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Related Information
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Qualified
Non-profit agencies may also be able to participate in
HUD's Housing Counseling Program. Find out more...
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Q:
How do I become a Non-profit approved to participate in HUD/FHA
programs?
A: In order to begin the process of becoming HUD-approved,
you need the application package (Mortgagee Letter 00-08
and 02-01)
on our Web page, complete and provide to your appropriate HOC to
obtain FHA insurance with the same percentage of financing available
to owner-occupants (203b,203k ), secondary financing (DAPs) and/or
the HUD Homes Program.
Q:
What is the FHA Non-profit Roster?
A:
The FHA Non-profit roster is the list of FHA Single Family Housing
approved Non-profit agencies. HUD published Nonprofit
Organization Participation in Certain FHA Single Family Activities;
Placement and Removal Procedures on 06/06/02.
This federal register notice provides additional
information on the approval procedure.
Q: What HUD/FHA programs require approval for non-profits to
participate?
A: There are three types of approval that can be obtained by
a non-profit organization. They are:
1) Approval to purchase HUD Homes at a discount. HUD/FHA allows
non-profit organization to bid on and purchase HUD Homes at a discount.
This allows the non-profit to pass on this savings, providing affordable
housing opportunities for low-income or first time homebuyers. 2)
Approval to finance FHA-insured mortgages at the same terms and
conditions as an owner-occupant. This allows non-profits to purchase
properties with lower down payment requirements, allowing them to
fully leverage their funds. 3) Approval to provide secondary financing
to borrowers originating FHA-insured mortgages. This allows organizations
to provide closing cost or down payment assistance to borrowers
in accordance with FHA guidelines. Gifts do not require approval
by the HOC.
Q: How long does my HUD/FHA approval last?
A: Unless revoked by the HOC, each non-profit organization approved
by the Department is subject to re-certification every two years.
This re-certification should be requested by the organization within
30 days of the expiration of their previous approval. (See
Mortgagee Letter 2000-08
and 2002-01)
Q:
How does a Non Profit determine it's recertification date?
A:
On the approval letter issued by the HUD Homeownership Center the
approval date is typically in the upper left corner. Starting with
that date, add two years, and that will be you agencies recertification
date. For example, if your agency was approved on January 16, 2002,
your recertification date would be January 16, 2004.
Q: Where do I send the documentation for my re-certification?
A: Send your documents to the Homeownership Center that serves
your state. A
directory is on the web.
Q: If my non-profit organization is approved in one state, do
I have to resubmit a complete application package if I want to become
active in another?
A: In order to expand your operations into another state you
need only provide a copy of your current approval letter, a notification
of any changes made in your application since its approval and an
affordable housing plan (see Attachment 1 of the nonprofit application
for a sample format) for the new zip codes/geographic area in which
you intend to become active. This also applies if you want to participate
in another Homeownership Center jurisdiction. However, a copy of
your application noting any changes you may have made since approved
by another HOC would also be needed. Send
your documents to the Homeownership Center that serves the state
you are applying for approval in. A
directory is on the web.
Important: Include copies of any letters from the Homeownership
Center where your organization has been previously/currently approved.
You must clearly designate the geographic area where your organization
plans to do business (e.g., State, cities, counties). If applying
to participate in the HUD Homes Direct Sale Program you must provide
zip codes.
Q: Once my organization is approved, how do I find out which
HUD Homes are available to purchase with my non-profit discount?
A: In order to determine what properties are available in your
city or state, go to HUD's
web page. Once there, click on the appropriate city or state
and view the listings under non-profit sales. This site is updated
regularly with available properties.
Q: Once my organization is approved, who do I contact about obtaining
HUD/FHA financing at the same terms and conditions as an owner-occupant?
A: Your non-profit organization will have to apply for FHA-insured
financing through an FHA-approved lender. A list
of lenders in your area can be found online.
Q:
What is the most important HUD document to read?
A: Mortgagee
Letter 2000-08 has all the information non-profit agencies need
to get started. Recently HUD published two new mortgagee
letters 2001-30
and
2002-01.
Both of these mortgagee letters contain important information for
non profit agencies. An index
of Non Profit Mortgagee Letters can also be found online.
Q: Where can I obtain a list of approved
non-profit
agencies participating in HUD single family programs?
A: Each homeownership center maintains an approved list. You
can find them on the Internet.
Q:
What is Net Development?
A:
Net Development Cost is a calculation applied to HUD properties
sold at a discount of 10 percent or more. It applies to government
entities and qualified nonprofit organizations that have been pre-approved
by HUD to purchase HUD Homes. Non-profit
organizations and government entities must pass on the discount
received from HUD to increase homeownership opportunities for low-
and moderate-income families and individuals. Appendix A of Mortgagee
Letter
2001-30
provides
a detailed list of the costs allowed in the Net Development Cost
calculation.
Q.
Does the net development guidelines apply to all HUD Homes?
A:
Net development guidelines apply to all Hud homes purchased at a
discount. Appendix A of Mortgagee Letter 2001-30
provides
a detailed list of the costs allowed in the Net Development Cost
calculation. in addition, Mortgagee Letter 2002-01
also states: "With the issuance of this Mortgagee Letter, non-profit
will be required to include in their annual reports information
on all REO properties purchased at a discount - 10% or higher. These
reports are due each February to the Homeownership Center Director
and provide information about the nonprofit's program accomplishments
over the past calendar year (See Mortgagee
Letter 2000-08,
Attachment 3). Previously, only nonprofits that purchased REO properties
at a 30% discount were required to submit this annual report. Properties
purchased under an Asset Control Area (ACA) agreement must be included
in the report, but listed separately from other purchases."
Q.
Does a non profit agency need to maintain an office?
A:
To ensure that all approved nonprofits have adequate space for employees
and records, FHA requires the submission of photographs and floor
plans for the agency's facilities with the application and recertification
packages. This new requirement is identical to the requirement for
lenders seeking FHA approval. See Mortgagee
Letter
2002-01
for more information on office requirements.
Q.
What are the experience requirements a Non Profit must meet to obtain
HUD approval?
A:
Non-profit
agencies must meet strict housing development experience requirements.
The nonprofit must have a minimum of two consecutive years, within
the last five years, of housing development experience. Housing
development experience is defined as acquisition, rehabilitation,
and sale to low-to-moderate income persons. Hiring of experienced
personnel does not relieve the nonprofit of the experience requirement.
Organizations that do not meet this experience requirement may be
able to obtain limited approval if they have at least one full year
of housing development experience and one year of other related
housing provider experience. To be considered, the organization's
"other related housing experience" must demonstrate that the organization
has the financial and administrative capacity to purchase, rehabilitate
and resell homes to low to moderate-income families. See
Mortgagee
Letter
2002-01
for more information on experience requirements.
Q.
Can a non-profit hire a for-profit consultant or developer to run
it's affordable housing program?
A:
Nonprofit agencies must have the administrative capacity to develop
and carry out their FHA approved homeownership plans in a timely
and successful manner. Nonprofits that obtain consultant services
to help implement their homeownership programs are not relieved
from this requirement. The nonprofit's operations must be independent
of the influence, control, or direction of the consultant or any
other outside party, particularly those seeking to derive profit
or gain from a proposed project (such as, but not limited to, landowners,
real estate brokers, bankers, contractors, builders, or consultants).
For a complete discussion of this topic please see Mortgagee
Letter
2002-01.
Q.
Does a non-profit
seeking approval from HUD need to have a IRS 501 (c) (3) certificate?
A:
Eligible nonprofits must have two years 501(c)(3) IRS tax-exempt
status. Non-profit
must submit to FHA their IRS letter of determination to prove their
501(c)(3) tax-exempt status. In addition, non-profits
must certify compliance with IRS regulations that require nonprofits
to notify the IRS of any substantial and material changes in the
nonprofit's character, purpose, or methods of operation [IRS Reg.
1.501(a)-1(a)(2)601.201(h)(3)(ii)]. Finally, non-profits
may not assume the name and employer identification number (EIN)
of another dormant or defunct nonprofit. See
Mortgagee
Letter
2002-01
for more information on IRS 501 (c) (3) requirements.
Q:
What are the reporting and record keeping requirements that a non-profit
must meet?
A:
In addition to the Annual Report required
in
Mortgagee
Letter 2000-08, Mortgagee
Letter
2002-01
has information on the reporting requirements, record keeping and
quality control plans that non-profits
must meet in order to remain in compliance. Non-profits
also have to recertify every two years Mortgagee letters 2000-08
and 2002-01 also have information in recertification procedures.
Q:
If A non-profit agency purchased no Hudhomes does it still need
to file an annual report with HUD?
A:
Yes, even if no HudHomes are purchased an annual report is still
required. A simple letter format affirming that there was no activity
will suffice. This is also known as a "negative report".
See HUD mortgagee letter 2000-08
attachment 3.
Q:
Does HUD provide training for Non Profit agencies?
A:
HUD does provide periodic training for non-profit
agencies. Visit HUD's Events
and Training calendar for any upcoming training opportunities.
Q:
Which HUD mortgagee letters are applicable to non profit activities?
A:
HUD has posted an index
on the Internet that lists all the applicable mortgagee letters.
In addition, Mortgagee Letter 2001-30
Appendix D, lists all the applicable mortgagee letters non-profits
need to be familiar with.
Q:
How is a Low To Moderate Income buyer defined?
A:
A purchaser whose income does not exceed the defined percent of
the median income, when adjusted for family size, for the area in
which the property is located. (See
Mortgagee Letter 2001-30
Appendix C). The land
use restriction addendum requires that all resales of discounted
HUD Homes by HUD approved non-profit
agencies must be to persons at or below 115% of area median income
limits, adjusted for family size. Non-profit
agencies must address this requirement in their affordable housing
plan. (See
Mortgagee Letter 2000-08
and 2002-01)
Q:
How can a non-profit
Agency determine the income limits for a particular geographical
area?
A:
Income limits
are posted on the web at the HUD User website.
Q:
What is "Identity of Interest"?
A:
Also known as "Conflict of Interest". It is a conflict
of interest for a nonprofit to employ staff who also work for and
receive financial benefits from a for-profit entity that is providing
the nonprofit with services related to the nonprofit's affordable
housing plan. Board members must serve on a voluntary basis, and
may not be paid nor receive any compensation for any services they
provide in the implementation of the non-profit's
affordable housing program. FHA will collect information on the
job responsibilities of all Board members to ensure that their occupational
activities and obligations do not conflict with the work of the
nonprofit. HUD strictly prohibits the sale or lease of properties
with FHA financing and/or discounted HUD Homes to any of the nonprofit's
officers, directors, elected or appointed officials, employees,
or business associates, either during their tenure or for one year
thereafter, or to any individual who is related by blood, marriage,
or law to any of the above. (See Mortgagee Letter 2002-01
for a discussion of this and related identity of interest issues.)
Q:
Is there a list of non-profit
program definitions available?
A:
See
Mortgagee Letter 2001-30
Appendix C for a list of applicable definitions for non-profit
programs.
Q:
What kind of financial capacity issues should non-profit
agencies be aware of?
A:
Non-profit
agencies must have the financial capacity to operate their homeownership
programs. Non-profits
will be required, if applicable, to submit documentation with their
application or recertification package so that FHA may assess each
organization's financial stability in terms of cash balances, assets
and liabilities, annual expenses, and cash flow from operations.
(See Mortgagee Letter 2002-01
for a discussion of this and related financial capacity issues.)
Q:
Can a non-profit agency provide "gift funds" to a buyer?
A:
Gifts to the eventual purchasers for down payment, financing or
closing costs, and any other purchaser-related expenses associated
with their purchase of the property are not allowable net development
costs. Guidance on "gift funds" can be found in several
places. HUD
Handbook 4155.1REV-4, Change 1 Change 1, HUD's
secondary financing webpage, and HUD Mortgagee Letters 1997-05,
2001-30,and
2002-02.
Q:
Does HUD approve "gift programs" administered by charitable
organizations?
A:
HUD does not approve “gift programs" administered by charitable
organizations and, thus, will not offer a formal approval of your
program. Mortgage lenders are responsible for assuring that the
gift to the homebuyer from the charitable organization meets the
instructions described in HUD
Handbook 4155.1REV-4, Change 1 Change 1 (e.g., no repayment
implied, etc. ). Those charitable organizations that comply with
existing regulations and policy guidelines are permitted to give
cash gifts to eligible homebuyers and do not need prior FHA approval
to do so.
Q:
How can I learn more about secondary financing/down payment assistance
programs.
A:
HUD has long recognized the important role that nonprofit agencies
may play in providing affordable housing opportunities. HUD's
secondary financing webpage describes the approval process for
secondary financing/downpayment assistance programs. Also see HUD
mortgagee letter 1994-02.
Q:
Why does my non-profit agencies approval letter have a limitation
on it that restricts the number of HUD Homes we can buy and/or the
number FHA Mortgages that we can have in force at any one time?
A:
HUD may restrict the activities of non-profit agencies based upon
the experience level of the non profit agency or on it's past performance
in the program. See HUD mortgagee letters 1996-52,
2000-08
and 2002-02.
Also see, HUD housing notice 1994-74
and HUD
Handbook 4310.5, REV-2 Chapter 10 Section 20 Paragraphs 2 and 3.
Q:
What is a "revitalization area"?
A:
Revitalization areas are HUD-designated neighborhoods in need of
economic and community development and where there is already a
strong commitment by the local governments. HUD Homes selected for
the direct sales program are in designated revitalization areas.
See HUD's
revitalization webpage for more information.
Q:
What is the direct sales program?
A:
Non-profit agencies may buy HUD Homes directly from HUD without
using the services of a real estate broker. See, HUD housing notice
1994-74.
Contact the HUD
Management and Marketing contractor that serves your state for
information on direct sales procedures.
Q.
Can my non-profit agency qualify as a HUD approved Housing Counseling
Agency?
A:
Your non-profit agency may be also be able to qualify as a HUD approved
Housing Counseling agency. To find out how, please visit HUD's housing
counseling homepage or read our housing
counseling FAQs.
Q.
How can my non-profit agency get information on new FHA publications,
training and grant opportunities?
A:
Non-profit
agencies can subscribe
to the Single Family Housing email list. You will get frequent,
training and event announcements, mortgagee letters, Grant programs,
FHA mortgage limits and notices about your Single Family Non-profit
business.
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