2009 Housing Innovation Marketplace Single Family Program Updates

Status Report on Housing

• Multiple factors affecting housing market • Credit Crunch/Financial Crisis • Industry tightening of credit • New Home Starts at 13-yr low • Over 2 mil vacant homes • Double digit home price drops • Job Market weakening • Foreclosure rising

USDA Loans are STANDING STRONG!

AFFORDABLE HOUSING THROUGH

USDA PROGRAMS

LENDER OF FIRST OPPORTUNITY IN RURAL NEBRASKA RESPONSIBLE LENDING Home Ownership Opportunities – (direct & guarantee)

• • •

100% Financing No PMI Fixed rates & terms Home Repairs - Loans and Grants

"Investing in Rural Nebraska Communities ...One Relationship at a Time"

Partners For Affordable Housing Government, Private & non-profit sectors • • • • • • • •

USDA NIFA / Lenders Realtors Nebraska Housing Developers Non-Profit Organizations DED – (CDBG , HOME , TRUST) Federal Home Loan Bank Nebraska Assistive Technology

DIRECT HOMEOWNERSHIP LOAN PROGRAM HIGHLIGHTS

• • •

Primary goal is to provide affordable quality housing to low and very low income households.

100% financing – subsidy available Loans are originated in the local USDA Rural Development offices. Rodney Baumeister: Wayne, NE handicap accessible home Partners: Wayne Co Housing, City of Wayne, DED, FHLB

PAYMENT SUBSIDY

• Subsidies are available to reduce monthly payment to as low at 1% for eligible low and very-low income households.

Working Together for successful Home Ownership • USDA direct loan $59,424 • Assistive Technology $22,000 • DED Down payment assist $10,000 • FHLB $3,000 • REACH Homebuyer Ed

Rural Home Repair Loan Program

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Loan funds can be used to improve or modernize dwelling as well as removal of health & safety hazards (must be primary residence) Very low income household Fund Uses: septic systems, utility connection fees, energy conservation, electrical, plumbing, heating systems, repair or replace roof, replace deteriorated siding, handicap accessibility such as install ramps, enlarge doorways, accessible bath and fixtures Loans-1% interest rate - Up to 20 year term

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Maximum amount-$20,000

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A deed of trust is required on loans exceeding $7,500.

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Leverage with partners to provide maximum utilization of funds

RURAL HOME REPAIR LOAN -Scottsbluff-

Rural Home Grant Program

• Applicants must own their own home and are very low income households (50% of median household adjusted income for the county.) • Grants are only available to homeowners 62 years of age or older • Lack repayment ability for a loan • Grant funds can only be used for health, safety and/or handicap accessibility repairs. • Maximum lifetime grant is $7,500 • 3 yr Grant Agreement entered into

RURAL HOME REPAIR GRANT * BEFORE REPAIRS * AFTER REPAIRS*

Guaranteed financing

• Loans processed & underwritten through approved lenders • True 100% program • No maximum purchase price • No monthly mortgage insurance – one time 2% GRH fee can be financed • Expanded qualifying ratios 29/41 and above • No asset limit / No reserve minimum • Generous income limits • NOT just for first time homebuyers • REFINANCING – exisiting direct or GRH – .5% GRH fee

Rates & Terms

• GRH loans are at a fixed interest rate negotiated between lender and applicant (RD does cap max. rate) • Participation with NIFA available • 30 year term

NO PMI LOAN 5% down $8,750 9% Rate NO MI $1338 FLEX 97 3% down $5250 680-699 FICO 35% MI $1259 FLEX 97 3% down $5250 700 + FICO 18% MI $1245 FHA 3% down $5250 1.75% UFMIP + 55 bp MI 95% LTV CONVENTIONAL 5% down $8750 30% MI MCM®/HOME POSSIBLE 3% down $5250 680 – 699 FICO 18% MI $1213 80/20 80% 1st 7% 30 YR TERM 20% 2 nd 8.5% 30 YR TERM $1201 MCM®/HP 3% down $5250 700 + FICO 18% MI $1196 VA 2.15% GUARANTY FEE NO MI $1189 $1228 $1214 102% LTV RURAL DEVELOPMENT NO MI $1188 100% LTV RURAL DEVELOPMENT NO MI $1164 $175,000 Loan 7% rate No r.e. taxes & insurance included

60,000,000 NE OBLIGATIONS PER YEAR 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08

SUCCESS / CHALLENGES

• FY ’08 – Record obligations • FY ’09 NE # loans up 106% • FY ’09 Funding Status – CR passed through March 6, 2009 – Funding still available for DIRECT Program – Lapse in funding – GRH (Jan 9 th ) – Conditional Commitment issued “subject to” funds • Additional funding proposals – Appropriations bill (FY ’09 budget) – Economic stimulus bill – add’l approp

Credit Scores

• No Minimum credit score to qualify • Baselines for reduced documentation - GRH Program – 620 or above - Direct Program – 640 or above

PORTFOLIO MANAGEMENT CREDIT SCORES - LOSSES

FICO Scores 619 & below – 17% portfolio – 39% losses No FICO score – 6 % of portfolio – 16% of losses Summary – 23% of portfolio resulting in 55% of losses 35%

Portfolio Credit Score Distribution

6% 17% 21% No score <= 619 620-659 660-699 >=700 21%

Loss Distribution w/in 3 Years

8% 16% 14% 23% 39%

Credit Score Factors*

• • • • •

35% Payment HISTORY – late pays, collections, etc 30% AMOUNTS Owed – weighted: 5% installment loans, 25% revolving (ie credit card). Balance of 30-35% of limit improves scores; balances of above 50% red flags – counts against score 10% NEW Credit – soft inquiries – do no count against; hard inquiries – creditors checking scores to acquire credit – 14 day window 15% LENGTH of credit – how long have established credit & most recent activity 10% MIX of credit – ideally 2-3 credit cards and installment. If don’t have open credit score won’t rate & hurts overall score. Must use open credit properly & manage amts owed – 2-3 month to establish *source Linda Ferarri, President of Credit Resource Corp

Rural Development Policy Updates

• Final rule on income limit structure • For example, the current base income limit for all non high cost counties is:

1 Person 2 Person 3 Person 4 Person 5 Person 6 Person 7 Person 8 Person

49,550 56,600 63,700

70,750

76,400 82,050 87,750

93,400

• Under the new income limit structure for non-high cost counties, those income limits would be:

1-4 Person 5-8 Person $70,750 $93,400 Proposed implementation January 20 th Implementation delayed to March 20th

Eligibility Website: LOG ON: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Click here for property eligibility Click here for income limits

Resources Available on the Web •

The USDA Rural Development website for Nebraska is

http://www.rurdev.usda.gov/ne/

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This website also provides information about our housing programs as well as links to many other Rural Development websites.

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Rural Development Helps Get Deals Done & Your Clients Into Homes

Economic Stimulus

RURAL DEVELOPMENT provided in 2008, $64 million through its’ Guaranteed and Direct Rural Housing Loan programs that assisted 850 households to achieve the dream of homeownership in rural Nebraska.

USDA RURAL DEVELOPMENT OFFICE DIRECTORY

Mike Buethe 402-437-5574 Office [email protected]

Krista Stevens 402-437-5518 Office [email protected]

NEBRASKA WEBSITE: www.rurdev.usda.gov/ne/ SIGN UP FOR LISTSERV AND NEVER MISS BREAKING NEWS!

www.rdlist.sc.egov.usda.gov/listserv/mainservlet USDA is an equal opportunity provider, employer, and lender. To file a complaint of discrimination write USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C., 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD).