2014 Equity Builder Program. March 2014

Transcription

1 2014 Equity Builder Program March 2014

2 Next Steps: Enrolling Homebuyers/Households

3 Equity Builder Program Agenda Topics to be Covered Equity Builder Program Overview Member Eligibility Requirements Household Eligibility Requirements Eligible/Ineligible Uses Establishing an EBP Work Flow Steps One Identifying Eligible Households Steps Two Documents Required Prior to Time of Enrollment Step Three Income Documents Required Income Calculation Reminders Online Income Calculation Process Step Four Enrollment Submission Step Five Disbursement Training Dates 2

4 Equity Builder Program The EBP: Is a regulated grant program offered annually by the Federal Home Loan Bank of Boston as a member benefit Is offered to members through a non competitive application process Members who have submitted an application, been approved and completed training will have access to the EBP pool of funds for 12 calendar months, or until all EBP funds are committed, whichever is first. The EBP offers: Downpayment, closing cost, or rehabilitation assistance to eligible households at or below 80 percent of the area median income for the location of the subject property A homebuyer the opportunity to bridge the gap between mortgage and purchase price The potential for lower debt ratios Homebuyers a greater equity position in the subject property with lower loan to value ratios 3

5 Equity Builder Program Grant Funds Member Enrollment Cap: Each approved member will have access up to a maximum of $150,000 Funds are not guaranteed to any one member Funds are available on a first come, first served, homebuyer byhomebuyer basis First one third of the enrollments must be to first time homebuyers (as defined by the FHLB Boston) Individual Household Cap: Each household can receive up to a maximum of $15,000 Approved enrollments are homebuyer specific Property location can be updated during the enrollment process, but in all instances must be prior to closing 4

6 Equity Builder Program First Time Homebuyer Definition 42 U.S.C (14): Individual and spouse who have not owned a home during the three year period prior to purchase, with exceptions for: Displaced homemakers; Single parents; Owned a dwelling unit that was not permanently affixed to a permanent foundation; or Owned a dwelling unit not in compliance with codes and which cannot be brought into compliance for less than the cost of constructing a permanent residence. 5

7 Equity Builder Program 2014 Pool For 2014, $3,634,346 in EBP funds have been allocated for the program On March 24, 75 percent of the EBP funds, $2,725,759, will be made available to all approved members On August 1, the remaining 25 percent, $908,587, will be placed into the pool and made available to all approved members If there are any funds remaining from the first funding period they will roll into the August 1 funding period Members approved in the first application/funding period do not need to reapply for the second application/funding period Members will receive an with remaining subsidy available on at least a weekly basis 6

8 Equity Builder Program Member Eligibility Reminders Member: Must be approved and complete enrollment and disbursement training Originates an eligible first mortgage loan (as identified in the application) Must provide a concession/incentive to each EBP household at the time of closing (as identified in the application) NEW 2014! Members will be able to request an increase/decrease in EBP subsidy for enrolled homebuyers, online Increases are based on funds availability, up to the maximum household cap After clicking on Change EBP Amount you will be brought to this screen for completion. 7

9 Equity Builder Program Household Eligibility Reminders Household: The EBP is for owner occupied purchase transactions only Eligible properties: one to four family units, condos, multifamily and manufactured homes (REO and foreclosed properties are eligible) EBP has a housing debt threshold of 34 percent exceptions will be reviewed on a case by case basis Participating households must complete pre and post purchase homebuyer counseling/education within 24 months of enrollment and prior to closing Maximum cash back to the homebuyer at closing is $250 NEW 2014! Homebuyer are required to contribute a minimum of $500 in downpayment funds Earnest money downpayment or cash into the transaction at closing on line 303 of the HUD 1 8

10 Equity Builder Program Eligible/Ineligible Uses Eligible Uses: Downpayment assistance Customary closing costs NEW 2014! Homebuyer counseling costs not covered by another funding source to a maximum of $500 Rehabilitation costs associated with acquisition (funds released only after 100 percent of the work has been completed) Ineligible Uses: Reimbursement for previously paid earnest money downpayments Co mingling of other AHP subsidy provided by the Federal Home Loan Bank of Boston Funding monthly housing payment reserve requirements or prepayment of life insurance premiums 9

11 Equity Builder Program Establishing an EBP Work Flow The two contact people identified at the time of application for the EBP will: Receive all s and correspondence associated with enrollments and disbursements Receive daily/weekly EBP subsidy updates Remain a point of contact for the homebuyer throughout the five year retention period Establish a work flow and train appropriate staff personnel such as: Loan Originators Underwriters/Processors Closers/Post closers 10

12 Equity Builder Program Establishing an EBP Work Flow Homebuyer Selected Executed P & S Agreement Online Income Calculation Enrollment Close on Purchase FHLB reviews and approves Request Disbursement/Reimbursement FHLB reviews, approves and disburses 11

13 Equity Builder Program Step One Identifying Eligible Households Interview and identify homebuyers that potentially meet the program and income guidelines for the EBP: A household member is defined as an individual who expects to live in the property at the time of closing and going forward Total household income must be verified and cannot exceed 80 percent of the area median income based on the current HUD Income guidelines at All members of the household, 18 years or older, must include their income in the total household income calculation to be eligible Income received by an adult on behalf of a minor child must be included (social security, disability, etc.) Remember: The EBP is an income based eligibility program. 12

14 Equity Builder Program Step Two Documents Required Prior to Time of Enrollment Purchase and Sale Agreement Executed by all parties to the transaction with a valid closing date Member must identify and provide an explanation for all related party transactions Homebuyer Information, Household Members and Income Worksheet and Authorization to Release/Certification of Information Updated 2014! The 2014 version is on the website and must be used with all enrollments at (under Forms and Applications) The entire document (6 pages) must be uploaded with the enrollment Page one, two, three, and four must evidence the homebuyer s initials Page five and six must be signed and dated by identified parties The total number of household members must be clearly identified and should correspond back to the most recent filed tax return 13

15 Equity Builder Program Step Two Documents Required Prior to Time of Enrollment This form must be completed and signed. This is a required uploaded document for ) Homebuyers must complete and verify all household members at time of enrollment 2.) Loan Originator must verify the income data provided 3.) EBP contact must review and sign 14

16 Equity Builder Program Step Two Documents Required Prior to Time of Enrollment Income documents must be provided, uploaded with the enrollment, and include: All working adult household members, age 18 years or older Documents from all sources of income, as defined in the Income Calculation Guidelines provided by the FHLB of Boston located on our website at NEW 2014! Benefits received by an adult for a minor child A Certification of Zero Income from non working adult household members who do not receive any income from any source An explanation from the member for any unusual income or household situation(s) Blackout account numbers, social security numbers and other personal account information 15

17 Equity Builder Program Step Three Income Documents Required at Time of Enrollment Most recent filed tax return (signed) or IRS transcript(s) covering all adult household members 16

18 Equity Builder Program Step Three Income Documents Required for Wage Earners Paystubs: Employer s name Employee s name and address Pay date = check date 17

19 Equity Builder Program Step Three Income Documents Required for Wage Earners Paystubs Covering one month period and dated within 45 days of enrollment: a. Employer name b. Employee name c. Pay cycle Period ending date d. Check date/pay date e. Year to date earnings f. Standard payroll deductions 18

20 Equity Builder Program Step Three Income Calculation for Wage Earners Paystub Income Calculation example: Prospective income equals year to date gross income divided by the number of actual year to date pay periods, based on the check date, multiplied by number of pay periods in a calendar year. Current Year Check Date Actual Pay Checks/Periods YTD Earnings /20/ weekly $19, Prospective income: $19,857.77/29 = $ X 52 = $35, Methods to Determining the Number of Actual Pay Checks/Periods: Method Used by the System Determine length of pay period (weekly, biweekly, etc.). Count actual calendar days from January 1 to check date: 01/01 to 07/20 = 202 days; divide days by pay period: 202/7 = 28.86; always round up to whole number: 29 pay periods. Manual Method Check date is a Friday. Based on the 2012 calendar, count back the number of Fridays including the check date, for 29 pay checks. EXCEPTION: If the pay check date is before the period ending date, use the period ending date for the calculation. 19

21 Equity Builder Program Step Three Income Documents Required for Wage Earners Verification of Employment Fannie Mae Form

22 Equity Builder Program Step Three Income Documents Required for Wage Earners Verification of Employment Fannie Mae Form percent completed, signed, dated within 45 days of enrollment, and must include: a. Box 9 Employee s date of employment b. Box 12A Current gross pay c. Box 12B Fully completed Gross earnings d. Box Completed as it applies not completed all bonus/over time included e. Box 20 Remarks from the employer, i.e. breaks in employment (to include seasonal or unemployment dates past, present, or future) f. Box 26 Signature of employer g. Box 28 Date completed 21

23 Equity Builder Program Step Three Income Calculation for Wage Earners Verification of Employment Fannie Mae form 1005 Income Calculation Examples: If the wage earner works 40 hours per week and the hourly wage rate is $18.00/hour with no O/T or bonus: ($18.00 X 40 Hours) X 52 weeks = $37,440 If the wage earner works 40 hours per week and the hourly wage rate is expected to increase 2 percent from $18.00/hour to $18.36/hour 35 weeks into the future, the base wage income would be calculated For example: ($18.00 X 40 hours X 35 weeks) + ($18.36 X 40 hours X 17 weeks) = $37, Overtime and Bonus income is calculated as specified in the Income Calculation Guidelines found on the Bank s website at 22

24 Equity Builder Program Step Three Income Documents Required for Self Employed Self Employment Documents: Schedule C, 1099, S Corporation, Partnership or C Corporation Must include all schedules and K 1 s Prior to June 30 (of the current calendar year) Three years most recent filed tax returns Signed July 1 and after (of the current calendar year) Two years most recent filed tax returns Signed Year to date profit and loss statement, signed by the household member, current within 45 days of enrollment 23

25 Equity Builder Program Step Three Income Documents Required for Other Work Number verifications Dated within 45 days of enrollment Interest/Dividend Income Statement within 45 days of enrollment Child Support/Alimony Divorce decree/state or local court orders and evidence of receipt State or Local Housing Vouchers Retirement/Social Security Most recent award letters and evidence of receipt Disability/Unemployment Most recent award letters and evidence of receipt 24

26 Equity Builder Program Income Calculation Reminders EBP income is the prospective annual (next 12 months) income from all sources of income disclosed by the household, as defined in the Income Calculation Guidelines available on our website at The total income of the household for all residing adult members cannot exceed 80 percent of the are median income (AMI) AMI is defined by HUD and adjusted for household size, based on the location of the property being purchased HUD income limits are not negotiable; updated annually by HUD Income eligibility is approved by the Federal Home Loan Bank of Boston at enrollment and with any change to the property Income calculations under the EBP will most likely vary from secondary market income requirements Online automated system is designed to provide you with a standard way of determining income eligibility and must be used 25

27 Equity Builder Program - Step Four Online Calculation Process Starting the Income Calculation Process 1. Log into the system: Users can request an account or reset their passwords. 26

28 Equity Builder Program Step Four Online Calculation Process 2. Click on Manage My Approved Apps/Income Calculations/Enrollments: 27

29 Equity Builder Program Step Four Online Calculation Process 3. Add you new household information and start the income calculation: The subsidy pool balance and member specific details can be viewed here. 28

30 Equity Builder Program Step Four Online Calculation Process 4. Enter information pertaining to the property being purchased: 29

31 Equity Builder Program Step Four Online Calculation Process 5. Enter information about each household member and their income: 30

32 Equity Builder Program Step Four Online Calculation Process 6. Don t forget to click Add Household Member : The household member must show up in the table that is being created 31

33 Equity Builder Program Step Four Online Calculation Process 7. Once you have entered all household members, you must upload the Homebuyer Information, Household Members and Income Worksheet, and the Authorization to Release: Homebuyer Information, Household Members and Income Worksheet and Authorization to Release Remember: Review to make sure that there are all three signatures NEW 2014! on the document! 32

34 Equity Builder Program Step Four Online Calculation Process 8. Enter Employment information and click Enter household member s employer/type of documentation : 33

35 Equity Builder Program Step Four Online Calculation Process 9. Use the document type selected to input income information (paystubs): NEW 2014! Income Calculation pay periods, are calculated based on the check date except when the check date is before the period ending date. Always round up; i.e pay periods = 10 34

36 Equity Builder Program Step Four Online Calculation Process 10. When you are finished adding income information, you should have a table with the data in it: 35

37 Equity Builder Program Step Four Online Calculation Process 11. Use the document type selected to input income information (VOE): 36

38 Equity Builder Program Step Four Online Calculation Process 12. Use the document type selected to input income information (SSI): 37

39 Equity Builder Program Step Four Online Calculation Process 13. Review uploaded documents and attached any additional documents here: 38

40 Equity Builder Program Step 4 Online Calculation Process 14. You will be able to review the system s calculation of the income and data you have entered: 39

41 Equity Builder Program Step 4 Online Calculation Process 15. If there is anything missing, it will show up on the right under the appropriate section: 40

42 Equity Builder Program Step 4 Online Calculation - Validate and Submit 16. Validate and submit the Income calculation: 41

43 Equity Builder Program - Step Four Online Income Submission 17. Member certification for income calculation: 42

44 Equity Builder Program Step Four Online Income Submission 18. Thank You! You can begin the enrollment process here. 43

45 Equity Builder Program Reminders Reserving EBP funds for income eligible homebuyers requires: 1.) The completion of the online Income Calculation, 2.) Uploading of required documents, and 3.) Enrollment Submission Enrollment can only be completed after the income data is entered and all documentation is uploaded! Please remember to black out all social security numbers and/or personal account information from documents. 44

46 Equity Builder Program - Step Five Enrollment Submission Member must manage and update their EBP enrollment pipeline Enrollments must be submitted at least 10 business days prior to the closing transaction NEW 2014! Upon submission of the enrollment, the EBP funds will be reserved for that specific household If a homebuyer is denied a mortgage loan or requests to withdraw their loan application, the expectation is that the member will withdraw the enrollment as soon as notification is received Once the FHLB Boston has completed their two step approval process, and the enrollment has been approved, the member will be notified by Each enrollment approval is valid for 90 days Extensions may be requested and are granted at the sole discretion of the FHLB Boston 45

47 Equity Builder Program Step Five Enrollment Submission 1. Log in to the system and Click on the Manage My Approved Apps/Income Calculations/Enrollment link: 46

48 Equity Builder Program Step Five Enrollment Submission 2. Click Create/View Enrollment: 47

49 Equity Builder Program Step Five Enrollment Submission 3. Use the links to the left to complete the homebuyer/household enrollment process: 48

50 Equity Builder Program Step Five Enrollment Submission 4. Enter required data and upload the P & S agreement: New 2014! There is a drop down list for types of transaction 49

51 Equity Builder Program Step Five Enrollment Submission 5. Enter mortgage information: Remember: Maximum 2/6 caps for all ARM products 50

52 Equity Builder Program Step Five Enrollment Submission 6. Attach documents: 51

53 Equity Builder Program Step Five Enrollment Submission 7. Missing items will display on the right under the appropriate section: 52

54 Equity Builder Program Step Five Enrollment Submission 8. Validate and submit: 53

55 Equity Builder Program Step Five Enrollment Submission 9. Member certification for enrollment: 54

56 Equity Builder Program Disbursement Training All approved members must attend EBP Disbursement training prior to requesting reimbursement of EBP funds Upcoming dates: Final Steps: Requesting the Disbursement April 1, 2014 and April 10, 2014 Registration is now open and can be accessed through the Bank s website at: Members should determine who is best suited to attend: Underwriters Closers and Post closing 55

57 Equity Builder Program Contact Information Primary EBP Contact: Sue Younis, Equity Builder Program Manager, Other HCI Staff: Mary Ellen Jutras, Vice President/Deputy Director, Vita Shklovsky, Compliance Analyst, Paulette Vass, Community Development Advances Manager, Kenneth Willis, First Vice President/Director,

58 Equity Builder Program Contact Information Theo Noell, Manager of Programs and Outreach, Fairfield, Hartford, Litchfield, and New Haven counties in western Connecticut Tobi Goldberg, Senior Community Investment Manager, Maine and Massachusetts Essex county Kathy Naczas, Senior Community Investment Manager, New Hampshire, Vermont, and Massachusetts Berkshire, Franklin, Hampden, Hampshire, and Worcester counties Christine Rogers, Senior Community Investment Manager, Eastern Connecticut (Middlesex, New London, Tolland, and Windham counties), eastern and southeastern Massachusetts (Barnstable, Bristol, Dukes, Middlesex, Nantucket, Norfolk, Plymouth, and Suffolk counties), and Rhode Island. 57

59 Equity Builder Program Thank you We look forward to working with you! 58