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110 Northeast 3rd Street, Suite 300 Fort Lauderdale, Florida 33301
Tel: 954.357.4900 Fax: 954.357.8221
www.broward.org/HFA
Chair Milette Thurston • Vice Chair Ruth T. Cyrus • Secretary Jacqueline Paige Browne • Assistant Secretary Colleen LaPlant Members: Kirk L. Frohme • Donna Jarrett-Mays • Jose “Pepe” Lopez • John G. Primeau • Daniel D. Reynolds
REGULAR MEETING
A regular meeting of the Housing Finance Authority of Broward County (the “HFA”), Florida, will be held on Wednesday October 12, 2016, at 5:30 p.m., in the 2nd Floor Conference Room, located at 110 N.E. 3rd Street, Fort Lauderdale, Florida.
CALLING OF THE ROLL PRESENTATION Broward Countywide Surtax Education and Outreach
Mr. Henry Sniezek, Director, Broward County Environmental Protection and Growth Management Department, will provide a presentation on “A Penny at Work” surtax for Broward County’s Transportation Projects.
CONSENT AGENDA (1 through 3)
1. Approval of September 14, 2016, Regular Meeting Minutes 2. Executive Director’s Report 3. J & J Dental (Family & Cosmetic Dentistry) – Revocable Parking License Agreement
MOTION TO APPROVE Resolution of the Housing Finance Authority of Broward County, Florida (“Housing Finance Authority”), approving the form and authorizing the execution and delivery of the Revocable Parking License Agreement (“Parking License Agreement”) between the Housing Finance Authority and J and J Dental, Inc.; authorizing certain Officials of the Housing Finance Authority to take all actions necessary in connection with the execution, delivery, and administration of the Parking License Agreement; and providing an effective date.
MOTION TO APPROVE the Consent Agenda for October 12, 2016.
Page 2 of 2
REGULAR AGENDA 4. Financial Reports Monthly Overview – Ms. Linda Dufresne
MOTION TO APPROVE the Housing Finance Authority monthly financial reports for September 30, 2016.
5. HFA Lee County Single Family Loan Program (Own A Home Opportunity Grant
Program)
MOTION TO APPROVE Resolution of the Housing Finance Authority of Broward County, Florida, approving and authorizing execution and delivery of the amended and restated Interlocal Agreement with the Housing Finance Authority of Lee County, Florida, for joint participation in a program to provide financing for single family mortgage loans through the issuance of bonds, Mortgage Credit Certificates, or Direct Lending (“Program”), including providing down payment assistance in connection with such loans; authorizing bond counsel expenditures not to exceed $5,000; authorizing certain Officials of the Housing Finance Authority of Broward County, Florida, to take all actions necessary or advisable in connection with the Program, including execution and delivery of all necessary or appropriate documents in connection therewith; and providing for an effective date.
6. MATTERS OF HFA MEMBERS 7. MATTERS FROM THE FLOOR 8. NEXT BOARD MEETING November 9, 2016 9. ADJOURNMENT
Subject to Change
BOARD PACKAGE
Meeting
OCTOBER 12, 2016
Chair Milette Thurston • Vice Chair Ruth T. Cyrus • Secretary Jacqueline Paige Browne • Assistant Secretary Colleen LaPlant Members: Kirk L. Frohme • Donna Jarrett- Mays • Jose “Pepe” Lopez • John G. Primeau • Daniel D. Reynolds
MINUTES
BOARD MEETING
Wednesday, September 14, 2016
The regular monthly Board Meeting of the Housing Finance Authority (“HFA”) of Broward County was held on Wednesday, September 14th, 2016 in the 2nd Floor Conference Room at 110 Northeast 3rd Street, Fort Lauderdale, Florida. The Chair, Milette Thurston, determined a quorum was present and called the meeting to order at 5:30 p.m. Board Members Present Board Members Absent Milette Thurston, Chair Donna Jarrett-Mays, Member Ruth T. Cyrus, Vice Chair Daniel D. Reynolds, Member Jacqueline Paige Browne, Secretary Colleen LaPlant, Assistant Secretary Kirk L. Frohme, Member Jose “Pepe” Lopez, Member John G. Primeau, Member Staff Also Present Ralph Stone, Executive Director Linda Mendillo, CPA, Accounting Services Norman Howard, Manager Deborah Zomermaand, Financial Advisor Tina Kosakowski, Secretary CALLING OF THE ROLL A Roll Call was taken by Ms. Tina Kosakowski. CONSENT AGENDA 1. Approval of August 10, 2016, Regular Meeting Minutes 2. Executive Director’s Report 3. Florida Association of Local Housing Finance Authorities
A MOTION was made by MR. KIRK L. FROHME and SECONDED by MR. JOHN G. PRIMEAU, TO AUTHORIZE staff to pledge $5,000 to the Florida Housing Coalition/Sadowski Education Effort to provide financial support during the 2017 Legislative Session. This motion passed with all ayes.
110 Northeast 3rd Street, Suite 300 Fort Lauderdale, FL 33301
Phone: 954.357.4900 Fax: 954.357.8221
www.broward.org/HFA
HFA Board Meeting
Minutes – September 14, 2016
Page 2 of 4
A MOTION was made by MR. KIRK L. FROHME and SECONDED by MR. JOHN G. PRIMEAU, TO APPROVE the Consent Agenda (Items #1-3). This motion passed with all ayes. REGULAR AGENDA 4. Financial Reports Monthly Overview – Ms. Linda Mendillo Ms. Mendillo made specific mention on the following Reports; but, overall stated there weren’t many changes, just the normal differences.
Financial Reports – August 2016 Balance Sheet (Flux Report) 8/31/16 - 8/2016 comparison to 7/2016 (Month to Month) A change in the Receivable on the Balance Sheet Flux, Month to Month, due to an accrual that was reversed. Balance Sheet (Flux Report) 8/31/16 - 8/2016 comparison to 8/2015 Same timing issues on this yearly comparison, Balance Sheet. Audit entries, #7, from 9/30/15 hit during last month. Profit & Loss (Flux Report) - Current Year-to-Date to Prior Year-to-Date No real significant changes. (Year-to-Date: As of 8/2016) Profit & Loss (Flux Report) - Budget to Actual No real significant changes. (Year-to-Date: As of 8/2016)
Aged Receivables 8/31/16 A change as noted above on the Balance Sheet (Flux Report) Month-to-Month comparison.
A MOTION was made by MR. KIRK L. FROHME and SECONDED by MR. JOSE “PEPE” LOPEZ, TO APPROVE the Housing Finance Authority Monthly Financial Reports for August 31, 2016. This motion passed with all ayes. 5. Mortgage Credit Certificate (MCC) Program Deborah Zomermaand started the discussion on the MCC Program advising the Board that the anticipated Staff actions disclosed at the last Board Meeting (8/10/16); i.e., requesting an additional allocation, were taken and the ratification of such actions is included within the HFA Resolution. Further, stating the MCC Program Administrator is the HFA and the Program Administrator has the flexibility to amend certain program criteria, including the ability to revise fees at the HFA’s discretion. Other amendments may be made with Bond Counsel’s Opinion to ensure the HFA is not in violation with any Tax Codes, Rules and Regulations.
HFA Board Meeting
Minutes – September 14, 2016
Page 3 of 4
Ms. Zomermaand explained with the MCC Program documents were revised slightly from the program parameters originally presented to the Board. The parameters previously stated a Homebuyer must have a fixed rate mortgage with a 15 or 30 year maturity. The documents reflect a fixed rate mortgage with a maturity anywhere from 15 to 30 years, capped at 30 years [maturity]. However, for the most part, the documents are fairly similar to the HFA’s 2014 MCC Program. A MOTION was made by MR. KIRK L. FROHME and SECONDED by MR. JOHN G. PRIMEAU, TO APPROVE Resolution of the Housing Finance Authority of Broward County, Florida (“Housing Finance Authority”) authorizing a Mortgage Credit Certificate Program (“MCC Program”); ratification of pending request for additional Single Family Private Activity Bond allocation; authorizing the exchange of Single Family Private Activity Bond allocation in an amount not to exceed $200,000,000 for mortgage credit certificate authority in an amount not to exceed $50,000,000; approving the form and authorizing the execution and delivery of the program administration guidelines; approving the form and authorizing the execution and delivery of Participation Agreements between the Housing Finance Authority and various lending institutions desiring to participate in the MCC Program; authorizing certain Officials of the Housing Finance Authority to take all actions necessary in connection with the implementation of the MCC Program; providing certain other findings and details with respect thereto; and providing an effective date. This motion passed with all ayes. 6. Single Family Mortgage Revenue Bonds - 2016 Carry Forward and 2017 Bond
Allocations Deborah Zomermaand explained this is a procedural item done every year to maintain the allocation in an effort to keep a balance of Multi-family and Single Family Allocation. The 2013 Multi-family, previously carried forward, will expire at the end of this year. Therefore, in this case, the 2016 Private Activity Bond Allocation will carry over as Multi-family. At the beginning of the year, any requested allocation received will be in the form of Single Family, as all Single Family allocation essentially will be exhausted. As such, procedurally, a TEFRA needs to be published as well; hence, the motion in asking for authorization in advance to do such and further asking the Authority to request the 27 Private Activity Bond Allocations from the State. Ms. Zomermaand further added, the second motion is basically readopting the Plan of Finance affirming the HFA will be administering MCC’s or Single Family Mortgage Bonds.
A MOTION was made by MR. KIRK L. FROHME and SECONDED by MR. JOHN G. PRIMEAU, TO APPROVE Item #6. This motion passed with all ayes.
HFA Board Meeting
Minutes – September 14, 2016
Page 4 of 4
Resolution of the Housing Finance Authority of Broward County, Florida approving a plan of finance involving the issuance by Authority of its Single Family Mortgage Revenue Bonds in an aggregate face amount of not to exceed $250,000,000 in one or more Series; approving use of State awarded allocation for Mortgage Credit Certificate programs or multifamily carry forward; authorizing the proper Officers to do all things necessary or advisable; and providing an effective date for this Resolution.
Resolution of the Housing Finance Authority of Broward County, Florida authorizing staff to carry forward 2016 Allocation; authorizing the request for 2017 Allocation; approving a plan of financing involving the issuance by the Authority of its Single Family Mortgage Revenue Bonds (the “Bonds”) in an aggregate face amount of not to exceed $250,000,000; approval of Bonds as required by section 147(f) of the Internal Revenue Code of 1986, as amended; authorizing the Authority to hold a public hearing held in accordance with Section 147(f) of the Internal Revenue Code of 1986, as amended; authorizing the proper Officers to do all things necessary or advisable; and providing an effective date for this Resolution.
7. MATTERS OF HFA MEMBERS None. 8. MATTERS FROM THE FLOOR None. 9. NEXT BOARD MEETING October 12, 2016 - Wednesday 10. ADJOURNMENT Meeting adjourned by Chair, Milette Thurston, at 5:53 p.m.
Disclosure: The above captioned Minutes are transcribed in a summary format. To request a CD of the full
meeting, please contact Tina Kosakowski at (954) 357-4928.
Housing Finance Authority of Broward County
Rental Occupancy Report
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Property
Total
Number of
Units
From Mgmt
Number of
Units
Occupied
% of Units
Occupied
Previous
month % of
Lower Units
Occupied
July
From Mgmt
Low
Income
Units
Occupied
%
Occupied
by Low
Income
LURA
Low Income
Requirement
Certificate of
Compliance
rec'd
August Comments
Vacant
Units
Lake Vista (fka Ashlar/Pier Club) 480 430 89.6 22% 93 21.6 20% 8/30/2016 QP expires 6/1/2021 50
Banyan Bay 416 379 91.1 51% 194 51.2 20% 9/8/2016 37
Bridgewater Place 312 311 99.7 98% 306 98.4 40% 9/1/2016 QP expires 4/2016 1
Chaves Lakes 238 234 98.3 98% 227 97.0 40% 9/1/2016 QP expires 3/2018 4
Colonial Park 160 159 99.4 100% 159 100.0 99% 8/24/2016 1
Cypress Grove/Sandalgrove 814 756 92.9 100% 756 100.0 40% 9/2/2016 58
Emerald Palms 318 313 98.4 88% 275 87.9 40% 8/31/2016 QP expires 5/1/2017 5
Fairlake at Weston 368 345 93.8 42% 144 41.7 20% 8/30/2016 QP expires 12/2015 23
Golden Villas 120 120 100.0 99% 119 99.2 40% 9/2/2016 0
Golf View Gardens 160 158 98.8 100% 158 100.0 100% 8/23/2016 2
Harbour Cove 212 210 99.1 89% 187 89.0 40% 8/31/2016 2
Heron Pointe 200 196 98.0 100% 190 96.9 40% 8/31/2016 4
Island Club 260 254 97.7 66% 165 65.0 20% 9/1/2016 QP expires 7/2016 6
Laguna Pointe 188 185 98.4 92% 169 91.4 40% 9/1/2016 3
Lauderhill Point (fka Driftwood Terr) 176 175 99.4 100% 175 100.0 100% 9/8/2016 1
Los Prados 444 407 91.7 25% 96 23.6 20% 9/6/2016 37
Mar Lago Village 216 201 93.1 42% 88 43.8 40% 9/7/2016 15
Meridian 160 158 98.8 100% 158 100.0 99% 8/25/2016 QP expires 5/2018 2
Pembroke Gardens 198 195 98.5 97% 190 97.4 40% 9/7/2016 QP expires 12/2015 3
Palms of Deerfield 56 56 100.0 100% 56 100.0 100% 9/7/2016 0
Pembroke Park 244 243 99.6 95% 228 93.8 40% 9/1/2016 1
Pembroke Villas 180 173 96.1 94% 163 94.2 40% 9/1/2016 QP expires 6/2016 7
Pinnacle Village 148 145 98.0 98% 144 99.3 40% 9/2/2016 3
Prospect Park 125 125 100.0 100% 125 100.0 40% 8/24/2016 0
Sailboat Bend 37 37 100.0 100% 37 100.0 100% 9/10/2016 0
San Tropez (fka Pembroke Village) 480 474 98.8 21% 96 20.3 20% 9/10/2016 6
Sanctuary Cove 292 292 100.0 99% 290 99.3 40% 8/30/2016 0
St Croix 246 246 100.0 100% 246 100.0 40% 9/1/2016 QP expires 6/1/2020 0
Stirling II 104 104 100.0 89% 94 90.4 40% 8/26/2016 QP expires 12/2015 0
Summerlake 108 106 98.1 100% 106 100.0 40% 9/1/2016 2
Venice Cove 150 147 98.0 100% 147 100.0 40% 9/1/2016 QP expires 11/2017 3
Woodsdale Oaks 172 170 98.8 100% 170 100.0 70% 8/25/2016 2
Totals 7,782 7,504 5,751 . 278
* Figures in red show properties that are less than 90% occupied
Total % rate of occupancy for all properties 96%
Properties highlighted in yellow have bonds outstanding although the QP has expired
Properties highlighted in green - although the QP expired 12/2015 - 2015 audit will be conducted in 2016
Pending New Projects
Northwest Gardens (new construction)
Stanley Terrace (acquisition rehab)
Residents at Crystal Lakes (acquisition rehab)
Item 2 - Attachemnt 2 - Rental Occupancy Report 10/19/2016; 3:25 PM
MULTI-FAMILY BOND RENTAL OCCUPANCY REPORT KEY
The Rental Occupancy Report was prepared by staff from Certifications of Continuing
Compliance reports received from Multi Family property management.
Column B represents the total number of units the property has.
Column C represents the number of units occupied during the time period.
Column D represents the percentage of units occupied versus the total number.
Column E represents the percentage of total units that were lower income occupied
during the month of July, 2016
Column F represents the number of lower income units occupied.
Column G represents the percentage of lower income units occupied versus the total
number of units available.
Column H represents the lower income requirement per the Land Use Restriction
Agreement.
Column I represents the date the Certificate of Compliance was received by Housing
Finance Authority.
Column J represents comments deemed important or necessary such as the qualifying
period expiration date or explanation for red numbers on the report.
Column K represents the number of units vacant for each property.
Columns that are blank represent no report was received from property management.
110 Northeast 3rd Street, Suite 300
Fort Lauderdale, Florida 33301 Tel: 954.357.4900 Fax: 954.357.8221
www.broward.org/HFA
MEMORANDUM DATE: October 4, 2016 TO: Housing Finance Authority Board Members THROUGH: Ralph Stone, Executive Director FROM: Norman L. Howard, Manager SUBJECT: September Operational Report SINGLE-FAMILY Information listed below is the foreclosure/bankruptcy report received from CitiMortgage for the months of July 2016 and August 2016. The report for the month of September 2016 has not been received from CitiMortgage to date. Bankruptcy – July 2016
Loan Count Total 1st Lien 2nd Lien 1st Mort./Total 2nd Mort./Total
0 $0 0 0 $0 $0
Foreclosure – July 2016
Loan Count Total 1st Lien 2nd Lien 1st Mort./Total 2nd Mort./Total
3 $319,698 2 1 $290,606 $29,092
Bankruptcy – August 2016
Loan Count Total 1st Lien 2nd Lien 1st Mort./Total 2nd Mort./Total
0 $0 0 0 $0 $0
Foreclosure – August 2016
2014 Mortgage Credit Certificate Program (MCC) At this time, the HFA has seventeen (17) lenders participating in the May 2014 MCC Program. Program totals to date are as follows:
Loan Count Total 1st Lien 2nd Lien 1st Mort./Total 2nd Mort./Total
3 $319,698 2 1 $290,606 $29,092
HFA Executive Report (August 2016)
Page 2 of 2
MCC’s by Lender Reserved Issued Cancelled/Expired
Academy Mortgage 0 6 4
Bank of America 0 3 1
Banking Mortgage Services Trust Corp. 2 3 0
Cornerstone Home Lending 0 1 0
Everett Financial 0 1 0
Gold Star Mtg. Financial Group 1 40 9
Guaranteed Rate 0 2 1
Hamilton Funding Group 5 201 29
HG Mortgage, LLC 9 24 14
Neighborhood Housing Services of S. FL 0 1 0
Paramount Residential Mortgage Group 1 74 15
Plaza Home Mortgage 0 5 0
Primary Residential Mortgage 0 0 1
Priority Lending Corp. 0 0 0
VanDyk Mortgage Corp. 0 0 0
Venta Financial Group 0 0 0
Wells Fargo Home Mortgage 0 1 0
Totals 18 362 74
Income to date: $62,875
MULTIFAMILY
Multifamily compliance monitoring; reporting period July 21, 2016, to August 20, 2016. Monthly Compliance
Review of this month’s bond report shows all properties are in compliance with their respective Land Use Restriction Agreements (LURA’s).
Occupancy Report
The HFA Rental Occupancy Report for time period July 21, 2016, to August 20, 2016, is included (Attachment 1). Annual Management Review and Inspections
There was one review and inspection completed during the reporting period of July 21, 2016, to August 20, 2016 listed below.
Prospect Park Apartments
The above listed property was in compliance with their respective LURAs.
RESOLUTION NO. 2016-017
A meeting of the Housing Finance Authority of Broward County, Florida was held at 5:30
P.M. on October 12, 2016, at the offices of the Housing Finance Authority of Broward County,
Florida, 110 Northeast Third Street, Suite 201, in the City of Fort Lauderdale, Florida.
Present:
Absent:
* * * * *
Thereupon, introduced the following resolution which was
read:
A RESOLUTION OF THE HOUSING FINANCE AUTHORITY OF BROWARD
COUNTY, FLORIDA (“HOUSING FINANCE AUTHORITY”), APPROVING
THE FORM AND AUTHORIZING THE EXECUTION AND DELIVERY OF
THE REVOCABLE PARKING LICENSE AGREEMENT (“PARKING LICENSE
AGREEMENT”) BETWEEN THE HOUSING FINANCE AUTHORITY AND J
AND J DENTAL, INC.; AUTHORIZING CERTAIN OFFICIALS OF THE
HOUSING FINANCE AUTHORITY TO TAKE ALL ACTIONS NECESSARY
IN CONNECTION WITH THE EXECUTION, DELIVERY, AND
ADMINISTRATION OF THE PARKING LICENSE AGREEMENT; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, the Legislature of the State of Florida (the "State") has enacted the Florida
Housing Finance Authority Law, Part IV, Chapter 159, Florida Statutes, as amended (the "Act"),
pursuant to which the State has empowered each county in the State to create by ordinance a
separate public body corporate and politic to be known as a Housing Finance Authority of the
county for the purpose of alleviating a shortage of housing and capital for investment in housing
in the area of operation of such Housing Finance Authority; and
WHEREAS, pursuant to the Act, the Board of County Commissioners (the “Board of
2
County Commissioners”) of Broward County, Florida enacted Ordinance No. 79-41, as
supplemented and amended (the "Ordinance") declaring a need for a Housing Finance Authority
to function in Broward County, Florida (the "County") and creating the Housing Finance
Authority of Broward County, Florida (the "Housing Finance Authority"); and
WHEREAS, the Housing Finance Authority is authorized by the Act to own real property
and make and execute contracts and other instruments related to such real property; and
WHEREAS, the Housing Finance Authority owns the real property located at 110
Northeast Third Street, Fort Lauderdale, Florida 33301, including the building and parking areas
thereon (“Premises”), as more particularly described on Exhibit A to Exhibit 1 attached hereto
and made a part hereof; and
WHEREAS, there is unused parking capacity at the Premises; and
WHEREAS, J & J Dental, Inc., a Florida corporation (“J & J Dental”), desires a license to
use ten (10) designated parking spaces at the Premises for vehicular parking for its officers and
employees; and
WHEREAS, pursuant to the direction given by the Housing Finance Authority at its
meeting of August 10, 2016, Housing Finance Authority staff negotiated the terms and
conditions of a parking license agreement between the Housing Finance Authority and J & J
Dental (“Parking License Agreement”); and
WHEREAS, the Housing Finance Authority desires to approve the form and authorize
execution and delivery of the Parking License Agreement in substantially the form attached
hereto as Exhibit 1; and
3
WHEREAS, the Housing Finance Authority has determined that execution of the Parking
License Agreement is in the best interests of the Housing Finance Authority and serves a valid
public purpose.
NOW, THEREFORE, BE IT RESOLVED by the Housing Finance Authority of Broward
County, Florida, as follows:
SECTION 1. AUTHORITY. This Resolution is adopted pursuant to the provisions of
the Act, the Ordinance and other applicable provisions of law.
SECTION 2. RECITALS. The recitals set forth in the preamble to this Resolution are
hereby ratified and incorporated by reference herein as though set forth in full hereunder.
SECTION 3. AUTHORIZATION AND APPROVAL OF PARKING LICENSE
AGREEMENT. The Parking License Agreement, attached hereto in substantially final form as
Exhibit 1, is hereby authorized and approved. The Chair, Vice Chair, or Executive Director and
Secretary or Assistant Secretary of the Housing Finance Authority are hereby authorized to
execute and deliver the Parking License Agreement, with such changes, insertions and deletions
to and from the form attached hereto as Exhibit 1 as shall be approved by the Office of the County
Attorney and the Housing Finance Authority officer executing the Parking License Agreement,
such execution and delivery to be conclusive evidence of such approval.
SECTION 4. AUTHORIZATIONS. Subject to the terms and conditions of the Parking
License Agreement, the Executive Director of the Housing Finance Authority is authorized and
empowered to take all actions on behalf of the Housing Finance Authority as may be necessary
4
or desirable in connection with the administration of the Parking License Agreement.
SECTION 8. RESOLUTION EFFECTIVE. This Resolution shall take effect
immediately upon its passage.
Upon motion of _ , seconded by , the
foregoing Resolution was adopted by the following vote:
Ayes:
Noes:
EXHIBIT 1
PARKING LICENSE AGREEMENT
STATE OF FLORIDA )
) SS:
COUNTY OF BROWARD )
I, Jacqueline Paige Brown, Secretary of the Housing Finance Authority of Broward
County, Florida, do hereby certify that the foregoing is an accurate copy of the resolution of the
Housing Finance Authority adopted at a meeting held on October 12, 2016, as set forth in the
official minutes of the Housing Finance Authority, relating to the approval, execution, and
administration of the Parking License Agreement between the Housing Finance Authority and J
& J Dental, Inc.
I DO HEREBY FURTHER CERTIFY that said meeting was duly called and held in
accordance with Chapter 286, Florida Statutes.
WITNESS my hand and the corporate seal of said Housing Finance Authority, this 12th
day of October, 2016.
HOUSING FINANCE AUTHORITY OF
BROWARD COUNTY, FLORIDA
By:
Jacqueline Paige Brown, Secretary
[SEAL]
1
PARKING LICENSE AGREEMENT
THIS PARKING LICENSE AGREEMENT ("Agreement"), entered into by and
between the Housing Finance Authority of Broward County, Florida, a public body corporate and
politic ("Licensor"), and J & J Dental, Inc., a Florida corporation ("Licensee"), is effective on the
date on which it is executed by the second of the parties hereto ("Effective Date").
RECITALS:
Whereas, Licensor owns the building and parking areas located at 110 Northeast Third
Street, Fort Lauderdale, Florida 33301 (“Premises”), as more particularly described on Exhibit A
attached hereto and made a part hereof; and
Whereas, subject to the terms and conditions of this Agreement, Licensee desires a license
to use ten (10) designated parking spaces on the Premises, as more particularly described on
Exhibit A (“Designated Parking Spaces”).
NOW, THEREFORE, in consideration of the mutual terms, conditions, and covenants
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Grant of License. Licensor hereby grants to Licensee the exclusive right, privilege, and
permission to use the Designated Parking Spaces, subject to the terms and provisions of this
Agreement (“License”).
2. Term. The term of this Agreement shall commence on November 1, 2016 and end on
October 31, 2019, unless terminated sooner or renewed in accordance with this Agreement.
3. Renewals. Upon the written request of Licensee to renew this Agreement, which request
must be delivered to Licensor at least ninety (90) days before expiration of this Agreement,
Licensor, acting by and through its Executive Director, in his or her sole discretion, may renew
this Agreement for two successive periods of one-year each. Each one-year renewal term shall be
upon the same terms and conditions as provided in this Agreement for the initial three-year term.
4. Early Termination. Licensor, acting by and through its Executive Director, and Licensee
shall each have the unilateral right to terminate this Agreement, with or without cause, upon
providing sixty (60) days advance written notice to the other party.
5. Limitations to License. The License granted hereunder is subject to the following
limitations and restrictions:
A. Licensee may use the Designated Parking Spaces for the sole purpose of providing
vehicular parking for Licensee’s officers and employees on weekdays (Mondays
through Fridays only), from 7:00 a.m. until 5:45 p.m., except for Licensor-observed
holidays that fall on a weekday as set forth in Exhibit B (on which days the
Designated Parking Spaces will not be available to Licensee).
2
B. Licensee shall not permit the Designated Parking Spaces to be used or accessed by
any person or entity other than Licensee’s officers and employees.
C. The Front Gate Entrance identified on Exhibit A shall be used for ingress to and
egress from the Designated Parking Spaces. Closure of the Front Gate Entrance
occurs promptly at 6:00 p.m. daily (“Daily Gate Closure”). All vehicles parked in
the Designated Parking Spaces must be vacated from the Premises by the Daily
Gate Closure. Any vehicles remaining in the Designated Parking Spaces after the
Daily Gate Closure will not be accessible until the following weekday (that is not
a Licensor-observed holiday identified in Exhibit B).
D. Licensee agrees that no hazardous materials shall be permitted or brought on, in, or
upon the Premises; no act shall be permitted, and nothing shall be kept in or about
the Premises, that will increase the risk of any hazard, fire, or catastrophe; and no
waste shall be permitted or committed upon or any damage done to the Premises.
Licensee shall not permit the Premises to be used or occupied in any manner that
will violate any applicable laws.
E. Use of the Premises shall be at Licensee’s sole risk.
6. License Fee.
A. Licensee shall pay an annual license fee of $12,000 payable to Licensor in monthly
installments of $1,000 ("Monthly License Fee”).
B. The Monthly License Fee is due on the first (1st) day of each month during the
term. Any Monthly License Fee not received in full by the Licensor by the fifth
(5th) business day after it is due shall be assessed a late payment fee of $10.00 per
day.
C. The Monthly License Fee shall be payable to the Housing Finance Authority of
Broward County, Florida and delivered to 110 Northeast Third Street, Suite 300,
Fort Lauderdale, Florida 33301.
7. Compliance with Laws. Licensee shall, at all times during this Agreement, and at
Licensee’s sole cost and expense, comply (and shall cause its officers and employees to comply)
with all laws, codes, statues, ordinances, and regulations applicable to this License and Licensee's
use of the Premises.
8. Costs and Expenses. Any and all costs, expenses, fees, or assessments arising out of or
relating to the grant of the License to Licensee shall be borne by Licensee, including, without
limitation, taxes, insurance premiums, and permit or approval fees.
9. Maintenance. Except as provided in Article 15, Licensor, at its sole cost and expense,
shall maintain and repair the Designated Parking Spaces.
3
10. Signage, Alterations and Modifications. Licensee shall not place any signage, equipment,
or fixtures on, or otherwise alter, modify, improve or change, the Designated Parking Spaces or
any other portion of the Premises.
11. Indemnification. Licensee shall at all times indemnify, hold harmless and defend
Licensor and all of Licensor's current and former officers, agents, servants, and employees
(collectively, "Indemnified Party") from and against any and all causes of action, demands, claims,
losses, liabilities and expenditures of any kind, including attorneys' fees, court costs, and expenses
(collectively, a "Claim"), raised or asserted by any person or entity not a party to this Agreement
(including any Claim raised by any officer or employee of Licensee), which Claim is caused or
alleged to be caused, in whole or in part, by any intentional, reckless or negligent act or omission
of Licensee, its current or former officers, employees, agents, or servants, arising from, relating
to, or in connection with this Agreement. In the event any Claim is brought against an Indemnified
Party, Licensee shall, upon written notice from Licensor, defend each Indemnified Party against
each such Claim by counsel satisfactory to Licensor or, at Licensor's option, pay for an attorney
selected by Licensor to defend the Indemnified Party. The obligations of this section shall survive
the expiration or earlier termination of this Agreement.
12. Assumption of Risk. Licensee, by its use of the Premises, assumes all risk of loss or
damage to property and all risk of personal injury, including death, attributable to any cause.
Licensee further agrees that it is familiar with the condition of the Designated Parking Spaces and
their suitability for their intended use, and Licensee accepts the Designated Parking Spaces on an
"AS-IS," "WHERE-IS" basis. Licensee forever releases Licensor, its agents, manager, affiliates
and employees from and against any and all of Licensee's claims, causes of action, liabilities and
expenses arising out of or relating to any such loss, damage, or injury. Licensor, its agents,
manager, affiliates, and employees shall not be responsible or liable for loss or damages by reason
of fire, theft, collision or any other cause to vehicles or their contents located in the Designated
Parking Spaces. No bailment is created by this Agreement.
13. Insurance.
A. Licensee shall, at a minimum, provide, pay for, and maintain in force at all times during
the term of this Agreement, the insurance coverage set forth in this Article in
accordance with the terms and conditions required by this Article.
B. Such insurance policies shall be issued by companies authorized or permitted to do
business in the State of Florida with an A.M. Best financial rating of A- or
better. Licensee shall be responsible for any policy deductibles or self-insured
retentions. Licensee shall protect Licensor and the Broward County Board of County
Commissioners by including Licensor, and “Broward County and the Board of County
Commissioners” as an additional insureds on the Commercial General Liability
Policy. The official title of the Certificate Holder is the Housing Finance Authority of
Broward County, Florida. This official title shall be used in all insurance.
4
C. Commercial General Liability Insurance. Commercial General Liability Insurance
shall be provided which shall contain minimum limits of One Million Dollars
($1,000,000.00) per occurrence, combined single limit for bodily injury liability
(including death) and property damage liability, and shall contain minimum limits of
Two Million Dollars ($2,000,000.00) general aggregate. Such policy shall apply on a
primary and non-contributory basis, and shall not require contribution from any other
insurance or self-insurance maintained by Licensor.
D. Licensee shall furnish Licensor a Certificate of Insurance and endorsements evidencing
the insurance coverage specified in this Article within fifteen (15) calendar days of the
Effective Date of this Agreement. Licensee's failure to provide to Licensor the
Certificates of Insurance and endorsements evidencing the insurance coverage within
fifteen (15) calendar days of the Effective Date shall provide the basis for the
termination of this Agreement.
E. Coverage is not to cease and is to remain in force (subject to cancellation notice) during
the term of this Agreement. Licensee shall provide notice of cancellation to Licensor
within thirty (30) days of Licensee’s notification. If any of the insurance coverage will
expire during the term of this Agreement, copies of renewal certificates shall be
furnished prior to, or upon the date of their expiration.
14. Safety Issues. Licensee shall promptly notify Licensor of any safety concerns regarding
or relating in any way to the Designated Parking Spaces or use of the Premises under this
Agreement. Licensee is responsible for using, and for instructing its officers and employees to
use, the Designated Parking Spaces and Premises in a safe and prudent manner.
15. Damage to Premises.
A. Licensee, at its sole cost and expense, shall repair any damage of any kind or nature
to the Premises and property located thereon caused by the use of the Premises by
Licensee's officers or employees.
B. Licensee shall give Licensor prompt written notice of any occurrence, incident, or
accident occurring on the Premises.
16. Assignment and Sub-licensing.
A. Licensee may not assign or transfer any or all of its interests under this Agreement to
any other individual or entity without Licensor's prior written consent, which may be
withheld in Licensor’s sole discretion.
B. Licensee may not sub-license any portion of its interest under this Agreement to another
party without Licensor's prior written consent, which may be withheld in Licensor’s
sole discretion.
5
17. Default. If either party defaults in the performance of a material provision of this
Agreement and fails to cure such default within fifteen (15) calendar days after receipt of written
notice specifying the nature of such default, or if such default cannot be cured within fifteen (15)
days and the defaulting party fails to commence such cure within such time and diligently pursue
such cure to completion, then the non-defaulting party may terminate this Agreement and may
pursue all other remedies available to it at law or in equity.
18. Third Party Beneficiaries. Neither Licensor nor Licensee intends to directly or
substantially benefit a third party by this Agreement. Therefore, the parties acknowledge that there
are no third party beneficiaries to this Agreement and that no third party shall be entitled to assert
a right or claim against either of them based upon this Agreement.
19. Notices. Whenever either party desires to give notice to the other, such notice must be sent
by email or sent by commercial express carrier with acknowledgement of delivery, addressed to
the party for whom it is intended at the place last specified. The place for giving notice shall
remain the same as set forth herein until changed in writing in the manner provided in this section.
For the present, the parties designate the following:
Notice to Licensor shall be addressed to:
Executive Director
Housing Finance Authority of Broward County, Florida
110 N.E. 3rd Street
Fort Lauderdale, FL 33301
Email: [email protected]
Notice to Licensee shall be addressed to:
Dr. John DeStefon
J & J Dental, Inc.
30 N.E. 3rd Street
Fort Lauderdale, Florida 33301
Email: [email protected]
20. No Waiver of Breach. Either party’s failure to enforce any provision of this Agreement
shall not be deemed a waiver of such provision or modification of this Agreement. A waiver of
any breach of a provision of this Agreement shall not be deemed a waiver of any subsequent breach
and shall not be construed to be a modification of the terms of this Agreement.
21. Severability. In the event any part of this Agreement is found to be unenforceable by any
court of competent jurisdiction, that part shall be deemed severed from this Agreement and the
balance of this Agreement shall remain in full force and effect.
22. Joint Preparation. This Agreement has been jointly prepared by the parties hereto, and
shall not be construed more strictly against either party.
6
23. Interpretation. The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement. All personal
pronouns used in this Agreement shall include the other gender, and the singular shall include the
plural, and vice versa, unless the context otherwise requires. Terms such as "herein," "hereof,"
"hereunder," and "hereinafter" refer to this Agreement as a whole and not to any particular
sentence, paragraph, or section where they appear, unless the context otherwise requires.
Whenever reference is made to a Section or Article of this Agreement, such reference is to the
Section or Article as a whole, including all of the subsections of such Section, unless the reference
is made to a particular subsection or subparagraph of such Section or Article.
24. Priority of Provisions. If there is a conflict or inconsistency between any term, statement,
requirement, or provision of any exhibit attached hereto, any document or events referred to herein,
or any document incorporated into this Agreement by reference, and a term, statement,
requirement, or provision of this Agreement, the term, statement, requirement, or provision
contained in this Agreement shall prevail and be given effect.
25. Law, Jurisdiction, Venue, Waiver of Jury Trial. This Agreement shall be interpreted
and construed in accordance with and governed by the laws of the state of Florida. The parties
agree that the exclusive venue for any lawsuit arising from, related to, or in connection with this
Agreement shall be in the state courts of the Seventeenth Judicial Circuit in and for Broward
County, Florida. If any claim arising from, related to, or in connection with this Agreement must
be litigated in federal court, the parties agree that the exclusive venue for any such lawsuit shall
be in the United States District Court or United States Bankruptcy Court for the Southern District
of Florida. BY ENTERING INTO THIS AGREEMENT, LICENSOR AND LICENSEE
HEREBY EXPRESSLY WAIVE ANY RIGHTS EITHER PARTY MAY HAVE TO A
TRIAL BY JURY OF ANY CIVIL LITIGATION RELATED TO THIS AGREEMENT. IF
A PARTY FAILS TO WITHDRAW A REQUEST FOR A JURY TRIAL IN A LAWSUIT
ARISING OUT OF THIS AGREEMENT AFTER WRITTEN NOTICE BY THE OTHER
PARTY OF VIOLATION OF THIS SECTION, THE PARTY MAKING THE REQUEST
FOR JURY TRIAL SHALL BE LIABLE FOR THE REASONABLE ATTORNEYS' FEES
AND COSTS OF THE OTHER PARTY IN CONTESTING THE REQUEST FOR JURY
TRIAL, AND SUCH AMOUNTS SHALL BE AWARDED BY THE COURT IN
ADJUDICATING THE MOTION.
26. Amendments. No modification, amendment, or alteration in the terms or conditions
contained herein shall be effective unless contained in a written document prepared with the same
or similar formality as this Agreement and executed by the Licensor and Licensee or others
delegated authority or otherwise authorized to execute same on their behalf.
27. Prior Agreements. This Agreement represents the final and complete understanding of
the parties regarding the subject matter hereof and supersedes all prior and contemporaneous
negotiations and discussions regarding that subject matter. There is no commitment, agreement,
or understanding concerning the subject matter of this Agreement that is not contained in this
written document.
7
28. Incorporation by Reference. Any and all Recital clauses stated above are true and correct
and are incorporated herein by reference. Attached Exhibits A and B are incorporated into and
made a part of this Agreement.
29. Representation of Authority. Each individual executing this Agreement on behalf of a
party hereto hereby represents and warrants that he or she is, on the date he or she signs this
Agreement, duly authorized by all necessary and appropriate action to execute this Agreement on
behalf of such party and does so with full legal authority.
30. Counterparts and Multiple Originals. This Agreement may be executed in multiple
originals, and may be executed in counterparts, each of which shall be deemed to be an original,
but all of which, taken together, shall constitute one and the same agreement.
[Signature Pages Follow]
8
IN WITNESS WHEREOF, the parties hereto have made and executed this Parking License
Agreement on the respective dates under each signature: Housing Finance Authority of Broward
County, Florida, and J & J Dental, Inc., signing by and through their duly authorized
representatives.
LICENSOR
ATTEST: HOUSING FINANCE AUTHORITY OF
BROWARD COUNTY, by and through its
Executive Director
___________________________
Secretary By_____________________________
Ralph Stone, Executive Director
___ day of ________________, 2016
Approved as to form by
Joni Armstrong Coffey
Broward County Attorney
Governmental Center, Suite 423
115 South Andrews Avenue
Insurance requirements approved Fort Lauderdale, Florida 33301
by Broward County Risk Management Telephone: (954) 357-7600
Division Telecopier: (954) 357-7641
By_________________________________ By____________________________
James D. Rowlee (Date)
Senior Assistant County Attorney __________________________________ Print Name
__________________________________ Title
JDR/dnt HFA Parking License Agreement
10/02/16
9
PARKING LICENSE AGREEMENT BETWEEN HOUSING FINANCE AUTHORITY OF
BROWARD COUNTY, FLORIDA, AND J & J DENTAL, INC.
LICENSEE
J & J DENTAL, INC.
ATTEST: By ____________________________
Printed Name: John DeStefon_______
__________________________ Title: President _____________
Secretary
______ day of __________________, 20____.
(SEAL)
OR
WITNESSES:
___________________________
Witness 1 Signature
___________________________
Witness 1 Print/Type Name
___________________________
Witness 2 Signature
___________________________
Witness 2 Print/Type Name
10
11
EXHIBIT B
HOLIDAY CLOSINGS
Holiday 2016 2017 2018 2019 2020 2021
New Year's Day Fri., Jan. 1 Mon., Jan. 2 Mon., Jan. 1 Tues., Jan. 1 Wed., Jan. 1 Fri., Jan. 1
Martin Luther King, Jr. Day Mon., Jan. 18 Mon., Jan. 16 Mon., Jan. 15 Mon., Jan. 21 Mon., Jan. 20 Mon., Jan. 18
Presidents' Day Mon., Feb. 15 Mon., Feb. 20 Mon., Feb. 19 Mon., Feb. 18 Mon., Feb. 17 Mon., Feb. 15
Memorial Day Mon., May 30 Mon., May 29 Mon., May 28 Mon., May 27 Mon., May 25 Mon., May 31
Independence Day Mon., July 4 Tue., July 4 Wed., July 4 Thurs., July 4 Fri., July 3 Mon., July 5
Labor Day Mon., Sept. 5 Mon., Sept. 4 Mon., Sept. 3 Mon., Sept. 2 Mon., Sept. 7 Mon., Sept. 6
Veterans' Day Fri., Nov. 11 Fri., Nov. 10 Mon., Nov. 12 Mon., Nov. 11 Wed., Nov. 11 Thurs., Nov. 11
Thanksgiving Day Thurs., Nov. 24 Thurs. Nov. 23 Thurs., Nov. 22 Thurs., Nov. 28 Thurs., Nov. 26 Thurs., Nov. 25
Day After Thanksgiving Fri., Nov. 25 Fri., Nov. 24 Fri., Nov. 23 Fri., Nov. 29 Fri., Nov. 27 Fri., Nov. 26
Christmas Day Mon., Dec. 26 Mon., Dec. 25 Tues., Dec. 25 Wed., Dec. 25 Fri., Dec. 25 Fri., Dec. 24
Housing Finance Authority (HFA) of Broward County
October 12, 2016 – Board Meeting
J & J Dental, Inc. (Family and Cosmetic Dentistry) (“JJ Dental”) – Consent Agenda Requesting approval of Revocable License Agreement with JJ Dental (Parking License Agreement”) for rental of ten (10) designated parking spaces at the HFA 110 Office Building on weekdays for JJ Dental employees. Background
1. On July 21, 2016, Dr. John DeStefon, DMO from JJ Dental, contacted staff in reference to additional parking for JJ Dental employees at the HFA 110 parking lot. The JJ Dental office is located at 30 Northeast 3rd Street (west of the HFA 110 building).
Dr. DeStefon proposed the following:
1. Rental of ten (10) designated parking spaces for JJ Dental employees to be used on weekdays.
2. Monthly license fee of $100 per space, totaling $1,000 monthly. 3. JJ Dental will provide general liability insurance coverage and
indemnify the HFA for any liability for losses or damage arising out of JJ Dental’s use of the parking lot.
2. At the HFA August 10, 2016 board meeting, the Board authorized staff to prepare
an agreement between the HFA and JJ Dental for rental of ten (10) designated parking spaces on weekdays at the HFA office building, located at 110 Northeast 3rd Street.
Present Situation Staff, the County Attorney and JJ Dental negotiated the following Parking License
Agreement terms and conditions:
1. Rental of ten (10) designated parking spaces to JJ Dental for a monthly fee of $1,000.
2. Initial three-year Parking License Agreement term commencing November 1, 2016, with two, one-year renewal options at the sole discretion of the HFA Executive Director.
3. Right of either party to terminate upon providing 60 days’ advance written notice. 4. JJ Dental will provide general liability insurance coverage with limits of $1 million
per occurrence and $2 million aggregate. 5. JJ Dental will indemnify the HFA for any losses or damages arising from its use
of the parking lot.
Recommendation
Request HFA approval of this Parking License Agreement with JJ Dental, to
commence on November 1, 2016, and continue for three years until October 31, 2019, unless terminated sooner or extended as permitted in the Parking License Agreement. The HFA, acting through its Executive Director, may, in its sole discretion, extend the Parking License Agreement for two (2) additional one (1) year periods (Attachment 1).
Attachment
1. HFA Resolution & Parking License Agreement
Housing Finance Authority of Broward County October 12, 2016- Board Meeting
Dufresne & Associates, CPA, P.A.- Overview of the September 30, 2016 Financial Reports
"Florida Statutes 189.069 para 16. At least 7 days before each meeting or workshop, the agenda of the event, along with any meeting materials available in an electronic format, excluding confidential and exempt information. The information must remain on the website for at least 1 year after the event."
As a result of this statute that is applicable beginning October 1, 2016, the financial statements that will be provided to the HFA Board will be 1 month in arrears. In months where the meeting date is the 81h day of the month, it would not be possible to comply with posting the financial statements at least 7 days prior to the meeting date. The October statements will be presented at the December meeting. There will be no financial statements presented at the November meeting.
The following are items considered to be of note regarding the financial reports for the month of September, 2016:
1. Balance sheet changes relate primarily to individual cash account activity, Authority fees, Audit fees, notes receivable, DPA related accounts, demolition of building, Franklin Park and audit adjustments for line items that are made only once annually at the end of each fiscal year.
2. There is a prior period adjustment eliminating the BNY Indemnification Account liability and reclassifying the balance to retained earnings. These funds have been accumulated over a number of years. The balance is not a liability; the amounts on deposit are available to be used by the Authority for its own operations.
3. Profit and loss report indicates the changes that relate p\'imarily to timing of new bond issuances, redemptions and related fees and residuals, fair market value adjustments Franklin Park and timing of invoices paid and payments received.
Cash vs Accrual Basis for P&L Budget to Actual comparison
On a monthly basis the process to prepare the financial statements includes:
a. Budgetary column- Cumulative 1/12 of the budgeted revenues and expenses are reported
b. Actual column -Significant known revenue and expense items are accrued
a. Authority fees receivable are adjusted to correct accrual basis balance
b. Cumulative 1112 of budgeted Personnel and Other Expenses due to BOCC are adjusted to correct accrual basis balance
c. Expenses for all invoices submitted to the HFA prior to month end are paid and recorded in the financial statements.
d. Bank and account management fees that are reported on the monthly bank statements are recorded as expense in the applicable month.
Attachments
1. Balance Sheet (Flux Report September, 2016 comparison to August, 2016)
Balance Sheet (Flux Report- September, 2016 comparison to September, 2015)
2. P&L (Flux Report- Current Year-to-Date to Prior Year-to-Date) P&L (Flux Report- Budget to Actual)
3. Aged Receivable Report
4. Wells Fargo Bank Reconciliation Report- Operating
5. Wells Fargo Bank Reconciliation Report- Franklin Park
6. Franklin Park Transactions
7. Change in Cash and Investments Analysis
The Housing Finance Authority of Broward County 11 o NE Third Street, #300 Fort Lauderdale, FL 33301
Balance Sheet (Flux Report) 9/30/2016
Explanation Se~tember August $ Difference % Difference (See criteria below)
Assets Cash-Wells Fargo $ 801,787 $ 376,472 425,315 53% 1, 3, 4 Cash-Wells Fargo- Franklin Park 69,363 175,518 (106,155) -153% 2 Cash- LOG 6,059 6,059 NA ldemnification Fund -BNY 287,527 267,527 20,000 7% Cash-BOCC Pooled equity 18,616 18,616 NA
Total Cash $ 1,183,352 $ 844,192
US Bank Custody Acct-Karpus $ 6,952,872 $ 9,062,791 (109,919) -1% Note Receivable-DPA 407,125 417,125 (10,000) -2%
Authority Fees Receivable 16,616 (16,616) -100%
Audit Fees Receivable 12,000 12,000 NA Interest Receivable 72,000 (72,000) -100% 3 FP Construction Loan Recievab!e 1,537,768 1,537,768 100% 5 Notes Receivable-CDC 200,000 200,000 NA Notes Receivable- Mt. Olive 251,156 251 '156 NA HFA Mortgage Receivables 10,022 10,052 (30) -0.3% Notes Receivable Gulfstream Ap 100,000 (100,000) -100% 5 Due from Artspace 503,729 503,729 NA Utility Deposit 1,925 1,925 NA HFA Land 693,289 693,289 NA HFA Land Inventory For Homes 31,400 31,400 NA HFA Buildings 1,115,000 1,115,000 NA Equipment 90,258 90,258 NA Capital Assets BOCC (Tagged) 127,474 127,474 NA Accumulated Depreciation -BOCC (126,954) (126,954) NA Accumulated Depreciation, HFA (657,338} (657,338} NA
Total Assets $ 14,333,078 $ 12,764,715
Liabilities Accrued SickNacatlon, ST $ 50,000 $ 50,000 NA Due to BOCC - Exp reimb 208,794 208,794 NA Due to BOCC-Artspace project 428,070 428,070 NA Due to BOCC-Artspace Interest 75,659 75,659 NA Escrow Deposit-Indemnification 247,527 (247,527) -100% 5 Accrued SickNacation, LT 39,000 39000 NA
Total Liabilities $ 801 523 $ 1,049,050
Equity
Beginning of year $ 12,981,681 $ 12,981,681
Prior Period Adjustment 247,527 247,527 100% 5
Current Year Earnings 302,347 (1 ,266,016)
Total Equity 13,531 555 11 715,665
Total Liability and Equity $ 14 333 078 $ 12 764 715
Criteria to determine if explanations are required: Cash account fluctuation explanations provided for >=$100,000 variance Remaining items explanations are provided for >=10% and >=$5,000 variance
NA No change as compared to prior month 100% No activity in prior month
-100% No activity in current month
1 Timing of receipts/payments and accruals based on budget 2 Transfer of cash received from Karpus and payments made for Franklin Park expenses 3 Gulfstream payoff of second mortgage 4 Stanley Terrace closing 5 Current period reclassification entries attributable to prior or current period activity
The Housing Finance Authority of Broward County 11 o NE Third Street, #300 Fort Lauderdale, FL 33301
Balance Sheet (Flux Report) 9/30/2016
Explanation
Se~-16 Se~-15 $ Difference % Difference (See criteria below)
Assets Cash-Wells Fargo $ 801,787 $ 68,839 $ 732,948 1065% 2, 7,8 Cash-Wells Fargo~ Franklin Park 69,363 326,127 (256,764) -79% 1 Cash- LOG 6,059 6,059 NA Jdemnification Fund -BNY 267,527 247,527 40,000 16% 7,8 Cash-BOCC Pooled equity 16,616 60,692 (42,076) -69% 6
Total Cash $ 1,163,352 $ 709,244
US Bank Custody Acct-Karpus $ 8,952,672 $ 10,068,500 $ (1,115,628) -11%
Note Receivable-DPA 407,125 437,126 (30,001) -7% Authority Fees Receivable 61,436 (61 ,436) -100% 2 Interest Receivable 72,000 (72,000) -100% 7 Interest Receivable 1,537,768 1,537,766 100% 6
Notes Receivable-CDC 200,000 200,000 NA Notes Receivable ~ Mt. Olive 251,156 266,156 (15,000) -6% HFA Mortgage Receivables 10,022 10,366 (344) -3% Notes Receivable Gulfstream Ap 100,000 {100,000) -100% 7 Rent Receivable 46,835 (46,835) -100% 2 Due from Artspace 503,729 503,729 NA Utility Deposit 1,925 1,925 NA HFA Land 693,289 621,704 71,585 12% 5
HFA Land Inventory For Homes 31,400 31,400 NA HFA Buildings 1,115,000 1,115,000 NA Equipment 90,258 108,437 (18,179) -17% 6
Capital Assets BOCC (Tagged) 127,474 127,474 NA Accumulated Depreciation -BOCC (126,954) {122,364) 4,590 -4%
Accumulated Depreciation, HFA (657,338) (643,563} 13,775 -2% Total Assets $ 14333 076 $ 13 715 405
Liabilities Prepaid Fees $ NA Accrued SickNacation, ST 50,000 50,000 NA Due to BOCC - Exp reimb 206,794 (6,260) 215,054 -3435% 2 Due to BOCC-Artspace project 428,070 428,070 NA Due to BOCC-Artspace Interest 75,659 75,659 NA Due to BOCC (HFA Bldg} 125,000 (125,000) -100% 4 Escrow Deposit-Indemnification 247,527 (247,527) -100% 6
Accrued SickNacation, L T 39,000 39,000 NA Good Faith Deposit 75,000 {75,000) -100% 3
Total Liabilities $ 601 523 $ 1 033 996
Equity
Beginning of year $ 12,981,681 $ 13,759,825
Prior Period Adjustment 247,527 247,527 100% 6
Current Year Earnings 3021347 (1,078,416)
Total Equity 13 531 555 12 681 409
Total Liability and Equity $ 14 333 078 $ 13 715 405
Criteria to determine If explanations are required: Cash account fluctuation explanations provided for >=$100,000 variance Remaining items explanations are provided for >=10% and >=$5,000 variance
NA No change as compared to prior year 100% No activity in prior month
-100% No activity In current month
1 Account fluctuates as a result of receiving transfers from Karpus and payment of FP expenses 2 Timing of payments and receipts 3 Closing on Bond Project-Residences at Crystal lake Apartments 4 Building paid off in fiscal 2015, no further payments will be made 5 Includes cost of demolition of building In current fiscal year 6 9-30-15 audit and current period reclassification entries made 7 Gulfstream payoff of second mortgage 8 Bond issues closed
The Housing Finance Authority of Broward County
110 NE Third Street, #300
Fort Lauderdale, FL 33301
Profit & Loss (Flux Report) Current Year-to-Date to Prior Year-to-Date
Year to Date As of Sef?:tember 2016
% Difference Sep-16 Sep-15 $ Difference to PY *Explanation
Income
Bond Authority Fees $ 526,132 $ 599,216 $ (73,084) -12% 5
Bond redemption & other income 346,040 702 345,338 49193% 3
Compliance Monitoring Fees 38,000 69,400 (31,400) -45% 2
Application, TEFRA and Closing Fees 16,005 5,500 10,505 191% 2
MCC and Lender Program Income 30,000 29,500 500 2%
Interest Income, Mortgages 37,960 718 37,242 5187% 7
Interest Income, Wells Fargo 93 105 (12) -11%
Interest Income, USBank 134,436 156,676 {22,240) -14% 4
Interest Income, Other 1,770 (1,770) 100%
Gain/Loss On Investment {50,382) (72,127) 21,745 -30% 4
Rent Income 121,819 112,398 9,421 8%
Other Income 5,425 1,004 4,421 440%
Total Income $ 1,205,528 $ 904 862 $ 300 666
Expenses
Personnel Services, Broward Co $ 416,081 $ 608,159 192,078 32%
Other Expenses, Broward County 120,975 222,410 101,435 46% 5
Cost of Bond Issuance 209 75,091 74,882 99.7% 2
Professional Fees 195,352 159,539 (35,813) -22%
First Housing Development Inc. 6,075 6,075 100%
Bank Management Fees 65,438 53,509 (11,929) -22%
Advertising/Marketing 4,273 1,598 (2,675) -167%
Dues and Membership Fees 3,290 8,115 4,825 59%
Conference and Travel Expense 14,386 12,595 (1,791) -14%
Miscellaneous Expense 392 392 100%
Building/Land Maintenance 61,487 51,409 (10,078) ·20%
U!!!ilies 21,690 23,711 2,021 9%
Franklin Park Homes Construction 760,675 760,675 100% 6
Total Expenses $ 903,181 $ 1,983,278 $ 1,080,097
Net Profif/(Loss) $ 302,347 $ (1 ,078,416) $ (779,431)
*Explanations provided for >::10% and >:: $5,000 variance
1 Timing of services and billings
2 Timing of new bond financings
3 Increase attributable to more current year bond redemptions
4 Loss related to current market conditions
5 Timing of receipts/payments and accruals based on budget
6 Expenses/Income related to Franklin Park Project
7 Gulfstream payoff of second mortgage
"%Actual to Budget' Column Lemmd
NA ·No amount reported in either of the two yeats
0%- Current year actual is equal to PY actual amount
100% ·No amount In one of the two vears presented
The Housing Finance Authority of Broward County
110 NE Third Street, #300
Fort Lauderdale, FL 33301
Profit & Loss (Flux Report) Budget to Actual Year to Date As of Se[!tember 2016
% Difference Selected Period Budgeted $ Difference to budget *Exelanation
Income
Bond Authority Fees $ 526,132 $ 512,476 $ 13,656 3%
Bond redemption & other income 346,040 290,986 55,054 19% 3
Compliance Monitoring Fees 38,000 38,000 NA
Application and Closing Fees 16,005 16,005 NA
MCC and Lender Program Income 30,000 29,000 1,000 3%
Interest Income, Mortgages 37,960 37,960 NA
Interest Income, Wells Fargo 93 93 NA
Interest Income, US Bank 134,436 160,000 (25,564) -16% 2
Gain/Loss On Investment (50,382) (50,382) NA
Rent Income 121,819 112,398 9,421 8%
Other Income 5425 5,425 NA
Total Income $ 1,205,528 $ 1,104,860
Expenses
Personnel Services, Broward Co $ 416,081 $ 639,410 $ 223,329 35%
Other Expenses, Broward County 120,975 186,250 65,275 35%
Cost of Bond Issuance 209 (209) NA
Professional Fees 195,352 156,000 (39,352) -25% 1
Audit Expense (BOCC) 13,200 13,200 100%
Bank Management Fees 65,438 (65,438) NA
Advertising/Marketing 4,273 4,000 (273) -7%
Dues and Membership Fees 3,290 5,500 2,210 40%
Conference and Travel Expense 14,386 10,000 (4,386) -44%
Postage/Fed Ex 500 500 100%
Building/Land Maintenance 61,487 57,000 (4,487) -8%
Utilities 21,690 33,000 11,310 34% 1
T ota! Expenses $ 903 181 $ 1 104 860
Net ProfiV(Loss) $ 302,347 $
*Explanations provided for >=10% and>= $5,000 variance
1 Timing of invoices and payments
2 A lower balance is maintained in current year, resulting in less interest earned
3 Increase attributable to more current year bond redemptions
NA- No Budget amount
100%- Actual is zero
The Housing Finance Authority of Broward County 110 NE Third Street, #300 Fort Lauderdale, FL 33301
Aged Receivables 9/30/2016
Authority fee receivable Total Due 0" 30 31 "60 61 "90 90+
Total Authority Fee Receivable
Housing Finance Authority 11 0 NE Third Street, #300 Fort Lauderdale, FL 33301
Reconciliation Report 10/5/2016 Page 1 11:45:17 AM
ID# Date Memo/Payee Deposit Withdrawal
Checking Account: 1-1000 Cash-Wells Fargo Date of Bank Statement: 9/30/2016
Reconciled Checks
4666 7/14/2016 Kirk Frohme $879.76 4677 8/29/2016 Holmes Lawn Service, Inc $275.00 4678 8/29/2016 Bauer Construction Corporatio $500.00 GJ002036 9/1/2016 to record WF trns for Sept 201 $264.11 SC093016 9/12/2016 to record Sept 2016 NFP WF S $244.87 4684 9/15/2016 Krystal Kleer $360.00 GJ002042 9/29/2016 to record WF trns in Sept 2016 $1,681.07
Total: $0.00 $4,204.81
Reconciled Deposits
CR000914 9/1/2016 1985 FAIRLAKES for 0000039 $17,100.00 CR000915 9/1/2016 2004 CYPRESS GROVE for 0 $32,490.00 CR000911 9/6/2016 Payment; 2002 MERIDIAN $6,098.77 CR000912 9/6/2016 Payment; 1998 PROSPECT P $3,723.75 CR000913 9/6/2016 Payment; 2006 Palms of Deerfi $6,741.00 GJ002037 9/8/2016 to record WF trns for Sept 201 $100,000.00 GJ002038 9/9/2016 to record WF trns for Sept 201 $836.84 GJ002039 9/16/2016 to record WF trns for Sept 201 $1 03,525.00 GJ002040 9/26/2016 to record WF trns for Sept 201 $1,225.00 GJ002043 9/28/2016 to record WF trns for Sept 201 $209,265.76 IE093016 9/30/2016 to record Sept 2016 NFP WF I $8.57
Total: $481 ,014.69 $0.00
Outstanding Checks
4679 9/13/2016 Dufresne and Associates $1,300.00 4680 9/13/2016 TECO Peoples Gas $37.25 4681 9/13/2016 L&B Janitorial Services $12,132.00 4682 9/13/2016 Florida ALHFA $1,000.00 4683 9/13/2016 AmeriGas $672.60 4685 9/27/2016 Zomermaand Financial Advisor $5,272.28 4686 9/27/2016 Bank of New York Mellon $20,000.00 4687 9/30/2016 Holmes Lawn Service, Inc $275.00 4688 9/30/2016 Dufresne and Associates $12,460.00
Total: $0.00 $53,149.13
Reconciliation
AccountEdge Pro Balance on 9/30/2016: $801 '787.08
Add: Outstanding Checks: $53,149.13
Subtotal: $854,936.21
Deduct Outstanding Deposits: $0.00
Expected Balance on Statement: $854,936.21
Housing Finance Authority 11 0 NE Third Street, #300 Fort Lauderdale, FL 33301
Reconciliation Report 10/3/2016 Page 1 2:08:38 PM
ID# Date Memo/Payee Deposit Withdrawal
Checking Account: 1·1005 WF Franklin Park Estates Date of Bank Statement: 9/30/2016
Last Reconciled: 8/31/2016 Last Reconciled Balance: $175,517.67
Cleared Checks
SC093016 9/12/2016 to record Sept 2016 WF Srvc $56.56 10057 9/13/2016 Access Builders, Inc. $1 05,438.94 10055 9/27/2016 $0.00
Total: $0.00 $105,495.50
Cleared Deposits
IE093016 9/30/2016 to record Sept2016WF In! $2.12
Total: $2.12 $0.00
Outstanding Checks
10056 9/13/2016 Dufresne and Associates $346.50 10058 9/30/2016 Dufresne and Associates $315.00
Total: $0.00 $661.50
Reconciliation
AccountEdge Pro Balance on 9/30/2016: $69,362.79
Add: Outstanding Checks: $661.50
Subtotal: $70,024.29
Deduct: Outstanding Deposits: $0.00
Expected Balance on Statement: $70,024.29
liO~slrig-~<i-ri~nccAuthoriiy' '110 NE TIJinl Street, '#300
_F~;I_i(mderda-le, FL 3_3307
Job Transactions 10/1/2015 TO 9/J0/2016
FP Franklin Park
GJ001918 GJ 10/13/2015 6-6105 $79.83 10028 CD 10/13/2015 Access Builders, Inc. 6-8200 $289,545.33 10029 CD 10/19/2015 Access Builders, Inc. 6-8200 $9,415.15 10030 CD 10/19/2015 Access Builders, Inc. 6-8200 $16,357.50 10031 CD 10/21/2015 Nabors Giblin & Nickerson P.A. 6-6100 $17,921.25 CR000860 CR 10/30/2015 4-4240 $4.41 GJ001938 GJ 11/12/2015 Imported Journal Entry 6-6105 $70.76 GJ001939 GJ 11/23/2015 Imported Journal Entry 4-8200 $355,726.58 10032 CD 11/25/2015 Dufresne and Associates 6-6100 $913.50 10033 CD 11/25/2015 Access Builders, Inc. 6-8200 $216,036.97 GJ001940 GJ 11/30/2015 4-4240 $4.10 10034 CD 12/10/2015 Access Builders, Inc. 6-8200 $79,081.77 10035 co 12/10/2015 Access Builders, Inc. 6-8200 $161,646.27 GJ001949 GJ 12/11/2015 to record WF lrns in Dec 2015 6-6105 $66.80 10036 co 12/21/2015 Dufresne and Associates 6-6100 $441.00 CD000007 CD 12/31/2015 Reversal; 10004; 6/3/2015 6-6221 $550.00 IE123115 CR 12/31/2015 4-4240 $6.27 10037 CD 1/6/2016 Access Builders, Inc. 6-8200 $113,664.53 SC013116 co 1/11/2016 6-6105 $86.13 10038 CD 1/22/2016 Dufresne and Associates 6-6100 $614.25 IE013116 CR 1/31/2016 4-4240 $4.56 10039 co 2/8/2016 Dufresne and Associates 6-6100 $551.25 10040 CD 2/10/2016 Access Builders, Inc. 6-8200 $77,705.70 SC022916 CD 2/11/2016 6-6105 $72.26 10041 CD 2/12/2016 Access Builders, Inc. 6-8200 $83,206.32 10043 co 2/29/2016 Access Builders, Inc. 6-8200 $49,212.23 IE022916 CR 2/29/2016 4-4240 $3.01 10044 CD 3/9/2016 Dufresne and Associates 6-6100 $724.50 SC033116 CD 3/31/2016 FP Client Analysis SNc Chrg 6-6105 $65.83 IE033116 CR 3/31/2016 FP In! Pmt 4-4240 $4.05 SC043016 co 4/11/2016 on 4-30-16 wf bank stmt 6-6105 $67.95 10045 co 4/12/2016 Dufresne and Associates 6-6100 $645.75 10046 co 4/12/2016 Access Builders, Inc. 6-8200 $152,289.63 IE043016 CR 4/30/2016 on 4-30-16 wf bank stmt 4-4240 $2.63 10047 co 5/4/2016 Access Builders, Inc. 6-8200 $26,705.67 10048 CD 5/6/2016 Access Builders, Inc. 6-8200 $58,953.18 10049 CD 5/11/2016 Dufresne and Associates 6-6100 $346.50 SC053116 CD 5/31/2016 May 2016 FP Srvc Ch,rg 6-6105 $56.86 IE053116 CR 5/31/2016 May 2016 lnt Earned 4-4240 $4.04 10050 CD 6/8/2016 Access Builders, Inc. 6-8200 $97,502.91 10051 co 6/8/2016 Florida Engineering & Testing, Inc. 6-8200 $1,555.56 10052 CD 6/8/2016 Dufresne and Associates 6-6100 $425.25 SC063016 CD 6/13/2016 6-6105 $72.55 IE063016 CR 6/30/2016 4-4240 $3.20 SC073116 CD 7/11/2016 Client Analysis SeNice Chrg 6-6105 $61.85 10053 CD 7/29/2016 Dufresne and Associates 6-6100 $378.00 IE073116 CR 7/31/2016 Interest Payment 4-4240 $2.68 SC083116 CD 8/11/2016 6-6105 $56.28 10054 CD 8/17/2016 Dufresne and Associates 6-6100 $330.75 1E083116 CR 8/31/2016 4-4240 $2.69 SC093016 CD 9/12/2016 to record Sept 2016 WF SNc Chrg 6-6105 $56.56 10056 CD 9/13/2016 Dufresne and Associates 6-6100 $346.50 10057 CD 9/13/2016 Access Builders, Inc. 6-8200 $105,438.94 10058 CD 9/30/2016 Dufresne and Associates 6-6100 $315.00 IE093016 CR 9/30/2016 to record Sept 2016 WF lnt 4-4240 $2.12
$1,563,084.82 $356,320.34 Beginning Balance: ($773,872.73)
Net Activity: ($1 ,206,764.48) Ending Balance: ($1,980,637.21)
Cash Activity Summary
April30, 2015- September 30, 2016 4/30/2015 9/30/2016 Difference
Total Cash 858,476 1,183,352 324,876 US Bank Custody Acct- Karpus 11,179,484 8,952,872 (2,226,612)
12,037,960 10,136,224 (1,901,736)
Explanation of Difference Total Difference (1,901, 736)
Franklin Park Construction Expenditures FYE 9/30/15- Expenditures beginning balance per Franklin Park job transactions report (773,873) Net activity per Franklin Park job transactions report fye 9/30/16 (1,206,764) Add back credits that reduced expenditure debits (356,320) (**)
Total Franklin Park Construction Expenditures fiscal year ending 9/30/16 (1,563,085) Total Franklin Park Construction Expenditures to date including fiscal 9/30/15 and 9/30/16 (2,336,958) (*)
Gulfstream payoff 209,266 Bond residuals 332,640
Remaining difference (106,684)
(*)Reconciliation of total Franklin Park job transaction report expenditures to total including fiscal9/30/15 and 9/30/16 1,980,637 9/30/2016 ending balance Franklin Park job transaction report
356,320 Add back credits that reduced expenditure debits
2,336,958 Total Franklin Park job transaction report expenditures to date
{**) Recognized as income accrued in fiscal 2015; cash received in fiscal 2016.
1
HOUSING FINANCE AUTHORITY OF BROWARD COUNTY
RAYMOND JAMES TURNKEY PROGRAM
National Housing Group
August 5, 2016
2
RAYMOND JAMES’ TBA “TURNKEY” PROGRAM OVERVIEW
• Raymond James bears 100% of market risk from interest rate movements and pipeline fall-out.
• RJ is a strong counterparty with $17.4 billion total capital and $348 million excess net capital.
• RJ execution not dependent upon third party performance, unlike competing “best efforts” TBA-programs.
• No charge for expenses relating to the implementation of the program.
• No posting of margin or other financial conditions.
• RJ prices are based on TBA prices using Tradeweb, a widely used inter-dealer electronic market.
• RJ is responsible for the delivery of Mortgage Rate Sheets and the establishment of mortgage loan rates and MBS
purchase prices; Raymond James reserves the right to submit one additional Mortgage Rate Sheet per day.
• RJ will pay the highest price by determining the best execution for each loan type and interest rate on a given day.
• Mortgage loans must be securitized into TBA eligible mortgage-backed securities.
• Requires that all loans reserved in the program be pooled by the Master Servicer into mortgage-backed securities.
Major Business Terms
• Loan typically to be underwriter-certified within 15 days of the Loan reservation date.
• Loan suggested be closed by the Lender and delivered to the Servicer within 60 days of the Loan reservation date.
• Loan to be purchased by the Servicer within 70 days of the Loan reservation date.
• Extension fee automatically assessed on the loan purchase price of loans not purchased or cancelled within 70 days of
the loan reservation date.
• RJ works with Servicer to ensure timely delivery of MBS before 90th day (120th day for loans which have been
extended).
Mortgage Loan Delivery Timetables
3
OWN A HOME OPPORTUNITY PROGRAM (OPERATED THROUGH LEE
COUNTY HFA) - LOAN PRODUCT DETAILS
Own a Home Opportunity Grant Program
• First-Time Homebuyer Requirement
• Income Limits (for example Lee County):
‒ Includes all persons 18+ years of age
(requires 3-years of tax returns)
‒ 1-2 Person - $62,562
‒ 3+ Person - $71,946
• Purchase Price Limits (for example Lee
County):
‒ $258,691
• Down Payment Assistance:
‒ $7,500 (funded by HFA)
‒ 0% second mortgage, 30 year
deferred (due upon sale/refinance)
• Eligible Counties:
‒ Charlotte, Collier, DeSoto, Lee, Palm
Beach, Sarasota
• Current Interest Rate: 4.375% (8/5/2016)
Own a Home Opportunity Program
• No First-Time Homebuyer Requirement
• Income Limits (for example Lee County):
‒ Qualifying income from the Form 1003
used to qualify borrower
‒ $85,800 (no family size criteria)
• Purchase Price Limits (for example Lee
County):
‒ $265,158
• Down Payment Assistance:
‒ 5.00% of the loan amount (funded thru
premium sale of 1st mtg); (4.00% for
borrowers with FICOs 640-659)
‒ Non-repayable grant
• Eligible Counties:
‒ Collier, DeSoto, Lee, Palm Beach,
Sarasota
• Current Interest Rate: 4.50% (8/5/2016)
Grant DPA Program 2nd Mortgage DPA Program
4
Current Date 8/5/2016
Mortgage
Rate
[B]
GNMA
Certificate
Purchase
Price
[C]
Loan Par
Amount
[D]
SRP to Lender
(OHOP)2
[E]
SRP to
Lender
(OHOGP)2
[F]
Loan
Purchase
Price
(OHOP)
[G] = D + E
Loan
Purchase
Price
(OHOGP)
[H] = D + F
Payment
for
Servicing4
[I] = V
Custodian
GNMA Cert
Purchase
Price
(OHOP)
[J] = G + I
Custodian
GNMA Cert
Purchase
Price
(OHOGP)
[K] = H + I
Authority Fee
(OHOP)
[M] = C + J
Gross
DPA2
[P]
Authority Fee
(OHOGP)
[Q] = C + K + P
Gross Servicing
Spread
[S]
Payment for
Servicing
[V]
3.250% 103.728% -100.000% -2.500% -2.000% -102.500% -102.000% 0.110% -102.390% -101.890% 1.338% -5.000% -3.162% 0.250% 0.110%
3.375% 103.728% -100.000% -2.500% -2.000% -102.500% -102.000% 0.580% -101.920% -101.420% 1.808% -5.000% -2.692% 0.375% 0.580%
3.500% 103.728% -100.000% -2.500% -2.000% -102.500% -102.000% 1.070% -101.430% -100.930% 2.298% -5.000% -2.202% 0.500% 1.070%
3.625% 103.728% -100.000% -2.500% -2.000% -102.500% -102.000% 1.480% -101.020% -100.520% 2.708% -5.000% -1.792% 0.625% 1.480%
3.750% 105.259% -100.000% -2.500% -2.000% -102.500% -102.000% 0.110% -102.390% -101.890% 2.869% -5.000% -1.631% 0.250% 0.110%
3.875% 105.259% -100.000% -2.500% -2.000% -102.500% -102.000% 0.580% -101.920% -101.420% 3.339% -5.000% -1.161% 0.375% 0.580%
4.000% 105.384% -100.000% -2.500% -2.000% -102.500% -102.000% 1.070% -101.430% -100.930% 3.954% -5.000% -0.546% 0.500% 1.070%
4.125% 105.259% -100.000% -2.500% -2.000% -102.500% -102.000% 1.480% -101.020% -100.520% 4.239% -5.000% -0.261% 0.625% 1.480%
4.250% 106.166% -100.000% -2.500% -2.000% -102.500% -102.000% 0.110% -102.390% -101.890% 3.776% -5.000% -0.724% 0.250% 0.110%
4.375% 106.166% -100.000% -2.500% -2.000% -102.500% -102.000% 0.580% -101.920% -101.420% 4.246% -5.000% -0.254% 0.375% 0.580%
4.500% 106.634% -100.000% -2.500% -2.000% -102.500% -102.000% 1.070% -101.430% -100.930% 5.204% -5.000% 0.704% 0.500% 1.070%
4.625% 106.166% -100.000% -2.500% -2.000% -102.500% -102.000% 1.480% -101.020% -100.520% 5.146% -5.000% 0.646% 0.625% 1.480%
4.750% 106.619% -100.000% -2.500% -2.000% -102.500% -102.000% 0.110% -102.390% -101.890% 4.229% -5.000% -0.271% 0.250% 0.110%
4.875% 106.619% -100.000% -2.500% -2.000% -102.500% -102.000% 0.580% -101.920% -101.420% 4.699% -5.000% 0.199% 0.375% 0.580%
5.000% 108.822% -100.000% -2.500% -2.000% -102.500% -102.000% 1.070% -101.430% -100.930% 7.392% -5.000% 2.892% 0.500% 1.070%
5.125% 106.619% -100.000% -2.500% -2.000% -102.500% -102.000% 1.480% -101.020% -100.520% 5.599% -5.000% 1.099% 0.625% 1.480%
5.250% 107.513% -100.000% -2.500% -2.000% -102.500% -102.000% 0.110% -102.390% -101.890% 5.123% -5.000% 0.623% 0.250% 0.110%
5.375% 107.513% -100.000% -2.500% -2.000% -102.500% -102.000% 0.580% -101.920% -101.420% 5.593% -5.000% 1.093% 0.375% 0.580%
5.500% 109.556% -100.000% -2.500% -2.000% -102.500% -102.000% 1.070% -101.430% -100.930% 8.126% -5.000% 3.626% 0.500% 1.070%
GNMA Purchase Program Rate Sheet
Lee County HFA - Own a Home Opportunity Program (OHOP)
Lee County HFA - Own a Home Opportunity Grant Program (OHOGP)
RJ Purchase Price1 Servicer Pays Lender Authority Pays Servicer5 Authority Fee3 Servicing Release Premium Detail4
OWN A HOME OPPORTUNITY PROGRAM - DAILY RATE SHEET
HFA Fee on
Grant DPA Program
– Broward County
HFA would join this
program
HFA Fee on
2nd Mtg DPA Program
* Grant DPA Program not reliant on HFA balance sheet to fund DPA.
5
REQUIREMENTS AND IMPACT
The Broward County HFA could very easily “re-join” the Own a Home Opportunity
Program (Grant Program only) sponsored by the Lee County HFA.
New “inter-local” agreement required:
• Lee County HFA Board
• Broward County HFA Board
• Broward County Board of Commissioners
• Also needs to be recorded in each County
Potential Impact to Broward County HFA of Introducing Grant DPA Program:
• Enables the HFA to provide additional financing products to lenders and low-
middle income homebuyers without ongoing funding concerns (DPA funded
through premium sale of 1st mortgage not from general funds).
• Can be paired with your MCC program.
• eHousing has marketed the grant program successfully to lenders and realtors;
many have asked if the grant program would be offered in Broward County.
6
ESTIMATED FINANCIAL IMPACT TO BROWARD COUNTY HFA
Assumptions
Average Loan Size: $125,000
Average HFA Profit per Loan: 0.50%
Average Monthly Reservations: $1,000,000
Estimated Monthly HFA Income: $5,000
Estimated Annual HFA Income: $60,000
The Own a Home Opportunity Grant Program has seen a spike in reservations
this year which as alleviated some of Lee County HFA’s cash flow concerns when
previously funding large amounts of DPA as second mortgages.
Below demonstrates what we believe could be conservative estimates on loan
reservation volume/fee income to Broward County HFA should you all “re-join” the
program.
7
DISCLAIMER
The information contained herein is solely intended to facilitate discussion of potentially applicable financing applications and is not intended to be a specific buy/sell
recommendation, nor is it an official confirmation of terms. Any terms discussed herein are preliminary until confirmed in a definitive written agreement. While we believe
that the outlined financial structure or marketing strategy is the best approach under the current market conditions, the market conditions at the time any proposed
transaction is structured or sold may be different, which may require a different approach.
The analysis or information presented herein is based upon hypothetical projections and/or past performance that have certain limitations. No representation is made that it
is accurate or complete or that any results indicated will be achieved. In no way is past performance indicative of future results. Changes to any prices, levels, or
assumptions contained herein may have a material impact on results. Any estimates or assumptions contained herein represent our best judgment as of the date indicated
and are subject to change without notice. Examples are merely representative and are not meant to be all-inclusive.
Raymond James shall have no liability, contingent or otherwise, to the recipient hereof or to any third party, or any responsibility whatsoever, for the accuracy, correctness,
timeliness, reliability or completeness of the data or formulae provided herein or for the performance of or any other aspect of the materials, structures and strategies
presented herein. This Presentation is provided to you for the purpose of your consideration of the engagement of Raymond James as an underwriter and not as your
financial advisor or Municipal Advisor (as defined in Section 15B of the Exchange Act of 1934, as amended), and we expressly disclaim any intention to act as your fiduciary
in connection with the subject matter of this Presentation. The information provided is not intended to be and should not be construed as a recommendation or “advice”
within the meaning of Section 15B of the above-referenced Act. Any portion of this Presentation which provides information on municipal financial products or the issuance
of municipal securities is only given to provide you with factual information or to demonstrate our experience with respect to municipal markets and products. Municipal
Securities Rulemaking Board (“MSRB”) Rule G-17 requires that we make the following disclosure to you at the earliest stages of our relationship, as underwriter, with
respect to an issue of municipal securities: the underwriter’s primary role is to purchase securities with a view to distribution in an arm’s-length commercial transaction with
the issuer and it has financial and other interests that differ from those of the issuer.
Raymond James does not provide accounting, tax or legal advice; however, you should be aware that any proposed transaction could have accounting, tax, legal or other
implications that should be discussed with your advisors and/or legal counsel.
Raymond James and affiliates, and officers, directors and employees thereof, including individuals who may be involved in the preparation or presentation of this material,
may from time to time have positions in, and buy or sell, the securities, derivatives (including options) or other financial products of entities mentioned herein. In addition,
Raymond James or affiliates thereof may have served as an underwriter or placement agent with respect to a public or private offering of securities by one or more of the
entities referenced herein.
This Presentation is not a binding commitment, obligation, or undertaking of Raymond James. No obligation or liability with respect to any issuance or purchase of any
Bonds or other securities described herein shall exist, nor shall any representations be deemed made, nor any reliance on any communications regarding the subject matter
hereof be reasonable or justified unless and until (1) all necessary Raymond James, rating agency or other third party approvals, as applicable, shall have been obtained,
including, without limitation, any required Raymond James senior management and credit committee approvals, (2) all of the terms and conditions of the documents
pertaining to the subject transaction are agreed to by the parties thereto as evidenced by the execution and delivery of all such documents by all such parties, and (3) all
conditions hereafter established by Raymond James for closing of the transaction have been satisfied in our sole discretion. Until execution and delivery of all such
definitive agreements, all parties shall have the absolute right to amend this Presentation and/or terminate all negotiations for any reason without liability therefor.
U .. . DEPAR r:-.1 E1\ r OF HOUSING AND URBAN DEVELOPMENT
OFFICE OF INSPECTOR GEI\ERAL
July26.20 16
The Honorable Jeb Hensarling Chairman House Committee on financial Services I louse of Representatives Washington, DC 205 15
Dear Representative Hensarling,
I am writing in regards to an issue that I wish to inform the Congress pursuant to my duty to report as it relates to serious problems, abuses or deficiencies in the administration of agency programs and operations. Through a series of audits, the Department of Housing and Urban Development's Office of Inspector General (I IUD OIG) has learned of a fund ing arrangement for down payment assistance to Federal Housing Administration (FHA) borrowers which we believe violates the National Housing Act regarding prohibited sources for down payment assistance. In addition, the costs to the borrower far exceeds the down payment. negatively affects the borrower, and makes these loans a risk to the FHA insurance fund 1• By IIUD's own estimate. this affects some 60.000 FHA loans each year.
After issuance of the first and then subsequent similar audits. the OIG had attempted for a period oftime to resolve the findings and recommendations in this matter wi th the Department to no avail. HUD has fai led to recognize disturbing parallels to the seller-funded down payment assistance arrangements practiced in the late 1990's to 2008 which caused wide-scale problems to the program and whose reverberations arc still felt today. In the last two weeks, there have been some noted developments regarding the Department's position that will be discussed later in the letter.
The Premium Interest Rate Down Payment Assistance Trap
In April 2014. IIUD's Santa Ana Homeownership Center. Quality Assurance Division (IIOC) self-initiated a referral on a FHA lender to the OIG's Office of Investigations, highlighting deficiencies related to down payment assistance gifts, including I) the lender permitted down payment assistance gift funds deri ved from a premhtm priced mortgage and 2) the girts were not true gifts and were repaid by the borrower through higher interest rates and recs? The HOC noted in the referral that the approach utilized violated HUD regulations and
1 The insurance fund at issue in this matter is formally known as the Mutual Mongagc Insurance Fund.
2 Premium pricing is a strategy offered by lenders to qualified borrowers through which a lender credit may become available by charging a higher interest rate. That lender credit is then applied to reduce the closing costs for the
OffiC(' of lnsp('f iOr Grnernl -151 7111 Street S. W., Room 8256, Washington. DC 204 10
Phone (202) 708-0430 l ',sillhe Office vj ln.v,;;:c/or Gcncra/IVebsile a/ 11' 11'11' hlldQ/U/11"
The Honorable Jeb Hensa rling
July 26, 2016
policies in effect at the time.3 Based on the referral. OTG identified two FHA lenders for review: Nova Financial and Investment Corporation (NOVA) and LoanDepot LLC.
During the course of three audits, HUD 010 learned that both NOV A and LoanDepot had entered into tri-party agreements among the FHA lender, a Housing Finance Agency (HF A) and U.S. Bank, a Ginnie Mae issuer.4 These agreements were part of a program in which the Housing Finance Agency would provide down payment assistance in a grant or loan to the borrower. The FHA mortgagee would provide the primary financing to the borrower in the form of an Fl LA-insured loan. Upon originat ion. the FHA Joan would be sold to U.S. Bank, which would securitize the mortgage loan through a Ginnie Mae security and service the mortgage.
Although not parties to the FHA loan, the Housing Finance Agency and U.S. Bank required the FHA lender to innate the interest rate on the loan.5 The Hf A providing the down payment assistance and U.S. Bank had previously determined what interest rate above the market interest rate would be necessary on the FHA loan to net a premium payment from the investor when the loan was securitized. The HFA. U.S. Bank and the FHA mortgagee agreed that the premium payment would reimburse the HF A for the down payment and pay other program related fees. The increased interest rate was up to 1.5% above the market rate for FHA loans (e.g., 4.5% for Housing Finance Agency down payment assistance versus 3% for non-assisted PI IA loans). The HFA, U.S. Bank and the FHA mortgagee also agreed to charge the borrower additional securitization, administration and tax fees as part of the origination, totaling $300-$600, that would not otherwise have been paid on the lower interest rate mortgage.6 Borrowers seeking down payment assistance from the HF A were directed to a "participating" FHA lender for their FHA loan. To our knowledge, the borrower was not informed that they could receive a lower rate and could avoid these additional fees with down payment assistance from another source.
ln our review, we determined that U.S. Bank has similar agreements with FHA mortgagees and Housing Finance Agencies around the country. U.S. Bank's 2014 annual report
loan. Thus, '·premium pricing" is ofTcred as a perk or incentive to qualified borrowers. In the context of FI-lAinsured mongages. HUD allows premium pricing when it is used by the lender in the trnditional manner (i.e. to cover closing costs and prepaid items) but prohibits its use to provide down payment assistance.
1 Specifically. the HOC relied upon 24 C.F.R. Pan 203, HUD Handbook 4155. 1, Sections 5.8.4.a, 5.B.4.b. 5.8.4.c, 5.B.4.d and HUD Handbook 4155.1, Sections 5.A.2.i, 5.A.2.j, 5.B.4.a and Mongagec Letter 09-53. The HOC also referenced the Interpretive Rule issued by HUD OGC in December 20 12 indicating that the IIOC considered the Interpretive Rule in its determination to refer the matter to the OIG for any action the OIG deemed appropriate.
1 ' U.S. Bank operates these programs through its Mortgage Revenue Bond Program (M RBP). See http://www. mrbp.usbank.com .
.s At times some Housing Finance Agencies utilized investment banks to determine the interest rates and negotiate the process.
" The securitization fee was passed through to U.S. Bank. and was listed on the HUD-1 under various names including ··bond transfer fcc," .. bond program fee:· and ··to be announced application fee:· The tax fee was also paid to U.S. Bank.
The Honorable Jeb Hensarling July 26, 2016
indicated that FHA loans in these programs may total over $19 billion and may amount to as much as 113 of its government portfolio.
The Statutory Prohibition and HUD's Interpretation
To qualify a mortgage for FHA mortgage insurance, section 203(b )(9)(A) of the National Housing Act (12 U.S.C. 1709(b)(9)) requires the homebuyer to pay "in cash or equivalent on account of the property an amount equal to not less than 3.5 percent of the appraised value of the property." However, section 203(b)(9)(C)7 of the National Housing Act (NHA) provides that no part of this required minimum investment may comprise funds provided by the seller of the property or any other person or entity who benefits financially from the sale of the property, or any person reimbursed by any such person or entity.
Section 203(b )(9)(C) of the NHA states:
PROHIBITED SOURCES.- In no case shall the funds required by subparagraph (A) consist, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale:
(i) The seller or any other person or entity that financially benefits from the transaction. (ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i).
In 2012, HUD interpreted§ 203(b)(9)(C) as not prohibiting FHA from insuring mortgages originated as part of the homeownership programs of Federal, State, or local governments or their agencies or instrumentalities when such agencies or instrumentalities also directly provide funds toward the required minimum cash investment.8 Specifically it concluded that " ... HUD interprets NHA section 203(b)(9)'s prohibited sources provision in subsection (C) as not including funds provided directly by Federal, State, or local governments or their and instrumentalities in connection with their respective homeownership programs."9 Nowhere, however, does this interpretive rule suggest that the Housing Finance Agency may inflate the cost of the FHA loan to the borrower to reimburse itself indirectly from the FHA loan. Rather, the interpretive rule referenced funding through mechanisms such as housing bonds, low-income housing tax credits, HOME program funds, and other Federal and State resources- which are entirely separate from the FHA loan transaction.
In 2013, HUD expounded further on Housing Finance Agency down payment assistance in Mortgagee Letter 2013-14. That guidance permitted the FHA mortgagee to advance down
7 §2113 of the Housing and Economic Recovery Act of2008 (HERA) amended §203(b) of the NHQA.
8 See, 24 CFR Part 203; Docket No. FR-5679-N-0 I; Federal Housing Administration: Prohibited Sources of Minimum Cash Investment under the National Housing Act - Interpretive Rule.
9 See, Interpretive Rule, Docket No. FR-5679-N-01 (December 5, 2012); ML 2013-14; August 11,2015 OGC Opinion to the Principal Deputy Assistant Secretary for Housing, Permissible Source of Funds for Government Entities Down Payment Assistance Programs.
The Honorable Jeb Hensarling July 26, 2016
payment assistance to the borrower in the FHA transaction, where the HF A had demonstrated a legal obligation to provide the assistance and would reimburse the FHA mortgagee.
OIG does not object to these interpretations as written; they are not inconsistent with the plain language of the statute. The statute does not prohibit down payment assistance per se, or exclude Housing Finance Agencies from providing down payment assistance. In addition, these interpretations reiterate that the statutory prohibition applies to "any other person or entity that financially benefits from the transaction, or from any person who is reimbursed by any prohibited source."10 The Mortgagee Letter also notes that "All other requirements applicable to secondary financing transactions remain in full effect, including the requirement that such financing comply with the prohibited source provisions if such financing will be providing the borrower's required Minimum Cash Investment."11 The DPA that the mortgagee provides "on behalfofHFA" is reimbursed by U.S. Bank when it purchases the loan. U.S. Bank is subsequently reimbursed from the sale of related mortgage backed securities and the HF A participates in the transaction in name only. Mortgagee Letter 2013-14 avoids HUD review by removing the requirement to document the actual funding trail. 12
I also note that during the pendency of the OIG NOVA audit process, FHA initiated and significantly changed its Handbook provisions applicable to down payment assistance. This was accomplished when multiple Handbooks were combined into one comprehensive Handbook, Handbook 4000.1. During this merging effort, FHA made significant core changes to the "new" handbook provisions addressing down payment assistance. A comparison of the Handbook 4155.1 provisions in effect during the audits to the "new" provisions reveals profound changes in policy whic~ in essence, appeared to make what problems we found arguably appropriate. These changes, which were included in hundreds of pages, were not flagged as a policy change as is general protocol and would then have been submitted for a more agency-wide review. The practical and actual effect was to deprive the OIG of the opportunity to raise concerns regarding the significant policy changes particularly as an audit was in process. The issue ofFHA's failure to properly follow departmental clearance protocols for its programs, policies and operations in this matter, as well as others, will be discussed in an upcoming audit to be released in the near future.
BUD's Management Decision
On May 25, 2016, the Department issued its decision regarding our disagreement over Housing Finance Agency down payment assistance and premium pricing audit findings which arose from OIG's audit of NOV A. HUD adopted the conclusion of an OGC opinion and asserted that - because the proceeds came out of the secondary market transaction, the borrower signed no separate security instrument for the down payment, and the borrower could have refinanced out of the FHA mortgage without a penalty- there was "no expectation of repayment of the down payment assistance." However, it is clear from the documentation that the
10 See M.L. 2013-14, p.2.
11 See M.L. 2013-14, p.S.
12 See M.L. 2013-14, p.4.
The Honorable Jeb Hensarling
July 26, 2016
origination and securitization of the loan through Ginnie Mae was preprogrammed by agreements with U.S. Bank, the FHA originating mortgagee, and the Housing Finance Agency to net funds to reimburse the down payment and that the borrower paid a higher cost to make that happen. In other words. for a borrower to get the HFA's down payment assistance as pmi of this speci fie program, the borrower had to accept the higher interest rate mortgage. The higher interest rate charged to the bonower in these programs would not have been required had the bonower received the down payment assistance from another source.
HUD's generic reference to "sale of mortgages on the secondary market" as a source of HF A funding and its refusal to look at the source of HFA funding is problematic. The statute prohibits parties that financially benefit from the loan origination transaction, whether directly or using third parties as intermediaries, from providing the minimum investment. Even under a nan·ow reading of the prohibition, U.S. Bank benefitted from the primary market transaction, charging fees to the borTower for its participation and later reimbursing the Housing Finance Agency that advanced the down payment assistance, through securitization proceeds. The "securitization fee" charged to the borrower and passed back to U.S. Bank is, to our knowledge, unique to this funding scheme, although nearly every FHA loan is securitized through Ginnie Mae issuers. In this case, it potentially unfairly allows U.S. Bank to gain a fee that is not universally applied in other FHA transactions. The FHA lender also benefits from the transaction through its origination fees, and its sale of the mortgage to U.S. Bank results in indirect reimbursement to the Housing Finance Agency.
But HUD's determination has larger implications. A Ginnie Mae issuer is perforce an FHA-approved mortgagee. Yet, U.S. Bank could not have originated these loans directly and reimbursed the Housing Finance Agency without running afoul of the statutory provision. HUD's decision allows a FHA lender to avo id the statutory prohibition by funneling the process through another FHA lender who is also a Gitmie Mae issuer. It opens the door to future circumvention by allowing FHA lenders who are Ginnie Mae issuers or who collaborate with Ginnie Mae issuers to bury additional costs in the FHA loan transaction which can be passed through to the securitizer and cashed out in the secondary market. It also opens the door to Ginnie Mae issuers using the origination transaction to generate fees for themselves. 13
The Cost to the Borrowers and to FHA
In addition to the legal violation, these transactions represent significant increased cost to borrowers and related risk to the FHA insurance fund. To illustrate the real cost to the borrower. the following is a comparison of costs for a $150,000 mortgage wi thout, and wi th, a $3,000 down payment assistance (DPA) grant.
13 A review of the Ginnie Mae Mortgage Backed Securities Guide, at http://ginniemae.gov/doing business with ginniemac/issuer resourcesiM BSGuideLib/Chaptcr 06.ru!f, makes clear that there is no loan level borrower or issuer fee that corresponds to the securitization fee charged ro the borrower at closing.
The Honorable Jeb Hensarling July 26, 2016
Without a $3.000 DPA grant:
Baseline market rate of: 3.25% • Monthly P&I = $ 652.81 • Annual P&I = $ 7,833.72 • Total Interest for 6 years• = $27,430.10 • Borrower's Equity at the end of6 years: $19,572.18 • Total Interest for 30 years= $85,011.41
With a $3.000 DPA grant:
Interest Rate: 4.5% (+1.25% premium) • Monthly P&I = $ 760.03 • Annual P&I = $ 9,120.36 • Total Interest for 6 years• = $38,429.74 • Borrower's Equity at the end of6 years: $16,292.27 • Total Interest for 30 years= $123,610.07
*Six years is the weighted average expected life of the loan per U.S. Bank's 2014 annual report.
Additional Cost to Borrower with a $3.000 DPA grant in a 6-year and 30-year scenario:
Additional Interest Cost after 6 years: $10,997.64 Reduced Eguity after 6 years: $ 3.279.91 Total 6-year cost for assistance: 14 $14,277.55
Total30-year cost for assistance: $38,586.66
In many instances the affected borrowers were not provided any notice of this, and 010 did not see evidence of the same during the audits. It does not appear that borrowers were notified by any direct or indirect beneficiary to the transaction they could get a lower interest rate if the down payment assistance was from a source other than the funding scheme. The borrowers in these instances do not benefit financially from the transaction. In fact, they are burdened with a higher monthly payment for the life of the loan. 15 While it is true a borrower becomes a homeowner in part through the down payment assistance programs and is no longer a renter, the arrangement involving this iteration of the Housing Finance Agency down payment
14 Some borrower-financed down payment assistance programs provided loans rather than grants. If the example were based on a loan requiring repayment, the total cost would increase by $3,000 plus interest.
15 Although the sales price is not increased in this instance, the homebuyer is subjected to unreasonable additional fees and is required to fmance the so-called DPA "gift" through an inflated interest rate. Under no reasonable definition should this be a gift.
The Honorable Jeb Hensarling July 26,2016
assistance places the borrower and the FHA at undue risk of loan failure as HUD has historically experienced in like scenarios at earlier times.
An increased risk of default creates a greater risk to the FHA insurance fund. The risk aspect of this program is already known by FHA. In a recent posting by Principal Deputy Assistant Secretary Edward Golding commenting on the Department's decision, risk is specifically highlighted by HUD as an ongoing concern of the Housing Finance Agency down payment assistance programs. Mr. Golding admits that HF A down payment assistance loans can carry greater risk. The posting further states that HUD continuously monitors risk and is "exploring additional steps we [HUD) can take to improve performance specifically in down payment assistance programs."
HUD has been down this road before with precarious down payment assistance programs. Specifically, these admitted risks are akin to those identified by HUD regarding seller-funded down payment assistance which was prevalent in the late 1990's until Congress passed the Housing Economic and Recovery Act (HERA) in 2008 that amended the National Housing Act to address growing FHA Mutual Mortgage Insurance Fund (MMIF) liquidity issues caused in significant part to the defaults of these then seller-funded DPA loans. These programs involved seller payments to a third party who provided down payments to the borrowers. HUD determined that the seller had inflated the sales price when providing these payments, which corresponded with the down payments provided to the borrower. HUD initially permitted funding by these third party groups resting on the notion that because the seller did not directly make the down payment, its later reimbursement through a third party was irrelevant. As the damage from these loans to borrowers and HUD became clear, particularly highlighted after many years of OIG and GAO reviews, HUD tried to reverse course and repeatedly tried to close down the program.16 A review ofHUD's own statements as noted in these court decisions is instructive:
... HUD essentially discussed two distinct negative outcomes it associated with sellerfunded DPA: one directed at the consumer and one directed at HUD (and, specifically, the MMIF). With regard to harm to consumers, HUD stated that seller-funded DPA leads to sales price inflation, causing home buyers to pay above-market mortgage payments. This consequence remains even if the loans originating from seller-funded DPA do not present any added risk to HUD. [Footnote omitted] With regard to harm to itself, HUD noted that loans relying upon seller-funded DPA do, in fact, present an added risk to HUD, as they categorically perform worse than other loans. Nehemiah Corporation of America v. Alphonso Jackson, 546 F .Supp 2d 830, 841 (2008)
It is easy to see the correlation between "causing home buyers to pay above-market mortgage payments" stated above and the effect of increased payments caused by adding an interest rate premium in the case at hand. HUD's prior action initially stalled correction of the
16 In addition, the GAO conducted an in-depth study of down payment assistance and generally noted the same concerns HUD and the OIG were recognizing while seller-funded DPA type programs were operating. The GAO report also noted concerns with non-seller funded down payment assistance in that they too were far more likely to default than loans without down payment assistance. Even the loans with non-seller down payment assistance performed worse than loans not receiving down payment assistance. GA0-06-24
The Honorable Jeb Hensarling July 26, 2016
problem at a timely point and ultimately required HUD to obtain a legislative fix -the 2008 HERA -which in plain language prohibits these payments not just from the seller but from any interested party or person reimbursed by the interested party.
It is exactly these types of risks, to the borrowers and to the health of the overall FHA's Fund which taxpayers rely on, that compel me to now raise these concerns. A repeat of the history regarding borrower risk and risk to the FHA must be avoided. It appears that the specific down payment assistance funding arrangements highlighted in the audits creates even more significant economic disparity over time since the borrower is burdened with a higher interest rate for the life of the loan.
As highlighted earlier, FHA Principal Deputy Assistant Secretary Golding estimates that over 60,000 FHA loans are originated per year using down payment assistance provided by Housing Finance Agencies under these borrower-reimbursed funding arrangements, in violation of the statutory prohibition. I raise this issue in order to highlight potential threats to borrowers, to the FHA's MMIF, and to the public fisc. I wish to reiterate that it is not down payment assistance programs that move me to send this letter. It is the specific funding mechanism exploited by the parties to these funding agreements which violate the plain language of the HERA and adversely affect the FHA-insured loans of participating borrowers who may have unknowingly been steered into these arrangements. Recently, however, I have been engaged in discussions with the Department that have forwarded their previously deadlocked commitment to potentially resolving this issue.
I noted earlier that prior to sending this letter, we made audit resolution attempts over a period of time. We had countless meetings and discussions with Office of General Counsel staff and the Deputy Secretary in an attempt to draw their attention to this issue and to our concerns over the last year. An opportunity to submit the legal issue that OIG and HUD disagree on to the Department of Justice, Office of Legal Counsel for an independent review was also suggested and rejected. Moreover, during the last few weeks it has become clear to us that the legal analysis supporting the continuation of this program was based on a concept and not the actual facts brought to light in the audit. The consequences of this revelation were that the program continued unabated and the issues at hand were never truly addressed. In recent days, through the involvement of the Secretary and his staff, we have been able to take some steps forward. The Deputy Secretary made a public statement released by the FHA Principal Deputy Assistant Secretary earlier this week regarding a wish to clarify the Department's earlier legal opinion, management decision, and FHA statement and that it will look into inappropriate practices of concern to the IG. We await their expeditious review and how this clarification will be fashioned. As an independent and objective reviewer of the facts, we strive to enhance program integrity with a shared commitment to improving operations and effectiveness and to reducing fraud, waste, and abuse. It is our goal to work with the head of this Department and with the Congress to improve program management.
The Honorable Jeb Hensarling July 26, 2016
Please contact my congressional liaison, Kathleen Hatcher, at [email protected], should you have any questions.
Sincerely,
~A~ David A. Montoya ~ Inspector General
cc: The Honorable Maxine Waters Ranking Member
Attachments NALHFA Letter 12.06.2011 Interpretive Rule 2012 Mortgagee Letter 2013 Santa Ana Homeownership Center Referral to OIG OGC Opinion 2015 U.S. Bank MRBP Agreement
NALHFA Action Alert: Support Local HFA DPA Programs
Page 1
HFA Single-Family Down Payment Assistance Programs at Risk Contact House Financial Services and Senate Banking Committee Members
Communicate Local Impact and Importance of HFA DPA Programs
Background: Last year, the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) investigated and audited the activities of two lenders participating in Housing Finance Agency (HFA) down payment assistance (DPA) loan programs. In two separate audits, the HUD OIG found two mortgage lenders (Nova Financial and Investment Corp., and LoanDepot) —through their participation in HFA-funded DPA programs—to be in violation of HUD/FHA regulations in that:
DPA was derived from a “premium priced” mortgage
Borrowers were “repaying” the DPA gift-grant through an above-market rate mortgage
HFA-funded DPA programs have been in place for approximately 20 years and fund approximately $10 billion in mortgage loans per year. The OIG has the power to audit lenders, but only HUD has the power to bring sanctions. Over the course of numerous months, HUD and the HUD OIG worked to resolve the differing views concerning the audit issues. If HUD had agreed to enforce the remedial measures and recommendations outlined in the OIG audits, the lenders would be subjected to potentially millions of dollars in penalties. In addition, finding these two lenders to be in violation of HUD guidelines would have effectively eliminated the current structure of most HFA DPA programs across the country, these programs are built on a common financing model. Throughout the process, HUD has underscored that HFA DPA programs conform to HUD and Federal Housing Administration (FHA) guidelines and voiced strong support of DPA programs sponsored by local and state agencies. In May, the HUD Deputy Secretary ultimately issued a decision rejecting the OIG’s audit findings and recommendations (NOTE: the Deputy Secretary has only issued a decision related to the audit of Nova Financial and the decision related to the audit of LoanDepot is still pending). In late July, HUD IG David Montoya sent a letter to House Financial Services Committee Chairman Jeb Hensarling (R-TX) criticizing the Deputy Secretary’s decision. The letter, which contains inaccuracies regarding the structure, pricing and operation of HFA-funded DPA programs, urges Chairman Hensarling to scrutinize HUD’s decision and the agency’s ongoing support for HFA DPA programs. The House Financial Services Committee has oversight jurisdiction of HUD and FHA programs. The Banking Committee fills that same role in the Senate.
About the HUD OIG The HUD Office of Inspector General (OIG) independently conducts audits, evaluations, and other reviews of HUD programs and operations and makes recommendations to promote the agency's economy, efficiency, and effectiveness. The OIG also investigates allegations of abuse, fraud, waste, mismanagement, and violations of rules and laws related to HUD employees. The HUD OIG is an autonomous agency independent of HUD leadership. The HUD Inspector General, David Montoya, was appointed by President Obama and confirmed by the U.S. Senate in 2010.
NALHFA Action Alert: Support Local HFA DPA Programs
Page 2
Information on HFA DPA Programs: HFAs provide DPA to help qualified and creditworthy low- and moderate-income homebuyers obtain FHA-insured mortgages for the purchase of affordable single-family housing. These programs are operated by governmental agencies or instrumentalities and are eligible to provide homeownership assistance, as outlined in HUD/FHA lending guidelines. In HFA-sponsored DPA gift-grant lending programs, borrowers make no repayment of the DPA to the donor HFA (nor the lender or servicer). The DPA grants is provided solely from HFA funds that are typically generated through the sale of bonds or mortgage-backed securities (MBS). The borrower is not expected or required to repay the DPA at any time. At any time, the borrower can prepay the loan and still retain the full benefit of the DPA grant. All or a portion of the DPA grant is typically raised from the sale of the related bonds or MBS at a premium—as such the mortgage interest rate to the borrower is often slightly above market rate. The additional interest rate is paid to the investors that purchase the bonds or MBS, not to the HFA that is donating DPA. This model for FHA-insured loans where HFAs sell bonds or MBS at a premium to provide a source of DPA has been used by state and local HFAs across the country for more than 20 years and in full compliance with HUD guidelines. Unfortunately, HUD’s OIG is misinterpreting the agency’s “premium pricing” rule which prevents lenders from providing repayable DPA on FHA-insured loans Action Needed: Since the HUD Deputy Secretary’s decision rejecting HUD OIG’s recommendations and reaffirming the legality of HFA DPA programs in May, the HUD OIG has begun communicating with leaders of the House Financial Services Committee, which has jurisdiction over HUD programs including the Federal Housing Administration (FHA). Local HFAs are encouraged to contact their Members of Congress, in particular those serving on the House Financial Services or Senate Banking Committees (see committee rosters below). Urge them to contact HUD to request the agency issue interpretive guidance to clarify that the “premium pricing” rule does not apply to loans made in connection with HFA programs providing DPA, whether that DPA is in the form of a gifts-grants or with secondary financing . Key Talking Points:
HFA DPA programs fill a gap in affordable housing by providing low- and moderate-income families a chance at sustainable home ownership.
With a lack of federal or other financial sources for DPA programs—such as the HOME Investment Partnerships Program, which has been cut by roughly 50 percent since 2010—local HFAs and governmental agencies must rely on the capital markets to raise the down payment assistance funds needed to provide an FHA-insured mortgage for deserving and credit-worthy borrowers.
HFA DPA programs are entirely controlled by the HFA, which is responsible for setting rates and terms. In a local HFA lending program that provides a DPA gift:
NALHFA Action Alert: Support Local HFA DPA Programs
Page 3
o the borrower makes no repayment of the DPA to the donor HFA (or lender or servicer) o the loan is pre-payable at any time by the borrower without penalty and there is no obligation to
repay the DPA o the borrower receives a letter informing them the DPA is a gift o often, the borrower is also required to attend homeownership counseling
Loans originated through HFA DPA programs conform to strict underwriting criteria and FHA’s Qualified Mortgage/Ability-to-Repay (QM/ATR) guidelines. They are fully amortized fixed-rate 30-year mortgages with: o a maximum allowable debt-to-income (DTI) ratio of 45 percent (as allowed by FHA) o minimum allowable borrower FICO scores of 640 o no prepayment penalties or negative amortization o limitations on points and fees charged to the borrower
Elimination of the HFA DPA programs would have a chilling impact on affordable homeownership efforts across the nation. Thousands of deserving low- and moderate-income families each year that rely on HFA DPA programs to facilitate their home purchase would be forced into a higher-cost and less sustainable form of housing.
Action Needed NALHFA believes it is important for HFAs to educate members of their Congressional delegations on the important role DPA programs play in their communities. In particular, it is important to emphasize that HFA DPA programs are operated in a transparent fashion with the highest levels of consumer protections. In addition, it is important that Members of Congress communicate to HUD the need for clear regulatory guidance that HFA-sponsored DPA programs are fully allowable under existing HUD/FHA guidelines. NALHFA members that operate or participate in DPA programs are encouraged to meet with their House and Senate delegations and educate them on the positive impact of these programs and to describe how they responsibly serve borrowers. NALHFA members are asked to:
Contact your U.S. Senators and Representatives—especially if they serve on the House Financial Services or Senate Banking Committees—and request a meeting to discuss HFA DPA programs.
If you are a local HFA, consider bringing along members of your board or officers to reinforce the local impact of HFA programs.
If you are private sector partner, please also consider setting up a meeting with your Congressional Delegation to describe the services you provide to assist local HFAs in responsibly serving their region’s local affordable housing mission, particularly as it relates to DPA programs.
Urge your Senator or Representative to contact leaders of either the House Financial Services Committee or Senate Banking Committee to voice their support for HFA-funded DPA programs.
Ask that your Senator or Representative contact HUD and urge the agency to clarify its existing guidelines that support HFA-funded DPA programs.
Make sure to discuss the local impact and success stories surrounding your DPA programs!
For more information, contact NALHFA Executive Director Jason Boehlert at 202.367.1225 or [email protected].
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT OFFICE OF THE DEPUTY SECRETARY
WASHINGTON, D.C. 20410-0050
May25,2016
MEMORANDUM FOR: David Montoya, HUD Inspector General Edward Golding, Principal Deputy Assistant Secretary,
HUD Office of Housing
FROM: Nani Coloretti, Deputy Secretary~~ SUBJECT: Decision: Office of Inspector General Audit of NOVA Financial &
Investment Corporation's FHA-Insured Loans with Downpayment Assistance, Report 20 15-LA -0010
Consistent ·with section 5-5 of the Department's Audit Management System Handbook 2000.06 REV-4, this decision memorandlllTI represents management's decision and resolves the present disagreement between the Office ofinspector General (OIG) and the Office of HousingFederal Housing Administration (FHA) arising out ofOIG's audit ofNOVA Financial & Investment Corporation (NOVA) and its origination ofFHA-insured single family mortgages for borrowers using downpayment assistance provided by various housing finance agencies.
BACKGROUND INFORMATION
Despite several attempts to resolve their differences of opinion, OIG and FHA continue to disagree as to whether the downpayment assistance programs being operated by the gove1nmental entities and utilized by borrowers in connection with FHA-insured financing originated by NOVA violated FHA's requirements. OIG and Housing disagree on six recommendations made in the NOV A Audit, and OIG refened these disagreements to me for resolution. Specifically, OIG recommended that NOV A do the following:
1. OIG Recommendation IB: "stop originating FHA loans with ineligible gifts as part of downpayment assistance programs .... "
2. OIG Recommendation lC: "indemnify HUD for 405 FHA loans that were originated with the ineligible gift as part of the down payment assistance programs
"
3. OIG Recommendation lD: "indemnify HUD for the additional 304 loans originated under the Home in Five, Pima Tucson, and similar dovo.'11payment programs that may contain ineligible down payment assistance .... HUD must review the 304loans to determine whether they were insurable without the ineligible downpayment assistance."
www.hud.gov espanol.hud.gov
4. OIG Recommendation lF: "collaborate with loan servicers to reduce the interest rates for FHA borrowers who received downpayment assistance, were charged a premium interest rate, and have not refinanced or terminated their original FHA loan"
5. OIG Recommendation lG: "reimburse FHA borrowers for overpaid interest as a result of the premium interest rate for those who received down payment assistance, were charged a premium interest rate, and have refinanced or terminated their original FHA loan"
6. OIG Recommendation 1 H: "update all internal control checklists to include specific HUD FHA rules and regulations governing downpayment assistance, premium interest rates, and allowable fees"
The resolution of these six recommendations primarily depends upon the determination of three issues:
1. What is the interpretation and application ofthe National Housing Act "Prohibited Sources" provisions to the downpayment assistance provided by a governmental entity?
2. Whether the specific practices of the governmental entities providing downpayment assistance in the particular instances referenced in the NOVA Audit violate these "Prohibited Sources" provisions as they were interpreted and applied at the time of the audit.
3. Whether the specific practices of the governmental entities at issue in the NOV A Audit violate any other applicable FHA requirements concerning premium pricing or gift funds.
After meeting with OIG, FHA and the Office of General Counsel (OGC) on these issues, I charged OIG and OGC with conferring further to see if there was any common ground with respect to the relevant legal issues underscoring the Audit's determinations. The two offices conferred, and OIG also provided documentation that previously was not available to FHA or OGC. I understand that, pursuant to those discussions, the three offices- OIG, Housing, and OGC -agree that the Federal Housing Administration: Prohibited Sources of Minimum Cash Investment Under the National Housing Act- Interpretive Rule ("2012 Interpretive Rule") permits governmental entities to provide downpayment assistance that may represent a borrower's minimum cash investment. Docket No. FR-5679-N-01. However, neither office has changed its underlying view of the legal issues surrounding the NOV A FHA-insured single mortgages at issue in the audit and continue to disagree as to the manner in which a governmental entity may raise funds for its downpayment assistance program and the manner in which a governmental entity may provide downpayment assistance to perspective borrowers. Both OIG and OGC provided me with their position on these legal issues, and this memorandum sets forth my final determination.
2
1) The "Prohibited Sources" Provisions and Treatment of Governmental Entities
The 2012 Interpretive Rule is the Department's legal interpretation and application of the National Housing Act's "Prohibited Sources" provisions, which restrict certain persons and entities from funding the borrower's minimum required downpayment. The Interpretive Rule specifically excludes governmental entities from the "Prohibited Sources" provisions and places no restrictions or prohibitions on how governmental entities raise funds for their downpayment assistance programs. In addition, the Department's General Counsel has opined by memorandum dated August 11, 2015 ("General Counsel's opinion") and attached hereto as Attachment A, that governmental entities generate their funds for downpayment assistance programs through a variety of mechanisms (which could include the sale of mortgages on the secondary market) and, once the funds legally belong to the governmental entity, that control is sufficient to render them eligible for use as downpayment assistance and a proper source for the borrower's minimum cash investment. Neither the Interpretive Rule nor the subsequent Mortgagee Letter 2013-14, titled "Minimum Cash Investment and Secondary Financing Requirements - Acceptable Documentation for Funds Provided by Federal, State, or Local Governments, their Agencies or Instrumentalities," placed restrictions on the manner in which governmental entities raised funds. Additionally and as the General Counsel has noted, the "Prohibited Sources" provisions of the National Housing Act, captured at section203(b)(9)(C) of the Act, are directed towards parties that financially benefit from the property sales transaction and the primary mortgage transaction, not transactions that occur in the secondary mortgage market. As such, I have determined that the governmental entities involved in the NOV A Audit represented a permissible source for borrowers' minimum cash investment.
2) "Prohibited Sources" Provisions as Interpreted and Applied at the Time of the NOVA Audit
The 2012 Interpretive Rule and Mortgagee Letter 2013-14 were in effect and applicable during the time ofOIG's audit. In fact, OIG's analysis in the audit acknowledged and recognized the applicability of the 2012 Interpretive Rule and Mmigagee Letter 2013-14. The audit determinations, however, rely upon a finding that certain provisions of the FHA Handbook ("Handbook") still apply to governmental entities. Specifically, OIG asserts that the lender is obligated to ensure compliance with 4155.1 5.B.4.a, which requires that there is no expected or implied repayment of gift funds by the borrower, and 4155.1 5.A.2.i, which places a restriction on the use of premium pricing that results in a credit to the borrower such that the credit cannot exceed the borrower's closing costs and/or prepaid items. In light of the Interpretive Rule and Mortgagee Letter 2013-14, which post-date and supersede the cited Handbook provisions, and the subsequent General Counsel's opinion regarding the applicability ofthese authorities, I conclude that OIG has not established in its audit a violation of any applicable requirements governing these dovmpayment assistance programs.
3
3) Gift Funds and Premium Pricing
a. Gift Funds
I also conclude, contrary to OIG's allegations, that the funds used for the downpayment assistance were consistent with the FHA rules governing gift funds, as determined by Handbook 4155.1. Based on the information provided by OIG, it appears that the borrowers received grant funds from the governmental entities and were not, in fact, required to repay these grants. Indeed, OIG takes issue with an apparent arrangement between certain governmental entities and lenders participating in the secondary mortgage market, in which the lenders reportedly provided funds to support the downpayment assistance program (financial support that, according to OIG, was borrower-funded); but documents memorializing the arrangement expressly provide that the "[d]own payment assistance is a grant and is not directly repayable by the borrower .... "1 In addition, according to the record information provided by OIG, the borrowers did not execute any additional note or security instrument to document the creation of a debt obligation securing the repayment of the downpayment assistance amount.2 The sales contract was not artificially inflated and the original principal balance of the mortgage was not increased to cover the cost of the downpayment assistance. There was no prepayment penalty imposed upon the borrower if the borrower prepaid the mortgage such that the full value of any increased interest rate was not fully realized. As such, I conclude that there was no expectation of repayment of the downpayment assistance as alleged by OIG. Thus, I conclude that the downpayment assistance at issue in OIG's audit is permitted under current FHA rules.
b. Premium Pricing
I also conclude that FHA' s policies addressing "premium pricing" in Handbook 4155.1 were not applicable in the circumstances as alleged by OIG. FHA's requirements related to "premium pricing" are only applicable where the interest rate negotiated between the borrower and lender results in a credit from the lender that then is reflected on line 802 of the HUD-1 Form. 3 OIG specifically has found that no credit was generated in these cases. See Appendix D (indicating that no credit was found in the HUD-1 for the reviewed loans). Consequently, there cannot be a violation ofFHA's premium pricing policies where there is no corresponding credit to the borrower, because FHA's restrictions on premium pricing do not apply.
DECISION
The "Prohibited Sources" provisions of section 203(b)(9)(C) of the National Housing Act do not mandate the conclusion that governmental entities are prohibited sources of downpayment
1 As previously determined, there are no restrictions placed on governmental entities in how they elect to raise funds for their respective downpayment assistance programs. The subsequent sale of the mortgage on the secondary market is a permissible source of funds for a governmental entity's downpayment assistance program. Additionally, FHA does not have the legal authority to regulate interest rates. 2 Memorandum of Jeremy Kirkland, Counsel to the Inspector General, to Tanya E. Schulze, Regional Inspector General For Audit (hereinafter "Kirkland Memorandum"), dated June 17, 2015, concerning the NOV A Audit, page 2, (noting borrowers had gift letters stating that the downpayment assistance was not required to be repaid.). 3 In the section ofthe HUD-1 Form setting out items payable in connection with the Joan, line 802 requires the mortgagee to provide the "credit or charge (points) for the specific interest rate chosen" by the borrower.
4
assistance in connection with FHA-insured mo1tgages, regardless of how such entities generate their funds. Based on the facts presented by OIG in the NOV A Audit, it does not appear that the legal position of the Department and the policies of FHA with respect to governmental downpayment assistance in place at the time of the audit were violated by the lender. Moreover, the policies of FHA with respect to premium pricing and gifts also do not appear to have been violated by the lender, based on the facts that OIG has presented.
The NOV A Audit makes neither allegations nor any determinations that the then applicable FHA requirements found in Mortgagee Letter 2013-14 were violated. The NOVA Audit also does not support a determination that the 2012 Interpretive Rule was violated. As such, I fmd no basis in the NOVA Audit to support Recommendations lB, lC, lD, IF and IG and therefore will not require any further action by FHA with respect to these recommendations. With respect to Recommendation lH, I concur with OIG's recommendation and direct FHA to review and, where appropriate, update its guidance, including any internal control checklists, to include FHA rules and regulations governing downpayment assistance, premium interest rates and allowable fees, consistent with this memorandum. Additionally, while the Department believes the downpayment assistance program as described in OIG's audit is permissible under law and that OIG has not established a violation of any FHA rules and regulations applicable at the time of the audit, I am directing FHA, in concert with the Government National Mortgage Association ("Ginnie Mae"), to review prospectively, and provide to the Deputy Secretary within 90 days any policy recommendations relating to, (1) the role of secondary mortgage market participants in providing financial assistance to governmental entities that in tum use those funds, including fimds generated through prior mortgage transactions, to support downpayment assistance progran1s; and (2) any advisable parameters governing such arrangements. In addition, I am directing FHA to evaluate the appropriate risk-related factors with respect to loans that include downpayment assistance, including any potential additional risk to consumers and/or to the Mutual Mortgage Insurance Fund, and determine whether steps can be taken to mitigate that risk and ensure that the risks are within FHA's risk tolerance. FHA should report the results of its evaluation to the Deputy Secretary within 30 days.
5
ATTACHMENT A
6
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, DC 20410-8000
AVG 1 1 2015 OFFICE OF HOUSING
MEMORANDUM FOR: Edward L. Golding, Principal Deputy Assistant Sefe· · J Housing, H ~"0
FROM: Helen Kanovsky, General Counsel, C
SUBJECT:
v-Pennissible Source of Funds for Governmental Entities Downpayment Assistance Programs.
You have advised that the audit ofNOVA Financial & Investment Corporation by the U.S. Department of Housing and Urban Development's (HUD) Office oflnspector General (OIG) has created concerns about the propriety of certain Downpayment Assistance (DPA) programs being operated by various governmental entities, including Housing Finance Agencies. Specifically, you requested guidance concerning whether a governmental entity's use ofFHA mortgages with arguably higher than market interest rates in its DP A program represents "premium pricing" as defmed by Federal Housing Administration (FHA) requirements. Additionally, you asked whether a practice of raising funds in this manner by governmental entities to provide DPA is pennissible under FHA requirements.
First, FHA's Interpretative Ru1e, Docket No. FR~5679~N-01, published on December 5, 2012 and Mortgagee Letter 2013-14, published on May 9, 2013 superseded previous FHA guidance in regards to governmental entities DP A programs. Second, neither the Interpretative Ru1e nor the Mortgagee Letter placed restrictions on how a governmental entity may fund its DP A programs. Finally, the use of funds derived from the sale ofmortgages with higher than market interest rates does not constitute premium pricing as defined by FHA, nor does it violate any other requirement placed on DPA provided by governmental entities.
Permissible Source of FWlds for Down payment Assistance Programs
Governmental entities are a pennissible source of funds for a borrower's Minimum Cash Investment. FHA's interpretation of section 203(b)(9)(C) of the National Housing Act provides that FHA is not prohibited from insuring mortgages originated as part ofa governmeJ}tal entities DPA programs when the entity directly provides .funds toward the requir~d Minimum Cash. Investment. This interpretive rule placed no restrictions on how governmental entities acquired the funds used for their respective DP A programs. In fact, the interpretive rule. specifically men~ioned and recognized various ways governmental entities currently .raise funds for their respective DP A programs- such as public funds, tax revenue, taxable and tax exempt general obligation bonds, and housing bonds. Further, the interpretative rule did not prohibit nor preclude governmental entities from raising funds through other means such as the sale of mortgages on the secondary market.
Subsequent to the interpretive rule, FHA issued Mortgagee Letter 2013~ 14, which provided additional guidance to mortgagees on how to document the funds used for DP A provided as well as guidance on secondary financing by a Federal, State, or local governments or their agencies or
www.hud.gov espanol.hud.gov
instrumentalities. This Mortgagee Letter did not place any restrictions or prohibitions on how a governmental entity could raise funds to ftmd its DPA program.
FHA's determination not to place restrictions or prohibitions on how a governmental entity raises ftmds to support its DP A programs through either the Interpretive Rule or the Mortgagee Letter is in keeping with FHA's previous guidance. FHA's Handbook4155.1.5. B.4.b concerning the source of funds for a gift specifically states that "FHA is not concerned with how a donor obtains gift funds, provided that the funds are not derived in any manner from a party to the sales transaction." Further, as the Interpretative Rule and the Mortgagee Letter are the later enacted, they supersede any previous guidance that arguably may conflict. FHA does not place restrictions or prohibitions on how a governmental entity elects to raise funds to support its DP A program and governmental entities may directly provide funds for a borrower's Minimum Cash Investment.
Premium Pricing
S.ection 203(b)(5) of the National Housing Act provides that the interest rate on an FHA insured mortgage is· to. be agreed upon by the borrower and the lender. Regulation 24 C.F .R. §203.20 similarly provides that the borrower and the lender are to agree upon the mortgage interest rate. FHA does not regulate interest rates and cannot regulate interest rates.
FHA's current guidance does not prohibit premium pricing. FHA guidance does, however, restrict how a credit to the borrower, as a result of premium pricing, may be used. FHA permits the credit to be applied towards a borrower's closing costs or other prepaid items, but does not permit the credit to. be used towards the borrower's downpayment. If the resulting creditexceeds the amount of actual closing costs or prepaid items, HUD requires the lender to reduce the priricipal balance of the mortgage.
There is noviolation of FHA restrictions onpremiUl11 pricing where the rates agreed upon by borrower and lender are generally the rates available to homebuyers participating in DP A programs. Similarly, there is also no violation of FHA restrictions on premium pricing where any apparent increased interest rate did not result in a corresponding credit to the borrower.
NOVA Audit
Based on the above legal analysis, we do not see any basis to challenge the legality of NOVA's DPAprograms. Because the practices engaged in by NOVA do not represent premium pricing as defined by FHA requirements, and because FHA does not restrict the source of the funds used for tbe DPA provided by governmental entities, we cannot support the OIG's conclusion that NOVA violated FHA requirements concerning premium pricing or the provision of gifts. Please let me know if you have any further q1,1estions concerning this matter.
2
Actual Real Cost to the Borrower
$150,000 HFA “Turnkey” Program
FHA Loan on 7/26/16:
3.50% DPA Grant & then Current 4.00% FHA Mortgage Rate
General market example without DPA:
Avg. 30-year fixed FHA Baseline FHA market rate of: 3.54% contract rate (week ending
Monthly P&I= $ 676.92 7/29/16, per Mortgage Bankers
Annual P&I= $ 8,123.05 Association)
Total Interest for 6 years*= $29,964.00
Borrower’s Equity at the end of 6 years: $18,774.00
Total Interest for 30 years= $93,691.00
HFA example with a $5,250 DPA grant:
FHA Interest Rate: 4.00% (+0.46% premium)
Monthly P&I= $ 716.12
Annual P&I= $ 8,593.48
Total Interest for 6 years*= $ 34,007.00
Borrower’s Equity at the end of 6 years: $ 17,554.00
Total Interest for 30 years= $107,804.00
*Six years is the weighted average expected life of the loan per U.S. Bank’s 2014 annual report (from
7/26 OIG ltr).
Additional Cost to Borrower with a $5,250 DPA grant in a 6-year scenario:
Additional Interest Cost after 6 years: ($4,043.00)
Reduced Equity after 6 years: ($1,220.00)
Total 6-year cost for assistance: ($5,263.00)
Up-front DPA Grant moneys provided to Borrower at closing: $5,250.00
Financial cost* of DPA loan to Borrower at end of year 6: $ 13.00
* Financial cost is not present valued, and does not reflect during such 6-year period (i) any home appreciation from ability to purchase home, (ii) any benefit of a mortgage tax deduction, or (iii) the non-monetary/social benefits that accompany homeownership. Note that the financial cost is deemed higher if DPA is in the form of a repayable loan, as opposed to in grant form.
RESOLUTION NO. 2016-_______
A regular meeting of the Housing Finance Authority of Broward County, Florida was
held at 5:30 p.m. on ____________, 2016, at the offices of the Housing Finance Authority of
Broward County, Florida, 110 Northeast Third Street, Suite 201, in the City of Fort Lauderdale,
Florida.
Present:
_____________
Absent: ______
* * * * *
Thereupon, introduced the following Resolution,
which was read:
A RESOLUTION OF THE HOUSING FINANCE AUTHORITY
OF BROWARD COUNTY, FLORIDA, APPROVING AND
AUTHORIZING EXECUTION AND DELIVERY OF THE
AMENDED AND RESTATED INTERLOCAL AGREEMENT
WITH THE HOUSING FINANCE AUTHORITY OF LEE
COUNTY, FLORIDA, FOR JOINT PARTICIPATION IN A
PROGRAM TO PROVIDE FINANCING FOR SINGLE
FAMILY MORTGAGE LOANS THROUGH THE ISSUANCE
OF BONDS, MORTGAGE CREDIT CERTIFICATES, OR
DIRECT LENDING (“PROGRAM”), INCLUDING
PROVIDING DOWN PAYMENT ASSISTANCE IN
CONNECTION WITH SUCH LOANS; AUTHORIZING BOND
COUNSEL EXPENDITURES NOT TO EXCEED $5,000;
AUTHORIZING CERTAIN OFFICIALS OF THE HOUSING
FINANCE AUTHORITY OF BROWARD COUNTY, FLORIDA,
TO TAKE ALL ACTIONS NECESSARY OR ADVISABLE IN
CONNECTION WITH THE PROGRAM, INCLUDING
EXECUTION AND DELIVERY OF ALL NECESSARY OR
APPROPRIATE DOCUMENTS IN CONNECTION
THEREWITH; AND PROVIDING FOR AN EFFECTIVE DATE.
2
WHEREAS, the Legislature of the State of Florida (the "State") has enacted the Florida
Housing Finance Authority Law, Part IV, Chapter 159, Florida Statutes, as amended (the "Act"),
pursuant to which the State has empowered each county in the State to create by ordinance a
separate public body corporate and politic to be known as a Housing Finance Authority of the
county for the purpose of alleviating a shortage of housing and capital for investment in
housing in the area of operation of such Housing Finance Authority; and
WHEREAS, pursuant to the Act, the Board of County Commissioners (the “Board of
County Commissioners”) of Broward County, Florida enacted Ordinance No. 79-41, as
supplemented and amended (the "Ordinance") declaring a need for a housing finance authority
to function in Broward County, Florida (the "County") and creating the Housing Finance
Authority of Broward County, Florida (the "Housing Finance Authority"); and
WHEREAS, in 2013, the Housing Finance Authority authorized its joint participation
with the Housing Finance Authority of Lee County, Florida (the “Lee HFA”) and other local
housing finance authorities in single family mortgage revenue bond or other financing
arrangements, including down payment assistance, for single family housing mortgage loans
(the “Program”); and
WHEREAS, the Housing Finance Authority entered into an interlocal agreement with
the Lee HFA (the “Interlocal Agreement”) to accomplish the foregoing purposes; and
WHEREAS, the Housing Finance Authority and LEE HFA desire to amend the
Interlocal Agreement (“Amended and Restated Interlocal Agreement”) to expand Program
3
funding options for financing mortgages and down payment assistance for eligible single
family households.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF BROWARD COUNTY, FLORIDA:
Section 1. Authority. This Resolution is adopted pursuant to the provisions of
the Act, the Ordinance, and other applicable provisions of law.
Section 2. Incorporation of Whereas Clauses. The foregoing “WHEREAS” clauses
are hereby ratified and confirmed as being true and correct and are hereby made a specific part
of this Resolution upon the adoption hereof.
Section 3. Approval of Amended and Restated Interlocal Agreement. The form of
the Amended and Restated Interlocal Agreement, attached hereto as Exhibit “A,” is hereby
approved. The Chair, Vice Chair, or Executive Director of the Housing Finance Authority is
hereby authorized to execute and deliver the Amended and Restated Interlocal Agreement,
and the Secretary or Assistant Secretary of the Housing Finance Authority is hereby authorized
to attest and place the seal thereon, in the form attached hereto as Exhibit A, with such
changes, modifications, additions, or deletions to or from such form as they, with the advice of
the Office of the County Attorney and/or Bond Counsel, may deem necessary or desirable.
Such officers are also authorized to execute and deliver funding commitment letters and down
payment assistance award letters, in the forms attached hereto as Exhibit B, with such changes,
modifications, additions, or deletions to or from such forms as they, with the advice of the
Office of the County Attorney and/or Bond Counsel, may deem necessary or desirable. Such
4
execution and delivery shall be conclusive evidence of the approval and authorization thereof
by the Housing Finance Authority.
Section 4. Further Actions. The officers identified in Section 3, above, are hereby
authorized to do all acts and things, and to execute all instruments and documents, as may be
necessary, advisable, or desirable to effectuate participation in the Program.
Section 5. Resolution Effective. This Resolution shall take effect immediately upon
its adoption.
Upon motion of ________________________, seconded by _____________________, the
foregoing Resolution was adopted by the following vote:
Ayes ______
Noes ______
5
EXHIBIT “A”
RESTATED AND AMENDED INTERLOCAL AGREEMENT
6
EXHIBIT “B”
FORM OF COMMITMENT AND AWARD LETTERS
7
STATE OF FLORIDA )
) SS:
COUNTY OF BROWARD )
I, Jacqueline Paige Brown, Secretary of the Housing Finance Authority of Broward
County, Florida, do hereby certify that the foregoing is an accurate copy of the resolution of the
Housing Finance Authority adopted at a meeting held on October 12, 2016, as set forth in the
official minutes of the Housing Finance Authority, relating to the approval and execution of the
Amended and Restated Interlocal Agreement between the Housing Finance Authority of
Broward County, Florida, and the Housing Finance Authority of Lee County, Florida.
I DO HEREBY FURTHER CERTIFY that said meeting was duly called and held in
accordance with Chapter 286, Florida Statutes.
WITNESS my hand and the corporate seal of said Housing Finance Authority, this 12th
day of October, 2016.
HOUSING FINANCE AUTHORITY OF
BROWARD COUNTY, FLORIDA
By:
Jacqueline Paige Brown, Secretary
[SEAL]
4
This instrument prepared by:
Mark T. Mustian, Esq. 320.73
Nabors, Giblin & Nickerson, P.A.
1500 Mahan Drive, Suite 200
Tallahassee, Florida 32308
AMENDED AND RESTATED INTERLOCAL AGREEMENT
THIS AMENDED AND RESTATED INTERLOCAL AGREEMENT (“AGREEMENT”) made and entered into by and between the Housing Finance Authority of Lee
County, Florida, a public body corporate and politic organized and existing under the laws of the
State of Florida (hereinafter referred to as the "Lee Authority"), and the Housing Finance Authority
of Broward County, Florida, a public body corporate and politic organized and existing under the
laws of the State of Florida (hereinafter referred to as the "Broward Authority"), amends and
restates in its entirety that Interlocal Agreement, dated April 10, 2013, between the Lee Authority
and the Broward Authority.
W I T N E S S E T H:
WHEREAS, Part IV of Chapter 159 of the Florida Statutes (the "Act") authorizes the
creation of Housing Finance Authorities within the State of Florida for the purpose of issuing
revenue bonds and refunding bonds and otherwise assisting in relieving the shortage of housing
available at prices or rentals which many persons and families can afford; and
WHEREAS, the Lee Authority has authorized a lending program through the issuance of
bonds, mortgage credit certificates ("MCCs") or through direct lending (the "Program") to provide
financing for single family homes for eligible persons as permitted by the Act; and
WHEREAS, to provide efficiencies in connection with the Program, pursuant to individual
interlocal agreements to be entered into between the Lee Authority and the Housing Finance
Authorities of other counties (or with other counties in the absence of a housing finance authority)
within the State, including the Broward Authority (collectively, the "Counties"), each of the
Counties will delegate, in the manner and subject to the limitations contained herein, its authority
to originate and purchase single family mortgage loans within the territorial boundaries of its
respective county to the Lee Authority (the territorial boundaries of Lee County and the territorial
boundaries of such other Counties, collectively, the "Area of Operation"); and
WHEREAS, by combining the resources of the Lee Authority and the Counties, the Lee
Authority will be able to make available single family mortgage loans at rates below the rates
otherwise attainable if any of the Counties undertook a separate means of financing the same; and
WHEREAS, the financing of single family home loans under the Program in the Area of
Operation will result in a wider allocation of fixed expenses and achieve certain other economies
4
of scale that will have the effect of reducing the financial burden on single family homeowners
that otherwise would have to be borne; and
WHEREAS, Sections 163.01, 159.608 and 125.01, Florida Statutes, authorize the Lee
Authority and the Broward Authority to enter into this Interlocal Agreement in order to make the
most efficient use of their respective powers, resources and capabilities by authorizing the Lee
Authority to exercise those powers which are common to them for the purpose of issuing one or
more series of the bonds and/or the financing of qualified single family mortgage loans or otherwise
assisting in providing affordable single family housing for the entire Area of Operation.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. SUBSTITUTION OF BONDS AND/OR ORIGINATION OF LOANS. The Broward Authority hereby grants authority to the Lee Authority to originate loans made with
its bonds or other funds in Broward County, Florida, or otherwise to finance the purchase of
qualified single family mortgage loans or assist in financing single family housing described in the
resolutions authorizing the Program in Broward County, Florida. At the direction of the Broward
Authority, any down payment assistance ("DPA") provided in connection with such loans shall be
provided by the Broward Authority. All revenues generated by the origination or sale of single
family mortgage loans pursuant to this Agreement will be administered by the Lee Authority or its
agents and paid to the Broward Authority, less reasonable administrative fees as provided in
Section 4. Notwithstanding the foregoing, nothing herein shall be deemed to prohibit the Broward
Authority from simultaneously participating in other programs to originate single family loans or
MCCs in Broward County, or from starting its own program or programs with respect to the same.
The Lee Authority reserves the right, at its sole discretion, to temporarily or permanently end the
Program at any time with a 30 day prior notice to the Broward Authority; provided no termination
will take place with respect to a single family loan made in Broward County but not purchased,
unless the parties to this Agreement mutually agree to such termination. In the event of such
termination, no further payment shall be made to the Broward Authority other than with respect to
Broward County loans or mortgage-backed securities relating thereto which are closed or are then
in the lending pipeline which close. The parties hereto may, if determined necessary, enter into a
separate agreement or agreements which establish the mechanics of operating the Program.
SECTION 2. ADMINISTRATION. The Lee Authority hereby assumes responsibility for
administering this Agreement by and through its employees, agents and officers; provided,
however, that the Broward Authority retains and reserves its right and obligation to require
reasonable reporting on programs designed for and operated within Broward County.
Notwithstanding the foregoing, unless specifically approved by the Broward Authority, no interest
rate shall be set for any loan made under the Program in Broward County which results in amounts
of less than $1.00 being paid to the Broward Authority with respect to said loan (including the
reimbursement of DPA provided by the Broward Authority, either from the price of mortgage-
backed securities sold relating to such loan or from expected reimbursement from the Florida
Housing Finance Corporation as provided in Section 4 hereof). The Lee Authority and its agents
shall provide the Broward Authority with such reports as may be reasonably necessary to account
for funds generated by this Agreement.
4
The Lee Authority shall have full authority and responsibility to negotiate, validate, market,
sell, issue and deliver its bonds and to arrange for the origination and purchase of single family
mortgage loans or make direct loans or otherwise finance single family housing in such amounts
as the Lee Authority shall in its sole judgment determine (taking into account lender demand and
available allocation of private activity bond issuance authority pursuant to Chapter 159, Part VI,
Florida Statutes) to finance qualifying single family housing developments in the Area of
Operation, including Broward County and to take such other action as may be necessary or
convenient to accomplish such purpose, such bonds to be issued in one or more series as determined
by the Lee Authority. Notwithstanding anything to the contrary contained herein, the Broward
Authority may by written notice to the Lee Authority elect to utilize its own MCCs in connection
with the origination of loans under the Program by the Lee Authority.
SECTION 3. PROGRAM PARAMETERS. The Broward Authority shall determine the
methodology for establishing and shall establish initial maximum housing prices and initial
maximum adjusted family income for eligible borrowers in Broward County in accordance with
Section 143 of the Internal Revenue Code of 1986, as amended (the "Code") (or, in connection
with single family mortgage loans that do not involve tax exempt Bonds, such higher limits as may
be designated by the Broward Authority in accordance with Part IV of Section 159, Florida
Statutes), and in each subsequent year, the Lee Authority shall adjust maximum housing prices and
maximum adjusted family income for eligible borrowers in Broward County using the
methodology determined by the Broward Authority in accordance with the Code, if necessary. The
Broward Authority hereby consents and agrees to the establishment by the Lee Authority of all
other program parameters, except as set forth in Section 2 above, including, but not limited to,
selection of allocations among participating lenders as may be required for any bonds issued by the
Lee Authority pursuant to this Agreement. The Lee Authority may select allocations among
participating lenders in Broward County based on lender demand in Broward County, available
allocation of private activity bond issuance authority, and the lenders' performance in prior bond
programs.
SECTION 4. DPA REIMBURSEMENT UNDER FLORIDA HOUSING
REIMBURSEMENT PROGRAM. The Lee Authority agrees to submit, to the extent the same
qualifies under rules and procedures developed by the Florida Housing Finance Corporation
("Florida Housing"), and as permitted by Florida Housing, each DPA loan made by the Broward
Authority under the Program for reimbursement by Florida Housing under any program for
reimbursement of local HFA down payment assistance. The Lee Authority shall use its best efforts
to ensure that DPA Loans funded by the Broward Authority are reimbursed by Florida Housing at
the same time and in the same manner as DPA Loans made by the Lee Authority. All amounts
received by the Lee Authority as reimbursement by Florida Housing for DPA loans made by the
Broward Authority shall be transferred to the Broward Authority within a reasonable period of time
after receipt by the Lee Authority, less wire transfer and administrative costs of the Lee Authority
and/or its consultants that process the reimbursement requests not to exceed $100 per loan, unless
otherwise agreed to by the Broward Authority. If for any reason Florida Housing does not provide
reimbursement for DPA loans made by the Broward Authority, the Lee Authority shall not be
responsible for reimbursing any such loan.
SECTION 5. TERM. This Agreement will remain in full force and effect until terminated
by either party hereto, each of which shall have the right to terminate the Agreement upon 30 days’
4
prior written notice to the other party hereto. Notwithstanding the foregoing, it is agreed that this
Agreement may not be terminated by any party during any period in which single family mortgage
loans in Broward County have been originated but not purchased, unless the parties to this
Agreement mutually agree in writing to the terms of such termination; provided, that immediately
upon the Broward Authority giving notice of termination to the Lee Authority, the Lee Authority
shall stop accepting reservations for single family mortgage loans in Broward County. It is further
agreed that in the event of termination the parties to this Agreement will provide continuing
cooperation to each other in fulfilling the obligations associated with the issuance of bonds pursuant
to this Agreement.
SECTION 6. INDEMNITY. The Lee Authority agrees to hold the Broward Authority and
Broward County harmless, to the extent permitted by law and solely from amounts made available
under the documents relating to the Program, from any and all liability for repayment of principal
of and interest or penalty associated with any bonds or the Program.
SECTION 7. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
(REMAINDER OF PAGE INTENTIONALLY BLANK)
S-1
IN WITNESS WHEREOF, the parties to this Agreement have caused their names to be
affixed hereto by the proper officers thereof as of the ____ day of ____________, 2016.
HOUSING FINANCE AUTHORITY OF
BROWARD COUNTY, FLORIDA
(SEAL)
By:
Milette Thurston, Chair
ATTEST:
___________________________________
Secretary
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me this _____ day of __________,
2016, by Milette Thurston, as Chair of the HOUSING FINANCE AUTHORITY OF BROWARD
COUNTY, FLORIDA, a public body corporate and politic duly created and existing under the
laws of the State of Florida, on behalf of the Housing Finance Authority of Broward County,
Florida. Said person is personally known to me or has produced a valid driver's license as
identification.
Notary Public; State of Florida
Print Name:
My Commission Expires:
My Commission No.:
S-2
IN WITNESS WHEREOF, the parties to this Agreement have caused their names to be
affixed hereto by the proper officers thereof as of the _____ day of _______, 2016.
HOUSING FINANCE AUTHORITY OF
LEE COUNTY, FLORIDA
(SEAL)
By:_____________________________
E. Walter Barletta, Chairman
ATTEST:
___________________________________
Secretary
STATE OF FLORIDA
COUNTY OF LEE
The foregoing instrument was acknowledged before me this _____ day of _______, 2016,
by E. Walter Barletta, as Chairman of the HOUSING FINANCE AUTHORITY OF LEE COUNTY,
FLORIDA, a public body corporate and politic duly created and existing under the laws of the State
of Florida, on behalf of the Housing Finance Authority of Lee County, Florida. Said person is
personally known to me or has produced a valid driver's license as identification.
Notary Public; State of Florida
Print Name:
My Commission Expires:
My Commission No.:
1
Housing Finance HFA of Broward County October 12, 2016 – Board Meeting
Single Family – Action Item Request Board authorization to: a) enter into an Amended and Restated Interlocal Agreement with the Housing Finance Authority of Lee County, Florida, b) execute a gift letter if required, c) take such other action necessary or advisable to allow for the funding for eligible households of first mortgages and down payment assistance via participation in the Lee County program as more specifically defined within the Amended and Restated Interlocal Agreement (the “Amended Lee Program”) and d) authorization of bond counsel expenditures not to exceed $5,000. Background
1. On February 13, 2013, the professional team discussed various single family first
mortgage alternatives that would be available to the HFA to allow for funding of first mortgages which could be used in conjunction with the Florida Housing Finance Corporation (“FHFC”) down payment assistance (“DPA”) utilizing multi-state mortgage settlement funds.
2. Based on then current market conditions, a “to-be-announced” program (“TBA”)
was deemed to offer the best mortgage rates for homebuyers utilizing the HFA’s MCC program. (A TBA is a forward contract on a mortgage-backed security. The seller agrees to deliver the MBS for an agreed upon price on an agreed upon date, but makes no guarantee as to which or how many securities are to be delivered. Note the programs will require that all first mortgages meet the requirements of the Code.)
3. Although Lee County and Miami-Dade County both had excellent programs, HFA staff and Financial Advisor recommended utilization of the Lee Program for the following reasons: a) the program had limited HFA risk, b) there was the ability for the program to generate HFA revenues, and c) if the program was successful, the HFA could split off from the Lee Program and establish a standalone Broward County HFA program.
4. At its March 13, 2013, meeting the HFA Board authorized participation in the
Housing Finance Authority of Lee County (“Lee County HFA”) single family mortgage revenue bond program (the “Lee Program”).
5. BOCC approval of the Lee Program documents was received on April 9, 2013.
At the same meeting, the BOCC authorized Broward HFA funding of a down payment assistance program, initially in the amount of $200,000 or such greater amount not to exceed $500,000 as authorized by the Broward HFA Board.
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6. The Lee Program generated $84,665.31 in revenues for the HFA, the HFA funded $437,125 in DPA second mortgages and received $437,125 in DPA reimbursement from FHFC.
7. Once the FHFC DPA funds were depleted, the HFA did not continue to participate in the Lee Program as DPA second mortgage resources were not available.
Present Situation
1. Over the past few years the Lee Program has been active within several Florida counties (including Palm Beach) and the HFA’s mortgage credit certificate (“MCC”) lenders have been requesting that the HFA participate in the Lee Program. Additionally, the Lee Program has expanded to include a DPA grant option on the first mortgages, thereby eliminating the need for a second mortgage from the HFA. An overview of the Amended Lee Program is included within Attachment I.
2. Similar to steps taken in 2013, both of the HFA’s underwriters were contacted
regarding program alternatives and it was determined that the most efficient course for the HFA was continued participation within the Amended Lee Program.
3. Presuming Board authorization is received for the HFA to participate within the Amended Lee Program, the HFA anticipates increased demand for its MCCs.
4. Presently the Amended Lee Program allows the Federal Housing Administration (FHA), Veterans Administration (VA) and Rural Development (RD) mortgages and the Lee Program is expected to be expanded to include Freddie Mac conventional mortgages by year end. To the extent that Fannie Mae conventional mortgages could be included within the Amended Lee Program it is anticipated that the Amended Lee Program would again be expanded.
5. Since there is the potential for lower mortgage insurance premium (“MIP”) costs with conventional mortgages, it is anticipated that this may be an attractive option for eligible households within Broward County.
6. In 2015 the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) (“HUD OIG”) raised concerns regarding DPA programs by HFAs. The HUD Deputy Secretary rejected HUD OIG’s recommendations within its May 25, 2016 correspondence. On July 26, 2016, HUD OIG submitted a letter to inform Congress of their findings. (Attachment II)
7. It is the opinion of many within the industry that the HUD OIG information was not representative of current market conditions and thereby distorted the adverse impact on homebuyers. Raymond James (“RJ”) prepared an analysis “Actual Real Cost to the Borrower”. (Attachment II).
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8. Based on actual loans originated within the Amended Lee Program, staff
believes the RJ analysis would be more representative of the impact on Broward borrower’s versus the analysis presented by HUD OIG. Additionally, the HUD OIG comments are restricted to FHA loans.
9. HFA Financial Advisor and staff recommend HFA participation within the
Amended Lee Program as it will provide: a) eligible households an opportunity to obtain DPA funds in an amount up to 5% of the first mortgage amount, b) potentially reduce ongoing MIP costs and c) expand the marketing of the HFA’s MCC program.
10. At this time it is not anticipated that the HFA will be required to sign a gift letter. If such letter is required in the future, staff is requesting authorization to sign letters similar to the letters included within Attachment III.b.
11. Staff is requesting the authorization of bond counsel expenditures not to exceed $5,000.
Recommendation
1. Request Board authorization: a. To execute an Amended and Restated Interlocal Agreement, b. To execute a Gift Letter if required, c. Take other such actions as necessary or advisable, and d. Of bond counsel expenditures not to exceed $5,000.
Attachments
1. Raymond James Turnkey Program – Dated August 5, 2016 2. Miscellaneous Correspondence
a. HUD Office of Inspector General Correspondence – Dated, July 26, 2016
b. NALHFA Action Alert: Support Local HFA DPA Programs c. HUD Deputy Secretary Correspondence – Dated, May 25, 2016 d. RJ Overview – Actual Real Cost to the Borrower
3. HFA Resolution with Attachments a. Amended and Restated Interlocal Agreement b. Form of Gift Letters
