Welcome to Housing Help!

2. Welcome to Housing Help! • Upcoming topics for the occupancy series: • 10/16/09: Verification Tune-up • 11/13/09: Asset Income • 12/11/09: Reasonable Accommodation Issues

3. Welcome to Housing Help! • Today’s topic: HCV Homeownership • Eligibility • Counseling & inspections • Financing • Family obligations • Resources

4. Housing Choice Voucher Homeownership Program

5. 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

6. 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

7. 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

8. 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

9. 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

10. Homeownership Voucher Subsidy • Calculate income as normal through total tenant payment (TTP) • Payment standard determines maximum subsidy in voucher program

11. Homeownership Voucher Subsidy • PHA uses the same voucher program payment standard amounts for homeownership families • same subsidy standards • no separate “homeownership” payment standard schedule

12. 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

13. 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

14. Homeownership Expenses • PITI & MIP • Principal and; • Interest on mortgage debt • Real estate taxes • Home insurance • Mortgage insurance payment

15. Homeownership Expenses • 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

16. Homeownership Expenses • Utility allowance • PHA uses the same utility allowance schedule that it uses for rental program

17. Homeownership Expenses • 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

18. 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

19. 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

20. Developing Allowances • Resources • American Society of Home Inspectors (ASHI) • Freddie Mac: www.freddiemac.com • Fannie Mae • Home maintenance checklist:www.repair-home.com

21. 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

22. PHA Allowances • Families are not required to actually escrow or put money aside for routine maintenance or major repairs

23. 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

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

25. Family Eligibility • Program participant or applicant • First time homeownership requirements • Minimum income requirements • Employment requirements • Mortgage defaults • Additional requirements

26. 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

27. 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

28. 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…..

29. 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…

30. Family Eligibility: First-time Homeowner Requirements • FAMILY INCLUDES A PERSON WITH DISABILITIES • PHA determines use of homeownership option is necessary as reasonable accommodation

31. 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 ($14,500 as of 7/24/09)

32. Family Eligibility: Minimum Income Requirements • 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

33. Family Eligibility: Minimum Income Requirements • 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

34. 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 year • PHA may determine to what extent interruptions are considered break in continuity

35. Family Eligibility: Employment Requirements • Full time employment requirements are not applicable for elderly and disabled families

36. Family Eligibility: Mortgage Defaults • Mortgage defaults • Family is not eligible if any family member has previously received homeownership assistance and defaulted on mortgage

37. 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

38. Pre-Assistance Homeownership Counseling

39. 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

40. 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

41. 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

42. Pre-Assistance Counseling • Topics include: • Financing aspects • obtaining financing and loan preapprovals • types of financing, pros and cons of different approaches

43. 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

44. Pre-Assistance Counseling • 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

45. Finding An Eligible Home

46. 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

47. 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

48. 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

49. 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

50. 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 …