HILP
Financing NIFA
 NE legislature created the
Nebraska Mortgage Finance Fund
(NMFF), in 1978
 In 1983, NE legislature created
NIFA by combining the NMFF & two
other finance funds
 NIFA sells tax-exempt Mortgage
Revenue Bonds to private investors
Financing NIFA
 NIFA uses $ from bond sales to
purchase guaranteed or insured
mortgages for home
purchase/repair
 NIFA lenders – banks and mortgage
companies – originate the loans
 The loans are packaged into
Mortgage Backed Securities
Financing HILP
 Participating lenders act as NIFA
agents, lending to homeowners at
6.5% interest
 City of Lincoln, Urban Development
Department (UDD) uses CDBG funds
to pay the interest, homeowners pay
the principal and 0% interest
Participating Lenders
 Marketing will be
conducted by the
participating lenders,
community groups
and UDD staff
 Brochures, magnets,
festival and event
booths, word of
mouth
Applicant Supplies Materials
The applicant supplies to UDD all documentation
requested by the lender including, but not limited to:
 Most recent income tax return, pay stubs,
any other documentation that will show
current income if significantly different
from that shown on the income tax return
 Proof of homeowner insurance coverage
 Most recent property tax assessment
 Status of current mortgage(s)
UDD Forwards Materials
UDD collects the pre-application and all
required supporting documentation and
forwards those materials via fax to the
lender selected by homeowner
Mary reviews the application for
completeness and eligibility
for the HILP Program
before forwarding to lender.

Homeowners
select a
lender from
participating
lenders
Loan Origination/
Review
Lender
Upon receipt of the pre-application and
supporting documents, the lender
contacts the borrower so that the
applicant can make a formal loan
application at lender’s
place of business and
present any additional
materials requested
by lender
Lender Processes
the Application
Lender determines applicant’s annual
income, reviews credit history, and
establishes the maximum loan amount -- up
to $15,000
Please approve for the
maximum amount requested!
For Denied HILP Loans:
 Fax Income Computation Worksheet to
UDD and indicate reason for denial
 Notify applicant of denial
 Explain alternative financing with your
bank, if available
 UDD will contact applicant if UDD has
other assistance is available
UDD Options for Denials:
 If the applicant’s credit is insufficient to
carry a loan of the size needed for
required improvements, UDD will determine
if other assistance is available for a
piggybacked loan
 If the application is denied by the bank and
the applicant’s property is located within
the Low-to-Moderate Income Area, UDD
may be able to provide a loan directly to
applicant
Loan Approval
 Upon receiving a completed Income Computation
Worksheet from Lender on an approved homeowner,
UDD assigns the new file to a Housing Rehab
Specialist
 UDD staff work with the homeowner to determine
the scope of the work & the contractors to be used
 When a final $ amount is determined, a Certificate
of Loan Approval is submitted to the
Division Manager (Steve Werthmann)
for final department approval
UDD Will FAX the Lender:
 Part IV – Certificate of Approval
 Subsidy Calculation
 Part II – List of Improvements
Part IV –
Certificate
of Approval
Subsidy Example
$15,000 Loan Amount
15,000

PV
STO
I/Y
120
N
+
CPT
125
1
6.5
CPT
=
120
170.32
PMT
RCL
1
PV
Subsidy = $3,991.44
=
PMT
The Lender:
 Upon receiving the Certificate of Loan
Approval, the Lender notifies the borrower
of the approval and conducts the loan closing
 Lender then requests subsidy funds from
UDD for interest buy down
 Lender instructs the borrower to sign
contracts, begin work, and contact the UDD
Rehabilitation Specialist when improvements
have been completed.
The Lender…
 Deposits the greater of the subsidy amount or 25%
of the total loan in the City’s program escrow
account
 Disburses the remaining loan funds to the borrower
 Faxes copies of the following loan closing documents
to Mary for review and recording. Mary will forward
to UDD accountant (Pat) for payment:




Documentation of amount of escrow deposited
Copy of settlement statement
Copy of Note
Request for Subsidy (as previously mentioned)
 For a loan of $3,500 or less, a Deed of Trust is not
usually prepared -- a signature loan is used instead
The Rehab Specialist…
 The Rehab Specialist takes photographs of
completed work for the file
 If work is satisfactorily completed, the
Rehab Specialist submits the final payment
invoice to the UDD accountant for
disbursement of escrowed funds
 UDD accountant prepares
the check drawn on the
program escrow account
Before
After
Before
After
Before
After
 Lender prepares and submits a
quarterly report to UDD, showing loans
closed during that quarter including:
 borrowers’ names
 addresses
 loan closing date
 total loan amount
 subsidy reimbursement
 closing costs
 net bank leverage
 Mary verifies this information and
forwards it to NIFA for reports to the
NIFA Board and the State Legislature
$
 Lender submits a quarterly report to
UDD containing the balance of all
active HILP loans including the
borrower’s name and address
 For those HILP loans that are repaid
prior to the end of the term
established at closing, UDD is due a
rebate check on the pre-paid interest
Participating Lenders