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Welcome to the Webinar NSP Demystified. Phone Use during the Webinar Please mute phone during the webinar, use (*6) To un-mute phone use (#6) Type all of your questions in the chat box Grantees- Direct your questions to Doug Ellis All Others- Direct your questions to Monica Spradlin.

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Welcome to the webinar nsp demystified

Welcome to the Webinar NSP Demystified

Phone Use during the Webinar

Please mute phone during the webinar, use (*6)

To un-mute phone use (#6)

Type all of your questions in the chat box

Grantees- Direct your questions to Doug Ellis

All Others- Direct your questions to Monica Spradlin

Our Program will begin shortly…..


Nsp demystified

NSP Demystified

Presented By:

Virginia Department of Housing

& Community Development

CheriL Miles


Meet the nsp team
Meet the NSP Team

From Left to Right: Chris Thompson, Kiera Johnson, Denise Ambrose, Roxanne Marrs-Shears, Cheri Miles, Lisa Atkinson, Joanne Peerman, Doug Ellis & Monica Spradlin


What is nsp neighborhood stabilization program
What is NSP?Neighborhood Stabilization program

  • Virginia was awarded $38.7 million dollars to help stabilize neighborhoods hard hit by foreclosures.

  • NSP purchases foreclosed homes, rehabs them & then resells them to Low, Middle, Moderate Income (LMMI) borrowers.

  • To date we have:

    • purchased 218 foreclosed homes

    • Resold over 80homes to NSP borrowers


Virginia nsp who is dhcd
Virginia NSP- Who is DHCD?

  • DHCD is a state agency

    • DHCD does not purchase properties directly

    • DHCD does not rehab properties directly

    • DHCD does not sell properties directly

  • DHCD does work with Grantees

    • Who are our 21 NSP Grantees:

      • Local Government Units

      • Non Profits

      • Housing Authorities

      • Community Development Corporations


Unraveling the mystery
Unraveling the Mystery

The foreclosed home is purchased using NSP Grant Funds.

The home is rehabbed using NSP Grant Funds and/or leveraged funds from another source.

The home will not be sold until all rehab is complete


How are nsp homes sold
How are NSP Homes Sold?

NSP Sales Price = Acquisition + Rehab (no profit)

  • The home is marketed to an LMMI borrower

    • Housing Counseling Programs

    • Local Government/ Teachers

    • Local Industries

    • Realtors/ MLS


What is allowed under nsp
What is allowed under NSP?

  • The Virginia NSP program allows the homes to be resold using a variety of first trust mortgages, with the following guidelines

    • All mortgages must be 30 year fixed rate loans

    • No prepayment penalties

    • No predatory or subprime lending

    • No negative amortization

    • First trust liens may be VA, FHA, VHDA, Conventional, USDA or Habitat.




Nsp qualification forms
NSP Qualification Forms

  • TCR- Tracking & Completion Report

  • Sample in your packet

    • Provided by Grantee/Housing Counselor

      • NSP Sales Price

      • Subsidies

      • Closing Cost Assistance

      • First Trust Loan Amount

      • 2nd DOT

  • DHCD NSP Underwriting Explanation Letter

  • Sample in your packet

    • Provided by DHCD

      • Outlines each category of NSP Assistance


Qualifying the borrower1

The Housing Counselor and the Loan Officer

Qualifying the borrower

  • Intake

    • The clients meets the Housing Counselor

      • Program explained

      • Housing Counselor determines qualification per NSP

      • TCR is completed (sections A,B,C)

        • Subsidies are determined

        • Backing Into a Loan Amount

      • Counselor requests UW explanation letter from DHCD Community Rep (Doug/Monica)


Tcr tracking completion report

The Housing Counselor completes this form…..

TCR- Tracking & Completion Report


Pre approval

The Housing Counselor and the Loan Officer

Pre Approval

  • Application

    • The Client visits the Loan Officer

      • Client provides all documents necessary for pre- approval

      • Complete the pre approval

      • Housing Counselor provides

        • TCR

          • First Trust Loan Amount required

        • UW explanation letter



Nsp assistance
NSP Assistance

DHCD Match

&

Subsidy


Nsp subsidy how does it work

Housing Counselor Determines Subsidy Qualification

NSP Subsidy- How does it Work

  • NSP Subsidy- Monies left in the deal

    • Subsidies are based on LMMI income levels

    • Grant funds

    • 0% Interest

    • No payments

    • Forgiven after affordability period 5-15/yrs

      • Up to $14,999- 5 Years

      • $15,000-$39,999- 10 Years

      • $Over 40,000- 15 Years


Dhcd match funds
DHCD Match Funds

  • NSP has a required acquisition discount of 1% under the as is appraisal.

  • The harder the Grantee negotiates with the REO the more the monies are left in the deal (additional subsidy)

    • Acquisition Cost/As Is Appraisal = DHCD Match

TCR – Section A

DHCD Match can never exceed 10% of discount


Nsp subsidy how much do they get
NSP Subsidy- How much do they get?

  • The subsidy is provided to the homebuyer at closing in the form of a Deed of Trust/Note.

  • Subsidy = % x NSP sales price


Exercise 1

Exercise #1

Determining the first trust loan amount

TCR- Part A, B, and C


Complete the tcr d etermine the borrowers loan amount line 37
Complete the TCR - Determine the Borrowers Loan Amount- Line 37

  • As Is Appraisal $197,000.00

  • Acquisition Price $195,030.00

    • NSP Dollars $195,030

    • Leveraged Dollars $0.00

  • Rehab Dollars $ 32,700.00

    • NSP Dollars $ 32,700

    • Leveraged Dollars $0.00

  • Client AMI 51-80%

  • Borrowers Down Pymt $ 500.00




Nsp closing cost assistance
NSP Closing Cost Assistance

This training reflects the new policy change regarding closing cost effective 3/8/11


Nsp homebuyer closing cost assistance

TCR- The closing costs calculations are found in section D

NSP Homebuyer Closing Cost Assistance-

  • NSP offers up to $8,000 in closing cost assistance per home.

    • The Closing Cost Assistance is reported as NSP Paid Closing Costs on the HUD-1 and forgiven at closing.

    • The Closing Costs assistance must match line 103 on the HUD-1 (NTE $8,000)


Welcome to the webinar nsp demystified

TCR- Section D

Closing Cost Calculation



Nsp deed of trust
NSP Deed of Trust

Calculating

NSP DOT

&

Forgiven Subsidy


How we calculate the nsp dot
How we calculate the NSP DOT

  • DHCD prefers the NSP DOT to be in 2nd place

    • We will consider 3rd in some instances

  • The NSP DOT includes:

    • NSP Subsidy

    • DHCD Match Funds

The NSP Grantees are provided templates for the NSP DOT/NOTE and in most instances will prepare these documents for closing


Nsp forgiven subsidy
NSP Forgiven Subsidy

  • DHCD allows 3.5% of the NSP sales price to be forgiven at closing.

    • This reduces the CLTV

    • Brings NSP in line with some secondary marketing requirements

    • The 3.5% is subtracted from the total assistance PRIOR to determining the NSP DOT


Tcr 2 nd dot calculation
TCR- 2nd DOT Calculation

TCR- 2nd DOT Calculation



Exercise 2

Exercise #2

Calculating the full Assistance

TCR – Part E


Complete sections d e
Complete Sections D & E

  • GFE Closing Costs $7,843.00

    • Enter the estimated costs

  • HUD-1 Closing Costs $8,074.00

    • Reenter the costs with prelim HUD-1 figure

      • Line 103 on the HUD-1


Grantees remember
Grantees Remember

  • Grantees:

    • Adjust the TCR once the HUD-1 draft is available and submit to DHCD for closing approval

  • Grantees:

    • Adjust the TCR with the final HUD-1 figure prior to submitting the final closing package to DHCD.



Days leading up to closing
Days Leading Up to Closing

  • Underwriting

    • File is approved with conditions

    • Notify Borrower

  • Schedule Closing Date

    • Title Company/ Lender Set Closing Date

      • Send NSP Closing Instruction Letter- Sample in Packet

    • Notify Borrower

  • Communicate

    • Grantee & DHCD

      • Closing Date

      • Prelim HUD-1 minimum of 24 hours in advance


Day before closing
Day Before Closing

  • Grantee/Title Company complete the NSP DOT/ NOTE

    • Remember: The NSP DOT contains the DHCD Match and Subsidy

  • Prelim HUD-1 is provided to Grantee/DHCD for review and sign off

    • **Client can not walk away with monies from the sale**


Day of closing
Day of Closing

  • All players need to be available

    • Title company

    • Lender

    • Grantee

    • DHCD

    • Borrower

    • TCR overrides and revisions may occur the day of closing…DHCD strives to turn them around quickly as to not delay closing




Hud 11
HUD-1

Borrower’s Side

Seller’s Side


Hud 12
HUD-1

  • The NSP 2ndDOT

  • NSP Paid Closing Costs

  • NSP Forgiven Subsidy

    • The gross proceeds to seller (Line 603) are reduced

    • DHCD/Grantee do not send additional funds to closing



Thank you for attending
Thank you for attending.

  • Chris Thompson- Program Manager

    • Chris.Thompson@dhcd.virginia.gov

  • Cheri Miles – Policy Analyst

    • Cheri.Miles@dhcd.virginia.gov

  • Monica Spradlin- Community Representative

    • Monica.Spradlin@dhcd.virginia.gov

  • Doug Ellis- Community Representative

    • Douglas.Ellis@dhcd.virginia.gov