MSHDA s Homeownership Counseling Program. Sharon Evans Homeownership Division May 24, 2011

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1 MSHDA s Homeownership Counseling Program Sharon Evans Homeownership Division May 24, 2011

2 The Homeownership Counseling Program supports the Michigan State Housing Development Authority s (MSHDA) mortgage loan programs that increase homeownership opportunities for low to moderate income families in Michigan.

3 Homeownership Counseling Services are available statewide Over 70 Homeownership Counseling Agencies Agencies consist of: Non-Profit Agencies Governmental Agencies Faith-Based Agencies Currently 238 Certified Counselors Services are free to eligible clients

4 National Industry Standards MSHDA Endorses Requires agency adoption Trusted agencies/advisors Ensure all clients receive high quality education and counseling Ensure counselors are providing professional services Services are consistent statewide Act on behalf of client observing their best interest

5 Counselor Connection Newsletter Monthly Issues on Program and Policies Required to pass MSHDA s New Counselor Training Attend annual MSHDA and NeighborWorks Training

6 Borrowers who received 1:1 Counseling experience a 34% reduction in delinquency rates. Homeownership gives families a financial stake in their home and community Homeownership builds stronger and safer communities Public benefits such as increased tax revenues

7 Homebuyer Education Home Ownership: Is it for everyone? Understanding Mortgage Programs and Processes Financial Management Counseling Household Budgeting Debt Reduction and Saving Pre-Purchase Credit Repair Education Repairing Credit and Improving Credit Scores Pre-Purchase Home Inspection Funds Funds for Property Inspections Home Maintenance Education Plumbing, Furnace and Electrical Repairs Energy Conservation Foreclosure Counseling Michigan s Foreclosure Process Understanding Loan Modifications and Available Options Transitioning out-of-the home

8 Eligibility for Homeownership Counseling Program: Homebuyer Education: No eligibility requirements Lender Referral: Lender Referral Form MSHDA Reservation Number All other Counseling Services are based on the DPA Income Limit Guidelines by: County Household Size, and Include a minor child Mortgage readiness within 12 months Eligibility for Foreclosure Counseling No eligibility requirements

9 Benefits of a MSHDA Loan Competitive interest rates Down Payment Assistance Several products available- FHA, VA, RD and Conventional Helps low-moderate income customers become homeowners

10 FIXED RATE LOAN: 30 years WITHOUT DPA = 4.750% 30 years WITH DPA = 5.125%

11 Buyer must occupy home as principal residence Co-signers/non-occupying co-borrowers are not allowed MSHDA Loan Products are based on: Sales Price Limit up to$224,500 Combined household income of $62,800 - $108,000 depends on family size and location All adults in household must apply, credit qualify and sign closing documents including note and mortgage (unless full-time student 12 credit hour minimum)

12 Down-Payment Assistance Borrower cash investment required 1% of sales price, may come from approved gift source Cash asset restriction - $5,000 (includes equity in current home) $7,500 maximum (formula used to determine actual DPA amount) May be used for down payment, closing costs, prepaid/escrow items but not for repairs or to buy down principal

13 Available with FHA and RD Loans Soft second 0% interest with no monthly payments Homebuyer Education required DPA loan due on sale, transfer, refinance, or repayment of first MSHDA mortgage

14 Inspection Funds Eligibility Criteria -MSHDA loan in process Payout of up to $750 used to cover homebuyer costs at closing Counselors partner with lenders and home inspection service providers

15 Home Maintenance Teaches homebuyer/owner how to perform basic repairs and routine maintenance: Plumbing Electrical and Furnace Landscaping Wall repair and Painting Structural Energy Efficiency

16 IDA Matched Savings Account Income under 200 percent poverty level Complete Financial Management Course Save money over a period of between six to thirty-six months Savings of up to $1,000 is matched: Ratio of 3:1 for a home purchase Ratio of 2:1 for post-secondary education/job training Ratio of 2:1 to start or expand a small business

17 Foreclosure Services 1 in 36 homeowners are projected to experience foreclosure as a result of their high-cost loan 30 % of all loans made in were subprime 43% of all homeowners will likely feel the ripple effects of foreclosures from subprime loans

18 Benefits of working with a MSHDA Foreclosure Counselor? Keep up with industry changes and program developments Senate Bill (SB) 90 day HAMP Supplemental Directives Task Force: list serve Helping Michigan s Hardest-Hit Homeowners Unemployment Rescue Funds Principle Reduction Identify community partners and stakeholders Identify community referrals Services are free

19 Online intake portal: Michigan Homeowner Assistance Nonprofit Housing Corporation $498.6 million through the Emergency Economic Stabilization Act (EESA) List of participating servicers available on MSHDA web-site

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21 Referrals HUD DHS/Community Health No Worker Left Behind Utility Assistance Programs Emergency Service Funds Faith Based Organizations Shelters Food Banks/Women Infant and Children (WIC) Programs Treasury Offices Salvation Army/Goodwill

22 Website: Buying Your Home Mortgage Credit Certificate Down-payment Assistance Homeownership Counseling Foreclosure Prevention/Counseling Individual Development Accounts Toll free number:

23 Outcomes Equipping buyers to make solid decisions Preparing buyers for the mortgage process Assisting with DPA and Inspection Funds Preventing buyers from predatory lending scams Preventing future foreclosure

24 Specialist Contact Information Sean Chapman, Wayne County or Sharon Evans, Central Michigan and Upper Peninsula or Katherine Grant, Eastern Michigan or Karen Lawson, Western Michigan or