ANNUAL REPORT: One Month to the Deadline

CAN YOU PASS THE TEST?
If you have ever created annual reports before, you know that the report is connected to the SHIP tracking spreadsheet your jurisdiction maintains for each SHIP distribution. When they are fully updated, these spreadsheets contain the data you need to complete the annual reports. But where exactly is the spreadsheet data you need for Annual Report Form 1, for Form 2 and for the rest of the report? The answers are illustrated in the following ‘Cheat Sheets’. The Florida Housing Coalition has created a sample report and sample tracking spreadsheet that show how these two documents match up.

As you assemble the data needed to complete your jurisdiction’s annual reports, the documents “Cheat Sheet Annual Report” and “Cheat Sheet Trak SHIP” may help. “Cheat Sheet Trak SHIP” shows where data required on the reports is located on the SHIP tracking spreadsheet designed by the Florida Housing Coalition. The red letters on this document correspond to the red numbers on “Cheat Sheet Annual Report”.

Can you pass the test? Looking at the two cheat sheets, match the proper letters to the numbers. Check your accuracy using “Cheat Sheet KEY”.

Download these documents from the following links:
· “Cheat Sheet Trak SHIP” http://content.screencast.com/users/FL-Coalition/folders/Default/media/1182cc35-ad91-40d5-b354-6aba168fc128/CHEAT%20SHEET%20SHIP%20Tracking%202009.xls?downloadOnly=true
· “Cheat Sheet Annual Report” http://content.screencast.com/users/FL-Coalition/folders/Default/media/7337b938-b3e5-4ae9-a886-ea010862ad94/CHEAT%20Sheet%20Annual%20Report.pdf?downloadOnly=true
· “Cheat Sheet KEY” http://content.screencast.com/users/FL-Coalition/folders/Default/media/fb7cb38c-76cf-4a28-b025-3996b2a58c47/Cheat%20Sheet%20KEY.doc?downloadOnly=true


DEADLINE EXTENSIONS
As you update your SHIP tracking spreadsheets, you may discover that your jurisdiction has not yet expended all the funds in the 06/07 close out distribution. Since SHIP funds must be expended within three years after they are received, how should you proceed?

First, recognize that it is common to have a small amount of unspent SHIP funds from a close out distribution; this is not a violation of the three year expenditure deadline. Whether the amount is $300 or $3000, this small unencumbered amount is insufficient to fully assist the next recipient for any of your strategies. In such a case, you may simply “carry forward” these remaining dollars. The new Web Report will identify these unencumbered funds as the carry forward amount and will automatically add this amount as the carry forward revenue on the 07/08 annual report.

However, consider the case of a jurisdiction that has tens or hundreds of thousands of 06/07 SHIP dollars left to expend. Perhaps the remaining funds are encumbered for projects that are not yet completed and occupied by eligible households. As soon as you discover that you have missed the expenditure deadline, you should request an expenditure deadline extension from Florida Housing. This request must be done in writing. Direct your correspondence to SHIP staff member Terry Auringer.

Your request should include:
The exact amount of funds still encumbered and/or unencumbered, and the number of months for which an extension is requested.
A brief explanation of why these funds have not been expended within the three year deadline. Was there, for example, a lack of contractors or materials, or is the jurisdiction still working to achieve some set-aside compliance?
Outline your plan to expend funds quickly, along with a timeline and estimate of when the funds will be fully expended. Indicate if changes have been made to SHIP strategies to address the delays. If a strategy has not been working, have you redesigned it, replaced it, or reallocated funds to a strategy known to be successful?

You should notify Florida Housing of your situation even if you anticipate that remaining 06/07 encumbered funds will be expended soon and before September 15th. The fact remains that funds were not expended by the June 30th deadline, so Florida Housing should be notified.


START YOUR REPORTS NOW
A handful of communities may receive extensions for expending their 06/07 funds, but they will still be required to submit a set of annual reports on September 15th. Every jurisdiction must submit their reports by this date, and there is no extension for submitting them after September 15th. Start now to ensure their timely completion. Many administrators find that these reports require more of their attention than originally expected.

The Coalition fields questions on a myriad of report-related topics. This year, the Coalition is available on Tuesdays and Thursdays to provide this assistance through its technical assistance line: 800 677-4548. In addition, a full and updated collection of frequently asked questions about annual reports is available at http://faqannualreports.blogspot.com/.

COUNTDOWN TO THE ANNUAL REPORT

UPDATED 08/09 DISTRIBUTIONS
The Florida Housing Finance Corporation recently announced one more distribution of funds (4th quarter payment #4) for the 2008-2009 SHIP fiscal year. Since this is the final 08/09 distribution to local governments, Florida Housing has now updated Form 1 of the Web Annual Report to show each jurisdiction’s total 08/09 distribution in the revenue section. Florida Housing has also posted on the SHIP section of their website under ‘SHIP Collections and Disbursements’ a spreadsheet that lists each distribution over the year and each local government’s total.


SAVE AND PRINT A DRAFT
Even before SHIP administrators have completed all three of their reports, they may need to save or print a copy of the data they have entered. Last month, Florida Housing added a feature on the ‘Review’ tab to ‘click here for a printer-friendly (PDF) copy of this annual report’. The upper right corner of each form also contains this feature, in case you only want to print or save the data from one form. The feature requires users to have Adobe Reader version 8 or above on their computer in order to view or save a report PDF. Fortunately, this product is available for download from the Adobe site for free: http://get.adobe.com/reader/. Once all three reports are completed, this feature allows you to save your reports, a necessity in order to make the reports available for public inspection and comment.


CONGRATULATIONS TO THOSE WHO ARE DONE!
While SHIP jurisdictions have historically started working on their annual reports at the beginning of August, this year several communities are already approaching completion of their reports, including :
Dixie County
Flagler County
Hamilton County
Hardee County
Holmes County
Santa Rosa County
Seminole County
Once a jurisdiction completes and submits its annual reports, its chief elected official must review and sign two certification forms (available for download right on the web report) to mail to Florida Housing. As the SHIP Rule notes: “SHIP forms AR/02-1(approving) & the AR/02-1 Regulatory Certification must be used. The original certifications must be mailed to the corporation within three working days of the report being electronically sent.”


START YOUR REPORTS NOW
All reports must be submitted by September 15th, so start now to ensure their timely completion. Many administrators find that these reports require more of their attention than originally expected. Furthermore, the online annual report is a new system and the reporting process may be slower than usual as you become familiar with it.

Each year when the September 15th SHIP Annual Report deadline approaches, the Coalition fields questions on a myriad of report-related topics. This year, the Coalition is available on Tuesdays and Thursdays to provide this assistance through its technical assistance line: 800 677-4548. In addition, a full and updated collection of frequently asked questions about annual reports is available at http://faqannualreports.blogspot.com/.

MORTGAGEE LETTER 2009-15 Using First-Time Homebuyer Tax Credits

The full text of Mortgagee Letter 2009-15 is below. This is the revised letter that was originally issued on May 11, 2009, then promptly withdrawn. The letter outlines the conditions under which FHA will insure a mortgage when the $8,000 tax credit is monetized. We will publish more information here as it becomes available.

To view the document in word format, click here. All mortgagee letters going back to 1976 are available at the HUD Web site.

May 29, 2009

MORTGAGEE LETTER 2009-15

TO: ALL APPROVED MORTGAGEES

SUBJECT: Using First-Time Homebuyer Tax Credits

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers. FHA supports this important initiative to promote homeownership. This mortgagee letter provides:

· Basic information on the first-time homebuyer credit obtained from the Internal Revenue Service (IRS) website. Complete information on how the first time homebuyer tax credit works, including the eligibility requirements for the tax credit, the amount of the tax credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may claim the tax credit is available on the IRS website .

· Guidance on how FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local government agencies or instrumentalities may assist homebuyers that are eligible for the tax credit.

I. About the First-Time Homebuyer Tax Credit

Please check the IRS website to ensure you have up-to-date information. A brief overview of the tax credit from the IRS website and a copy of IRS Form 5405 (including instructions) are attached for reference.

Pursuant to 31 U.S.C. 3727 and 26 U.S.C. 6402, a refund of the first-time homebuyer credit will be made by the IRS only to the taxpayer, not to a third party. In other words, any refund issued in response to a claim for this credit cannot be assigned by a taxpayer to a third party.

II. FHA Tax Credit Guidance

Secondary Financing

Consistent with existing FHA policy, FHA will permit entities covered by Section 528 of the National Housing Act to use the current authority to offer tax credit advances with second liens in a manner consistent with the requirements in 12 U.S.C. 1709(b)(9). Eligible government agencies and instrumentalities of government are described in handbook HUD-4155.1 5.C3 and 5.C4.

Conditions:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.
• The second lien may not exceed the total amount needed for the down payment, closing costs, and prepaid expenses.
• Secondary financing may be “soft” (silent) or require a monthly repayment.
• If payments are required, they must be included within the qualifying ratios and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
• If the tax credit advance loan has a short term for repayment, it must also provide that if the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second.
• The secondary financing may not require a balloon payment before ten years.

Purchase of Tax Credit

FHA-approved mortgagees and FHA-approved nonprofit organizations as well as Federal, state, and local governmental agencies and instrumentalities thereof may purchase the tax credit anticipated by the homebuyer.

Conditions:

• The proceeds of the sale of the tax credit may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405;

• The borrower must submit a signed certification that the tax credit is not subject to offset due to other indebtedness.
• A copy of the borrower’s tax refund and/or the IRS 5405 must be collected and retained in the FHA case binder.
• Any costs attendant to the purchase of the tax credit are to be nominal and discounting the anticipated credit to cover the costs and expenses of the transaction must be reasonable and disclosed to the homebuyer. In FHA’s view, fees and costs that total more than 2.5% of the anticipated credit are considered excessive. (Example: $6000 to be refunded, with all fees and costs discounted, borrower should receive not less than $5850.00 for sale of tax credit.)
• Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer’s downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction (or by any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity). Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.

Due Diligence

FHA expects that entities purchasing tax credit assets will employ appropriate due diligence measures including, but not limited to:

· Require the homebuyer to draft and provide the IRS form 5405 “First-Time Homebuyer Credit.”

· Contact the borrower’s employer and review pay stubs to confirm there are no outstanding garnishments.

· Review the homebuyer’s credit report to ensure there are no unpaid student loans, or other obligations that could be offset against the credit.

· Validate that all of the eligibility requirements for the tax credit are fulfilled

· Review previous tax returns and IRS tax assessment letters, if any, to determine that the borrower does not have unsettled obligations to the IRS

III. Monitoring

In order to track the tax credit monetization activities, FHA will require FHA-approved mortgagees to input into FHA Connection the following data:

• Name and EIN of the party who purchased the tax credit,
• The amount of the anticipated credit, and
• The amount the homebuyer paid for the monetization services.

The lender must also collect and maintain in the FHA case file the documentation that validates all of the tax credit monetization data submitted via FHA Connection.

FHA will monitor the purchase of tax credit transactions closely. Charging of excessive fees or costs in the purchase of the tax credit or increasing other fees or charges in the transaction without FHA approval may result in referral to the Mortgagee Review Board, and particularly with respect to entities that are not FHA-approved mortgagees, referral to the Federal Trade Commission, or referral to the appropriate State Attorney General office, as may be applicable.

If you have any questions regarding this mortgagee letter, please call FHA’s Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

Brian D. Montgomery

Assistant Secretary for Housing-

Federal Housing Commissioner

Homebuyer Education Training

At the Coalition's Homebuyer Education Workshop in Tampa on February 19th, the staff was joined by presenter Carrie Vitale from the Tampa Bay Community Development Corporation. Carrie shared from her experiences teaching homebuyer education seminars. The following videos are from her presentation:

Become a Better Educator
* Visit other classes
* Build Partnerships
* Keep current on housing guidelines
* Tips about Public Speaking




Tips to Help You E-D-U-C-A-T-E
E- EIGHT is great
D- DON’T advertise it as a class
U- USE unbiased presenters
C- COMPLETE the workshop prior to closing
A- ALL buyers should attend the workshop
T- TAUGHT by a HUD-approved agency
E- ENTERTAIN, including an example of a Role Play

Sadowski Workforce Housing Coalition Asks the Governor to Veto $190 million Sweep from the Housing Trust Funds

The Sadowski Workforce Housing Coalition urged Governor Charlie Crist to veto Section 47 of Senate Bill 2-A, the section that sweeps $190 million from the Housing Trust Funds—money that is desperately needed to jump start Florida’s economy and house our working families. For the complete text of the letter sent to the Governor click on the image below.

Housing Strategy Check-Up

If your Local Housing Assistance Plan has had the same strategies for some time, give your Plan a Check-Up. Consider the three topic areas below as you review your current strategies. These subjects were discussed at the Coalition's "SHIP Program Administration" workshop in Miami on November 5, 2008. The powerpoint slides for this section of the workshop are available at this link: www.flhousing.org/uploadedcontentfiles/SHIPstrategy.ppt

Universal Design for New Construction
*Design Principles to incorporate into SHIP Strategies
*Examples of Accessible Features



Energy Efficiency
*Energy Education for SHIP recipients
*Features for New Construction



Combining Strategies
*How many strategies do other communities include in their plans?
*When are there too many strategies?



aBonus Clip: Universal Design Song

Fannie Mae ditching declining-market policy

Fannie Mae is scrapping a "declining markets" policy that required loan underwriters to boost minimum down-payment requirements by 5 percent in areas where home prices are falling or difficult to determine.
Beginning in June, Fannie Mae will instead require 3 percent down payments for conventional, conforming mortgages processed through its Desktop Underwriter automated underwriting system, and 5 percent minimum down payments for loans processed manually. Larger down payments may be required depending on occupancy, property and transaction types.
The new single national down-payment policy will retire a controversial declining-market policy announced in December. The policy, implemented Jan. 15, boosted the minimum down payment required by 5 percent when Desktop Underwriter flagged a property as being located in an area of declining home prices or where it was difficult to assess home values. The policy also applied if an appraiser determined a property was in a declining market.
In an April 11 letter, the National Association of Realtors complained to Fannie Mae that "entire metropolitan statistical areas (MSAs) have been tagged as declining markets regardless of the actual values in the local neighborhoods, which further discourages potential buyers from entering the market."
The policy kept some would-be home buyers from taking action because they could not come up with the funds to make the increased down payment. Others avoided buying because they were afraid to do so if prices were still declining.
"In either case, the impact of the policy becomes a self-fulfilling prophecy that creates declining markets that did not exist before and intensifies the decline for markets that are declining and delays their recovery," NAR President Richard Gaylord said in a letter to Fannie Mae Chief Executive Officer Daniel Mudd.
Fannie Mae says it's able to move away from the declining markets policy because the latest version of Desktop Underwriter -- Version 7.0 -- will limit risk layering and assess each loan more precisely.
"At the same time, we believe that equity matters, especially in this market," Marianne Sullivan, Fannie Mae's senior vice president of single-family credit policy and risk management, said in a statement. "Down payments are a critical success factor in home ownership -- and responsible lending is good business."
Private mortgage insurers who insure most loans purchased by Fannie Mae and Freddie Mac in cases where borrowers put down less than 20 percent have their own requirements, including 3 percent minimums and stricter standards in declining markets (see story).
Fannie Mae's new national down-payment policy is part of the company's "Keys to Recovery" initiative announced May 6, which also includes improved pricing for jumbo-conforming mortgages to help borrowers in high-cost areas.
Through the end of the year, Fannie Mae announced this month that it will buy the new jumbo-conforming loans -- up to $729,750 in high-cost areas -- at the same price as loans that meet the conventional conforming loan limit of $417,000.
Congress gave the government-sponsored enterprises the ability to purchase mortgages larger than the conventional conforming loan limit of $417,000 in the hopes of bringing down interest rates on jumbo loans.
But until recently, the "spread" between conventional conforming loans and jumbo loans had remained pronounced -- about 1 percent -- and lawmakers have expressed disappointment about the pricing of jumbo conforming loans.
Although rates on jumbo conforming loans have come down, the House Financial Services Committee will hold a hearing on May 22 to examine the steps taken to implement the new loans and the impact on home buyers and the housing market.
http://www.freddiemac.com/singlefamily/20080529_advisory.html
Update on Elimination of Declining Markets Policy
May 29, 2008 Advisory E-mail Message to Seller/Servicers
On May 16, we announced the elimination of our declining markets policy to provide a simplified way for lenders to determine the maximum allowable financing for loans that we will purchase. In today's special Single-Family Seller/Servicer Guide (Guide) Bulletin [PDF 210K], we are following up on this announcement by providing the detailed requirements for this change.
For mortgages with application dates on or after June 1, 2008, we are eliminating the requirement to reduce the maximum LTV/TLTV/HTLTV ratios when a property is located in a market with declining home values.
For mortgages with application dates on or after June 1, whether manually underwritten or assessed through Loan Prospector®, we will continue to allow maximum financing up to 95 percent LTV for most purchase and no cash-out refinance mortgages secured by 1- to 2-unit primary residences or second homes–in all markets. For low- and moderate-income borrowers and borrowers in underserved areas, we will continue to provide up to 100 percent LTV and 105 percent TLTV financing for 1-unit primary residences through our Home Possible® Mortgages.
To help ensure that borrowers are using purchase transaction Home Possible Mortgages with higher LTV/TLTV ratios to purchase homes they can afford and keep, effective June 1 and as previously announced, we will require homeownership education before the note date when all borrowers are first-time homebuyers. At the same time, we are also ensuring borrowers have an appropriate credit history.
In addition, as a result of our review of our maximum financing requirements, we are making adjustments to maximum financing requirements for certain mortgage products and transaction types to ensure they more appropriately reflect sound lending practices in the current market environment. With today's Bulletin, effective for mortgages with application dates on or after June 1, 2008 we are also:
Announcing that we will no longer purchase mortgages with LTV/TLTV/HTLTV ratios greater than 95 percent, with the exception of: FHA/VA Mortgages, Section 502 GRH Mortgages, Section 184 Native American Mortgages and Home Possible Mortgages with LTV and TLTV ratios greater than 95 percent, subject to all existing requirements for these mortgages. Note that as previously announced, Home Possible Mortgages with an LTV/TLTV ratio greater than 97 percent must have an Indicator Score greater than or equal to 700.
Eliminating the requirement announced in our May 2 Guide Bulletin of a Loan Prospector® Accept Risk Class for purchase and no cash-out refinance mortgages with LTV/TLTV/HTLTV ratios equal to or greater than 95 percent. We established this requirement as a condition for reducing maximum financing to 95 percent for mortgages in declining markets where maximum financing was equal to or greater than 95 percent. This requirement, along with other requirements in our May 2 Bulletin, no longer applies as a result of the elimination of our declining markets policy.
Reducing the maximum LTV/TLTV/HTLTV ratios for:
Cash-out refinance mortgages secured by 1- to 2-unit primary residences or second homes to 85%/80%/85%/90% LTV without and with secondary financing/TLTV/HTLTV (this includes cash-out refinance Initial InterestSM Mortgages).
Purchase and no cash-out refinance mortgages secured by 1- to 2-unit investment properties to 85%/80%/85%/90% LTV without and with secondary financing/TLTV/HTLTV.
Modifying our current Alt 97® Mortgage requirements to reduce the maximum financing to 95 percent LTV/TLTV (for Alt 97 Mortgages with secondary financing, the maximum LTV ratio is reduced to 90 percent).
Adjusting our maximum financing requirements for Home Possible Mortgages and lender-branded affordable mortgages secured by:
2-unit properties, by reducing the maximum LTV ratio to 95 percent, and reducing the maximum TLTV ratio to 100 percent.
3- and 4-unit properties, by maintaining the maximum LTV ratio at 95 percent, and reducing the maximum TLTV ratio to 100 percent.
Revising Guide Exhibit 19, Postsettlement Delivery Fees, to reflect the reduced LTV/TLTV/HTLTV ratios. There are no changes to our delivery fees or fee rates as a result of these changes. However, all applicable current postsettlement delivery fees continue to apply, including the Market Condition delivery fee.
Implementing These Changes
All changes in this Bulletin supersede the maximum financing requirements that previously applied to mortgages secured by properties located in declining markets. This includes the changes we made to LTV/TLTV/HTLTV ratio reduction requirements in our May 2 Bulletin.
There are no changes to our delivery requirements as a result of today's Bulletin.
In addition, please see the Bulletin for more information on:
To cover pipelines for mortgages originated under our declining markets policies in effect before June 1, 2008, these mortgages are still eligible for sale to us provided they met all of our previous requirements and have Freddie Mac Settlement Dates on or before August 31, 2008.
Specific information on how the changes we announced today may impact your Master Agreement.
Information for Loan Prospector Assessments
At this time, we will not update Loan Prospector to reflect our new requirements. For mortgages assessed in Loan Prospector with application dates on and after June 1, 2008, you will need to perform a manual review of the mortgage file to ensure the mortgage meets the requirements announced in today's Bulletin and is eligible for sale to us.

Get More Information
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