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FY'19 HFH-IA Loan Program

Programs & Services

ABOUT THE FUND

The HFH-IA Loan Program allows HFH-IA to act as a secondary lender for Iowa’s HFH mortgages.  Affiliates pledge their homeowners’ mortgages and monthly mortgage payments to the Program.  In return, affiliates get a portion of the cash value of the mortgage right away, rather than having to wait 20 to 30 years for the payments to come in.  Affiliates then use this cash to accelerate home building, acquire land for large-scale projects, and leverage support from others. 

FY’19 FUNDS: Anticipated to lend $200,000 with final amount subject to CDFI requirements.

  • Four (4) loans of approximately $50,000 each will be awarded to qualifying affiliates with approved applications
    • Depending on the number of qualified applicants, HFH-IA reserves the right to lend out fewer than 3 awards, at a larger amount
    • HFH-IA is pursuing other funding options and may have more funds available at time of application deadline: HFH-IA will let qualified applications know the amount available and may award a greater amount to approved applicants, if they are interested in a larger loan
  • Loan Term: 10 years
  • Interest Rate: set at application announcement and is based on the lowest rate used by Iowa Finance Authority’s First Home Program
  • Closing Fee: a minimal closing fee may be required to cover costs, e.g. attorney fees or appraisal fees, if a new appraisal is required
  • Prequalification Worksheet due: Friday, February 22, 2019 
    • An Application and Readiness File Checklist will be made available to all affiliates deemed eligible at that time: the completed Application and all documents on the Readiness File Checklist must be submitted to HFH-IA no later than March 29, 2019. 

All FY'19 approved loan requests will be disbursed from the HFH-IA’s current Loan Program.    The FY'19 HFH-IA loan program is available to Iowa HFH affiliates only.

Example of Loan Transaction:

  • Assume an approved loan allocation of $50,000.
  • Affiliate will pledge a mortgage with an outstanding balance of at least $50,000                                            
  • Interest Rate:  3.625%                               
  • Loan proceeds to affiliate evidenced by a promissory note between the affiliate and HFH-IA:  $50,000
  • Note term up to or equal to the pledged mortgage maturity date:  10 Years            
  • Note payment matches the homeowner monthly Payment:  $497.36
  • Closing Fee paid at loan closing:  $300 for new appraisal

PREQUALIFICATION PACKET

A complete Prequalification Packet consists of the following 3 items.  All forms referred to in blue type are available on the HFH-IA website.

  1. Fully completed and executed Prequalification Worksheet
  2. FY’19 Financial Projections:
    • Detailed FY’19 Budget
    • 12-month, Monthly Cash Flow Projections FY’17. If you operate a ReStore, please include the ReStore budget if it is separate from the affiliate budget. Use HFH Projected Cash Flow Budget.
  3. FY’18 Financial Statements (all statements should be for the 12-month fiscal year ended June 30, 2018):
    • Balance Sheet
    • Statement of Cash Flow
    • Profit & Loss Statement compared to budget.  If you operate a ReStore, please include the ReStore financial statements if they are separate from the affiliate financials.  If you do not prepare an income statement compared to budget, please provide the report provided to your board of directors that compares your financial performance to budget, such as a cash flow budget compared to actual report. See HFH Actual compared to Budget Cash Flow – sample.

APPLICATION

A complete application consists of the following 6 items. Please include Exhibit A. Readiness File Checklist with your application packet. All forms referred to in blue type are available on the HFH-IA website.

  1. Collateral File for each mortgage offered as collateral on the loan:
    • Mortgage Information Sheet
    • Homeowner payment history
    • Copy of recorded mortgage
    • Original homeowner promissory note
    • Current Title Opinion or Title Guaranty (Title Insurance outside Iowa)
    • Evidence of homeowner’s property insurance paid
    • Flood hazard determination
    • Appraisal at time of closing
    • Homeowner application and income verification
  2. A completed Mortgage Portfolio Quality Report for each mortgage or contract for deed you hold as of June 30, 2018.  Use the Mortgage Portfolio Quality Report template.
  3. Your affiliate's Historical Summary of Sources of Support showing data for the 12-month fiscal years ending June 30, 2016, 2017 and 2018 and projections for FY’19.  Important Note:  FY’18 sources should match the affiliate’s FY’18 financial statements and FY’19 projections should match the affiliate’s FY’19 budget.  HFH-IA is seeking to ensure that affiliates continue to receive strong support from their local communities.  Should significant decreases in local support be evident, funding allocations will be adjusted accordingly.  Use the Historical Sources of Funds FY’17 template.
  4. A count and brief narrative of your affiliate's plan for new housing production, A Brush With Kindness or Critical Home Repair and ReStore over the next three years and how HFH-MN resources will be utilized to accomplish your program goals.
  5. A copy of your current Fund Development Plan.  An “ideal” Fund Development Plan includes planned fund sources, amount, timing and the responsible committee or staff person.
  6. The approximate date you anticipate drawing the funds based on cash flow needs.

FUNDING CRITERIA

HFH-IA will use the following Funding Criteria as a guide to allocating HFH-IA Loan Program funds.  In addition, please see Exhibit B. Loan and Portfolio Requirements, some of the requirements are necessary to apply for funding and some are ongoing requirements once you become a borrower.

  1. Broad Allocation of Resources throughout the State
    • The loan committee will review the proposed project locations and make every effort to ensure funding is being allocated to both rural and urban settings throughout the state.
  2. Local Fund Raising
    • Local funding is intended to leverage affiliates’ local fund raising efforts.  As such, Habitat Iowa loans are considered as matching funds to those raised locally.  Each affiliate’s budget, historical sources of support, and fund development plan are reviewed to ensure that no more than 50% of an affiliate’s program and operating support comes from HFH-IA.
  3. Home Production
    • An affiliate is active in housing production, per HFHI good standing guidelines, and has a reasonable plan in place to continue to utilize HFH-IA loan funds for their intended purpose of increasing home production.
  4. Credit Risk Rating (CRR)
    • HFH-IA CRR System is used to assess an affiliate’s financial health, capacity, and the related risk of a HFH-IA loan.  See the Credit Risk Rating System Survey for details on the seven CRR criteria and what they are designed to measure.

TIMELINE

Request for Prequalification Worksheets posted January 15, 2019
Prequalification Worksheets due to HFH-IA Office Friday, February 22, 2019 (5pm)
Loan Committee reviews Prequalification Worksheets Week of February 26, 2019
Affiliates notified of eligibility to continue Application Process March 1, 2019
Applications due to HFH-IA Office Friday, March 29, 2019 (5 pm)
Loan Committee reviews Applications and provides recommendations to the full Board April, 2019
Board approves loans May, 2019
Loans delivered to approved affiliates By June 28th, 2019

All Prequalification Worksheets must be complete and received at Habitat Iowa’s office by 5:00 p.m. on Friday, February 22, 2019 in order to be considered for funding.

We greatly appreciate the submission of the application ELECTRONICALLY in “Excel”, “Word”, or PDF document formats whenever available (such as budgets, financial statements, and historical sources of funds).

Please feel free to contact me with any questions you may have regarding the Prequalification Worksheet and/or Application.  I am happy to work with you to complete the necessary forms.  My contact information is below.  I look forward to receiving your applications.

Christine Hall, Housing Program Specialist                                                          

Habitat for Humanity of Iowa, Inc.

5191 Maple Drive, Suite L

Pleasant Hill, IA 50327

Email: chall@iowahabitat.org

Phone: 515-266-6886

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