Family Selection Impact on Affiliates

Policy for Income and Credit Qualifications

•Verifying Income• Is the income verifiable?• Is the income sustainable?• Does the documentation match what is

on the application?• Are there employment gaps?

• Documentation collected• 2 years tax returns• Recent pay stubs• Benefit letters SSI/SSD• Food assistance letter• 2 year history of child support• Employer references• Re-verify income every 2-3 months

•Verifying Credit• Do they have a good pay history?• Do they have collections?• Do they have open judgments?•What is the debt-to-income ratio• Discuss importance of maintaining credit• Recheck credit

Homebuyer Readiness

•Homebuyer orientation

• Sweat equity•Down payment contribution• Ability to manage and save their funds• IDA• CD

Ability to Repay

• Dodd –Frank Act requires creditor to make a reasonable, good-faith determination, based on verified and documented information, that the consumer will have reasonable ability to repay any consumer credit transactions secured by a dwelling, including any mortgage-related obligation (such as property tax).

• Ability to Repay Rule• Non profit entities are exempt from the statute and the legal

consequences of non-compliance, but non profits still have to ensure the borrower is able to repay the mortgage

• Non profit creditor will need to maintain documentation of their procedures regarding the determination of consumer’s ability to repay• Verify the documentation used in qualify

the consumer

Eight factors to the Ability to Repay Rule

• Verify current or reasonably expected income or assets• Current employment status•Monthly mortgage payment•Monthly payment on any simultaneous

loans•Monthly payment for mortgage-related

obligations.

• Current debt obligations, alimony, child support• Total monthly debt-to-income ratio or

residual income• Credit history

Goals

Comprehensive Plan• Qualification • Income• Credit• Other

• Training• Budgets• Credit Counseling• Setting Expectations

• Accountability• Credit Checks• Verification of Employment

Consequences

• Smooth mortgage process• Avoid De-selection• Accelerate cash flow

• Defaults• Negative Escrows• Cash Flow

• Foreclosure Costs• Legal Costs• Time

• Impact on the Homeowner