Family Selection: An Overview
Family Selection: An Overview
Participants will: Review the work of the Family Selection Committee. Understand HFHI policies for family selection. View the Quality Assurance factors expected by HFHI. Share best practices
© Copyright 2008
Oct., 2013
© Copyright 2008
Oct., 2013
Preparation for Family Selection • Knowledge of Mission The Affiliate Covenant • Knowledge of the law FHA, ECOA, ADA, FCRA, RESPA, SAFE • Residency considerations Legal residents GSA • Develop Income Guidelines • Know your Affiliate’s Vision and Plan © Copyright 2008
Oct. 2013
Habitat for Humanity Mission Statement
Seeking to put God’s love into action, Habitat for Humanity brings people together to build homes, communities, and hope.
© Copyright 2008
Oct. 2013
Guiding Principles for Family Services Affiliate Covenant Habitat for Humanity Affiliates build, renovate, and repair decent and affordable housing with people who are living in inadequate housing and who are unable to secure adequate housing by conventional means. Habitat for Humanity is committed to the development and uplifting of people and communities, not only to the development of housing. © Copyright 2008
Oct. 2013
Know Your Affiliate’s Mission, Vision and Plan Based upon your BOD’s goals for the year, determine a plan and timeline for selecting the families with whom your affiliate will build. Establish a time frame for acceptance of applications Open application cycle Closed application cycle
© Copyright 2008
Oct. 2013
Group Activity Gather in a small group and discuss: What are the realities of living on a low income?
© Copyright 2008
Oct. 2013
© Copyright 2008
Oct. 2013
HFHI Policy
© Copyright 2008
Oct. 2013
Policy #11 Homeowner Partner Selection Habitat for Humanity’s Three Selection Criteria Need Ability to Pay Willingness to Partner
Know the laws that govern family selection Fair Housing ECOA ADA Fair credit reporting Privacy
DeSelection © Copyright 2008
Oct. 2013
Policy 19 Sexual Offender Registration Check Check all applicants, volunteers, board members, staff against the sex offender database. Develop an affiliate policy around sex offenders.
Sample policy on my.habitat in Legal Advisory section. © Copyright 2008
Oct. 2013
HFHI Quality Assurance Checklist Complete every year to be in compliance. Service Delivery Homeownership #5 Affiliate makes all reasonable efforts to serve families whose incomes do not exceed 60 percent of the area median income (AMI), and in no case selects households with incomes above 80 percent of AMI*. Affiliate sells homes to low-income families in need. Need is evaluated in the context of the affiliate’s service area median income, cost of living index and other local factors. © Copyright 2008
Oct. 2013
HFHI Quality Assurance Checklist Homeowner Selection #7 Perform appropriate due diligence in determining ability to pay and credit worthiness of applicants: income verification, credit, assessment of all of the household debt; projected utility costs; homeowner association dues; and other costs directly associated with owning the home. #9 Abide by the applicable federal, state, local laws. © Copyright 2008
Oct 2013
HFHI Quality Assurance Checklist Homeowner Selection #8 Affiliate de-selects partners only in the following cases: demonstrated fraud on the application, failure to complete requirements set forth in the letter of acceptance, negative change in financial condition which would significantly impact the ability to pay, or presence on a sexual offender database.
© Copyright 2008
Oct 2013
HFHI Quality Assurance Checklist Policy #18 Affiliate abides by a board-approved family selection policy which defines the criteria used and how they are applied in a non-discriminatory manner as pet applicable laws.
© Copyright 2008
Oct. 2013
Anti Money Laundering Must have policy related to anti-money laundering—check the policy for selection implications. Must have compliance officer—who is your officer? Check customers on the OFAC list. Required information: Name Address (residential or business street address for an individual; for armed services personnel, an Army Post Office (“APO”) or Fleet Post Office (“FPO”) number). If necessary, address will be confirmed by a current utility bill mailed to the customer at the address in question. Date of Birth (verifiable via an unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a government-issued passport or driver’s license) Government-issued identification number, © Copyright 2008
Oct. 2013
Consumer Financial Protection Bureau Dodd Frank Legislation set up the bureau. CFPB New Rules Mortgage servicing – changes in policy, process, foreclosures, loss mitigation, response to questions, continuity of contact RESPA / TILA & Appraisals ECOA - Appraisals SAFE Act – loan originator employee background checks Other aspects detailed on MPAR homepage on My.Habitat. http://my.habitat.org/kc/home/mpar . CFPB –Final Rules 9 Pay attention because CFPB also opened a complaint portal. © Copyright 2008
Oct. 2013
Mortgage Origination This process begins when the Affiliate receives a written application or pre application Representatives designated for this task (new part of the selection committee) evaluate the completed application through a review process. The initial screening. All Mortgage Procedures and Regulations (MPAR) are followed. (ABA courses available on my.habitat) For those who do qualify for a mortgage, the Affiliate should send an immediate denial letter stating the reason(s) for the adverse action. © Copyright 2008
Oct. 2013
Need Need for adequate shelter. Need varies from family to family. Examples: The home that lacks proper plumbing or wiring or has severe structural problems. Overcrowding Unhealthy housing situations—mold, mildew Factors beyond obvious structural inadequacies such as the family being cost-burdened. • Households paying more than 30% of income to housing costs (including utilities) are said to be “cost burdened.” Households paying more than 50% of income for housing are said to be “severely cost burdened © Copyright 2008
Oct. 2013
Ability to Pay Serve families whose income does not exceed 60% or AMI (Area Median Income). In no case permitted to go above 80% of AMI. Use an ability-to-pay calculator to help the Family Selection Committee determine affordability.
© Copyright 2008
Oct. 2013
Payment shall not exceed 30% of gross monthly income. YEARLY HOUSING EXPENSES Sales Price _____ Years Amortized _____ total number of monthly payments _____ MONTHLY MORTGAGE PAYMENT Taxes Insurance Other
_____
_____ _____ _____
MONTHLY ESCROW PAYMENT _____ PROJECTED MONTHLY UTILITY _____ TOTAL MONTHLY EXPENSES _____ TOTAL YEARLY EXPENSES _____ MINIMUM GROSS INCOME REQUIRED (Family of 4— AMI 35,000) At 30% At 38% © Copyright 2008
At 33% At 40% Oct. 2013
Debt-to-Income Ratios Each Affiliate should establish its own income guidelines and ratios, paying careful attention to the needs and abilities of the applicants falling within these guidelines.
© Copyright 2008
June 2008
Housing Expense Ratio Housing Expenses (use Habitat figures) 1. Principal _______________ 2. Taxes (1/12) _______________ 3. Insurance (1/12) _______________ 4. Utilities (except phone) _______________ 5. Association Assessments (if applicable) ________________ ≤ 33% of gross monthly income is the HUD standard ______________
Long-term Debt Ratio Total Obligations 1. Housing Expenses _______________ 2. Auto Payment _______________ 3. Credit Cards _______________ 4. Reserve Fund (home repair) _______________ 5. Child Support _______________ 6. Alimony _______________ ≤ 38% as appropriate, recommended to not exceed 40% _____________ © Copyright 2008
Oct. 2013
What Do We Count as Income? Family Income is all the money that is legally received on a regular schedule by all family members from all sources (salary, retirement, pension, Social Security, disability, child support, alimony, public assistance, etc.). Sources of income that will continue for at least three years. © Copyright 2008
Oct. 2013
Verifying Income Recent pay stubs Checks or payments from pensions, SSI, child support, alimony, or public assistance Verification of Assistance from a case worker Copies of recent income tax forms (these may not be helpful if employment has changed or is inconsistent) © Copyright 2008
Oct. 2013
Willingness to Partner Objective Criteria for assessing willingness to partner: • Completion and return of the application in a timely fashion. • Acceptance of the down payment and closing cost requirements. • Acceptance of the affiliate’s sweat equity requirements. © Copyright 2008
Oct. 2013
Processing Applications Setting up the applicant’s file When a written application is received, the Affiliate opens a permanent file for the applicant. Regulation B (12 C.F.R. §202) requires creditors to retain records for a period of 25 months from the date the creditor notifies an applicant of action taken on the application. © Copyright 2008
Oct. 2013
Processing Applications Notice of Incomplete Application When the Affiliate receives a written application that is not rejected as part of the initial application review, it has 30 days to send a written notice to the applicant: Specifying the information needed to complete the application process Designating a reasonable time period for the applicant to provide the information Informing the applicant that if the information is not provided within the specified time, the application will no longer be considered © Copyright 2008
Oct. 2013
Processing Applications Deadline for return of materials ECOA regulations require that a “reasonable period of time” be allowed for applicants to return the requested information. If the applicant fails to return the requested information within the designated time, the Affiliate has no further obligation to the applicant. If the applicant supplies the requested information within the designated time period, the Affiliate should proceed with processing the application.
© Copyright 2008
Oct. 2013
Processing Applications Information gathering and evaluation The application for housing alone does not contain enough information to determine whether a family qualifies for a Habitat home. Additional information necessary to evaluate the applicant’s eligibility may include: Residency requirement (if the Affiliate has this criterion) Participation in orientation session List of personal assets Income verification Credit report
Credit references Landlord statement Home visit Criminal Background Check (if the Affiliate has this criterion) Sex offender database check
Generally, Affiliates will spend up to 30 days gathering the necessary information to determine eligibility. © Copyright 2008
Oct. 2013
Making the Decision Finalizing the decision An application is complete when the Affiliate has received all information it regularly considers in evaluating applications
Once the application is complete, a home visit is completed and a presentation is made to the Family Selection Committee. The committee has 30 days to make a decision, report this decision to the board for review, and send a letter of notification to the applicant.
© Copyright 2008
Oct. 2013
Approvals YES—you have been approved When the Affiliate approves an applicant, the applicant should be notified in writing and then sign a Letter of Acceptance. The Letter of Acceptance informs the applicant of acceptance as a Habitat homeowner and explains the Affiliate’s requirements for home ownership.
© Copyright 2008
Oct. 2013
Non-Approvals NO—your application has been denied When the Affiliate denies an applicant, the law requires that, in the Letter of Denial, the Affiliate must either provide a statement of specific reasons for the denial or inform the applicant that he or she has a right to a statement of specific reasons for denial if requested within 60 days of the Letter of Denial. The Affiliate has 30 days to respond to the request. If the Affiliate chooses to provide the reasons orally, it must disclose the applicant’s right to have them confirmed in writing within 30 days of receiving written request of confirmation. © Copyright 2008
Oct. 2013
RESPA Prepare for mortgage closing by reviewing and delivering: • • • •
GFE TIL Disclosure HUD Special Information Booklet Mortgage Servicing Disclosure
7 day waiting period after receipt of above items by homeowner Closing © Copyright 2008
Oct. 2013
Homeowner Selection Flow Chart
© Copyright 2008
Oct. 2013
© Copyright 2008
Oct. 2013
Standard Advice from HFHI Utilize the Family Selection Manual Develop separate family selection and family support committees. Hold public applicant meetings Use the printed application and keep demographic statistics
© Copyright 2008
Oct. 2013
More Advice from HFHI Use the denial letter found on my.habitat Do not keep applicants on a waiting list Use a letter of acceptance (intent) on my.habitat after families are approved by the board Study MPAR and include mortgage origination Study RESPA information and adjust your closing to meet RESPA standards © Copyright 2008
June 2008
More Advice from HFHI Evaluate your process periodically with the Ability to pay calculator, Family support satisfaction surveys.
© Copyright 2008
June 2008
Developing the Marketing Strategy The Federal Fair Housing Act The Act requires that Affiliates make the availability of their programs widely known to the general public. Equal Housing Opportunity Logo Regulations state that all advertising of residential real estate or financing should contain an equal housing opportunity logo, statement, or slogan. This is available from your local or regional HUD office.
© Copyright 2008
June 2008
Thank you for your important role in this ministry!
© Copyright 2008
Oct. 2013
Participants will: Review the work of the Family Selection Committee. Understand HFHI policies for family selection. View the Quality Assurance factors expected by HFHI. Share best practices
© Copyright 2008
Oct., 2013
© Copyright 2008
Oct., 2013
Preparation for Family Selection • Knowledge of Mission The Affiliate Covenant • Knowledge of the law FHA, ECOA, ADA, FCRA, RESPA, SAFE • Residency considerations Legal residents GSA • Develop Income Guidelines • Know your Affiliate’s Vision and Plan © Copyright 2008
Oct. 2013
Habitat for Humanity Mission Statement
Seeking to put God’s love into action, Habitat for Humanity brings people together to build homes, communities, and hope.
© Copyright 2008
Oct. 2013
Guiding Principles for Family Services Affiliate Covenant Habitat for Humanity Affiliates build, renovate, and repair decent and affordable housing with people who are living in inadequate housing and who are unable to secure adequate housing by conventional means. Habitat for Humanity is committed to the development and uplifting of people and communities, not only to the development of housing. © Copyright 2008
Oct. 2013
Know Your Affiliate’s Mission, Vision and Plan Based upon your BOD’s goals for the year, determine a plan and timeline for selecting the families with whom your affiliate will build. Establish a time frame for acceptance of applications Open application cycle Closed application cycle
© Copyright 2008
Oct. 2013
Group Activity Gather in a small group and discuss: What are the realities of living on a low income?
© Copyright 2008
Oct. 2013
© Copyright 2008
Oct. 2013
HFHI Policy
© Copyright 2008
Oct. 2013
Policy #11 Homeowner Partner Selection Habitat for Humanity’s Three Selection Criteria Need Ability to Pay Willingness to Partner
Know the laws that govern family selection Fair Housing ECOA ADA Fair credit reporting Privacy
DeSelection © Copyright 2008
Oct. 2013
Policy 19 Sexual Offender Registration Check Check all applicants, volunteers, board members, staff against the sex offender database. Develop an affiliate policy around sex offenders.
Sample policy on my.habitat in Legal Advisory section. © Copyright 2008
Oct. 2013
HFHI Quality Assurance Checklist Complete every year to be in compliance. Service Delivery Homeownership #5 Affiliate makes all reasonable efforts to serve families whose incomes do not exceed 60 percent of the area median income (AMI), and in no case selects households with incomes above 80 percent of AMI*. Affiliate sells homes to low-income families in need. Need is evaluated in the context of the affiliate’s service area median income, cost of living index and other local factors. © Copyright 2008
Oct. 2013
HFHI Quality Assurance Checklist Homeowner Selection #7 Perform appropriate due diligence in determining ability to pay and credit worthiness of applicants: income verification, credit, assessment of all of the household debt; projected utility costs; homeowner association dues; and other costs directly associated with owning the home. #9 Abide by the applicable federal, state, local laws. © Copyright 2008
Oct 2013
HFHI Quality Assurance Checklist Homeowner Selection #8 Affiliate de-selects partners only in the following cases: demonstrated fraud on the application, failure to complete requirements set forth in the letter of acceptance, negative change in financial condition which would significantly impact the ability to pay, or presence on a sexual offender database.
© Copyright 2008
Oct 2013
HFHI Quality Assurance Checklist Policy #18 Affiliate abides by a board-approved family selection policy which defines the criteria used and how they are applied in a non-discriminatory manner as pet applicable laws.
© Copyright 2008
Oct. 2013
Anti Money Laundering Must have policy related to anti-money laundering—check the policy for selection implications. Must have compliance officer—who is your officer? Check customers on the OFAC list. Required information: Name Address (residential or business street address for an individual; for armed services personnel, an Army Post Office (“APO”) or Fleet Post Office (“FPO”) number). If necessary, address will be confirmed by a current utility bill mailed to the customer at the address in question. Date of Birth (verifiable via an unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a government-issued passport or driver’s license) Government-issued identification number, © Copyright 2008
Oct. 2013
Consumer Financial Protection Bureau Dodd Frank Legislation set up the bureau. CFPB New Rules Mortgage servicing – changes in policy, process, foreclosures, loss mitigation, response to questions, continuity of contact RESPA / TILA & Appraisals ECOA - Appraisals SAFE Act – loan originator employee background checks Other aspects detailed on MPAR homepage on My.Habitat. http://my.habitat.org/kc/home/mpar . CFPB –Final Rules 9 Pay attention because CFPB also opened a complaint portal. © Copyright 2008
Oct. 2013
Mortgage Origination This process begins when the Affiliate receives a written application or pre application Representatives designated for this task (new part of the selection committee) evaluate the completed application through a review process. The initial screening. All Mortgage Procedures and Regulations (MPAR) are followed. (ABA courses available on my.habitat) For those who do qualify for a mortgage, the Affiliate should send an immediate denial letter stating the reason(s) for the adverse action. © Copyright 2008
Oct. 2013
Need Need for adequate shelter. Need varies from family to family. Examples: The home that lacks proper plumbing or wiring or has severe structural problems. Overcrowding Unhealthy housing situations—mold, mildew Factors beyond obvious structural inadequacies such as the family being cost-burdened. • Households paying more than 30% of income to housing costs (including utilities) are said to be “cost burdened.” Households paying more than 50% of income for housing are said to be “severely cost burdened © Copyright 2008
Oct. 2013
Ability to Pay Serve families whose income does not exceed 60% or AMI (Area Median Income). In no case permitted to go above 80% of AMI. Use an ability-to-pay calculator to help the Family Selection Committee determine affordability.
© Copyright 2008
Oct. 2013
Payment shall not exceed 30% of gross monthly income. YEARLY HOUSING EXPENSES Sales Price _____ Years Amortized _____ total number of monthly payments _____ MONTHLY MORTGAGE PAYMENT Taxes Insurance Other
_____
_____ _____ _____
MONTHLY ESCROW PAYMENT _____ PROJECTED MONTHLY UTILITY _____ TOTAL MONTHLY EXPENSES _____ TOTAL YEARLY EXPENSES _____ MINIMUM GROSS INCOME REQUIRED (Family of 4— AMI 35,000) At 30% At 38% © Copyright 2008
At 33% At 40% Oct. 2013
Debt-to-Income Ratios Each Affiliate should establish its own income guidelines and ratios, paying careful attention to the needs and abilities of the applicants falling within these guidelines.
© Copyright 2008
June 2008
Housing Expense Ratio Housing Expenses (use Habitat figures) 1. Principal _______________ 2. Taxes (1/12) _______________ 3. Insurance (1/12) _______________ 4. Utilities (except phone) _______________ 5. Association Assessments (if applicable) ________________ ≤ 33% of gross monthly income is the HUD standard ______________
Long-term Debt Ratio Total Obligations 1. Housing Expenses _______________ 2. Auto Payment _______________ 3. Credit Cards _______________ 4. Reserve Fund (home repair) _______________ 5. Child Support _______________ 6. Alimony _______________ ≤ 38% as appropriate, recommended to not exceed 40% _____________ © Copyright 2008
Oct. 2013
What Do We Count as Income? Family Income is all the money that is legally received on a regular schedule by all family members from all sources (salary, retirement, pension, Social Security, disability, child support, alimony, public assistance, etc.). Sources of income that will continue for at least three years. © Copyright 2008
Oct. 2013
Verifying Income Recent pay stubs Checks or payments from pensions, SSI, child support, alimony, or public assistance Verification of Assistance from a case worker Copies of recent income tax forms (these may not be helpful if employment has changed or is inconsistent) © Copyright 2008
Oct. 2013
Willingness to Partner Objective Criteria for assessing willingness to partner: • Completion and return of the application in a timely fashion. • Acceptance of the down payment and closing cost requirements. • Acceptance of the affiliate’s sweat equity requirements. © Copyright 2008
Oct. 2013
Processing Applications Setting up the applicant’s file When a written application is received, the Affiliate opens a permanent file for the applicant. Regulation B (12 C.F.R. §202) requires creditors to retain records for a period of 25 months from the date the creditor notifies an applicant of action taken on the application. © Copyright 2008
Oct. 2013
Processing Applications Notice of Incomplete Application When the Affiliate receives a written application that is not rejected as part of the initial application review, it has 30 days to send a written notice to the applicant: Specifying the information needed to complete the application process Designating a reasonable time period for the applicant to provide the information Informing the applicant that if the information is not provided within the specified time, the application will no longer be considered © Copyright 2008
Oct. 2013
Processing Applications Deadline for return of materials ECOA regulations require that a “reasonable period of time” be allowed for applicants to return the requested information. If the applicant fails to return the requested information within the designated time, the Affiliate has no further obligation to the applicant. If the applicant supplies the requested information within the designated time period, the Affiliate should proceed with processing the application.
© Copyright 2008
Oct. 2013
Processing Applications Information gathering and evaluation The application for housing alone does not contain enough information to determine whether a family qualifies for a Habitat home. Additional information necessary to evaluate the applicant’s eligibility may include: Residency requirement (if the Affiliate has this criterion) Participation in orientation session List of personal assets Income verification Credit report
Credit references Landlord statement Home visit Criminal Background Check (if the Affiliate has this criterion) Sex offender database check
Generally, Affiliates will spend up to 30 days gathering the necessary information to determine eligibility. © Copyright 2008
Oct. 2013
Making the Decision Finalizing the decision An application is complete when the Affiliate has received all information it regularly considers in evaluating applications
Once the application is complete, a home visit is completed and a presentation is made to the Family Selection Committee. The committee has 30 days to make a decision, report this decision to the board for review, and send a letter of notification to the applicant.
© Copyright 2008
Oct. 2013
Approvals YES—you have been approved When the Affiliate approves an applicant, the applicant should be notified in writing and then sign a Letter of Acceptance. The Letter of Acceptance informs the applicant of acceptance as a Habitat homeowner and explains the Affiliate’s requirements for home ownership.
© Copyright 2008
Oct. 2013
Non-Approvals NO—your application has been denied When the Affiliate denies an applicant, the law requires that, in the Letter of Denial, the Affiliate must either provide a statement of specific reasons for the denial or inform the applicant that he or she has a right to a statement of specific reasons for denial if requested within 60 days of the Letter of Denial. The Affiliate has 30 days to respond to the request. If the Affiliate chooses to provide the reasons orally, it must disclose the applicant’s right to have them confirmed in writing within 30 days of receiving written request of confirmation. © Copyright 2008
Oct. 2013
RESPA Prepare for mortgage closing by reviewing and delivering: • • • •
GFE TIL Disclosure HUD Special Information Booklet Mortgage Servicing Disclosure
7 day waiting period after receipt of above items by homeowner Closing © Copyright 2008
Oct. 2013
Homeowner Selection Flow Chart
© Copyright 2008
Oct. 2013
© Copyright 2008
Oct. 2013
Standard Advice from HFHI Utilize the Family Selection Manual Develop separate family selection and family support committees. Hold public applicant meetings Use the printed application and keep demographic statistics
© Copyright 2008
Oct. 2013
More Advice from HFHI Use the denial letter found on my.habitat Do not keep applicants on a waiting list Use a letter of acceptance (intent) on my.habitat after families are approved by the board Study MPAR and include mortgage origination Study RESPA information and adjust your closing to meet RESPA standards © Copyright 2008
June 2008
More Advice from HFHI Evaluate your process periodically with the Ability to pay calculator, Family support satisfaction surveys.
© Copyright 2008
June 2008
Developing the Marketing Strategy The Federal Fair Housing Act The Act requires that Affiliates make the availability of their programs widely known to the general public. Equal Housing Opportunity Logo Regulations state that all advertising of residential real estate or financing should contain an equal housing opportunity logo, statement, or slogan. This is available from your local or regional HUD office.
© Copyright 2008
June 2008
Thank you for your important role in this ministry!
© Copyright 2008
Oct. 2013
