Hello All:
Well, when the going gets tough, the tough get going - and no where is this more evident and true and absolutely necessary than with NACA. For those of you who are unfamiliar with NACA, let me first tell you that the acronym NACA stands for Neighborhood Assistance Corporation of America. The organization boasts of having the world's best mortgage - has been in the business of providing low and moderate families the means by which they can purchase their first home regardless of their income, credit rating, or location - by offering free down payment, free closing costs, mortgage 1% or more below prime rate, and free counseling (including lawyers).
With the current administration apparently bent on making it increasingly more difficult for you to become a homeowner, NACA Founder, Bruce Marks, and his team have put their heads together to come up with alternatives so that you can still realize your dream of becoming a home owner.
Open to New York, NJ, Philly, DC, Connecticut, Boston, Maryland - actually the whole US, since NACA is national - so make it your plan to be a part of your own solution by owning your own home. After meeting wth a counselor for preliminary advice, you will also meet with an underwriter to get pre-approved for shopping for your new home. For additional information log on to www.naca.com, or call 973.79.2601 x 1439 -
Imagine, if you will, not having to come up with the down payment, but being able to get a decent affordable home anywhere (well almost anywhere) in the US you want to live. Most people would say it's impossible - which is why NACA is so great - they not only take the impossible and make it real - they continue to work with you as long as you continue to have a NACA Mortgage - so that if you run into difficulties - NACA's got your back. GDW
NACA’S ACHIEVE THE DREAM EVENTS
REINVENTING MORTGAGE LENDING FOR WORKING PEOPLE
Something miraculous just happened, ten years after the mortgage crisis. Just like during the height of the crisis, thousands of people showed up at a lending event. This time they showed up not to save their home but to purchase a home at the first two Neighborhood Assistance Corporation of America (NACA) Achieve the Dream events. These four to five-day one stop mortgage operations took place in Charlotte with over 4,000 people and twice that in Miami with hundreds lining up early in the morning with the vast majority being minority individuals.
This massive turnout is a result of both the cutoff of lending to and the effectiveness of NACA’s purchase program. In 2016 10.5% of conventional loans went to minority African American and Hispanic homebuyers with an approval rate of 58%. NACA’s Achieve the Dream events have for the first time opened the floodgates to affordable homeownership to people who have been historically excluded. The participants are hard-working responsible individuals who should be homeowners if the purchase process and mortgage underwriting was not fundamentally structured to keep them out. It provides the opportunity for working people who do not have an aggressive Type “A” personality to become homeowners.
NACA is a non-profit homeownership and advocacy organization. We were in the forefront in the mortgage crisis providing same day solutions for over 250,000 homeowners facing foreclosure in our Save the Dream Events. Now NACA, in partnership with Bank of America and CitiMortgage, is transforming mortgage lending for low to moderate income people and minority homebuyers. Bank of America with $10 billion and CitiMortgage with $3 billion have provided NACA with the funds to lend on the best mortgage terms in America.
The mortgage requires no down payment, no closing costs and no fees at a below market fixed interest rate, with every homebuyer receiving the same extraordinary terms. In addition, eligible properties include single, condo and multi-family with the ability to purchase and renovate a property. While the mortgage is outstanding, the essential transformation lies in changing the sequence of the home buying process and the traditional underwriting criteria. These barriers block mainly low to moderate income borrowers, and particularly minority borrowers, from accessing affordable conventional mortgages including Federal Housing Authority (FHA) and government sponsored mortgages. NACA revolutionizes the process by putting mortgage approval first and using an alternative underwriting approach without consideration of the credit score.
Process
The current home purchase process negatively impacts low and moderate-income buyers by placing the house shopping first and the financing last. It starts with real estate agents, then
Something miraculous just happened, ten years after the mortgage crisis. Just like during the height of the crisis, thousands of people showed up at a lending event. This time they showed up not to save their home but to purchase a home at the first two Neighborhood Assistance Corporation of America (NACA) Achieve the Dream events. These four to five-day one stop mortgage operations took place in Charlotte with over 4,000 people and twice that in Miami with hundreds lining up early in the morning with the vast majority being minority individuals.
This massive turnout is a result of both the cutoff of lending to and the effectiveness of NACA’s purchase program. In 2016 10.5% of conventional loans went to minority African American and Hispanic homebuyers with an approval rate of 58%. NACA’s Achieve the Dream events have for the first time opened the floodgates to affordable homeownership to people who have been historically excluded. The participants are hard-working responsible individuals who should be homeowners if the purchase process and mortgage underwriting was not fundamentally structured to keep them out. It provides the opportunity for working people who do not have an aggressive Type “A” personality to become homeowners.
NACA is a non-profit homeownership and advocacy organization. We were in the forefront in the mortgage crisis providing same day solutions for over 250,000 homeowners facing foreclosure in our Save the Dream Events. Now NACA, in partnership with Bank of America and CitiMortgage, is transforming mortgage lending for low to moderate income people and minority homebuyers. Bank of America with $10 billion and CitiMortgage with $3 billion have provided NACA with the funds to lend on the best mortgage terms in America.
The mortgage requires no down payment, no closing costs and no fees at a below market fixed interest rate, with every homebuyer receiving the same extraordinary terms. In addition, eligible properties include single, condo and multi-family with the ability to purchase and renovate a property. While the mortgage is outstanding, the essential transformation lies in changing the sequence of the home buying process and the traditional underwriting criteria. These barriers block mainly low to moderate income borrowers, and particularly minority borrowers, from accessing affordable conventional mortgages including Federal Housing Authority (FHA) and government sponsored mortgages. NACA revolutionizes the process by putting mortgage approval first and using an alternative underwriting approach without consideration of the credit score.
 |
| You can choose a traditional home |
Process
The current home purchase process negatively impacts low and moderate-income buyers by placing the house shopping first and the financing last. It starts with real estate agents, then
sellers and lastly lenders. Real estate agents are only paid for completed sales, and are unlikely
to work with a borrower with a lower credit score, who may require more time finding an
affordable home, or may have potential difficulties in securing financing for the deal. Sellers and
builders often do not look favorably on low and moderate income and minority borrowers, in part,
because of their perceived inability to get financing.
To break down this procedural barrier, NACA pre-approves borrowers for the best in America mortgage requiring full documentation (i.e. paystubs, bank statements, tax returns, etc.). Once the borrower is NACA Qualified (i.e. pre-approved), virtually all applications submitted to a lender are approved. With this solid, document based approval in hand, the borrower becomes a desired customer for real estate agents, sellers and builders becoming an equivalent of a cash buyer.
Underwriting:
NACA Qualification involves comprehensive counseling to determine that the borrower is ready for homeownership and can afford the approved monthly mortgage payment for the long term. This involves borrower’s completing realistic and verified weekly and monthly budgets to determine how they spend their money. This is an invaluable financial learning experience that lays the foundation for improved financial management and stable homeownership.
NACA’s underwriting uses “character based lending” with compensating factors. This means that our underwriters consider life realities of low and moderate-income people evaluating payment and income documentation that do not neatly fit into standard underwriting criteria to document their readiness for homeownership and a mortgage payment they can afford. NACA has demonstrated that the counseling and underwriting results in one of the country’s best mortgage performance. NACA has been providing affordable homeownership for over twenty years with over 80% of the mortgages to minority families at an extremely low foreclosure rate of .00215 (i.e. about one-fifth of one percent).
Traditional mortgage lending outside of NACA is based on risk based price lending. This lending model takes into consideration three factors: 1. Down payment (i.e. loan-to-value);
2. Credit Score; and 3. Debt Ratios. These criteria are put into an algorithm which determines if the borrower is approved and at what interest rate. These criteria result in denial rates of about 30% of low and moderate income and minority applications. NACA’s purchase program eliminates all three of these underwriting criteria by fundamentally changing the underwriting analysis.
Eliminating the down payment requirement, removes a major roadblock to homeownership for working people who struggle to save while meeting their living expenses, including a high cost of rent. History has already shown that no down payment VA mortgages worked by being the primary financing in building the American suburbs after World War II even as racist government and bank policies excluded minority borrowers. Moreover, the “skin in the game” argument in favor of down payment, only has a meaning for people for whom home ownership is a game.
To break down this procedural barrier, NACA pre-approves borrowers for the best in America mortgage requiring full documentation (i.e. paystubs, bank statements, tax returns, etc.). Once the borrower is NACA Qualified (i.e. pre-approved), virtually all applications submitted to a lender are approved. With this solid, document based approval in hand, the borrower becomes a desired customer for real estate agents, sellers and builders becoming an equivalent of a cash buyer.
Underwriting:
NACA Qualification involves comprehensive counseling to determine that the borrower is ready for homeownership and can afford the approved monthly mortgage payment for the long term. This involves borrower’s completing realistic and verified weekly and monthly budgets to determine how they spend their money. This is an invaluable financial learning experience that lays the foundation for improved financial management and stable homeownership.
NACA’s underwriting uses “character based lending” with compensating factors. This means that our underwriters consider life realities of low and moderate-income people evaluating payment and income documentation that do not neatly fit into standard underwriting criteria to document their readiness for homeownership and a mortgage payment they can afford. NACA has demonstrated that the counseling and underwriting results in one of the country’s best mortgage performance. NACA has been providing affordable homeownership for over twenty years with over 80% of the mortgages to minority families at an extremely low foreclosure rate of .00215 (i.e. about one-fifth of one percent).
Traditional mortgage lending outside of NACA is based on risk based price lending. This lending model takes into consideration three factors: 1. Down payment (i.e. loan-to-value);
2. Credit Score; and 3. Debt Ratios. These criteria are put into an algorithm which determines if the borrower is approved and at what interest rate. These criteria result in denial rates of about 30% of low and moderate income and minority applications. NACA’s purchase program eliminates all three of these underwriting criteria by fundamentally changing the underwriting analysis.
Eliminating the down payment requirement, removes a major roadblock to homeownership for working people who struggle to save while meeting their living expenses, including a high cost of rent. History has already shown that no down payment VA mortgages worked by being the primary financing in building the American suburbs after World War II even as racist government and bank policies excluded minority borrowers. Moreover, the “skin in the game” argument in favor of down payment, only has a meaning for people for whom home ownership is a game.
Something the mortgage crisis clearly demonstrated is how treasured a family home is and how
devastating a foreclosure can be.
To determine a borrower’s readiness for homeownership we do not consider a borrower’s credit score. Instead, we review the borrower’s payment history as provided on their comprehensive credit report dealing only with the payments that the borrower controls. Thus, for example, if a late payment was a result of an emergency room medical bill, we believe that this is not a reflection of their readiness for homeownership but reflects America’s unaffordable dysfunctional health care system.
To determine an affordable monthly mortgage payment, we again eliminate the traditional debt ratio criteria which uses a percentage of a borrower’s debt to their income. Instead, we use a more relevant guideline, the borrower’s actual rent and then analyze whether it is an affordable mortgage payment. If the borrower wants a mortgage payment that is higher than their current rent, they must save the difference over a period of three to six months to ensure that they can afford it over the long term. We call this their Payment Shock Savings.
Achieve the Dream Events:
NACA’s Achieve the Dream Events shatter the structural barriers to homeownership for low and moderate-income borrowers and particularly minority borrowers who often do not have a family history of affordable homeownership. They come together as a group gaining support from others in the process and the counselors who come from the same communities and experiences.
These one-stop mortgage operations have housing counselors and underwriters who work with borrowers during the four day event to be approved for the best mortgage in America. In addition, support staff are available to work with participants to use the many available scanners to upload their documents and input information from the documents. This is important since it further engages the participant in the process.
The massive turnouts in Miami and Charlotte were the result of word of mouth about NACA’s effectiveness from family, friends, co-workers and churches reflecting peoples’ intense desire for affordable homeownership. We are committed to working with each person to improve their financial management and if they stay with NACA to have the opportunity to be a homeowner with NACA’s best mortgage in America. We are taking the Achieve the Dream events nationwide planning over twenty more this year.
The transformative NACA Mortgage, process, and underwriting provide a model for Fannie Mae and Freddie Mac, as well as, for major lenders like Wells Fargo and Chase to get back to lending to working people. This is a historic change in lending that provides unprecedented opportunities for stable, long-term homeownership to all working Americans.
To determine a borrower’s readiness for homeownership we do not consider a borrower’s credit score. Instead, we review the borrower’s payment history as provided on their comprehensive credit report dealing only with the payments that the borrower controls. Thus, for example, if a late payment was a result of an emergency room medical bill, we believe that this is not a reflection of their readiness for homeownership but reflects America’s unaffordable dysfunctional health care system.
To determine an affordable monthly mortgage payment, we again eliminate the traditional debt ratio criteria which uses a percentage of a borrower’s debt to their income. Instead, we use a more relevant guideline, the borrower’s actual rent and then analyze whether it is an affordable mortgage payment. If the borrower wants a mortgage payment that is higher than their current rent, they must save the difference over a period of three to six months to ensure that they can afford it over the long term. We call this their Payment Shock Savings.
Achieve the Dream Events:
NACA’s Achieve the Dream Events shatter the structural barriers to homeownership for low and moderate-income borrowers and particularly minority borrowers who often do not have a family history of affordable homeownership. They come together as a group gaining support from others in the process and the counselors who come from the same communities and experiences.
These one-stop mortgage operations have housing counselors and underwriters who work with borrowers during the four day event to be approved for the best mortgage in America. In addition, support staff are available to work with participants to use the many available scanners to upload their documents and input information from the documents. This is important since it further engages the participant in the process.
The massive turnouts in Miami and Charlotte were the result of word of mouth about NACA’s effectiveness from family, friends, co-workers and churches reflecting peoples’ intense desire for affordable homeownership. We are committed to working with each person to improve their financial management and if they stay with NACA to have the opportunity to be a homeowner with NACA’s best mortgage in America. We are taking the Achieve the Dream events nationwide planning over twenty more this year.
The transformative NACA Mortgage, process, and underwriting provide a model for Fannie Mae and Freddie Mac, as well as, for major lenders like Wells Fargo and Chase to get back to lending to working people. This is a historic change in lending that provides unprecedented opportunities for stable, long-term homeownership to all working Americans.
Home Ownership through Public Housing Assistance
(“HOT-PHA”)
Developed By: NACA
Introduction:
The purpose of this document is to design a transformative homeownership program for public housing authority Housing Choice Voucher recipients (“Participants”). This innovative new program will allow Participants who are first-time homeowners to utilize their Housing Choice Voucher (“HCV”) to purchase a home of their own through NACA’s home ownership program. Participants will become homeowners and own their home without a mortgage in 10 to 15 years depending whether they have a 15 or 30-year term.
This project, called the Home Ownership through Public Housing Assistance (“HOT- PHA”), will use NACA’s extraordinary counseling and mortgage program in conjunction with the HCV. NACA’s existing homeownership program is designed to help low- and moderate-income individuals achieve homeownership, and NACA’s program has already achieved tremendous success. The existing HUD/PHA homeownership program has had very limited success primarily due to the restrictive underwriting guidelines of the few available mortgage products, the terms of these mortgage products, and program restrictions. Also those who have purchased homes had higher incomes. NACA’s mortgage overcomes each of these obstacles to obtain success on a large scale.
Participants must adhere to all of NACA’s requirements for all homebuyers including full- document underwriting. Participants must work full-time and have savings for escrows and reserves for the purchase transaction. Funds can come from the Participant directly, Participant’s savings through the Family Self-Sufficiency (“FSS”) program, or other government programs. The HOT-PHA supplements the Participant’s income with the mortgage payment based on the HCV payment to the landlord.
Benefits for all Parties:
The HOT-PHA program will become the first sustained program where Participants can obtain affordable long-term homeownership. This is a private sector initiative that utilizes the existing HUD homeownership regulations without the need for additional government assistance. The HOT-PHA programs provides unprecedented benefits for Participants, Housing Authority, lender, and public policy as identified below. It is truly one of the few programs that everyone across the political spectrum will support.
Participants:
Participant is likely to be the first homeowner ever in his/her family and have an
opportunity to provide stability for themselves and generations to follow. The HOT-PHA will allow Participants to build wealth through homeownership generating in many instances over one hundred thousand dollars in wealth (i.e. equity with the payoff of the mortgage). The Participant and his/her family would be out of the cycle of dependency and now financial independent. This is truly a game changer.
Public Housing Authority:
The Public Housing Authority (“PHA”) significantly reduces their costs and achieves their ultimate mission of ending a Participant’s depending on government assistance. Currently PHA/HUD is obligated to make rental payments for the Participant’s lifetime. The HOT-PHA ends government assistance within 10 to 15 years saving hundreds of thousands of dollars in rental
The purpose of this document is to design a transformative homeownership program for public housing authority Housing Choice Voucher recipients (“Participants”). This innovative new program will allow Participants who are first-time homeowners to utilize their Housing Choice Voucher (“HCV”) to purchase a home of their own through NACA’s home ownership program. Participants will become homeowners and own their home without a mortgage in 10 to 15 years depending whether they have a 15 or 30-year term.
This project, called the Home Ownership through Public Housing Assistance (“HOT- PHA”), will use NACA’s extraordinary counseling and mortgage program in conjunction with the HCV. NACA’s existing homeownership program is designed to help low- and moderate-income individuals achieve homeownership, and NACA’s program has already achieved tremendous success. The existing HUD/PHA homeownership program has had very limited success primarily due to the restrictive underwriting guidelines of the few available mortgage products, the terms of these mortgage products, and program restrictions. Also those who have purchased homes had higher incomes. NACA’s mortgage overcomes each of these obstacles to obtain success on a large scale.
Participants must adhere to all of NACA’s requirements for all homebuyers including full- document underwriting. Participants must work full-time and have savings for escrows and reserves for the purchase transaction. Funds can come from the Participant directly, Participant’s savings through the Family Self-Sufficiency (“FSS”) program, or other government programs. The HOT-PHA supplements the Participant’s income with the mortgage payment based on the HCV payment to the landlord.
Benefits for all Parties:
The HOT-PHA program will become the first sustained program where Participants can obtain affordable long-term homeownership. This is a private sector initiative that utilizes the existing HUD homeownership regulations without the need for additional government assistance. The HOT-PHA programs provides unprecedented benefits for Participants, Housing Authority, lender, and public policy as identified below. It is truly one of the few programs that everyone across the political spectrum will support.
Participants:
Participant is likely to be the first homeowner ever in his/her family and have an
opportunity to provide stability for themselves and generations to follow. The HOT-PHA will allow Participants to build wealth through homeownership generating in many instances over one hundred thousand dollars in wealth (i.e. equity with the payoff of the mortgage). The Participant and his/her family would be out of the cycle of dependency and now financial independent. This is truly a game changer.
Public Housing Authority:
The Public Housing Authority (“PHA”) significantly reduces their costs and achieves their ultimate mission of ending a Participant’s depending on government assistance. Currently PHA/HUD is obligated to make rental payments for the Participant’s lifetime. The HOT-PHA ends government assistance within 10 to 15 years saving hundreds of thousands of dollars in rental
payments for that Participant. It also makes additional vouchers available without requiring
additional government assistance. In compliance with the Quality Housing and Work
Responsibility act, this assists the PHA in achieving the goal of making homeownership available
for public housing recipients.
Lender:
This is a very high quality mortgage that meets the lender’s CRA obligations. The mortgage payment is virtually guaranteed by the PHA. The Participant is approved based on stable income, on-time payments and full documentation underwriting. In addition, the Accelerated Principal Payment, described below, provides a cushion that provides for immediate equity and even if the mortgage payment, is not paid due to extenuating circumstances, it would not result in default or foreclosure.
Public Policy:
The HOT-PHA promotes neighborhood stabilization through affordable home ownership. It has bi-partisan support particularly from critics of public housing assistance. This program is a national model that can become a major part of housing authority’s policies providing unprecedented benefits to Participants and the government.
HOT-PHA Program:
NACA’s mortgage is the perfect mortgage product to provide homeownership utilizing public housing authority assistance. NACA has designed the program to create a pathway to homeownership whereby the Participant can pay off the entire mortgage during the years in which he or she receives HCV funds. In fact, Participants will be able to own their home outright in fewer than 10 years with a 15-year mortgage or 15 years with a 30-year mortgage. The HCV payments are sufficient to purchase a reasonably priced home as demonstrated in the exhibits for a variety of markets.
The HOT-PHA program is structured to replicate the existing HCV rental program. The NACA mortgage uses the Standard Payment as the Mortgage Payment and not income. Even though Participant(s) must work full-time as defined by HUD, very few Participants would have sufficient income to qualify for a realistic purchase price. NACA’s rigorous underwriting criteria and comprehensive housing counseling program ensures that the Participant has a track record of steady employment and understands and accepts the responsibilities of homeownership.
The HOT-PHA program utilizes the Mortgage Payment defined above, consisting of the Standard Payment by family size for the mortgage with two components: 1) Monthly Mortgage Payment - approximately 70% of the Standard Payment; and 2) Accelerated Principal Payment - approximately 30% of the Standard Payment. The Standard Payment is paid in two parts directly to the lender into the Participants account: 1) PHA pays the HAP, and 2) Participant pays the Participant Payment. The lender combines both payments and applies it first to the required mortgage payment and then the remaining (i.e. the Accelerated Principal Payment) to the outstanding principal. This significantly reduces the total interest payments thus reducing the time period to pay-off the mortgage (i.e. mortgage term). The Standard Payments for handicapped, disabled or elderly Participants are guaranteed for the life of the mortgage and payments for such individuals would not require Accelerated Principal Payments.
Lender:
This is a very high quality mortgage that meets the lender’s CRA obligations. The mortgage payment is virtually guaranteed by the PHA. The Participant is approved based on stable income, on-time payments and full documentation underwriting. In addition, the Accelerated Principal Payment, described below, provides a cushion that provides for immediate equity and even if the mortgage payment, is not paid due to extenuating circumstances, it would not result in default or foreclosure.
Public Policy:
The HOT-PHA promotes neighborhood stabilization through affordable home ownership. It has bi-partisan support particularly from critics of public housing assistance. This program is a national model that can become a major part of housing authority’s policies providing unprecedented benefits to Participants and the government.
 |
| You can choose a modern home |
HOT-PHA Program:
NACA’s mortgage is the perfect mortgage product to provide homeownership utilizing public housing authority assistance. NACA has designed the program to create a pathway to homeownership whereby the Participant can pay off the entire mortgage during the years in which he or she receives HCV funds. In fact, Participants will be able to own their home outright in fewer than 10 years with a 15-year mortgage or 15 years with a 30-year mortgage. The HCV payments are sufficient to purchase a reasonably priced home as demonstrated in the exhibits for a variety of markets.
The HOT-PHA program is structured to replicate the existing HCV rental program. The NACA mortgage uses the Standard Payment as the Mortgage Payment and not income. Even though Participant(s) must work full-time as defined by HUD, very few Participants would have sufficient income to qualify for a realistic purchase price. NACA’s rigorous underwriting criteria and comprehensive housing counseling program ensures that the Participant has a track record of steady employment and understands and accepts the responsibilities of homeownership.
The HOT-PHA program utilizes the Mortgage Payment defined above, consisting of the Standard Payment by family size for the mortgage with two components: 1) Monthly Mortgage Payment - approximately 70% of the Standard Payment; and 2) Accelerated Principal Payment - approximately 30% of the Standard Payment. The Standard Payment is paid in two parts directly to the lender into the Participants account: 1) PHA pays the HAP, and 2) Participant pays the Participant Payment. The lender combines both payments and applies it first to the required mortgage payment and then the remaining (i.e. the Accelerated Principal Payment) to the outstanding principal. This significantly reduces the total interest payments thus reducing the time period to pay-off the mortgage (i.e. mortgage term). The Standard Payments for handicapped, disabled or elderly Participants are guaranteed for the life of the mortgage and payments for such individuals would not require Accelerated Principal Payments.
The Standard Payment is based on the number of bedrooms required by the Participant
based on the Participant’s family size and composition. NACA will pre-approve the Participant
for their maximum purchase price based on the Standard Payment. If the Participant purchases
a home for less than the maximum purchase price, the Participant mortgage payment will be
reduced by calculating to pay off the mortgage in 10 years for 15-yr mortgage or 15 years for
30-yr mortgage. NACA does this calculation to ensure that the Participant’s home is completely
paid off with the HCV payments. The PHA locks in the Participant’s mortgage payment for the
term of their payments regardless of future changes in the Participant’s family size or
composition. The HAP may change with the PHA’s re-evaluation of the Participant’s income
which may change the mix of the HAP and Participant’s Payment.
While the NACA mortgage does not require down payment or closing costs, the Participant will need minimum required funds ranging from $2,000 to $3,500. This consists of the following: Purchase & Sale earnest money deposit, home inspection fee, pre-paid insurance, pre-paid taxes, and a reserve of at least one month mortgage payment. Participants could use their Family Self-sufficiently funds, savings and funds from other sources for the minimum required funds and to buy-down the interest rate if they choose to do so. If the funds are used to buy-down the interest rate, the Participant could purchase a higher priced home.
NACA:
The HOT-PHA is the most effective use of NACA’s Best in America Mortgage for low income individuals and families. Participants receive NACA’s comprehensive pre and post counseling. The post-counseling program assistance includes access to financial assistance and ongoing housing counseling.
NACA has $13 Billion committed to this mortgage product by some of the nation’s major lenders for its 30-year and 15-year mortgage (i.e. known as the “Wealth Builder Mortgage”). NACA uses character-based full-doc underwriting guidelines. Over the past twenty years, the payment performance of the many thousands of NACA homeowners has been very strong with a very low foreclosure rate. This demonstrates the effectiveness of providing an affordable mortgage along with comprehensive counseling to low and moderate income borrowers.
NACA Mortgage:
NACA provides the best mortgage in America with these extraordinary terms:
While the NACA mortgage does not require down payment or closing costs, the Participant will need minimum required funds ranging from $2,000 to $3,500. This consists of the following: Purchase & Sale earnest money deposit, home inspection fee, pre-paid insurance, pre-paid taxes, and a reserve of at least one month mortgage payment. Participants could use their Family Self-sufficiently funds, savings and funds from other sources for the minimum required funds and to buy-down the interest rate if they choose to do so. If the funds are used to buy-down the interest rate, the Participant could purchase a higher priced home.
NACA:
The HOT-PHA is the most effective use of NACA’s Best in America Mortgage for low income individuals and families. Participants receive NACA’s comprehensive pre and post counseling. The post-counseling program assistance includes access to financial assistance and ongoing housing counseling.
NACA has $13 Billion committed to this mortgage product by some of the nation’s major lenders for its 30-year and 15-year mortgage (i.e. known as the “Wealth Builder Mortgage”). NACA uses character-based full-doc underwriting guidelines. Over the past twenty years, the payment performance of the many thousands of NACA homeowners has been very strong with a very low foreclosure rate. This demonstrates the effectiveness of providing an affordable mortgage along with comprehensive counseling to low and moderate income borrowers.
NACA Mortgage:
NACA provides the best mortgage in America with these extraordinary terms:
-
No down payment required
-
No closing costs (lender paid)
-
No fees
-
Loan-to-value -100% for purchase and 110% for purchases with a rehab
-
No consideration of credit score
-
Below market fixed interest rate
-
Term of 15 or 30 years fully amortizing
-
Buy-down to permanently reduce the interest rate to virtually zero percent
o 15-year – each one percent reduces interest rate by 0.50%.
o 30-year – each one percent reduces interest rate by 0.25%.
-
Property Types:
The eligible properties are single family, condos and co-ops. Participants can purchase
homes anywhere they want based on the maximum mortgage payment for which NACA
qualifies them.
apartments demonstrating responsibility and readiness for long-term homeownership. 11.Inspection – Must pass HUD inspection requirements with a licensed inspector. 12.Principal Acceleration Agreement – Participant is provided documentation to ensure he/she
understands and agrees that part of the Mortgage Payment will be used to pay-off additional principal. It will explain that this is necessary to have the mortgage paid-off prior to expiration of the HCV payments.
13.Program Requirements:
a. MustbereceivingaHCV.
b. Cannot be in default on the rental/ housing payments
Copyright©NACA HOT-PHA Page: 5 HOT-PHA – Ver.17.5
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Purchase & Renovation:
Eligible properties include those requiring all levels of renovations which would be aided by NACA’s Home and Neighborhood Development (“HAND”) department. The Participant could finance the cost of significant repairs to be completed after closing on the mortgage. The funds would be held in a separate rehab escrow account to be disbursed after completion and inspection of the required repairs.
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Second Lien:
A second lien is placed on the property to ensure that the Participant lives in the home and does not obtain an unaffordable home equity loan or refinance that puts the home at-risk.
NACA Underwriting & Program Requirements:
-
Credit Score – no consideration of the credit score. Qualification based on last 12 to 24
months of payment history.
-
Mortgage Payment – The mortgage payment is the lower of 1) Standard Payment or 2)
Participant’s Mortgage Payment calculated on the property acquisition cost, the mortgage
term (i.e. 30 or 15-year) for a pay off in ten years for the 15-year mortgage and fifteen years
for the 30-year mortgage. Since the lender would receive the Mortgage Payment regardless
of the Participant’s income, there is no consideration of housing or debt ratios.
-
HAP Payment - The Housing Assistance Payment is the Mortgage Payment minus the
Participant’s Payment.
-
Participant’s Payment – The Participant pays 30% of their gross income, less allowable
deductions including utilities, towards the Mortgage Payment. This may change periodically
per the PHA’s policies, which changes the amount paid by the PHA (i.e. HAP Payment). It
does not impact the Mortgage Payment and therefore is not considered in underwriting the
mortgage.
-
Minimum Required Funds – the homebuyer funds needed for the home inspection, tax and
insurance escrows, prepaid interest and reserves.
-
Employment-Steadyemploymentforatleastthepast24months.
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Income - Income for at least 24 months with likelihood of continuation.
-
PaymentHistory–On-timepaymentstheParticipant’scontroloverthepast12-24months
including the Participant’s Payment.
-
Debt–Chargeoffsandcollectionsthatoccurredinthemostrecent24monthsresolvedorin
an approved payment plan.
apartments demonstrating responsibility and readiness for long-term homeownership. 11.Inspection – Must pass HUD inspection requirements with a licensed inspector. 12.Principal Acceleration Agreement – Participant is provided documentation to ensure he/she
understands and agrees that part of the Mortgage Payment will be used to pay-off additional principal. It will explain that this is necessary to have the mortgage paid-off prior to expiration of the HCV payments.
13.Program Requirements:
a. MustbereceivingaHCV.
b. Cannot be in default on the rental/ housing payments
Copyright©NACA HOT-PHA Page: 5 HOT-PHA – Ver.17.5
c. Must have a minimum of 12 months on time rental/ housing payments
HUD Guidelines:
The Housing Authority can implement the HOT-PHA within the existing HUD guidelines including the following:
-
Minimumincome-minimumhourlywagemultipliedby2,000hours
-
Employment – average of 30 hours per week for at least a year.
-
Debt-to-Income – Should not have a debt-to-income ratio exceeding 43%.
-
The FSS program is encouraged but not required. The FSS funds upon graduation are
important in having the Minimum Required Funds and to permanently reduce the interest
rate to afford a higher price house.
-
Attendanapprovedhomebuyerworkshop.
-
Pre-Counseling - Meet with a NACA Housing Counselor and complete homeownership
counseling. The counseling prepares Participants for homeownership and the associated
responsibilities.
-
Post-Purchase Counseling – Have a NACA post-purchase counselor assigned to the
Participant for as long as they have their home to provide on-going support. While the counselor would be available as needed, there would be a regularly scheduled counseling session at least once every three months after closing for the first year and bi-annually thereafter. This counseling includes budgeting, financial planning, home maintenance and upkeep, financial services, etc.
NACA also provides other assistance to the Participant. This includes financial assistance and help applying for modifications, forbearances, etc. NACA has established peer committees of fellow homeowners to provide support and decide whether to offer financial assistance if a Participant is delinquent on his/her Mortgage Payments, has repair issues, or other issues.
 |
| Condominiums are eligible |
HUD Guidelines:
The Housing Authority can implement the HOT-PHA within the existing HUD guidelines including the following:
-
Section982.635-Homeownershipoption:Amountanddistributionofmonthly
homeownership assistance payment.
This section defines the mortgage payment that includes the following: principal, interest, taxes, home insurance, allowance of maintenance expenses, allowance for costs of major repairs and replacements. Importantly, this section does not limit the amount of the principal payment. It also states that the HAP payment can be paid by the Housing Authority directly to the lender.
-
Section982.632–Homeownershipoption:Financingpurchaseofhome;affordabilityof
purchase
This section allows the PHA to “establish requirements or restrictions concerning debt secured by the home.” The PHA can thus require that the Participant’s Mortgage Payment include the accelerated principal payment. All PHA financing or affordability requirements would need to be described in the PHA administrative plan.
-
Section 982.634–Homeownership option:Maximum term of homeownership
assistance:
The maximum term of assistance is fifteen years if the initial mortgage has a term of twenty years or greater, or ten years if less. The accelerated principal payment with the
NACA mortgage allows for full pay-off within the term of assistance. The elderly or
disabled would not require the accelerated principal payment.
-
Section 982.625 – Homeownership Options: General
This section allows for NACA’s no down payment mortgage if the PHA can demonstrate in its Annual Plan that it has the capacity, or will have the capacity, to successfully operate a HUD/PHA homeownership program. There is no requirement for a minimum credit score, minimum savings, or other limitations. This allows NACA’s Best in America mortgage to be effectively utilized.
-
Section982.627–Homeownership option:Eligibility requirements for families
This section defines the minimum income and employment that are incorporated in the program requirements.
-
Section982.628–Homeownership option:Eligible units
Property types can be single family, condos or coops. Properties can also be new construction if the unit is under construction or already built.
-
Section982.631–Homeownership option:Home inspections and contract of sale
This section requires a home inspection by a licensed inspector to determine that the units passes Housing Quality Standards (“HQS”). The HQS would utilize either the HUD or PHA standard. This standard should consist of what the private sector currently uses when the required repairs need to be completed after the mortgage closes. In such cases, the inspector would verify that the rehab escrow funds are sufficient to complete the required repairs and the funds would only be released upon verification by the inspector of the completed work. The lenders holding the mortgages have approved and support this process and have determined that the units pass the HQS.
-
Section982.630–Homeownership option:Homeownership counseling
NACA is the largest HUD certified counseling intermediary providing about twenty percent of the counseling in the country. NACA provides both pre and post counseling that far exceeds the HUD requirements. NACA’s comprehensive housing counseling has been recognized as the national standard.
-
Section 982.640 – Homeownership option: Recapture of homeownership assistance:
The Participant would not have to repay any of the homeownership assistance since
they would be receiving the HAP for ten years and at the end of ten years the
homeownership assistance subject to recapture would be zero.
Example of HOT-PHA
Rochester, N.Y
The following example uses the Standard Payment based on number of bedrooms as the mortgage payment. It shows the maximum purchase price and payment allocation for the HAP and Accelerated Principal Payment. It also shows the pay-off time period with the interest saved using the Accelerated Principal Reduction. The combination of the Mortgage Payment and extra principal payment would have the mortgage completely paid-off in under 10 years for the 15- year mortgage and in under 15 years for the 30-year mortgage. If the Participant purchases a property for less than the Standard Payment, the HAP and Participant payments would decrease but the term of the mortgage would remain the same.
The following example uses the Standard Payment based on number of bedrooms as the mortgage payment. It shows the maximum purchase price and payment allocation for the HAP and Accelerated Principal Payment. It also shows the pay-off time period with the interest saved using the Accelerated Principal Reduction. The combination of the Mortgage Payment and extra principal payment would have the mortgage completely paid-off in under 10 years for the 15- year mortgage and in under 15 years for the 30-year mortgage. If the Participant purchases a property for less than the Standard Payment, the HAP and Participant payments would decrease but the term of the mortgage would remain the same.
Studio
|
1 BR
|
2 BR
|
3 BR
|
4 BR
|
5 BR
|
6 BR
|
|
Payment Standard
|
$625
|
$737
|
$915
|
$1,145
|
$1,261
|
$1,450
|
$1,667
|
30-Year Mortgage:
|
|||||||
PITI Payment (68%)
|
$425
|
$501
|
$622
|
$779
|
$857
|
$986
|
$1134
|
Accelerated Principal
Reduction (32%)
|
$200
|
$236
|
$293
|
$336
|
$404
|
$464
|
$533
|
Minimum Required Funds
|
$2,176
|
$2,311
|
$2,524
|
$2,802
|
$2,940
|
$3,167
|
$3,429
|
Maximum Purchase Price – 30-year
|
|||||||
Current Interest Rate – 3.5%
|
$67,000
|
$81,000
|
$103,500
|
$133,000
|
$147,000
|
$171,500
|
$199,000
|
Pay-off
|
14yr 2m
|
14yr 2m
|
14yr 7m
|
15yr 5m
|
14yr 10m
|
14yr 11m
|
15yr 0m
|
Interest Saved
|
$23,258
|
$27,824
|
$35,109
|
$42,838
|
$49,132
|
$57,010
|
$65,849
|
15-Year Mortgage:
|
|||||||
PITI Payment (70%))
|
$438
|
$516
|
$641
|
$802
|
$883
|
$1,015
|
$1,167
|
Accelerated Principal
Reduction (30%)
|
$187
|
$221
|
$274
|
$343
|
$378
|
$435
|
$500
|
Minimum Required Funds
|
$2,100
|
$2,217
|
$2,404
|
$2,646
|
$2,267
|
$2,965
|
$3,193
|
Maximum Purchase Price – 15-year:
|
|||||||
Current Interest Rate- 2.875%
|
$48,500
|
$58,500
|
$74,500
|
$95,500
|
$106,000
|
$123,000
|
$142,500
|
Pay-off
|
8yr 10m
|
8yr 11m
|
9yr 0m
|
9yr 1m
|
9yr 2m
|
$9yr 2 m
|
9yr 2m
|
Interest Saved
|
$4,793
|
$5,714
|
$7,165
|
$9,058
|
$10,012
|
$11,560
|
$13,331
|
*Exceptional Area Payment
Standard $687 $810 $1,006 $1,259 *Higher HAP if purchase in certain areas
Standard $687 $810 $1,006 $1,259 *Higher HAP if purchase in certain areas
$1,387 $1,595
$1,833
Rochester NY:
Property tax: 10.70% of assessed value
Insurance: $774 annual premium with $65 per month **http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
Property tax: 10.70% of assessed value
Insurance: $774 annual premium with $65 per month **http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
Example of HOT-PHA
Boston, MA
The following example uses the Standard Payment based on number of bedrooms as the mortgage payment. It shows the maximum purchase price and payment allocation for the HAP and Accelerated Principal Payment. It also shows the pay-off time period with the interest saved using the Accelerated Principal Reduction. The combination of the Mortgage Payment and extra principal payment would have the mortgage completely paid-off in under 10 years for the 15- year mortgage and in under 15 years for the 30-year mortgage. If the Participant purchases a property for less than the Standard Payment, the HAP and Participant payments would decrease but the term of the mortgage would remain the same.
The following example uses the Standard Payment based on number of bedrooms as the mortgage payment. It shows the maximum purchase price and payment allocation for the HAP and Accelerated Principal Payment. It also shows the pay-off time period with the interest saved using the Accelerated Principal Reduction. The combination of the Mortgage Payment and extra principal payment would have the mortgage completely paid-off in under 10 years for the 15- year mortgage and in under 15 years for the 30-year mortgage. If the Participant purchases a property for less than the Standard Payment, the HAP and Participant payments would decrease but the term of the mortgage would remain the same.
Studio
|
1 BR
|
2 BR
|
3 BR
|
4 BR
|
5 BR
|
6 BR
|
|
Payment Standard
|
$1,313
|
$1,509
|
$1,860
|
$2,327
|
$2,564
|
$2,948
|
$3,333
|
30-Year Mortgage:
|
|||||||
PITI Payment (68%)
|
$892
|
$1,026
|
$1,265
|
$1,582
|
$1,744
|
$2,005
|
$2,266
|
Accelerated Principal
Reduction (32%)
|
$420
|
$483
|
$595
|
$745
|
$820
|
$943
|
$1065
|
Minimum Required Funds
|
$3,192
|
$3,437
|
$3,873
|
$4,451
|
$4,746
|
$5,223
|
$5,509
|
Maximum Purchase Price – 30-year
|
|||||||
Current Interest Rate –
3.625%
|
$146,000
|
$170,000
|
$212,500
|
$270,000
|
$302,000
|
$350,000
|
$396,000
|
Pay-off
|
14yr 5m
|
14yr 6m
|
14yr 8m
|
14yr 9m
|
14yr 10m
|
14yr 11m
|
14yr 11m
|
Interest Saved
|
$52,083
|
$60,314
|
$74,911
|
$94,563
|
$105,015
|
$121,280
|
$137,109
|
15-Year Mortgage:
|
|||||||
PITI Payment (70%))
|
$919
|
$1,056
|
$1,302
|
$1,629
|
$1,795
|
$2,063
|
$2,333
|
Accelerated Principal
Reduction (30%)
|
$394
|
$453
|
$558
|
$698
|
$769
|
$884
|
$1,000
|
Minimum Required Funds
|
$3,006
|
$3,217
|
$3,598
|
$4,103
|
$4,360
|
$4,774
|
$5,150
|
Maximum Purchase Price – 15-year
|
|||||||
Current Interest Rate- 3%
|
$110,000
|
$124,500
|
$155,000
|
$196,000
|
$218,500
|
$252,000
|
$285,000
|
Pay-off
|
9yr 2m
|
9yr 1m
|
9yr 1m
|
9yr 2m
|
9yr 2m
|
$9yr 2 m
|
9yr 2m
|
Interest Saved
|
$10,923
|
$12,477
|
$15,437
|
$19,396
|
$21,472
|
$24,717
|
$27,597
|
Boston MA:
Property tax: 12.5% of assessed value
Insurance: $900 annual premium with $75 per month **http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
Property tax: 12.5% of assessed value
Insurance: $900 annual premium with $75 per month **http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
Example of HOT-PHA
Worcester, MA
The following example uses the Standard Payment based on number of bedrooms as the mortgage payment. It shows the maximum purchase price and payment allocation for the HAP and Accelerated Principal Payment. It also shows the pay-off time period with the interest saved using the Accelerated Principal Reduction. The combination of the Mortgage Payment and extra principal payment would have the mortgage completely paid-off in under 10 years for the 15- year mortgage and in under 15 years for the 30-year mortgage. If the Participant purchases a property for less than the Standard Payment, the HAP and Participant payments would decrease but the term of the mortgage would remain the same.
The following example uses the Standard Payment based on number of bedrooms as the mortgage payment. It shows the maximum purchase price and payment allocation for the HAP and Accelerated Principal Payment. It also shows the pay-off time period with the interest saved using the Accelerated Principal Reduction. The combination of the Mortgage Payment and extra principal payment would have the mortgage completely paid-off in under 10 years for the 15- year mortgage and in under 15 years for the 30-year mortgage. If the Participant purchases a property for less than the Standard Payment, the HAP and Participant payments would decrease but the term of the mortgage would remain the same.
Studio
|
1 BR
|
2 BR
|
3 BR
|
4 BR
|
5 BR
|
|
Payment Standard
|
$745
|
$881
|
$1,060
|
$1,326
|
$1,466
|
$1,658
|
30-Year Mortgage:
|
||||||
PITI Payment (68%)
|
$507
|
$599
|
$721
|
$902
|
$997
|
$1,127
|
Accelerated Principal
Reduction (32%)
|
$238
|
$282
|
$339
|
$424
|
$469
|
$531
|
Minimum Required Funds
|
$2297
|
$2,482
|
$2,729
|
$3,096
|
$3,288
|
$3,552
|
Maximum Purchase Price – 30-year
|
||||||
Current Interest Rate – 3.5%
|
$74,100
|
$89,300
|
$109,400
|
$139,000
|
$154,500
|
$176,000
|
Pay-off
|
13y 8mo
|
13y 9mo
|
13y 11mo
|
14y 0mo
|
14y 1mo
|
14y 1mo
|
Interest Saved
|
$ 26,526
|
$ 31,743
|
$38,584
|
$ 48,699
|
$54,018
|
$ 61,373
|
15-Year Mortgage:
|
||||||
PITI Payment (70%))
|
$522
|
$617
|
$742
|
$928
|
$1,026
|
$1,161
|
Accelerated Principal
Reduction (30%)
|
$223
|
$264
|
$318
|
$398
|
$440
|
$497
|
Minimum Required Funds
|
$2,178
|
$2,342
|
$2,555
|
$2,873
|
$3,040
|
$3,272
|
Maximum Purchase Price – 15-year:
|
||||||
Current Interest Rate- 2.85%
|
$55,400
|
$66,700
|
$81,400
|
$103,400
|
$115,000
|
$131,000
|
Pay-off
|
8yr 9mo
|
8yr 9mo
|
8yr
10mo
|
8yr
10mo
|
8yr 11mo
|
8yr 11mo
|
Interest Saved
|
$ 5,610
|
$ 6,691
|
$ 8,105
|
$10,209
|
$ 11,315
|
$12,827
|
Worcester MA:
Property tax: $19.22 per $1000 of assessed value
Insurance: $660 annual premium with $55 per month **http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
Copyright©NACA HOT-PHA
NOTE THE ABOVE ARE EXAMPLES: Similar guidelines are worked out for each city/state in which the individual/family is purchasing their home
This is a great opportunity for you to benefit from this wonderful program - take the time to make it happen for you - if you are not in the Newark, NJ area, this is a great time for a road trip - especially those of you who live in the NY, NJ, PA, MD, DE, DC corridor - it's no more than a 4 hour road trip - but well worth the time.
NOW THAT YOU KNOW
WHAT ARE YOU GOING TO DO
ABOUT IT?
Stay Blessed &
ECLECTICALLY BLESSED
Gloria
Property tax: $19.22 per $1000 of assessed value
Insurance: $660 annual premium with $55 per month **http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx
Copyright©NACA HOT-PHA
NOTE THE ABOVE ARE EXAMPLES: Similar guidelines are worked out for each city/state in which the individual/family is purchasing their home
This is a great opportunity for you to benefit from this wonderful program - take the time to make it happen for you - if you are not in the Newark, NJ area, this is a great time for a road trip - especially those of you who live in the NY, NJ, PA, MD, DE, DC corridor - it's no more than a 4 hour road trip - but well worth the time.
NOW THAT YOU KNOW
WHAT ARE YOU GOING TO DO
ABOUT IT?
Stay Blessed &
ECLECTICALLY BLESSED
Gloria
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