Slide #1 Annie Stevenson Housing Choice Voucher Homeownership Program © Copyright 2008 Nan McKay &...

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Annie Stevenson

Housing Choice Voucher

Homeownership Program

© Copyright 2008 Nan McKay & Associates

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Welcome to Lunch N Learn!

Upcoming topics for the occupancy series:• 8/1/08: Factors of Eligibility (PH and HCV)• 8/15/08: EIV• 9/4/08: PH Denials and Terminations• 9/5/08: HCV Reasonable Accommodation


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Welcome to Lunch N Learn!

Today’s topic: HCV Homeownership• Eligibility• Counseling & inspections• Financing• Family obligations• Resources


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Housing Choice Voucher Homeownership Program


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Voucher Homeownership Program

Basic concept -- Instead of using voucher subsidy to help family with rent, homeownership option allows first-time homeowner to use voucher subsidy to meet monthly homeownership expenses


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PHA Option

PHAs have the option to offer one or both forms of assistance• Monthly homeownership assistance payments;

or• Single downpayment assistance grant

Not funded


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PHA Option

PHAs may choose not to offer either form of assistance• However, PHAs must offer assistance if needed

as a reasonable accommodation Homeownership option is considered a special

housing type under Subpart M of Part 982


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Downpayment Assistance Grants

Final Rule issued 10/18/02• Effective date 11/18/02

A PHA may not offer downpayment assistance until HUD publishes a notice in the Federal Register (funding)• No $$ have been appropriated


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Homeownership Voucher Option

Family responsible for finding eligible property they wish to purchase

Homeownership assistance payments are provided to help the new homeowner with monthly homeownership expenses

PHA may make monthly payment directly to the family or to the lender


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Homeownership Voucher Subsidy

Calculate income as normal through total tenant payment (TTP)

Payment standard determines maximum subsidy in voucher program


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Homeownership Voucher Subsidy

PHA uses the same voucher program payment standard amounts for homeownership families• same subsidy standards• no separate “homeownership” payment

standard schedule


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Payment Standards

Payment standard for homeownership family is greater of:• payment standard at commencement of

homeownership assistance• payment standard at most recent reexamination

since commencement of homeownership assistance


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Homeownership Assistance Payments

The monthly homeownership assistance payment (HAP) is calculated as the lesser of:• Payment standard minus family total tenant

payment (TTP)• Family’s monthly homeownership expenses

minus family TTP


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Homeownership Expenses

• PITI & MIPPrincipal and; Interest on mortgage debtReal estate taxesHome insurance Mortgage insurance payment


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Principal and interest on mortgage debt for major repairs

Land lease payments If home is a co-op or condo, may include

co-op or condo operating charges or maintenance fees


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Utility allowance• PHA uses the same utility allowance

schedule that it uses for rental program


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2 additional allowances• PHA allowance for routine maintenance• PHA allowance for major repairs

Work in same fashion as utility allowance, set for program as a whole, not based on actual costs or condition of individual homes


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Routine Maintenance

PHA allowance for routine maintenance is for the annual maintenance of a home such as• Servicing the heating/AC systems• Checking for plumbing leaks, caulking• Walls, basements, attics• Cleaning gutters


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Major Repairs

PHA allowance is for major home repairs and replacements for “big ticket” items such as• Ranges, refrigerators• AC units• Roofs• Water heaters• Electrical


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Developing Allowances

Resources • American Society of Home Inspectors (ASHI)• Freddie Mac: www.freddiemac.com• Fannie Mae• Home maintenance checklist:

www.repair-home.com


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Developing Allowances

Also research what is available in your community, contact:• Non-profit organizations• Real estate professionals (brokers & agents)• Title companies• Home inspectors and builders


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PHA Allowances

Families are not required to actually escrow or put money aside for routine maintenance or major repairs


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PHA Allowances

Families are responsible for all homeownership expenses not covered by the HAP payment• If homeownership expenses exceed the

payment standard, family pays the difference out-of-pocket in addition to TTP


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Family Share

40% of adjusted monthly income limitation does not apply to homeownership families (law limits amount family may pay for rent)


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Family Eligibility

Program participant or applicantFirst time homeownership requirementsMinimum income requirementsEmployment requirementsMortgage defaultsAdditional requirements


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Family Eligibility

Family must be • Current voucher program participant or • Eligible for admission to the HCV program

PHA may not set aside program funding from special housing types or require applicant to use voucher for particular housing type


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Family Eligibility

Family must be • Current voucher program participant or • Eligible for admission to the HCV program

PHA may not •maintain separate waiting list, or•provide selection preference for applicants who agree to use voucher for homeownership


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Family Eligibility: First Time Homeowner Requirements

FIRST TIME HOMEOWNER• No family member has had ownership interest in a

residence in the last 3 years Except for single parent or displaced homemaker

who, while married, owned a home with spouse or resided in home owned by spouse

….or…..


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Family Eligibility: First-time Homeowner Requirements

Family must be:• COOPERATIVE MEMBER

Except for cooperative members who have already acquired shares, no family member has a present ownership interest in a residence…or…


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Family Eligibility: First-time Homeowner Requirements

FAMILY INCLUDES A PERSON WITH DISABILITIES• PHA determines use of homeownership option

is necessary as reasonable accommodation


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Family Eligibility: Minimum Income Requirements

The annual income of the adult family members who will will own the home can not be less than:• Disabled families

Monthly SSI x 12• Non-disabled families

Federal min. wage x 2000 hours ($11,700 as of 7/24/07)


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Welfare assistance may not be considered in determining whether a family meets the minimum income requirements• Except for elderly or disabled families

A PHA may establish a minimum income requirement higher than HUD’s for either or both types of family


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However, if a family meets HUD’s income requirement and not the PHA’s, they are considered to meet the income requirement if• Family has been pre-qualified or pre-approved for

financing;• Financing meets PHA requirements, and• Is sufficient to purchase housing that meets HQS


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Family Eligibility: Employment Requirements

Full time employment • Currently employed full-time (not less than an

average of 30 hours a week), and • Has been continuously employed for at least

one yearPHA may determine to what extent interruptions

are considered break in continuity


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Family Eligibility: Employment Requirements

Full time employment requirements are not applicable for elderly and disabled families


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Family Eligibility: Mortgage Defaults

Mortgage defaults• Family is not eligible if any family member

has previously received homeownership assistance and defaulted on mortgage


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Family Eligibility: Additional Requirements

PHA may also establish additional requirements for family eligibility• Example: FSS graduates• May not establish different eligibility

requirements for the employment requirement


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Pre-Assistance Homeownership Counseling


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Pre-Assistance Homeownership Counseling

Eligible family must attend and satisfactorily complete homeownership counseling program required by PHA

PHA staff and/or other entity may conduct• HUD-approved housing counseling agencies

provide counseling services at little or no charge


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Who Will Provide The Counseling

PHAs must make a determination of who will provide the counseling• PHA provided, the use of partners, both• Partnerships: who are they? Non-profit • Agreement in place for the cost• Will counseling take weeks, months• Individual counseling vs classes


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Pre-Assistance Counseling

Topics include:• Home maintenance• Budgeting and money management• Credit counseling and credit repair• How to negotiate the purchase price of a

home


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Topics include:• Financing aspects

obtaining financing and loan preapprovalstypes of financing, pros and cons of

different approaches


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Pre-Assistance Counseling Topics

Topics (continued):• How to find a home• Advantages of purchasing in area that does not

have high concentration of low-income families• Information on fair housing, fair housing lending and

local enforcement agencies


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Topics (cont)• Information about RESPA, state and Federal

truth-in-lending laws, how to avoid loans with oppressive terms and conditions

Pre-assistance counseling may be adapted for needs of individual family


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Finding An Eligible Home


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Finding a Home

PHA may establish time limits for a family to locate a home to purchase and to purchase a home

Family may choose eligible unit within PHA jurisdiction• May go outside jurisdiction only if receiving PHA is

administering homeownership program and accepting new families


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Eligible Units

Unit under construction or already existing at time the family enters into the contract of sale

One unit property or single dwelling unit in co-op or condo

• yes: townhouse• no: both units of a duplex


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Eligible Units

Purchase of a home (ie; manufactured home) where the family will not own the real property where the home is located is eligible, but only if• The home is located on a permanent

foundation, and• The family has the right to occupy the site for at

least 40 years


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PHA Owned Units

Interim Rule issued in the FR 10/28/02 Effective date 11/27/02

• Allows for a family to purchase PHA owned housing using homeownership assistance


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PHA Owned Units

The PHA must inform the family, both orally and in writing, they have freedom of choice in selecting a unit, and

The unit must be eligible housing, and …


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PHA Owned Units

The PHA must use an independent agency to• Perform HQS inspection• Review the independent inspection report• Review the contract of sale• Make the determination of the reasonableness

of the sales price and any PHA-provided financing requirements


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Disapproval of Seller PHA disapproval of seller

• PHA must not approve if informed (by HUD or otherwise) seller is debarred, suspended, or subject to limited denial of participation (see www.epls.gov)

• PHA may deny approval of a seller for any reason provided for disapproval of an owner in 982.306(c)


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Two Home Inspections

Housing quality standards inspection and independent professional home inspection

PHA conducts HQS inspection under voucher program• determines current condition is decent, safe,

and sanitary • no annual HQS inspection requirement


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Independent Professional Inspection

Unit must also be inspected by independent professional selected and hired by family• Assess adequacy and life-span of major

systems, appliances, and other structural components


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Independent Professional Inspection

Identify potential problems (e.g., need to replace aging heating system)

Requirement for inspection arranged by buyer and satisfactory to buyer is typical contingency clause in contracts of sale, consistent with real estate practice

PHA may disapprove unit on basis of report


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Contract of Sale

Family must provide copy of contract of sale to PHA• Contract of sale must:

specify price and terms of saleprovide for pre-purchase inspection

• buyer satisfaction, buyer not obligated to pay for repairs


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Contract of Sale

Family must provide copy of contract of sale to PHA• Contract of sale must:

Contain seller certification that seller is not debarred, suspended, or subject to limited denial of participation


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Financing


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Financing

Voucher funds may NOT be used to assist with financing costs (downpayment, closing costs, etc.)• This does not apply to downpayment

assistance grants


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Financing

Family ultimately responsible for securing own financing• PHA may develop partnerships with lenders

to assist family in obtaining financing, but may not require use of a certain lender


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FHA Underwriting Requirements

If purchase of home is financed with FHA mortgage insurance, financing is subject to FHA mortgage insurance requirements


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Financing

PHA may establish:• requirements concerning qualifications of

potential lenders• prohibitions on certain forms of financing

for example, balloon payment mortgages, ARMs


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Financing

PHA may establish:• requirements concerning terms of financing

minimum downpayment• requirements or restrictions on other debt

secured by home


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Financing

Affordability of purchase• PHA may disapprove proposed financing,

refinancing, or financing for improvements or repairs if PHA determines debt is unaffordable or lender or loan terms do not meet PHA requirements

All PHA financing or affordability requirements must be described in PHA administrative plan


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PHA Capacity

PHA demonstrates capacity through one of three options• Option 1: Establishes minimum downpayment

requirement3 percent of sale priceFamily contribution towards downpayment: at least 1

percent of sale price comes from family’s personal resources


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PHA Capacity Option 2: PHA requires the financing for purchase of a

home meets one of the following:• provided, insured, or guaranteed by state or Federal

government• complies with secondary mortgage market underwriting

requirements• complies with generally accepted private sector

underwriting standards


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PHA Capacity

Option 3:• PHA demonstrates in its Annual Plan that it

has capacity, or will acquire capacity, to successfully operate a homeownership program


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Continued Assistance

Occupancy of home• PHA may not continue homeownership

assistance after the month when family moves out

• Family or lender not required to refund to PHA any homeownership assistance for the month when the family moves out


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Family Obligations

Comply with the terms of mortgage Use and occupancy

family’s only residencereport changes in compositionno subletting or leasing


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Family Obligations

Upon death of a family member who holds title to the home, homeownership assistance may continue • Pending settlement of the decedent’s estate• So long as the home is solely occupied by

remaining family members


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Family Obligations

Comply with other family obligations under the voucher program

• Supply information concerning: • refinancing such debt, payment of debt• sale or transfer of any interest in home• homeownership expenses

• Provide notice of move-out• Provide notice of default


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Family Obligations

• Prohibition on ownership interest on second residence• During time family receives homeownership

assistance, no member may have any interest in any other residential property


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Family Obligations

Comply with any additional PHA requirements for continuation of homeownership assistance post-purchase counseling

Statement of homeowner obligations• written agreement signed by family to comply with

all family obligations under homeownership optionOn HUD’s voucher homeownership page


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Move with Continued Assistance

May move with continued voucher assistance (homeownership or rental)• PHA may not commence continued voucher

assistance for occupancy of new unit so long as any family member owns title or other interest in the prior home

• PHA may prohibit more than one move during any one year period


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Move to New Unit

For continuation of homeownership assistance• initial eligibility requirements apply again,

except: first-time homeownerpre-assistance counseling (PHA may require

additional counseling)


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Denial or Termination

Normal program requirements under 982.552 Mortgage default

PHA must terminate homeownership assistance

PHA may permit a family to continue participation with rental assistance


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Termination of Assistance

Homeownership assistance for a family automatically terminates 180 calendar days after the last payment made on behalf of the family


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FHA Insured Defaults

If a family defaults on an FHA insured mortgage, the PHA must deny permission for rental assistance if the family fails to demonstrate:• They have, or will convey, title to the home as

required by HUD; and• The family has moved, or will move within the

time required by HUD


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Time Limits


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Time Limits

Maximum term• 15 years if the initial mortgage has term of 20

years or longer• 10 years in all other cases• Time limit applies from initial purchase,

regardless of whether family moves to new unit


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Time Limits

The maximum term of assistance does not apply to elderly or disabled families• Elderly families: exception only applies if the

family qualified as an elderly family at the start of homeownership assistance

• Disabled families: exception applies if at any time, the family qualifies as a disabled family


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Time Limits

If at any time the family no longer qualifies as elderly or disabled• The max term applies retroactive to the date of

commencement of homeownership assistance• A family must be provided at least 6 mos. of

homeownership assistance once the max term applies


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No Recaptures

A PHA shall not impose or enforce any requirement for the recapture of homeownership assistance upon the sale or refinancing of a home


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Some HCV Regs Don’t Apply

CFR 982.641: Applicability of other requirements Not applicable: provisions concerning owners,

leases, HAP contracts, rents, or voucher terms HQS requirements are not applicable after

admission Still applicable: payment standards, utility

allowances, regular & interim reexams


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Homeownership Resources

HUD’s homeownership voucher page:• http://www.hud.gov/offices/pih/programs/hcv/h

omeownership/ Fannie Mae

• www.fanniemaefoundation.org


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Freddie Mac• www.freddiemac.com

Both Fannie Mae & Freddie Mac can assist with:• Identifying/collaborating with counseling agencies• Identify lending partners/underwriting guidelines• And more!


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Free training!• Link through HUD’s h’ownership page or:

http://www.nw.org/network/training/training.asp• Regular NRC training offers free tuition for PHAs• HUD conducts 1.5 day seminars with NRC and

may add additional sessions


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Upcoming HUD trainings (http://www.hud.gov/offices/pih/programs/hcv/homeownership/training.cfm):• Cincinnati 7/30 – 7/31• Martin, TN 8/19 – 8/20• Longview, WA 9/2 – 9/3


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HUD/NRC training• Focus on partnerships with nonprofits • Financing strategies

Subsidy layeringCreative strategies

• Input from PHAs with successful programsHow they achieve success


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NMA Lunch ‘n’ Learn Seminar

NEXT TOPIC…


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NMA Lunch ‘n’ Learn Seminar


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Upcoming Lunch ‘n’ Learns…

Factors of Eligibility Aug. 1, 2008 EIV Aug. 15, 2008 Reasonable Accommodation Aug 22,

2008 Denials and Terminations Sept. 4, 2008


Slide #1 Annie Stevenson Housing Choice Voucher Homeownership Program © Copyright 2008 Nan McKay &...

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