MSHDA Down Payment Assistance and Foreclosure Relief Programs

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					MSHDA’s Homeownership Counseling

                                Sharon Evans
                        Homeownership Division
                                 May 24, 2011
The Homeownership Counseling Program supports
     the Michigan State Housing Development
  Authority’s (MSHDA) mortgage loan programs
  that increase homeownership opportunities for
   low to moderate income families in Michigan.
• Homeownership Counseling Services are
  available statewide

• Over 70 Homeownership Counseling

• Agencies consist of:
   – Non-Profit Agencies
   – Governmental Agencies
   – Faith-Based Agencies

• Currently 238 Certified Counselors

• Services are free to eligible clients
National Industry Standards
– MSHDA Endorses
– Requires agency adoption
– Trusted agencies/advisors
– Ensure all clients receive “high quality
  education and counseling
– Ensure counselors are providing
  professional services
– Services are consistent statewide
– Act on behalf of client – observing their
  best interest
– Counselor Connection Newsletter
   • Monthly Issues on Program and Policies

– Required to pass MSHDA’s New Counselor Training

– Attend annual MSHDA and NeighborWorks Training
• Borrowers who received 1:1 Counseling
  experience a 34% reduction in delinquency
• Homeownership gives families a financial
  “stake” in their home and community
• Homeownership builds stronger and safer
• Public benefits such as increased tax revenues
•   Homebuyer Education
    – Home Ownership: Is it for everyone?
    – Understanding Mortgage Programs and
•   Financial Management Counseling
    – Household Budgeting
    – Debt Reduction and Saving
•   Pre-Purchase Credit Repair Education
    – Repairing Credit and Improving Credit Scores
•   Pre-Purchase Home Inspection Funds
    – Funds for Property Inspections
•   Home Maintenance Education
    – Plumbing, Furnace and Electrical Repairs
    – Energy Conservation
•   Foreclosure Counseling
    – Michigan’s Foreclosure Process
    – Understanding Loan Modifications and Available
    – Transitioning out-of-the home
Eligibility for Homeownership Counseling Program:
     Homebuyer Education: No eligibility requirements
     Lender Referral:
        Lender Referral Form
        MSHDA Reservation Number

     All other Counseling Services are based on the DPA Income Limit
      Guidelines by:
        County
        Household Size, and
        Include a minor child
        Mortgage readiness within 12 months

Eligibility for Foreclosure Counseling – No eligibility requirements
Benefits of a MSHDA Loan
• Competitive interest rates
• Down Payment Assistance
• Several products available-
  – FHA, VA, RD and Conventional
• Helps low-moderate income
  customers become homeowners

• 30 years WITHOUT DPA = 4.750%

• 30 years WITH DPA = 5.125%
•   Buyer must occupy home as principal

•   Co-signers/non-occupying co-borrowers are
    not allowed

•   MSHDA Loan Products are based on:
     – Sales Price Limit up to$224,500

•   Combined household income of $62,800 -
     – depends on family size and location

•   All adults in household must apply, credit
    qualify and sign closing documents including
    note and mortgage (unless full-time student – 12
    credit hour minimum)
  Down-Payment Assistance
• Borrower cash investment required – 1% of sales
  price, may come from approved gift source

• Cash asset restriction - $5,000
  (includes equity in current home)

• $7,500 maximum (formula used to determine actual
  DPA amount)

• May be used for down payment, closing costs,
  prepaid/escrow items – but not for repairs or to buy
  down principal
• Available with FHA and RD Loans

• Soft second – 0% interest with no monthly

• Homebuyer Education required

• DPA loan due on sale, transfer, refinance, or
  repayment of first MSHDA mortgage
Inspection Funds
• Eligibility Criteria
  -MSHDA loan in process

• Payout of up to $750 used to
  cover homebuyer costs at closing

• Counselors partner with lenders
  and home inspection service
Home Maintenance
Teaches homebuyer/owner how to perform basic
  repairs and routine maintenance:

  –   Plumbing
  –   Electrical and Furnace
  –   Landscaping
  –   Wall repair and Painting
  –   Structural
  –   Energy Efficiency
IDA Matched Savings Account
• Income under 200 percent poverty level

• Complete Financial Management Course

• Save money over a period of between six to thirty-six

• Savings of up to $1,000 is matched:

   – Ratio of 3:1 for a home purchase
   – Ratio of 2:1 for post-secondary education/job training
   – Ratio of 2:1 to start or expand a small business
 Foreclosure Services
• 1 in 36 homeowners are projected to
  experience foreclosure as a result of
  their high-cost loan

• 30 % of all loans made in 2005-06
  were subprime

• 43% of all homeowners will likely feel
  the ripple effects of foreclosures from
  subprime loans
Benefits of working with a
MSHDA Foreclosure Counselor?
• Keep up with industry changes and program
   –   Senate Bill (SB) – 90 day
   –   HAMP – Supplemental Directives
   –   Task Force: list serve
   –   Helping Michigan’s Hardest-Hit Homeowners
        • Unemployment
        • Rescue Funds
        • Principle Reduction
• Identify community partners and stakeholders
• Identify community referrals
• Services are free
• Online intake portal:

• Michigan Homeowner Assistance Nonprofit
  Housing Corporation

• $498.6 million through the Emergency Economic
  Stabilization Act (EESA)

• List of participating servicers available on MSHDA
• DHS/Community Health
• No Worker Left Behind
• Utility Assistance Programs
• Emergency Service Funds
• Faith Based Organizations
• Shelters
• Food Banks/Women Infant and Children
  (WIC) Programs
• Treasury Offices
• Salvation Army/Goodwill
• Website:
  –   Buying Your Home
  –   Mortgage Credit Certificate
  –   Down-payment Assistance
  –   Homeownership Counseling
  –   Foreclosure Prevention/Counseling
  –   Individual Development Accounts

• Toll free number: 866-946-7432
  Equipping buyers to make solid decisions

  Preparing buyers for the mortgage process

  Assisting with DPA and Inspection Funds

  Preventing buyers from predatory lending scams

  Preventing future foreclosure
 Specialist Contact Information

• Sean Chapman, Wayne County 517-241-2630 or

• Sharon Evans, Central Michigan and Upper Peninsula
  517-373-8016 or

• Katherine Grant, Eastern Michigan 517-373-8045 or

• Karen Lawson, Western Michigan 517-373-2307 or

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