2011 Welcome Home Program
This is only a brief overview of the Welcome Home program. Complete details, limits, requirements, and guidelines are contained in Attachment H of the 2011 AHP Implementation Plan, and in the 2011 Welcome Home Guide.
The Federal Home Loan Bank of Cincinnati (the FHLBank) has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership. These funds are available to members as grants to assist homebuyers under the Welcome Home Program. This is a general description of the program. Complete information and documents are available at http://www.fhlbcin.com.
Uses of Funds
Welcome Home grants are used to fund reasonable down payments and closing costs incurred in conjunction with the acquisition or construction of owner-occupied housing by low- and moderate-income homebuyers. The grants are limited to $5,000 per homebuyer and members are subject to an aggregate limit of $200,000 per offering. All funds are reserved for specific homebuyers purchasing specific homes and cannot be transferred to other homebuyers or to other homes.
Funds Available for 2011
For 2011 approximately $7.1 million in funds will be available.
Funds will be reserved for members and homebuyers on a “first-come, first-served” basis, but only to the extent that funds are available. Once all funds have been reserved, the FHLBank will no longer accept Reservation Requests.
Schedule for 2011 Welcome Home
Welcome Home funds will be available for reservation beginning on March 1, 2011, and will remain available until all funds have been reserved. Any Reservation Requests received before that date will be denied.
All Funding Requests must be submitted by 5PM ET on December 1, 2011. Any Funding Requests received after that date will be denied.
In order to receive Welcome Home funding, the following requirements must be met:
Funds must be used to assist households whose incomes are at or below 80% of the Mortgage Revenue Bond (MRB) income limits, as adopted by the appropriate state housing finance agency, adjusted for family size. MRB limits for KY, OH, and TN are available at http://www.fhlbcin.com. Please note that 2010 MRB limits will be used until the 2011 MRB limits are published by the respective state housing finance agencies.
Welcome Home funds are intended only for homebuyers who would qualify for the first mortgage based on their current income. Co-signors and co-borrowers are not allowed unless they will occupy the home as their primary residence and their incomes are included in determining eligibility.
The member who reserves the Welcome Home funds must originate the first mortgage, but may close in the name of a third party.
Homebuyers must contribute at least $500 of their own funds toward down payment and closing costs (60% of these funds may be received as a gift).
The rate of interest, points, fees, and any other charges must not exceed a reasonable market rate for a loan of similar maturity, term, and risk.
The interest rate on the first mortgage (or the fully indexed rate for an Adjustable Rate Mortgage (ARM)) may not exceed 8.00%. (Note: the fully indexed rate means the index at the time of loan origination plus the stated margin).
The interest rate on the second mortgage may not exceed 11.50%.
Welcome Home funds may not be used in transactions involving a second mortgage provided by an individual as seller. Second mortgages provided by formal organizations, including financial institutions, Community Development Financial Institutions, housing finance agencies, non-profit organizations, etc. are acceptable. Should you have any questions, please contact the FHLBank prior to submitting the Reservation Request.
Interest only loans are not eligible for Welcome Home.
All fixed rate loans must have a minimum term and amortization of 10 years.
All ARMs must have a minimum term of 10 years and a minimum amortization of 20 years.
Welcome Home first mortgage loans must comply with applicable federal, state and local anti-predatory lending laws, regulations and orders designed to prevent or regulate abusive and deceptive lending practices and loan terms (collectively, “Anti-Predatory Lending Laws”). For example, Anti-Predatory Lending Laws may prohibit or limit certain practices and characteristics, including, but not limited to the following:
Requiring the borrower to obtain prepaid, single-premium credit life, credit disability, credit unemployment, or other similar credit insurance;
Requiring mandatory arbitration provisions with respect to dispute resolution in the loan document; or
Charging prepayment penalties for the payoff of the loan beyond the early years of such a loan.
The FHLBank will not provide Welcome Home assistance to any transaction in which a loan exceeds the annual percentage rate, or points and fees thresholds of the Home Ownership and Equity Protection Act of 1994 and its implementing regulations (Federal Reserve Board Regulation Z).
First-time homebuyers must complete a homebuyer counseling program. The counseling program must be provided by, or based on one provided by, an organization recognized as experienced in homeownership counseling. The counseling program must cover, at a minimum, mortgage financing, credit-worthiness, household budgeting, and home maintenance. Welcome Home funds may be used to pay up to $300 of the costs provided they are not covered by another funding source. Homebuyer counseling is only required for first-time homebuyers.
The housing assisted with Welcome Home funds must be subject to a legally enforceable restriction in the Warranty Deed or restrictive covenant to the Warranty Deed requiring that the FHLBank be given notice of any refinancing, sale, foreclosure, or change in ownership of the unit prior to the end of a five-year retention period. If the home is sold or refinanced during the five-year retention period, the homebuyers may be required to pay back a pro rata amount of the Welcome Home grant. If the home is foreclosed, no repayment is required. (Note: a “deed in lieu of foreclosure” or an assignment of an FHA first mortgage to the Secretary of HUD is treated as a foreclosure). The 2011 Welcome Home Retention language is available at http://www.fhlbcin.com.
Welcome Home funds may be used in conjunction with other local, state, and federal funding sources and with the FHLBank’s Community Investment Cash Advance programs. However, they may not be used with an existing or future award through any of the FHLBank’s other Housing and Community Investment Programs, including AHP.
If Welcome Home funds have been disbursed to the member and the funds are misused, the FHLBank may recapture all or a portion of the funds.
If the homebuyer receives any cash back at closing, as indicated on the HUD-1 Settlement Statement, the Welcome Home grant will be reduced by a like amount. In lieu of receiving cash back at closing, any excess Welcome Home funds may be used as “principal repayment” or “principal reduction” and must be shown on the HUD-1 as such.
If the HUD-1 Settlement Statement indicates that earnest money was returned to the homebuyer, the Welcome Home grant will be reduced by a like amount.
If the HUD-1 Settlement Statement indicates funds were used for an ineligible purpose, e.g. paying off consumer debt, the Welcome Home grant will be reduced by a like amount.
Welcome Home is not intended for purchases requiring any significant repair or rehabilitation. If more than $500 is to be escrowed for repairs, the property is not eligible for Welcome Home without the advance written approval of the FHLBank prior to closing. Funds escrowed for repairs do not count towards the homebuyer’s required $500 cash contribution. Welcome Home funds will not be disbursed until the member certifies that: 1) all repairs were required for mortgage approval as evidence by the appraisal; 2) all repairs have been completed; and 3) all escrowed funds have either been disbursed or released. If unused escrowed funds are released to the homebuyer, the Welcome Home grant may be reduced by a like amount.
Welcome Home may be used for new construction. However, the home must be complete and the permanent financing closed before December 1, 2011.
Some manufactured housing is eligible for Welcome Home assistance, please consult the 2011 Welcome Home Guide for more information.
Reserving Welcome Home Funds
Funds may be reserved via the Welcome Home link on the FHLBank’s Members Only website available at http://www.fhlbcin.com. For assistance in accessing the “Members Only” website, please contact the “Members Only” Administrator at your institution or contact the FHLBank’s Help Desk at 800-781-3090 (8:30 – 5:00 PM ET).
After completing the Reservation Request, please submit the following required documents to the FHLBank via fax, e-mail or mail:
1. A completed, signed, and dated Uniform Residential Loan
2. Third party documentation for all sources of current year income for all
persons who will reside in the home.
The FHLBank will perform a preliminary review of the Reservation Request and the documentation submitted to determine eligibility of the homebuyer, availability of funds in the program, and availability of funds for the member. If any of the information is incomplete, additional documentation or information may be required. Written notification will be provided to the member as to the homebuyer’s eligibility and date the reservation will expire. Submission of the Reservation Request does not constitute a reservation of funds; funds are reserved only upon written notification of approval from the FHLBank.
Please allow four to six weeks for the FHLBank to review the Reservation Request and supporting documentation.
Welcome Home funds will only be disbursed after closing. To request the disbursement of funds, please complete a Funding Request via the Welcome Home link on the FHLBank’s Members Only website available at http://www.fhlbcin.com. For assistance in accessing the “Members Only” website, please contact the “Members Only” Administrator at your institution or contact the FHLBank’s Help Desk at 800-781-3090 (8:30 – 5:00 PM ET). After submission of the Funding Request, please submit the following documents via fax, e-mail or mail:
1. An executed HUD-1 Settlement Statement, showing the Welcome Home
2. An executed final Truth-in-Lending statement for all repayable
3. A copy of the Warranty Deed containing the 2011 Welcome Home five-
year retention language (available at http://www.fhlbcin.com).
Funds will be disbursed only to the extent they are required to fill the gap for downpayment, closing costs, and counseling fees.
Please allow four to six weeks for the FHLBank to review the Funding Request and supporting documentation.
For information or assistance, please contact the Housing and Community Investment Department toll free at (888) 345-2246, or:
Jill A. Cravens
Housing Program Manager
E-mail: firstname.lastname@example.org Damon v. Allen
Fax Number: Supporting documentation may be faxed to: 513-852-7648. (See Instructions for submitting Welcome Home requests by fax at the Welcome Home website, http://www.fhlbcin.com ).
E-mail Address: Supporting documentation may be e-mailed to email@example.com. (See Instructions for submitting Welcome Home requests by e-mail at the Welcome Home website, http://www.fhlbcin.com).
Mailing Address: Supporting documentation may be mailed to:
Welcome Home Program
Attn: Jill A. Cravens
Federal Home Loan Bank of Cincinnati
Welcome Home Program
P.O. Box 598
Cincinnati, OH 45201-0598