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					               HOME/ HSF
           OCCUPANCY TRAINING
            (HOMEOWNERSHIP)
                                         1

MASSACHUSETTS DEPARTMENT OF
  HOUSING AND COMMUNITY
    DEVELOPMENT (DHCD)
             &



                              JUNE 2008
P R E PA R E D B Y D H C D & O K M A S S O C I AT E S A N D R E V I S E D B Y D H C D &
FINEPOINT
                  Homebuyer Activities
                                  2

 Purchaser-based (aka HOME ADDI)
    Down-payment and closing costs assistance

 Project-based
    Construction and sales to eligible buyers
    Rehab and sales to eligible buyers
                   Eligible Properties
                                 3

 Eligible property types:

    Single-family home
    Two-to-four unit property
    Condominium unit
    Manufactured home
              Maximum Property Value
                                   4

 The housing must be modest housing:
 If Acquisition only (Purchaser-based (HOME ADDI)
 program):
    Sales price cannot exceed 95% of the median area purchase
     price (FHA Mortgage 203(b) limits). Although the Economic
     Stimulus Act of 2008, effective March 6, 2008, allows HUD to
     temporarily increase FHA loan limits, they are not
     applicable to HOME (see handout).

    Property appraisal required
           Maximum Property Value (cont.)
                                    5

 If Acquisition and New Construction, (FTHB Project-
 based):
    Per the HOME Rule: sales price cannot exceed 95% of the
     median area purchase price (203(b) limits). Although the
     Economic Stimulus Act of 2008, effective March 6, 2008,
     allows HUD to temporarily increase FHA loan limits, they
     are not applicable to HOME (see handout).
     But with DHCD-assisted projects…
    Sales price cannot exceed DHCD’s sales price limits (see
     handout), but affordability must be demonstrated with an
     affordability analysis, where specific condo fees, tax rates, etc.
     are taken into account
           Maximum Property Value (cont.)
                                  6

 If Acquisition with Rehab:
    Per the HOME Rule: as-completed value cannot exceed 95% of
     the median area purchase price (203(b) limits). Although the
     Economic Stimulus Act of 2008, effective March 6, 2008,
     allows HUD to temporarily increase FHA loan limits, they are
     not applicable to HOME (see handout)
     And, with DHCD-assisted projects…
    Sales price cannot exceed DHCD’s sales price limits (see
     handout)
                     Property Standards
                                  7

 Purchaser-based (HOME ADDI):
    State/local code (C of O for new construction)        STANDARDS




    Section 8 HQS
    Smoke detectors and CO detectors
    House must be inspected by a representative of the
     administering agency and documentation of final ―pass‖ to be
     retained in files
    Must meet standards at time of closing
             Property Standards (cont.)
                               8



   Lead must be addressed to meet the HUD federal regulations
    at 24 CFR Part 35 and the Massachusetts Lead Law whether or
    not children under six will reside at the property
   Environmental Checklist for homebuyer assistance
               Property Standards (cont.)
                                 9

 Project-based with Rehabilitation or New
 Construction:
    Written rehab standards/specifications
    Applicable state/local code and HQS
    Model Energy Code/Energy Star (especially new construction;
     must be certified by Energy Star, as applicable)
    Think about accommodating asthma-related needs
                                                        STANDARDS
                 Property Standards (cont.)
                                    10

 Project-based with Rehabilitation or New
  Construction (cont.):
    Lead Based Paint (24CFR Part 35)
        Project commitments after 9/15/00
        Test disturbed surfaces
        Risk assessments & interim controls ($5k+)
        Abatement ($25k+)
                Property Standards (cont.)
                                      11

   Healthy Homes; intervention in 4 areas that can be expected to
    help children:
     Excess Moisture
     Dust
     Ventilation and control of toxins
     Education
                     Other Standards
                                 12


 Section 504 requirements

     Your ownership program must be accessible
     Desirable to create accessibility or adaptability even if the
      Federal or State requirements don’t trigger physical
      accessibility
                Other Standards (cont.)
                                13

 Ownership and accessibility

    With single family project-based housing, accommodation
     efforts should be made to the maximum extent feasible should
     you have a buyer with accessibility needs
     Affirmative Marketing/ Fair Housing
                                14


Before any project marketing begins:
 Must analyze the market and assess which groups are least likely
  to apply

 How will you reach them?
 Affirmative Marketing/ Fair Housing
                                          15

 Efforts to attract those who would not normally
 apply
    Wait list/lottery
        www.chapa.org advertises upcoming lotteries
    Written affirmative marketing plan
    Advertise in Mass Access for accessible units
        www.Massaccesshousingregistry.org
    Use HUD Logos (EHO, etc.) in all advertising
    Metro Boston- use Metro List for initial marketing
        What is Metrolist? Metrolist is the popular name for the Metropolitan
         Housing Opportunity Clearing Center. Metrolist collects and provides
         information primarily about government subsidized apartments for rent, and
         homes for sales, in and around Boston. Metrolist is located on the ninth floor,
         room 966-A, of Boston City Hall at Government Center and is open for business
         Monday through Friday, 9:00am to 4:00pm. Metrolist is a free service. The
         phone number to the clearing center is 617-635-3321
   Affirmative Marketing/ Fair Housing
                               16


Lotteries: Part of your Buyer Selection Plan
 When, where and how it will be conducted

 State who is eligible

 Fair Housing Issues

 Local Preference Issues
Affirmative Marketing/ Fair Housing (cont.)
                                17




Limited English Proficiency (LEP)
 On August 11, 2000, Executive Order 13166, titled,
  "Improving Access to Services by Persons with
  Limited English Proficiency”, was issued. Final guidance
  was issued effective February 21, 2007.
                              LEP
                                 18

   Executive Order 13166 requires that administrators of federal
    funding assess and address the needs of otherwise eligible
    persons seeking access to federally conducted programs and
    activities who, due to LEP cannot fully and equally participate
    in or benefit from those programs and activities.

   http://www.lep.gov/ISpeakCards2004.pdf

   http://www.hud.gov/offices/fheo/promotingfh/leptranslated.
    cfm
               Four Factor Analysis
                              19

 Whether and at what point the importance of the service,
  benefit, or activity involved warrants written translations of
  commonly used forms into frequently encountered languages
  other than English;
 Whether the nature of the information sought warrants
  written translations of commonly used forms into frequently
  encountered languages other than English;




                                                                19
                  Four Factor Analysis

 Whether the number or proportion of LEP persons served
  warrants written translations of commonly used forms into
  frequently encountered languages other than English; and
 Whether the demographics of the eligible population are specific
  to the situations for which the need for language services is being
  evaluated. In many cases, use of the "safe harbor" would mean
  provision of written language services when marketing to the
  eligible LEP population within the market area. However, when
  the actual population served (e.g., occupants of, or applicants to,
  the housing project) is used to determine the need for written
  translation services, written translations may not be necessary.
       Methods for Oral Communication
                             21



 Share language services between sites;

 Train bilingual staff to act as interpreters;

 Telephone and Video Conferencing interpreter
 services; AT&T for emergencies
 Tapes and Audio Files

 Community volunteers (make formal agreements)



                                                  21
      Written Translation
                           22

 Standardize documents to reduce translation needs
 Translate an entire document
 Translate a short description of the document
 Provide a statement in various languages that says ―If
 you don’t understand this document we will provide
 you oral translation at no cost to you‖
 Consider using a professional translator to
 proof/ensure accurate translation if bi-lingual staff is
 used to translate documents.


                                                       22
             Documents to be Translated
                                   23

 Vital documents are those that are critical for
 ensuring meaningful access by applicants and
 households served, and LEP persons specifically
 Determine what documents and identify them in a
 Language Access Plan (LAP)
    Notices of free language assistance
    Applications
    Written notices of rights, denial, loss or decreases in benefits
     or services (including recertification notices)
    30 Day Notices
    Outreach/marketing materials
                                                                        23
         Safe HARBOR for Written Translation
                                                  24


                                                            Recommended Provision of Written
            Size of Language Group
                                                                 Language Assistance



1,000 or more in the eligible population in the
                                                       Translated vital documents
market area or among current beneficiaries



More than 5% of the eligible population or
                                                       Translated vital documents
beneficiaries and more than 50 in number



More than 5% of the eligible population or             Translated written notice of right to receive free
beneficiaries and 50 or less in number                 oral interpretation of documents.



5% or less of the eligible population or
                                                       No written translation is required.
beneficiaries and less than 1,000 in number




                                                                                                       24
                              The Applicant
                                          25

 First-time Homebuyer
    An individual or an individual and his/her spouse who have
     not owned a home during the 3-year period prior to the
     HOME/HSF home purchase, except that the following cannot
     be excluded from consideration:
        Any individual who is a displaced homemaker (as defined by HUD)
        Any individual who is a single parent (as defined by HUD)
        An individual who owns or owned, as a principal residence during the 3-
         year period before the purchase of a home under the Program a dwelling
         unit whose structure is :
          (i) not permanently affixed to a permanent foundation or

            (ii) not in compliance with State, local or model building codes and
             cannot be brought into compliance with such codes for less than the
             cost of constructing a permanent structure.
                 The Applicant (cont.)
                                26

 Low-income (80% AMI by family size as determined
  by HUD)
 Income eligibility determined
    At purchase for existing housing
    At contract (P&S) signature for new construction
 Property will be principal residence
 Sponsor or agency does initial income
 determination; DHCD to approve Project-based
 applicants.
 Does not have eligible assets in excess of $75,000 for
 project-based or $25,000 for purchaser based
                    Income Eligibility
                                27


 To verify income:
    Use Part 5 definition (as in rentals) –Purple Book!
    Project income for next 12 months based on previous year’s
     income
 Income verification information good for six
 months; after that it must be updated
            Application for Housing
                                       28

 Use Application that covers all areas
    Size of unit requested
    Size of household (ages, student status)
    Household income from ALL sources
          Any changes in income expected in next 12 months?
    Assets of all kinds for all household members
          Any lump sum?
          Any dispossession of assets in last 2 years?
 Remember to include all possible types of
 income/assets on application to avoid ―surprises‖
 (see hand out of application package)
            Income Documentation
                          29

 If you use paystubs and other ―source‖ documents:


     WAKE UP
     AND LISTEN!

 Guidelines on how much documentation is required….
                   Income Documentation
                                      30


 Wages/Public Assistance/Pension/Child Support, etc.
    Third Party Verification is first choice but compare to paystubs
     to assess consistency
    Source Doc (only if 3rd party is not available)
      Steady (salaried) employment: THREE CONSECUTIVE MONTHS
      Less Steady (seasonal/hourly workers): ENTIRE 12 MONTHS

    Affidavits to prove negative such as ―no income‖, ―no child
     support‖, etc.
        Must include ―under penalties of perjury‖ and must be notarized.
                Income Documentation (cont.)
                                          31
 Income from Assets
   $5,000 or less; verify amount of asset; use actual income from
    the asset
   Above $5,000; verify amount of the asset
         And use the larger of actual income from the assets or the imputed asset
          income. (using current passbook interest rate which is currently 1%)
         If any seemingly countable assets are inaccessible and provide no income
          to the applicant, this may be documented and the assets may be excluded
          from the calculation. (with approval from DHCD)
         Individual retirement accounts even if withdrawal would result in a
          penalty.
 Disposition of Assets for less than Fair Market Value
     In essence, applicant has voluntarily reduced their ability to
      afford housing. Therefore, an imputed rate must be calculated
      and added as income from assets.
               Income Documentation (cont.)
                                        32


 Students 18 and over-
   Verify full-time student status
   Verify and document all income and assets
         If student, and NOT Head of Household, then income capped at
          $480/year
 Minors – earned income of minors under 18 is not
  counted
     However, unearned income and assets attributable to a minor,
      e.g., child support, TANF payments, income from bank
      accounts, and other benefits paid on behalf of a minor is
      included
        HUD HOME Income Calculator
                         33



http://www.hud.gov/offices/cpd/affordablehousing/tr
  aining/web/calculator/calculator.cfm



This is on HUD’s ―Home Page‖ HOME under the
 ―HOME Tools‖ along the left side of the page.
                 The Purple Book
                              34


 Real Title: Technical Guide for Determining Income
  and Allowances for the HOME Program
 Available FREE at Community Connections:
   COMMUNITY CONNECTIONS
    P.O. Box 7189, Gaithersburg, MD 20898-7189
    Telephone: 1-800-998-9999
   TDD: 1-800-483-2209
    Fax: 1-301-519-5027/5622
   www.comcon.org

 www.hud.gov/offices/cpd/affordablehousing/library/modelguides/
  1780.pdf
                  Pre-Closing Steps
                               35


 Forward proposed buyer info to DHCD
    Income/Asset information, including the household
     application, back-up documentation, and the sponsor’s
     income summary calculation worksheet.
    Financing commitment—All loans must be conforming. The
     commitment must be fixed for the term of the loan and
     should reflect competitive industry standard rates.
    Loan products must be reviewed with respect to points and
     other closing costs.
    Homebuyer Counseling Certificate: Given after pre-purchase
     counseling
                Pre-Closing Steps (cont.)
                                36

 Forward proposed buyer info to DHCD
    Disclosure Statement
    Purchase and Sale Agreement
    Certificate of Occupancy
    Deed Rider for a particular household—completed page 1 to
     confirm HOME/HSF investment and assistance amounts
    HUD-1 Settlement Statement
    HOME/HSF Project Completion Form
                   Pre-Closing Steps (cont.)
                                     37


 Homebuyer Counseling
    Pre Purchase- Homebuyer Counseling Certificate
    Post-Purchase Counseling and Foreclosure Prevention
        Ideas on what is working
        Telephone and mail contact
        Classes with incentives?
        Tuition?
        Establish and keep RELATIONSHIP with buyers
 New buyers may be still buying at a time where
 housing prices are still likely to fall. They need to
 understand that, and what it may mean to them.
         Review of First Mortgage Product
                                 38

 Agencies must take strict approach to reviewing the
 first mortgage
    Conform to GSE guidelines (i.e. Fannie Mae/Freddie Mac,
     FHLB)
    Fixed rate; reasonable and competitive, without points
    Underwritten with ratios within the industry standard
    Maximum 95% loan to purchase price for HSF
    Must be at a competitive interest rate and without points
 HOME/HSF Project Completion Form
                                  39

 General project-related data
    Financial
    M/WBE
    Section-3 accomplishments
    Accessible unit information, etc.
HOME/HSF Project Completion Form
(cont.)
                                   40

 Beneficiary data
     Information on your homebuyers and their HOME/HSF-
      assisted tenants
     Some additional questions to meet
       Objectives of HUD’s Performance Measures initiative and
       Commonwealth’s data collection goals

     Many areas in question can be covered by amending your
      application/intake form
                    On-going reporting
                                   41

 The Federal and State governments are increasingly
 interested in on-going data on subsidy beneficiaries
     Agencies’ abilities to report play a crucial role in the
      allocation of funding
     Post-purchase counseling provides opportunities to get
      meaningful data on how your project is going
 Principal Residency Requirement
     FTHB on-going reporting mainly consists of confirming
      ongoing primary residency, but may include other measures
      (particularly for homeowners with assisted rental units)
           Post-Purchaser Counseling
                                 42

Can focus on things such as:
 Creating relationships with home buyers
 Covering things not done at pre-purchase counseling
 How to avoid predatory lending
 How to undertake responsible refinancing
 Where to turn if you get into trouble
    More Program Requirements-Project-Based
                         43

Deed Riders (or Covenants)

      DHCD’s Maximum Resale Price formula
                  Deed Riders (cont.)
                                44

   Disclosure statement—should be signed at or before execution
    of the P & S with the buyer
   The Deed Rider requirements should be made as clear as
    possible to the purchaser
   The Deed Rider must be completed properly (as per the loan
    agreement Assistance Amount exhibit or per other lender-
    approved schedule) and gets recorded at closing
   Typically, these documents are part of the Project-based Loan
    Agreement
              Capital Improvements
                          45

 Documentation of all Capital Improvements in order
 to be considered for inclusion in Maximum Resale
 Price formula
 Must have legitimate receipts of products used and
 work performed
 Capital Improvements are approved at DHCD’s
 discretion
         Refinancing: project-based
                                 46

 Must get consent from DHCD
 Up to 95% of resale formula (90% for HSF)
 Rate must be
    Fixed
    Competitive
    Comparable or better than current rate
 Conforming Loan – mortgage loans that conform to
 GSE guidelines (Fannie Mae/Freddie Mac, FHLB)
 Supported by Appraisal by licensed MA appraiser
                          Resales
                              47

 Deed Riders contain instructions and formulas
  pertinent to re-sales
 In nearly all cases, our first goal is to find an eligible
  purchaser and provide the housing opportunity for
  another low-income first-time homebuyer household
 Recapture provisions may apply
      DHCD
HOME/HSF Monitoring

            48



   HOME- CONDUCTED BY
FINEPOINT ASSOCIATES, LLC

 HSF- CONDUCTED BY OKM
    ASSOCIATES, INC.
                     DHCD Monitoring
                                   49

 Homeownership compliance
    One time only (unless rental units present), but there are
     continued development occupancy responsibilities
 Ongoing compliance for multi-family homes with
  homeowner and rental units
    Site visits when inspections required
    Desk audits for projects in compliance in lieu of visit for years
     inspections not required
                    Scheduling the Visit
                                   50


 Monitoring Agent will contact you at least two weeks
 in advance of visit
 It’s an ―open book‖ test; we want you to pass!
    you’ll get a copy of the monitoring guide
    you’ll have time to check your files
    you can call with questions
                   Monitoring Visit
                              51

 Visit typically completed in 1 day
 Procedures
 1. Interview
 2. File Review (random sample)
 3. On-site inspections
               Findings & Recommendations
                                         52


 Monitoring letter issued by DHCD:
    Findings:
        Addresses statutory/regulatory violations
        Must cure/respond in 45 days
    Recommendations:
        Addresses good practices
        No formal response is typically required, but we expect to see improvement
         next time
Development and Construction Management
                                        53


 HOME/HSF FTHB Project-based
 Basics:
    HOME/HSF Requisitions
        Approved contractor work/invoices
        All requisitions forwarded to all lenders simultaneously
        For monitoring, evidence of contractor payment, etc. must be available
         for the visit
    Section 3 and M/WBE tracking must be available for the visit
    For HOME- must complete HUD Completion Report
        Other Federal Requirements
                              54




 Davis-Bacon labor standards
     12 or more HAU’s require Federal Wage rates (Davis
      Bacon) Sufficient documentation must be maintained in
      the project files



                                                FED
                                               REGS
        Other Federal Requirements (cont.)
                                       55

 Relocation: Yes, even for homeownership!
     Obtain waiver from seller that they are selling of their own
      free will.-HUD Handbook 1378- Appendix 32
     49 CFR Part 24 (the ―Uniform Relocation Act‖) requirement
      that you ensure that acquisition of any property with Federal
      funds will not contribute to any ―displaced‖ persons, as
      defined by the Act, thereby triggering relocation assistance
     All the Right Moves (HUD website) for help in the Uniform
      Relocation Act (―Barney Frank Rule‖)
      If project-based, must follow URA and pay benefits if building is to be
       demolished or if tenants (commercial or residential) have to be relocated
       as a result of your action
       Other Federal Requirements (cont.)
                                     56

 Conflict of Interest (24CFR Part 92.359)
      No one associated with project may obtain financial
       interest in contract or subcontract
      Persons include themselves, or those with whom they have business or
       family ties during their tenure or for one year thereafter
      Includes employee, agent, consultant, officer, or elected official or
       appointed official of the organization receiving the funds
        Other Federal Requirements (cont.)
                                 57

 Conflict of Interest (24CFR Part 92.359) (cont.)
      EXCEPTION: On behalf of an awardee, DHCD may request
       an exception from HUD. It may be granted on a case by case
       basis when HUD determines that the exception will serve to
       further the purposes of the HOME program and the effective
       and efficient administration of the project or program. (For
       HSF, awardee should request exception from DHCD).
         Other Federal Requirements (cont.)
                                         58

 Minority and Woman Owned Business Enterprises
  (M/WBE) (Applies to all DHCD HOME/HSF project-
  based)
 Section 3
    Applies to HOME/HSF project-based homeownership
        Projects for which HUD’s share of project costs exceeds $200,000; and
        The contract or subcontract exceeds $100,000.




                                                             FED
                                                            REGS
                   Enforcement
                           59

 Enforce Deed Rider requirements by maintaining
  communication with your buyers.
 Verify continued principal residency.
 Periodically, we may need to follow up with
  homebuyers to comply with HUD’s Performance
  Measurement initiative.
 REMEMBER! If homeowners want to sell or
  refinance, they should get in touch with you and/or
  the Town/City and DHCD.
                 HOME Monitoring
                              60


            FinePoint Associates, LLC
 Elaine Nickerson
    617.543.2204
    eknick@aol.com

 Lindsay Cohrs
    508.340.8890
    lindsaycohrs@gmail.com
                   HSF Monitoring
                            61

                OKM Associates, Inc.
Contact information
 Judy Katz
    617.742-8616 ext 102
    jakcbo@aol.com
                           DHCD
                                  62

Contact information
 HOME: Rebecca Frawley, 617.573.1318
    Rebecca.Frawley@state.ma.us


 HSF: Eric Alexander, 617.573.1310
    Eric.Alexander@state.ma.us


 Website: www.mass.gov/dhcd

				
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