HILP

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

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

Financing NIFA

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

Participating Lenders

Marketing will be conducted by the participating lenders, community groups and UDD staff

Brochures, magnets, festival and event booths, word of mouth

Applicant Supplies Materials

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)

The applicant supplies to UDD all documentation requested by the lender including, but not limited to:

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.

UDD Forwards Materials

Homeowners select a

lender from participating

lenders

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

Please approve for the maximum amount

requested!

Lender Processes the Application

Lender determines applicant’s annual income, reviews credit history, and establishes the maximum loan amount -- up to $15,000

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

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

UDD Options for Denials:

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

UDD Will FAX the Lender:

Part IV – Certificate of Approval Subsidy Calculation Part II – List of Improvements

Part IV – Certificate

of Approval

Subsidy Example

$15,000 Loan Amount

15,000

120 125

6.5

120

170.32

Subsidy = $3,991.44

CPT PMT

+ RCL

1 =

CPT PV

PV

=

STO 1

I/Y

N

PMT

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.

The Lender:

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

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

Before

After

Before

After

Before

After

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

$

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

Participating Lenders