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FEDERAL HOME LOAN BANK OF CINCINNATI_1_

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					                                            Attachment H


                   FEDERAL HOME LOAN BANK OF CINCINNATI
                            Requirements for the Welcome Home Program


I.      General Program Description
        The Federal Home Loan Bank of Cincinnati (the FHLBank) has established a set-aside of
        Affordable Housing Program (AHP) funds to help create homeownership through a
        program called the Welcome Home Program. Up to thirty-five percent of the accrual for
        the AHP will be set-aside for the Welcome Home Program (WHP). Per regulation, at
        least one-third of the funds will be used to assist first-time homebuyers.

        Welcome Home funds are available to Members as grants to assist homebuyers.
        Welcome Home grants are limited to $5,000 per household on a “first-come, first-served”
        basis. Households are eligible only if the total household income is at or below 80
        percent of Mortgage Revenue Bond (MRB) income limits, as adjusted for family size.



II.     Member Eligibility
        All Members are eligible to participate in the program and each Member is eligible to
        receive up to $200,000 of Welcome Home funds, subject to availability. Funds are not
        reserved for a Member, but rather all funds are reserved for specific homebuyers and
        specific properties on a “first-come, first-served” basis. As a result, funds typically are
        fully reserved before the majority of participating Members reach the $200,000 per
        Member limitation.


III.    Homebuyer Eligibility
        In order to receive Welcome Home funding, homebuyers must meet all of the following
        eligibility requirements:
         Total household income must be at or below 80 percent of the MRB program
          income limits, as adopted by the appropriate state housing finance agency, adjusted
          for family size. The FHLBank will rely on the 2010 income limits until 2011 income
          limits are adopted by the various state housing finance agencies. Current MRB and
          Welcome Home income limits for KY, OH, and TN are posted on the FHLBank’s
          website (www.fhlbcin.com).
         Homebuyers must contribute at least $500 of their own funds toward
          downpayment and closing costs (60 percent of these funds may be received as a
          gift).
                 o Funds received from non-profit or other organizations, including state and
                   local government agencies, for downpayment assistance grants are not
                   considered “gifts” and cannot be used to reduce a homebuyer’s required
                   contribution.



Adopted by the Board on January 20, 2011 Page 1 of 16 pages
                 o Funds paid for items outside of closing, such as hazard insurance, taxes,
                   application fees, and other items related to the purchase are considered as
                   part of the homebuyer’s required $500 cash contribution. Such items should
                   be shown on the HUD-1 or with other documentation provided.
         First-time homebuyers must complete a homebuyer counseling program.
                o The counseling program must be provided by, or be based, on one provided
                  by an organization recognized as experienced in homeownership counseling;
                o The counseling program must cover, at minimum, mortgage financing, credit-
                  worthiness, household budgeting, and home maintenance; and,
                o Welcome Home funds cannot be used to pay more than $300 of the costs
                  related to counseling.
         Non-occupant co-signors and co-borrowers are not permitted. Welcome Home
          funds are intended only for homebuyers who would qualify for the first mortgage
          based on their current household income, not relying on others as co-signors, co-
          borrowers, or guarantors, and not relying on any expected but uncertain change in job
          status or income or other circumstances. That is, the Member's mortgage approval
          should not be contingent on some change in status or income or based on a reliance
          on some other party to pay or guarantee the payment of the first mortgage. Unless the
          Member is approving the first mortgage based solely on the homebuyer’s current
          income, the homebuyer is not eligible for Welcome Home funds.
        The FHLBank will determine household income in accordance with the HUD Housing
        Choice Voucher Program (see HUD Occupancy Handbook, 4350.3, Chapter 5,
        Determining Income summarized in Appendix A) and will make the final determination
        of whether or not a homebuyer meets the income requirements of the program.


IV.     Eligible Property
        In order for a property to receive Welcome Home funds, the property must meet the
        following criteria:
         One to four-units (Note: for any property with two or more units, 93 percent of the
          projected rent of the other units will be included in the homebuyer’s income for the
          purpose of determining eligibility.)
         Some manufactured housing is eligible for Welcome Home assistance. For
          eligibility for Welcome Home, “manufactured housing” is defined as a dwelling that
          is built on a permanent chassis and installed on a FHA Title II permanent foundation
          system; the definition includes only multi-section homes with a minimum 24-foot
          width. Also, the home and the lot must be taxable together as real property.
          Welcome Home funds may not be used for any other type of manufactured or mobile
          homes.
         Funds will not be disbursed until proper documentation is received; such
          documentation may include an FHA appraisal, an independent appraisal, or evidence




Adopted by the Board on January 20, 2011 Page 2 of 16 pages
            from property tax records. Under certain conditions, the FHLBank may require such
            documentation prior to approving the Reservation Request.
         The housing assisted with Welcome Home funds must be subject to a legally
          enforceable restriction in the warranty deed or restrictive covenant to the warranty
          deed requiring that the Federal Home Loan Bank of Cincinnati be given notice of any
          refinancing, sale, foreclosure, deed in lieu of foreclosure or change in ownership of
          the unit prior to the end of a five-year retention period. In some instances,
          homebuyers may be required to pay back a pro rata amount of the Welcome Home
          grant if the home is sold, refinanced, or otherwise conveyed during the five-year
          retention period. The specific “retention” language required is in Attachment G of
          the AHP Implementation Plan and is also available at the FHLBank’s website
          (www.fhlbcin.com).
         Welcome Home may be used only in transactions which convey full title to the
          homebuyer. Welcome Home may not be used to initiate lease-purchase or land
          contracts.
         Welcome Home may be used for new home construction. The Welcome Home
          reservation is valid until December 1, 2011. Any construction must be complete, the
          first mortgage permanent loan must be closed (or the construction/permanent loan
          must be converted to a permanent loan) and funds must be requested no later than
          December 1, 2011.

        The FHLBank reserves the right to determine whether or not a property is considered
        eligible.


V.      Eligible Uses of Funds
        The following outlines eligible uses of Welcome Home funds:
         Welcome Home funds may be used to fund reasonable downpayment and closing
          costs incurred in conjunction with the acquisition of eligible property by eligible
          homebuyers as defined in this policy. (Note: The reasonableness of the down
          payment and closing costs is determined at the FHLBank’s discretion.)
         Welcome Home grants may not exceed $5,000 per homebuyer, based on
          documented need, as determined by the FHLBank.
         Welcome Home funds may be used in conjunction with other local, state, and
          federal funding sources and with the FHLBank’s Community Investment Cash
          Advance programs. However, Welcome Home funds may not be used with an
          existing or future award through the FHLBank’s competitive Affordable Housing
          Program or through any of the FHLBank’s voluntary housing programs.
         A portion of the funds awarded may be used to pay for the reasonable costs of
          counseling (not to exceed $300) for homebuyers purchasing Welcome Home assisted
          housing if the cost is not covered by another funding source.




Adopted by the Board on January 20, 2011 Page 3 of 16 pages
         Welcome Home is not intended for any purchases requiring any significant
          repair or rehabilitation.
           o    Purchases using HUD 203(k) mortgages are not eligible for Welcome Home
           o    If more than $500 from the buyer is to be escrowed for repairs, the property is not
                eligible for Welcome Home funds without the advance written approval of the
                FHLBank prior to closing. If the HUD-1 reflects escrows for repairs and the
                Member did not seek approval prior to reserving the funds, the Funding
                Request will not be funded regardless of the amount of escrow or any funds
                brought to closing by the homebuyer.
           o    If any funds are escrowed for repairs, the funds must come either from the seller
                or from the buyer’s own funds, in addition to the required $500 homebuyer cash
                contribution.
           o    If any funds are escrowed for repairs, Welcome Home funds will not be disbursed
                until the Member certifies that:
                   All repairs were required for mortgage approval as documented in the
                    appraisal;
                   All repairs have been completed; and
                   All escrowed funds have either been disbursed or released.
           o    All payments from escrow funds for repairs should be made only by the closing
                agent and such payments should be made directly to the materials and/or services
                providers. Under no condition should escrowed funds be paid to the homebuyer.
           o    If any unused escrowed funds are paid or otherwise released to the homebuyer,
                the Welcome Home grant will be reduced by a like amount, unless such funds
                were originally provided by the borrower. In lieu of releasing unused funds to the
                homebuyer, the unused funds may be applied as a prepayment of the first
                mortgage principal.


VI.     Ineligible Uses of Funds
        Welcome Home funds may not be used for any other purposes except those
        specifically stated above. Welcome Home funds may not be used to pay for significant
        repairs (i.e. repairs in excess of $500), pay off consumer debt, buy down the mortgage
        rate, etc. If the FHLBank determines that funds were used for an ineligible expense, the
        grant will be reduced by the amount of the ineligible expense unless the homebuyer
        brings adequate funds to the closing to meet the required $500 homebuyer cash
        contribution and cover the amount of the ineligible expense.
        Welcome Home funds may not be used for any loan with collateral other than the
        subject property. Blanket loans (loans with cars, boats, CD’s, or other property secured
        as additional collateral) are not eligible.




Adopted by the Board on January 20, 2011 Page 4 of 16 pages
VII.    Requirements for Members
         The Member who reserves the Welcome Home funds must originate the first
          mortgage in the Member’s name, but is not required to close the loan in their
          name.
            o After closing, the first mortgage may be sold or assigned.
            o If a Member wholly owns a mortgage company and that company originates first
              mortgage loans only for the Member, the loans may be originated in that
              mortgage company’s name and closed in the name of the mortgage company,
              Member or any investor.
            o If a Member wholly owns a mortgage company and that company also originates
              first mortgage loans for financial institutions other than the Member, then that
              mortgage company must originate the first mortgage in the name of the Member
              in order to access Welcome Home funds. However, the mortgage company may
              close in the name of the mortgage company, Member or any other investor.
            o Seller financed mortgages are not acceptable.
         The stated first mortgage rate may not exceed the rate determined according to
          Part II.B.12.b.2 of the AHP Implementation Plan. If the stated mortgage rate
          exceeds the allowed amount, the loan is not eligible for Welcome Home funds. The
          maximum mortgage rate for 2011 will be published in the 2011 Welcome Home
          Guide on the FHLBank’s website and in the appropriate Welcome Home documents
          prior to the opening of the program on March 1, 2011.
         The rate on any second mortgage cannot exceed the stated maximum rate permissible
          for the first mortgage by more than three and one-half percent (3.50%).
         Welcome Home funds may not be used in transactions involving a second mortgage
          provided by an individual as seller. Second mortgages provided by formal
          organizations, including financial institutions, Community Development Financial
          Institutions, housing finance agencies, non-profit organizations, etc. are acceptable.
         Welcome Home may not be used with interest-only mortgages. If used with
          adjustable rate mortgages, the mortgages should be underwritten at their fully
          indexed rates.
         Welcome Home first mortgage loans must comply with applicable federal, state
          and local anti-predatory lending laws, regulations and orders designed to
          prevent or regulate abusive and deceptive lending practices and loan terms
          (collectively, “Anti-Predatory Lending Laws”). For example, Anti-Predatory
          Lending Laws may prohibit or limit certain practices and characteristics, including,
          but not limited to the following:
            o Requiring the borrower to obtain prepaid, single-premium credit life, credit
              disability, credit unemployment, or other similar credit insurance;
            o Requiring mandatory arbitration provisions with respect to dispute resolution in
              the loan document; or




Adopted by the Board on January 20, 2011 Page 5 of 16 pages
            o Charging prepayment penalties for the payoff of the loan beyond the early years
              of such loan.
         Any project including a loan that does not comply with all applicable Anti-
          Predatory Lending Laws will be ineligible for Welcome Home assistance.
         Members are responsible for avoiding all unlawful practices and terms
          prohibited by applicable Anti-Predatory Lending Laws for loans originated in
          connection with Welcome Home.
         The FHLBank will not provide Welcome Home assistance to any homebuyer
          with a permanent first mortgage that exceeds the annual percentage rate or
          points and fees thresholds of the Home Ownership and Equity Protection Act of
          1994 and its implementing regulations (Federal Reserve Board Regulation Z).
         The Welcome Home transaction may not include single-premium credit life
          insurance. If the HUD-1 Settlement Statement shows a charge for single-premium
          credit life insurance, no Welcome Home funds will be disbursed.
         Members must take care to comply with all applicable civil rights and other fair
          housing laws and regulations. The Fair Housing Act prohibits discrimination on the
          basis of race, color, religion, sex, handicap, familial status, or national origin in the
          sale, rental or advertising of dwellings, in the provision of brokerage services, or in
          the availability of residential real estate-related transactions.
         Funds must be requested to assist the homebuyer to purchase the specific home
          by December 1, 2011. That is, the Funding Request and Certification must be
          received by the FHLBank by December 1, 2011 or the reservation will be cancelled.
          Under unusual or extraordinary circumstances, and at the FHLBank’s discretion, the
          FHLBank may extend the reservation beyond December 1, 2011.
         If Welcome Home funds have been disbursed to the Member and the funds are
          misused, or if the housing is sold or refinanced during the five-year retention
          period, the FHLBank may require repayment of all or a portion of the funds
          pursuant to the retention language in the warranty deed.


VIII. Reduction in Welcome Home Amount
         If the homebuyer receives any cash back at closing, as indicated on the HUD-1
          Settlement Statement, the Welcome Home grant will be reduced by a like
          amount. However, instead of receiving cash back at closing, any otherwise excess
          Welcome Home funds may be applied as a “prepayment” or as a “principal
          reduction” to the first mortgage and such use must be shown on the HUD-1.
         Any funds, regardless of the amount, indicated on the HUD-1 as earnest money,
          whether paid by cash, check, or note, are considered a partial down payment
          and no amount of the earnest money can be refunded or returned to the
          homebuyer. If the HUD-1 indicates that earnest money has been refunded or
          returned to the homebuyer, the Welcome Home grant will be reduced by the
          amount of earnest money refunded or returned.



Adopted by the Board on January 20, 2011 Page 6 of 16 pages
         If any Welcome Home funds appear to be used for an ineligible purpose, e.g.,
          paying off consumer debt, the Welcome Home grant will be reduced by a like
          amount. Any amounts paid for these kinds of items must come from the buyer’s own
          funds, in addition to the required $500 homebuyer cash contribution.



IX.     Funds Available for 2011
        For 2011, at least thirty percent (30%) of the FHLBank’s accrual for the Affordable
        Housing Program will be set aside for Welcome Home Program.
         At least one-third of the total amount available through the program is reserved for
          first-time homebuyers. The FHLBank will track the use of Welcome Home funds for
          first-time homebuyers and will impose no special requirements as long as this
          targeting is being met.
         Once all available funds have been reserved, the FHLBank will no longer accept any
          new Reservation Requests.


X.      Schedule for the 2011 Welcome Home Program
        Welcome Home funds will be available for reservation beginning on March 1, 2011, and
        will remain available until all funds have been reserved. Any Reservation Requests
        received before that date will be denied. The Reservation Requests and Funding Requests
        can only be submitted through the “Members Only” page of our website at
        www.fhlbcin.com.

        All Welcome Home Funding Requests must be submitted to the FHLBank by 5:00PM
        (ET) on December 1, 2011 or the reservation will be cancelled. Under unusual or
        extraordinary circumstances, and at the FHLBank’s sole discretion, the FHLBank may
        extend the reservation beyond December 1, 2011.


XI.     Reserving Welcome Home Funds
        Funds will be allocated on a “first-come, first-served” basis. Members are not
        guaranteed any specific amount of Welcome Home funds.
        Funds will be reserved only for specific homebuyers purchasing specific homes and
        reservations cannot be transferred to other homebuyers or to other homes.
        To reserve funds, the Member must:
         Have a Funds Transfer Agreement in place;
         Access the FHLBank’s “Members Only” website at www.fhlbcin.com. For assistance
          in accessing the “Members Only” website, please contact the “Members Only”
          Administrator at your institution or contact the FHLBank’s Help Desk at 800-781-
          3090 (8:30 – 5:00 PM ET);



Adopted by the Board on January 20, 2011 Page 7 of 16 pages
         Access the Welcome Home section and complete a Reservation Request. (Note:
          beginning with the 2011 Welcome Home Program, Reservation Requests may only
          be submitted online via the FHLBank’s “Members Only” website.); and,
         Submit the following required documents to the FHLBank by mail, fax (513-852-
          7648) or email (WelcomeHome@fhlbcin.com):
                  1. A completed, signed, and dated loan application (generally a Uniform
                     Residential Loan Application);
                  2. Third party documentation for all sources of current year income for all
                     persons who will reside in the home. (See Guidelines for Determining
                     Income); and,
                  3. An appraisal if the subject property is a manufactured home.


        A Reservation Request will not be reviewed unless it was submitted online and the
        aforementioned documentation is received by the FHLBank.
        Please note that during periods of peak demand it may take four to six weeks to
        review and approve a Reservation Request. If the information submitted is
        incomplete, it might take longer. Funds are not reserved and the loan should not
        close using Welcome Home funds until the FHLBank has given approval.
        A homebuyer is considered to be “enrolled” in the Welcome Home program at the time
        the Reservation Request is approved.
        Income eligibility will be determined based on income documentation required at the
        time the Reservation Request is submitted and will be based on an estimate of the
        household’s expected annual income for 2011 based on the household’s income
        information at the time the Reservation Request is submitted.
        The FHLBank will perform a preliminary review of the Reservation Request and the
        documentation submitted to determine eligibility of the homebuyer, availability of funds
        in the program, and availability of funds for the Member. If any of the information is
        incomplete, additional documentation or information may be required.
        Written notification will be provided to the Member as to the homebuyer’s
        eligibility. Submission of the Reservation Request does not constitute a reservation of
        funds; funds are reserved only upon the written notification from the FHLBank.


XII.    Closing Instructions
        The FHLBank has provided specific instructions which Members, or their agents, should
        use in closing mortgages using Welcome Home funds. That information is posted on the
        FHLBank’s Welcome Home website.


XIII. Disbursing Welcome Home Funds




Adopted by the Board on January 20, 2011 Page 8 of 16 pages
        Welcome Home funds will be disbursed only after completion of construction, if
        applicable, and after closing of the permanent first mortgage upon receipt of the
        following additional information:
        To request funds, the Member must:
         Access the FHLBank’s “Members Only” website at www.fhlbcin.com. For assistance
          in accessing the “Members Only” website, please contact the “Members Only”
          Administrator at your institution or contact the FHLBank’s Help Desk at 800-781-
          3090 (8:30 – 5:00 PM ET);
         Access the Welcome Home section and complete a Funding Request and
          Certification (available at www.fhlbcin.com); and,
         Submit the following required documents to the FHLBank by mail, fax (513-852-
          7648) or email (WelcomeHome@fhlbcin.com):
                  1. An executed HUD-1 Settlement Statement, signed by both seller and buyer;
                  2. The Warranty Deed containing the Welcome Home five-year retention
                     language; and,
                  3. The Final Truth-In-Lending Statement.


        Funds will be disbursed only to the extent they are required to fill the gap for
        downpayment, closing costs, and counseling fees. Cash back to the homebuyer,
        including the return of earnest money, constitutes a reduction in the funding gap and will
        result in a reduction in the Welcome Home grant. Therefore, instead of returning earnest
        money or cash to the homebuyer, the FHLBank encourages the application of excess
        Welcome Home funds in the form of a “prepayment” or “principal reduction” of the first
        mortgage, which must be shown on the HUD-1.
        Please note that during periods of peak demand, it may take four to six weeks to
        review and approve a Funding Request. If the information submitted is incomplete,
        it might take longer.


XIV. Repayment of Welcome Home Funds
        Under certain circumstances, the recipient of Welcome Home funds may have an
        obligation to repay part or all of the grant funds received. The provisions are stated in the
        retention language required to be included in the warranty deed for the property.
        Generally:
         If the home is sold within the five-year retention period, the recipient of the Welcome
          Home grant might be required to repay a pro rata portion of the Welcome Home
          grant. Such repayment would come only from any “net gain” realized on the sale of
          the home. If the home is sold to an income-eligible household, no repayment is
          required and the retention provision terminates.
         If the home is refinanced during the five year period, including taking out any
          additional debt secured by the property, such as a second mortgage, the recipient of



Adopted by the Board on January 20, 2011 Page 9 of 16 pages
            the Welcome Home grant may be required to repay a pro rata portion of the Welcome
            Home grant. Such repayment would come only from any “net gain” realized from the
            refinancing. Additional funds received in cash or received for any other purpose,
            such as a second mortgage, are considered “net gain.” However, if the retention
            language remains in the warranty deed after the refinancing, no repayment is required
            even if the owner receives a net gain from the refinancing.
         If the home/mortgage is foreclosed, no repayment is required. Please note that a
          “deed in lieu of foreclosure” or an assignment of an FHA first mortgage to the
          Secretary of HUD is treated as a foreclosure.
        To determine the required payment, if any, the owner should contact the FHLBank.
        Pursuant to the retention requirements, the owner is required to give the FHLBank notice
        of any sale, refinancing, foreclosure or deed in lieu of foreclosure.


XV.     Other Welcome Home Documents
        Other information about the Welcome Home program, including required forms,
        instructions, and other documents, are provided on the FHLBank’s website. This
        information is incorporated herein by reference.




Adopted by the Board on January 20, 2011 Page 10 of 16 pages
                                    Appendix A: Household Income

Guidelines for Determining Income
    The Welcome Home program bases the income definitions and income determination and
    calculation guidelines on those for the HUD Housing Choice Voucher program (see HUD
    Occupancy Handbook, 4350.3 Chapter 5: Determining Income).
Household
    A household is either a single person or a group of persons and includes all persons who will
    reside together in the home, as certified by the homebuyer at the time of enrollment.
Household Income Limits
    The FHLBank establishes income limits by family size for the area in which the property is
    located. The Welcome Home income limits are 80 percent of the income limits established by
    state housing finance agencies for first-time homebuyers in their mortgage revenue bond (MRB)
    programs, as adjusted for household size. The income limits for Kentucky, Ohio, and Tennessee
    are available at www.fhlbcin.com. The MRB limits for other states are available from those
    states’ housing finance agencies or from the FHLBank.
Eligibility
    Annual Household Income (see below) is compared to the applicable income limit to determine
    eligibility. A household’s income must be at or below the appropriate income limit for the
    jurisdiction at the time the Member requests Welcome Home funds for a household.
    Both citizens and non-citizens are eligible for Welcome Home assistance, so long as all other
    conditions and requirements are met.
Annual Household Income
    The combined current annual earned and unearned income of all of the occupants in a given
    dwelling unit, at the time the household is enrolled for participation in the Welcome Home
    Program, determines eligibility for Welcome Home funds. Generally, the current circumstances
    will be used to anticipate income and projected annual income is calculated by annualizing
    current income taking into account changes expected to occur during the year. Household
    income is determined using the calculation methodologies to determine annual income as
    outlined in the HUD Occupancy Handbook, 4350.3. Information about income for all residents
    in the household should be provided with the Reservation Request.
Documenting Household Income
    Income from all the occupants must be documented. Income from employment should be
    documented with the two most recent consecutive pay stubs or completed Verification of
    Employment (VOE) from the employer. Income from self-employment should be documented
    by the most recent two years of federal income tax returns. Income from child support and
    alimony should be documented with a copy of the divorce decree or court order. For more
    complete information, please see the HUD Occupancy Handbook, 4350.3.




    Adopted by the Board on January 20, 2011 Page 11 of 16 pages
Certification of No Income
    If any adult member of the household indicates that they are not receiving any income from any
    source, they must complete and sign a “Certification of No Income.” The document is available
    at www.fhlbcin.com and must be submitted with the Reservation Request.


    Exhibit 1: Items Included in Household Income
    Below is the complete definition of annual income and includes all amounts that are not
    specifically excluded.
    (1) The full amount, before any payroll deductions, of wages and salaries, overtime pay,
        commissions, fees, tips and bonuses, and other compensation for personal services;
    (2) The net income from operation of a business or profession. Expenditures for business
        expansion or amortization of capital indebtedness shall not be used as deductions in
        determining net income. An allowance for depreciation of assets used in a business or
        profession may be deducted, based on straight line depreciation, as provided in Internal
        Revenue Service regulations. Any withdrawal of cash or assets from the operation of a
        business or profession will be included in income, except to the extent the withdrawal is
        reimbursement of cash or assets invested in the operation by the household;
    (3) Interest, dividends, and other net income of any kind from real or personal property.
        Expenditures for amortization of capital indebtedness shall not be used as a deduction in
        determining net income. An allowance for depreciation is permitted only as authorized in
        paragraph (2) of this section. Any withdrawal of cash or assets from an investment will be
        included in income, except to the extent the withdrawal is reimbursement of cash or assets
        invested by the household. Where the household has net assets in excess of $5,000, annual
        income shall include the greater of the actual income derived from net assets or two percent
        (2%) of the value of such assets;
    (4) The full amount of periodic payments received from social security, annuities, insurance
        policies, retirement funds, pensions, lotteries, disability or death benefits, and other similar
        types of periodic receipts, including a lump-sum payment for the delayed start of a periodic
        payment (but see #13 below under Items Excluded from Income);
    (5) Payments in lieu of earnings, such as unemployment, worker's compensation, and severance
        pay (but see #3 under Items Excluded from Income);
    (6) Welfare Assistance.
         a.   Welfare assistance received by the household.
         b.   The amount of reduced welfare income that is disregarded specifically because the
              household engaged in fraud or failed to comply with an economic self-sufficiency or
              work activities requirement.
         c.   If the welfare assistance payment includes an amount specifically designated for shelter
              and utilities that is subject to adjustments by the welfare assistance agency in
              accordance with the actual cost of shelter and utilities, the amount of welfare income to
              be included as income shall consist of: (i) The amount of the allowance or grant



    Adopted by the Board on January 20, 2011 Page 12 of 16 pages
          exclusive of the amount specifically designated for shelter or utilities; plus (ii) The
          maximum amount that the welfare assistance agency could in fact allow the household
          for shelter and utilities. If the household's welfare assistance is ratably reduced from the
          standard of need by applying a percentage, the amount calculated under this paragraph
          shall be the amount resulting from one application of the percentage;
(7) Periodic and determinable allowances, such as alimony and child support payments, and
    regular contributions or gifts received from persons not residing in the dwelling; and
(8) All regular pay, special pay, and allowances of a Member of the Armed Forces (whether or
    not living in the dwelling) who is head of the family, spouse, or other person whose
    dependents are residing in the unit (but see # 7 Items Excluded from Income).

Source: Occupancy Requirements of Subsidized Multifamily Housing Programs
HUD Handbook 4350.3 REV-1, Exhibit 5-1: Income Inclusions and Exclusions


Exhibit 2: Items Excluded from Household Income
(1) Income from employment of children (including foster children) under the age of 18 years;
(2) Payments received for the care of foster children or foster adults (usually individuals with
disabilities, unrelated to the household, who are unable to live alone);
(3) Lump-sum additions to household assets, such as inheritances, insurance payments (including
payments under health and accident insurance and worker's compensation), capital gains, and
settlement for personal or property losses (but see #5 under Items Included in Income);
(4) Amounts received by the household that are specifically for, or in reimbursement of, the cost
of medical expenses for any household Member;
(5) Income of a live-in aide;
(6) The full amount of student financial assistance paid directly to the student or to the
educational institution;
(7) The special pay to a household Member serving in the Armed Forces who is exposed to
hostile fire;
(8) (a) Amounts received under training programs funded by HUD;
    (b) Amounts received by a person with disabilities that are disregarded for a limited time for
purposes of Supplemental Security Income eligibility and benefits because they are set aside for
use under a Plan to Attain Self-Sufficiency (PASS);
     (c) Amounts received by a participant in other publicly assisted programs which are
specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment,
clothing, transportation, child care, etc.) and which are made solely to allow participation in a
specific program;
     (d) A resident service stipend. This is a modest amount (not to exceed $200 per month)
received by a resident for performing a service for the owner, on a part-time basis, that enhances
the quality of life in the development. This may include, but is not limited to fire patrol, hall



Adopted by the Board on January 20, 2011 Page 13 of 16 pages
monitoring, lawn maintenance, and resident initiatives coordination and serving as a Member of
the PHA’s governing board. No resident may receive more than one such stipend during the
same period of time; or
      (e) Incremental earnings and benefits resulting to any household Member from participation
in qualifying state or local employment training programs (including training programs not
affiliated with a local government) and training of a household Member as resident management
staff. Amounts excluded by this provision must be received under employment training programs
with clearly defined goals and objectives, and are excluded only for the period during which the
household Member participates in the employment training program.
(9) Temporary, nonrecurring, or sporadic income (including gifts). For example, amounts earned
by temporary census employees whose terms of employment do not exceed 180 days (Notice
PIH 2000-1).
(10) Reparations payments paid by a foreign government pursuant to claims filed under the laws
of that government by persons who were persecuted during the Nazi era;
(11) Earnings in excess of $480 for each full-time student 18 years or older (excluding the head
of household and spouse);
(12) Adoption assistance payments in excess of $480 per adopted child;
(13) Deferred periodic payments of supplemental security income and social security benefits
that are received in a lump-sum payment or in prospective monthly payments;
(14) Amounts received by the household in the form of refunds or rebates under state or local
law for property taxes paid on the dwelling unit;
(15) Amounts paid by a state agency to a household with a developmentally disabled family
Member living at home to offset the cost of services and equipment needed to keep the
developmentally disabled household Member at home; and
(16) Amounts specifically excluded by any other federal statute from consideration as income for
purposes of determining eligibility or benefits under a category of assistance programs that
includes assistance under the 1937 Act. A notice will be published in the Federal Register
identifying the benefits that qualify for this exclusion. The following is a list of income sources
that qualify for that exclusion:
    a) The value of the allotment provided to an eligible household under the Food Stamp Act of
1977 (7 U.S.C. 2017 (b));
    b) Payments to Volunteers under the Domestic Volunteer Services Act of 1973 (42 U.S.C.
5044(g), 5058);
     c) Payments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626(c));
     d) Income derived from certain submarginal land of the United States that is held in trust for
certain Indian tribes (25 U.S.C. 459e);
   e) Payments or allowances made under the Department of Health and Human Services’
Low-Income Home Energy Assistance Program (42 U.S.C. 8624(f));
    f) Payments received under programs funded in whole or in part under the Job Training
Partnership Act (29 U.S.C. 1552(b); (effective July 1, 2000, references to Job Training



Adopted by the Board on January 20, 2011 Page 14 of 16 pages
Partnership Act shall be deemed to refer to the corresponding provision of the Workforce
Investment Act of 1998 (29 U.S.C. 2931);
    g) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians
(Pub.Law 94-540, 90 Stat. 2503-04);
     h) The first $2,000 of per capita shares received from judgment funds awarded by the Indian
Claims Commission or the U. S. Claims Court, the interests of individual Indians in trust or
restricted lands, including the first $2,000 per year of income received by individual Indians
from funds derived from interests held in such trust or restricted lands (25 U.S.C. 1407-1408);
     i) Amounts of scholarships funded under title IV of the Higher Education Act of 1965,
including awards under federal work-study program or under the Bureau of Indian Affairs
student assistance programs (20 U.S.C. 1087uu);
    j) Payments received from programs funded under Title V of the Older Americans Act of
1985 (42 U.S.C. 3056(f));
     k) Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund
or any other fund established pursuant to the settlement in In Re Agent-product liability
litigation, M.D.L. No. 381 (E.D.N.Y.);
    l) Payments received under the Maine Indian Claims Settlement Act of 1980 (25 U.S.C.
1721);
    m) The value of any child care provided or arranged (or any amount received as payment for
such care or reimbursement for costs incurred for such care) under the Child Care and
Development Block Grant Act of 1990 (42 U.S.C. 9858q);
    n) Earned income tax credit (EITC) refund payments received on or after January 1, 1991
(26 U.S.C. 32(j));
    o) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of
Yakima Indian Nation or the Apache Tribe of Mescalero Reservation (Pub. L. 95-433);
   p) Allowances, earnings and payments to AmeriCorps participants under the National and
Community Service Act of 1990 (42 U.S.C. 12637(d));
    q) Any allowance paid under the provisions of 38 U.S.C. 1805 to a child suffering from
spina bifida who is the child of a Vietnam veteran (38 U.S.C. 1805);
    r) Any amount of crime victim compensation (under the Victims of Crime Act) received
through crime victim assistance (or payment or reimbursement of the cost of such assistance) as
determined under the Victims of Crime Act because of the commission of a crime against the
applicant under the Victims of Crime Act (42 U.S.C. 10602); and
   s) Allowances, earnings and payments to individuals participating in programs under the
Workforce Investment Act of 1998 (29 U.S.C. 2931).
(17) Earned Income Disallowance for persons with disabilities [24CFR5.617]
     (a) Initial Twelve Month Exclusion [24CFR5.617(C)(1)]
     (b) Second Twelve Month Exclusion and Phase-In [24CFR5.617(C)2)
     (c) Maximum Four Year Disallowance [24CFR5.617 (C) (3)



Adopted by the Board on January 20, 2011 Page 15 of 16 pages
   Source: Occupancy Requirements of Subsidized Multifamily Housing Programs
   HUD Handbook 4350.3 REV-1, Exhibit 5-1: Income Inclusions and Exclusions


Annualizing Anticipated Annual Income
   Once the FHLBank verifies all sources of income, the FHLBank will convert reported income to
   an annualized figure using one of the following methodologies:

                                             Annualizing Income
    Multiply hourly wages by the number of hours worked per year (2080 hours for full-time
     employment with a 40 hour work week and no overtime).
    Multiply weekly wages by 52.
    Multiply bi-weekly wages (paid every other week) by 26.
    Multiply semi-monthly wages (paid twice each month) by 24.
    Multiply monthly wages by 12.

   Generally the FHLBank will use current circumstances to anticipate annual income, unless there
   is some evidence to indicate an imminent change (e.g., notice of a pay increase on a certain
   date).
   The FHLBank may choose among several methods to determine the anticipated annual income.
   The following are two acceptable methods of calculating annual income: 1) Calculating
   projected annual income by annualizing current income; or 2) Using information available to
   average anticipated income from all known sources when the sources are expected to change
   during the year.
   If there are unusual circumstances about the income of any member of the household, the
   Member should provide explanations about those unusual circumstances with the Reservation
   Request. If no explanations are provided, the FHLBank will annualize income based solely on
   the principles outlined above.




   Adopted by the Board on January 20, 2011 Page 16 of 16 pages

				
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