MSHDAs Key to Own Family Self Sufficiency Programs

MSHDA’s Key to Own & Family Self Sufficiency Programs Lisa Lehman Key to Own Program lehmanl 1@michigan. gov Phone: 517 -241 -4474 Kerri Nobach Key to Own Program nobachk 1@michigan. gov Phone: 517 -373 -1714

HCV Homeownership Program, What is it? • 24 CFR Parts 5, 903 and 982, October 12, 2000. Basic Concept—Instead of using the voucher subsidy to help a family with rent, homeownership option allows first -time homeowner to use the voucher subsidy to meet monthly homeownership expenses. • No separate or additional funding from HUD. • Term of HAP assistance is a maximum of 10 years with a possible 5 year extension unless elderly or disabled. (MSHDA Guideline)

Vision of the Key to Own Homeownership Program: The Homeownership Program is for MSHDA voucher holders who are successfully gaining financial and economic independence and working to become self-sufficient! They want to move to the next step!

HCV Homeownership Purpose • Provide pre-purchase counseling and training through MSHDA’s counselors and other local partners to accomplish the goal of assisting eligible HCV participants into successful homeownership. • Follow up with post-purchase counseling after the participant becomes a homeowner, if necessary. • Official start date of March 1, 2005!

Internal Partners Homeownership Program • • Housing Voucher Programs Family Self-Sufficiency Program Single Family Mortgage Programs Property Improvement Program Housing Initiatives Contracted Housing Agents FSS Resource Coordinators MSHDA’s Counselors

External Partners Homeownership Program • USDA’s Rural Development • Neighborhood Reinvestment Corporation • Habitat for Humanity • Local Units of Government • Non-Profit Housing Agencies • Lenders • Correction’s Prison Build Program • Federal Home Loan Bank • And the list goes on and on….

#1 Eligibility Criteria Household Eligibility Participant is in MSHDA’s HCV Rental Assistance Program: • For one-year • In good standing with the program • No tenant-caused HQS violations within the past year • Do not owe money to MSHDA or any other Housing Authority • And may not have committed any serious or repeated violations of the MSHDA-assisted lease within the past year.

#2 Eligibility Criteria First-Time Homebuyer • Definition: Any member of the assisted family not having owned a residence in the three years prior to the homeownership assistance. • “First-time homebuyer” assisted family may NOT include a member who has: – Current or previous ownership of any residential property within the past three-years – “Present ownership interest” in any property or previously received assistance through the homeownership program

#3 Eligibility Criteria Enrolled in the Family Self-Sufficiency (FSS) Program • Being in the FSS program is NOT a requirement for the Key to Own program. However, the FSS Program and the IDA program work great with the Key to Own! • Preferred, unless elderly or disabled, exceptions may be granted on a case-by-case basis. • If enrolled in FSS, the participant must be actively participating in the FSS program and achieving or working towards their ITSP goals.

#4 Eligibility Criteria Employment (Unless Elderly or Disabled) Head of Household on the HCV voucher must: Currently have full-time employment (not less than 30 hours per week) earning at least $15, 000/year unless elderly or disabled. Continuously been employed for the past year, the participant must demonstrate a history of full-time employment. Employment gaps will be reviewed on a caseby case basis.

#5 Eligibility Criteria Pre-Purchase Counseling • Potential homebuyers must attend all required homeownership & economic literacy counseling sessions. • The participant must have a Key to Own Counseling Referral Form to attend the sessions. • Homeownership counseling is additional beyond the FSS financial economic literacy counseling.

#6 Eligibility Criteria Minimum Income & Credit Participating families must have: – $15, 000 gross income unless elderly or disabled (MSHDA Guideline) – Elderly & Disabled Federal SSI minimum (currently $750/mo. ) – ALL THREE CREDIT SCORES OVER 640 (MSHDA Guideline) and credit cards paid off – Liquid Assets – Can not have more than $10, 000 (MSHDA Guideline) – Credit Card Debt/Old Bills – must be paid off completely!

Eligibility Criteria Continued #7 Secure Financing – Buyer is responsible **Must be referred by Key to Own staff to one of our preferred lenders. #8 Locate an Eligible Unit #9 Live in this Home as Primary Residence

Exceptions for Elderly and Disabled • Two exceptions: – Income from public assistance may be permitted when receiving Federal SSI minimum. – The maximum term for homeownership assistance does not apply, but can not exceed 30 years.

Financing, Terms of Mortgage, Down Payment, Escrow • Step One: Participant needs to talk to Lisa or Kerri to get the approval to move to the lending step! • Participant(s) must secure their own financing from a Key to Own participating lender. • MSHDA must approve all financing before purchase. • Minimum down payment of 3% of the purchase price, with at least 1% from personal savings, but not less than $1, 300. • Maintain a maintenance reserve account of $1, 000 (MSHDA Guideline)

Funding Sources • • • USDA Rural Development set-aside MSHDA’s Single Family Programs First Mortgage Lenders Habitat for Humanity FSS Escrow Account Individual Development Accounts Housing Assistance Payment Homebuyer Contribution HOME Funds Federal Home Loan Bank Local Foundations And the list goes on & on …

Continued Assistance Requirements & Family Obligations The following must be adhered to: Ongoing counseling, post-purchase 2. Compliance with mortgage 3. Prohibition against transfer of home 4. Supply required and requested information 5. Notify MSHDA if moving out 6. Notice of Mortgage Delinquency & Default 7. Prohibition of ownership interest on a second residence 8. Fraud or other program violations 9. Crime by family members 10. Other HCV housing assistance may not be received 11. Comply with Statement of Family Obligation 1.

Portability MSHDA will allow a voucher participant to port to MSHDA from another housing authority if funding is available and they meet all the eligibility criteria to take advantage of the Key to Own Program if the are mortgage ready! Call Lisa or Kerri to determine this!

Switching between Homeownership & Rental • There a number of circumstances which a participant(s) may switch between homeownership and rental. An example: Family purchases a home under the Key to Own program, after five years decides they prefer to live in an apartment. – The family may sell the home and go back to a rental voucher

Homeownership Process Flow WRAP IT UP! • You have a MSHDA Voucher • You decide you want to pursue homeownership • You call Lisa or Kerri, they will help you decide if you meet the initial program requirements and send you a preapplication to fill out and return. • Your application is reviewed and you are accepted into the Homeownership Program!

Homeownership Process Flow Continued • You are employed and working to become economically independent and self-sufficient (unless elderly or disabled) • You have attended the Financial Capability/Homeownership Training • You complete the Economic Literacy/Homebuyer counseling classes, ALL 3 CREDIT SCORES ARE OVER 640, all credit cards/debt are paid off and all bills are paid on time for one year, and your have $1, 300 saved in the bank!

Homeownership Process Flow Continued • You are now mortgage ready and you secure financing. • You are pre-approved for a determined loan amount and know the approximate HAP amount. • You shop for a home. • You find a home, it passes HQS inspection and a private inspection and MSHDA approves both inspections.

Homeownership Process Flow Continued • You close on your loan • You move into your new home! • MSDHA does an annual recertification and HQS inspection • You attend post-purchase counseling if necessary • Congratulations!

Key to Own Statistics • Successfully transferred over 450 voucher holders into their own home as of March 2017! • Rental HAP for these homes was over $127, 000/month and the Homeownership HAP for March 2017 was $26, 515/month! This is over $1. 5 million/year in HAP savings to the program allowing vouchers for other families. • Of the homeowners only 72 voucher participants remain on our program and receive assistance. This is a 82% reduction!

Key to Own Statistics • Working with almost 1100 HCV participants in pursuing their dream of homeownership! • Promoting with a new postcard/flyer! • The Key to Own Program won a National Award for the design of the program and has trained several other PHA’s on how to develop a homeownership program at the request of HUD.

A Look Ahead! • Lending Standards have extremely tightened. We are experiencing tight lending practices and expect this to continue into the future. This is resulting in our homebuyers needing more down payment assistance, credit scores above 640, almost a zero debt-to-income ratio, and student loans must be in a repayment plan or 1% of the outstanding balance will be counted as their monthly payment.

Here is what we’re doing to get ahead of the curve! • Continue to identify and cultivate with Non-Profits and local lenders willing to work with the Key to Own program. • The participant must use one of our preferred lenders! We will give the participant the list once they have met all the pre-approval requirements with MSHDA. • Manage the Homeownership workload and continue to support our families by providing them with knowledge, security and confidence! • Tap outside sources for help with homeownership activities.

Time for Questions