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1. HUD Updates 4/13/10 Definition of foreclosure expanded to allow more property types and faster obligation of funds
Definition of abandoned expanded as well
For cities and counties using code compliance, triggers additional URA requirements
2. HUD Updates 4/13/10 Other significant recent updates:
Appliances may be purchased with NSP funds (some limitations apply)
Purchase contracts may be signed prior to completing ERR (Part 58) requirements, if required language included
3. HUD Updates 4/13/10 Additional updates (less significant):
For land banking, acquisition-only with no intent to demolish structure doesnt immediately trigger historic preservation requirements
Down payment, closing cost and principal reduction cant be obligated until buyer identified (doesnt apply to most KY projects)
4. HUD Updates 4/13/10 Minor updates continued:
Clearer guidance on financial documentation and recordkeeping for some project activities
Occasionally addressing units outside of primary target areas OK, with limits (DLG waiver still required)
And the one weve all been waiting for
5. HUD Updates 4/13/10 Yes, you CAN rehab
swimming pools!
6. HUD Updates 4/13/10 Definition of foreclosure:
Properties will be eligible for NSP if any of the following apply:
The property is at least 60 days delinquent on its mortgage and the owner has been notified;
The property owner is 90 days or more delinquent on tax payments;
7. HUD Updates 4/13/10 Foreclosure eligibility continued:
Under state/local law, foreclosure proceedings have been initiated or completed; or
Foreclosure proceedings have been completed and title transferred to an intermediary aggregator or servicer that is not an NSP grantee, subrecipient, developer or end user.
8. HUD Updates 4/13/10 New definition of foreclosed uses term current delinquency status
Determine CDS using Mortgage Banker Association Delinquency Calculation method:
Loan is considered delinquent if payment not received by the end of the day immediately preceding the loans next due date
Example:
Payment is due Aug. 1, 2010, and no payment received by Aug. 31, 2010. Loan will be reported as delinquent in September.
From Sept. 1 to Sept. 30, loan is considered 30 days delinquent
On Oct. 1, loan delinquency status is 60 days delinquent
9. HUD Updates 4/13/10 Changes will broaden the inventory of eligible properties, increase obligations, and reduce regulatory friction points.
New definitions retroactive to date substantial amendment to action plan submitted to HUD in Kentucky, 12/2/08.
Significantly expands pool of eligible properties and agencies ability to obligate funds; increases LISA-eligible property pool
10. HUD Updates 4/13/10 Definition of abandoned expanded as well:
Homes where no mortgage or property tax payments have been made by the property owner for at least 90 days (must be delinquent); OR
Code enforcement inspection has determined that the property is not habitable (more restrictive than blighted) and the owner has taken no corrective actions within 90 days of notification of deficiencies.
11. HUD Updates 4/13/10 For cities and counties using code compliance, triggers additional URA requirements
URA applies to property acquisition and displacement of persons as the result of a federally-funded program.
For non-profits, all acquisitions are voluntary.
For local governments, most are voluntary.
If code compliance, will be considered involuntary and additional URA requirements apply.
12. HUD Updates 4/13/10 Local govts have power of eminent domain; if NSP used to acquire a property with a serious code enforcement deficiency, it is an involuntary transaction.
Requirement carries through to unit of local governments development partners.
Must follow full URA, including statement of just comp, invitation to accompany appraiser, review appraisal, etc.
13. HUD Updates 4/13/10 For refresher on URA requirements, please review the NSP URA training provided by DLG earlier this year available on DLGs website at:
http://www.dlg.ky.gov/grants/federal/NSP+Training+Resources.htm
URA training recorded and can be viewed at any time; Power Point slides also available at same link
14. HUD Updates 4/13/10 Appliances may be purchased with NSP funds (some limitations apply)
Amenities in NSP-assisted housing should be comparable to amenities in the area's unassisted housing as long as they do not constitute luxury items.
NSP-assisted housing may include amenities such as washer/dryer, dishwasher, and air conditioner
15. HUD Updates 4/13/10 Clothes washers, dryers and dishwashers are permitted in the NSP1 and NSP2 when all of the following conditions are met:
NSP funds have rehabilitated or constructed the homes;
Installation of such appliances is comparable to unassisted homes in the local housing market
Deed restrictions or covenants ensure that the appliances remain in the home, if appropriate;
Qualifying appliances meet or exceed Energy Star standards.
16. HUD Updates 4/13/10 High-efficiency models (above Energy Star) provide the following benefits:
Washers save 7,000 gallons of Water per year and use 50% less energy and detergent;
Dryers use 58 percent less energy; both produce longer clothes life;
Home installation reduces the costs of Laundromats on LMMI occupants.
17. HUD Updates 4/13/10 High-efficiency appliances meet the following standards:
Clothes Washers
CEE Tier 2 or higher
Minimum Energy Factor of 2.0 or greater
Water Factor 6.0 or less
18. HUD Updates 4/13/10 Clothes Dryers
Minimum 7.0 cubic feet capacity - Shortens drying time due to maximizing air flow
Sensor Dry SystemMeasures moisture in drum, then automatically adjusts drying time and temperature.
5 Temperature Levels - High, Medium High, Medium, Low & Ultra Low
19. HUD Updates 4/13/10 Dishwashers
CEE Tier 2
Minimum Energy Factor of 0.68 or greater
Maximum annual energy use of 325 kilowatt-hours or less
20. HUD Updates 4/13/10 Purchase contracts may be signed prior to completing ERR (Part 58) requirements, if required language included
Limited to existing 1 to 4 unit house; can be done IF:
The purchase contract includes the appropriate language for a conditional contract;
No transfer of title until unit environmentally cleared; and
Any deposit using NSP funds or other funds is refundable if the conditions are not met, or if non-refundable, is nominal ($1,000 or less).
21. HUD Updates 4/13/10 Sample required language:
Notwithstanding any other provision of this Contract, Purchaser shall have no obligation to purchase the Property, and no transfer of title to the Purchaser may occur, unless and until [Responsible Entity] has provided Purchaser and/or Seller with a written determination, on the basis of a federally required environmental review and an approved request for release of federal funds, that purchase of the property by Purchaser may proceed, subject to any other Contingencies in this Contract, or may proceed only if certain conditions to address issues in the environmental review shall be satisfied before or after the purchase of the property. [Responsible Entity] shall use its best efforts to conclude the environmental review of the property expeditiously.
22. HUD Updates 4/13/10 For land banking, acquisition-only with no intent to demolish structure doesnt immediately trigger historic preservation requirements
Cities and counties (responsible entities) may determine, or DLG may determine on behalf of a nonprofit, that a foreclosed residential property acquired as part of land banking is eligible;
23. HUD Updates 4/13/10 Can determine the mere acquisition has no potential to cause effects to historic properties, in accordance with 36 CFR 800.3(a)(1), as long as all of the following conditions are met:
The properties to be acquired are not being acquired with intent to demolish existing structures on the property.
The RE has completed the first tier of a tiered environmental review on its NSP program activities
24. HUD Updates 4/13/10 Down payment, closing cost and principal reduction cant be obligated until buyer identified (doesnt apply to most KY projects)
HUD FAQ: If a grantee has purchased and rehabilitated a home and knows exactly how much homeownership assistance will be provided to the income eligible homebuyer at resale, but has not identified the buyer, can the homeownership assistance be counted as an obligation on top of the acquisition and rehabilitation obligations?
25. HUD Updates 4/13/10 HUD answer:
The acquisition and rehabilitation work do not require identification of a buyer to obligate funds. But if the grantee has not identified the buyer, there is no contract for the homeownership assistance which is what would be needed to satisfy the obligation requirement.
26. HUD Updates 4/13/10 Clearer guidance on finance documentation and recordkeeping for some project activities (think more broadly than the example below)
HUD FAQ: If an NSP grantee hires a contractor to market its program and charges the contractors fees to program administration, does the contractor have to provide the grantee with timesheets when submitting payment requests?
27. HUD Updates 4/13/10 HUD Answer: It depends on how the contract is written between the NSP grantee and the contractor. If the contractor is being paid by units of services produced, the answer is no. However, if the contractor is being paid by time spent marketing the program, the answer is yes.
Apply same rationale to other project delivery costs, both internal and external
28. HUD Updates 4/13/10 If you are paying a contractor by time spent, appropriate supporting documentation must be provided to document time spent (timesheet). If you are paying on a per-unit basis, no time sheet is required.
Example 1: If you pay someone to mow the lawns of NSP-assisted houses an hourly rate, a timesheet is required. If you pay a per-lawn fee (i.e., $25 per house), no time sheet is required.
29. HUD Updates 4/13/10 Example 2: Your housing coordinator inspects NSP homes and spends 20 hours this week, and 15 the next. This is reimbursable as a project delivery cost provided timesheets are kept that tie to the specific unit address being inspected, when the inspection was done, and how long the inspection took. You can charge both the hourly rate (or salary hourly rate equivalent) plus your agencys standard fringe.
30. HUD Updates 4/13/10 Occasionally addressing units outside of primary target areas OK, with limits (DLG waiver still required)
May grantees undertake projects outside of their NSP target areas without changing their target area boundaries?
There is no hard rule here. If projects are being undertaken on a spot basis outside of the target area boundaries, the change is probably not needed. However, if there are a concentration of projects being done outside the target area, HUD would expect
31. HUD Updates 4/13/10 (continued)
to see the boundaries changed. Its easier to justify going to a lesser need area to address a handful of properties, but if the grantee is doing substantial work outside the target boundaries its harder to demonstrate compliance with the statute which stipulates greatest need areas."
DLG has been issuing waivers for spot houses outside risk score areas of 8-10 that are in or adjacent to the targeted neighborhood. Spot waivers may still be requested; significant increase in units outside primary areas will require modification to funding agreement.
32. HUD Updates 4/13/10 About those swimming pools (again, think more broadly)
HUD FAQ: Under what conditions can swimming pool expenses be paid for with NSP funds?
33. HUD Updates 4/13/10 HUD answer: If a property was acquired and rehabilitated with NSP funds, NSP funds can be used to repair the pool to a level that is decent, and safe and habitable for resale purposes. Any pool maintenance expenses while the property is waiting to be resold would be eligible disposition costs.
However, in evaluating the debt burden that an income eligible homebuyer can afford, pool maintenance cost should be factored into the equation. In some cases a pool may not be feasible and the grantee should consider filling in the pool prior to resale or avoid purchasing properties with pools all together.
34. HUD Updates 4/13/10 Apply the same logic to:
Storage buildings (can be repaired or reconstructed)
Detached garages, car ports (can be repaired or reconstructed)
Jacuzzis and hot tubs (only if they are already there)
Other similar structures/issues; if questions, contact DLG for clarification
No luxury items may be added; they must be existing and require repair, and cost must be reasonable in relation to return on expense and marketability
