Development Department (UDD) uses CDBG funds to pay the interest, homeowners pay the principal and 0% interest
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Participating Lenders
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Marketing will be conducted by the participating lenders, community groups and UDD staff
Brochures, magnets, festival and event booths, word of mouth
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Applicant Supplies Materials
Most recent income tax return, pay stubs, any other documentation that will show current income if significantly different from that shown on the income tax return
Proof of homeowner insurance coverage Most recent property tax assessment Status of current mortgage(s)
The applicant supplies to UDD all documentation requested by the lender including, but not limited to:
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UDD collects the pre-application and all required supporting documentation and forwards those materials via fax to the lender selected by homeowner
Mary reviews the application for completeness and eligibility for the HILP Program
before forwarding to lender.
UDD Forwards Materials
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Homeowners select a
lender from participating
lenders
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Loan Origination/ Lender Review
Upon receipt of the pre-application and supporting documents, the lender contacts the borrower so that the applicant can make a formal loan application at lender’s place of business and present any additional materials requested by lender
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Please approve for the maximum amount
requested!
Lender Processes the Application
Lender determines applicant’s annual income, reviews credit history, and establishes the maximum loan amount -- up to $15,000
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For Denied HILP Loans:
Fax Income Computation Worksheet to UDD and indicate reason for denial
Notify applicant of denial Explain alternative financing with your
bank, if available UDD will contact applicant if UDD has
other assistance is available
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If the applicant’s credit is insufficient to carry a loan of the size needed for required improvements, UDD will determine if other assistance is available for a piggybacked loan
If the application is denied by the bank and the applicant’s property is located within the Low-to-Moderate Income Area, UDD may be able to provide a loan directly to applicant
UDD Options for Denials:
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Loan Approval Upon receiving a completed Income
Computation Worksheet from Lender on an approved homeowner, UDD assigns the new file to a Housing Rehab Specialist
UDD staff work with the homeowner to determine the scope of the work & the contractors to be used
When a final $ amount is determined, a Certificate of Loan Approval is submitted to the Division Manager (Steve Werthmann) for final department approval
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UDD Will FAX the Lender:
Part IV – Certificate of Approval Subsidy Calculation Part II – List of Improvements
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Part IV – Certificate
of Approval
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Subsidy Example
$15,000 Loan Amount
15,000
120 125
6.5
120
170.32
Subsidy = $3,991.44
CPT PMT
+ RCL
1 =
CPT PV
PV
=
STO 1
I/Y
N
PMT
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Upon receiving the Certificate of Loan Approval, the Lender notifies the borrower of the approval and conducts the loan closing
Lender then requests subsidy funds from UDD for interest buy down
Lender instructs the borrower to sign contracts, begin work, and contact the UDD Rehabilitation Specialist when improvements have been completed.
The Lender:
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The Lender… Deposits the greater of the subsidy amount or 25%
of the total loan in the City’s program escrow account
Disburses the remaining loan funds to the borrower Faxes copies of the following loan closing
documents to Mary for review and recording. Mary will forward to UDD accountant (Pat) for payment: Documentation of amount of escrow deposited Copy of settlement statement Copy of Note Request for Subsidy (as previously mentioned)
For a loan of $3,500 or less, a Deed of Trust is not usually prepared -- a signature loan is used instead
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The Rehab Specialist… The Rehab Specialist takes photographs
of completed work for the file
If work is satisfactorily completed, the Rehab Specialist submits the final payment invoice to the UDD accountant for disbursement of escrowed funds
UDD accountant prepares the check drawn on the program escrow account
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Before
After
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Before
After
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Before
After
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Lender prepares and submits a quarterly report to UDD, showing loans closed during that quarter including: borrowers’ names
addresses
loan closing date
total loan amount
subsidy reimbursement
closing costs
net bank leverage
Mary verifies this information and forwards it to NIFA for reports to the NIFA Board and the State Legislature
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$
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Lender submits a quarterly report to UDD containing the balance of all active HILP loans including the borrower’s name and address
For those HILP loans that are repaid prior to the end of the term established at closing, UDD is due a rebate check on the pre-paid interest
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Participating Lenders