HILP

1. Home Improvement Loan Program HILP

2. Financing

3. Financing NIFA • 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

4. Financing NIFA • 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

5. 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

6. Participating Lenders

7. Marketing

8. Marketing will be conducted by the participating lenders, community groups and UDD staff • Brochures, magnets, festival and event booths, word of mouth

9. Application Process

10. Applicant Supplies Materials The applicant supplies to UDD all documentation requested by the lender including, but not limited to: • 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)

11. UDD Forwards Materials 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.

12.  Homeowners select a lender from participating lenders

13. 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

14. Lender Processes the Application Lender determines applicant’s annual income, reviews credit history, and establishes the maximum loan amount -- up to $15,000 Please approve for the maximum amount requested!

15. Denial

16. 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

17. UDD Options for Denials: • 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

18. Approval

19. 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

20. UDD Will FAX the Lender: • Part IV – Certificate of Approval • Subsidy Calculation • Part II – List of Improvements

21. Part IV – Certificate of Approval

22. Subsidy Example $15,000 Loan Amount 15,000 120 125 6.5 120 170.32 Subsidy = $3,991.44 PV  = STO 1 I/Y N PMT CPT + RCL = PMT 1 CPT PV

23. The Lender: • 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.

24. 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

25. Completion

26. 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

27. Before After

28. Before After

29. Before After

30. Reporting

31. 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

32. Rebates $

33. 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

34. Participating Lenders