Blog
Improving HPAP
Today I was given an opportunity to meet with DC Government and share insight on HPAP. DC homeownership (and housing) is unaffordable to many, and HPAP can fix that for some. And the tens of thousands of homeowners since 1980 who’ve been through the program successfully are a testament to that (including 480 of them last year!).
But the program has a reputation for being unreliable and an enigma. This is my framework to improve that.
Please join me in advocating for better outcomes for first time buyers who need help the most. I think in time, and with work, that DHCD can improve the program to make it more acceptable to sellers, buyers, realtors and lenders.
See my previous (2020) testimony to city council here: https://www.alexjaffe.com/testimony
Acronyms/links:
DHCD is the DC government entity that funds and is in charge of HPAP https://dhcd.dc.gov/
DCHFA is the primary administrator of HPAP and they process, underwrite and close most HPAP loans http://www.dchfa.org/
GWUL processes, underwrite, and closes co-ops, 203ks and all EAHP loans https://www.gwul.org/
Framework:
Operations
-Eliminate the NOE process – it prolongs the process and confuses more than it helps. Retain the housing counseling, which is important, helpful and federally required.
– IZ and ADU purchasers should be prioritized due to housing need (inclusionary zoning and affordable dwelling units)
-Publish underwriting turn times
-Reserve funds when a buyer gets a contract. Require loan officers to cancel reservations when contracts fall through.
-Change how DHCD sends funds to GWUL. GWUL should be able to get funding when they need it, to meet contractual timelines.
– GWUL to please switch to digital rather than paper file processing
-Require the community based organizations to allow anyone to sign up for the 8 hour housing counseling class, rather than limiting access to NOE holders. (notice of eligibility)
Funding
-Either budget more money for the program or reduce the assistance amounts / income caps so that funds don’t deplete too early in a fiscal year. Prioritize funding for those who need it the most (income/household size).
-Send announcements out when funding is running low and announce same day when funds are depleted. Examples: https://mmp.maryland.gov/Lenders/Documents/IR/Rates.pdf https://mmp.maryland.gov/Lenders/Pages/Directives.aspx
Outreach
-Provide more education on how HPAP funds are gap funds (28% rule) (Learn more Https://www.alexjaffe.com/hpap-eahp)
-Provide more education on household size and how that’s determined (it’s based on the number of people who’ll occupy the home)
-GWUL needs someone whose job is to speak to the public. Both GWUL and DCHFA intake more communication than they can currently field and can cease communication with anyone but lenders because of it. Someone at GWUL or DCHFA should communicate with parties to the contract if a closing date cannot be met due to underwriting queue or funding delays.
Guidelines
-Standardize and publish guidelines. Provide trainings for loan officers. Example of guidelines: https://mmp.maryland.gov/Lenders/Documents/Manual.pdf
Underwriting is inconsistent. Example: GWUL disallows and DCHFA allows a buyer getting a partial refund of their EMD up to minimum borrower contribution
Standardize exception criteria between DCHFA/GWUL. How are exceptions granted and which compensating factors are acceptable
Specify whether shorter loan terms than 30 year loans are allowed
-HPAP guidelines say that non district residents are eligible but only when all NOE holders have already received funds. I asked DCHFA and they’re not aware of any non district residents who weren’t also getting EAHP who got funded within the last 5 years. The impact of this is that I’m often asked by MD or VA residents how to impersonate DC residency. Perhaps the residency requirement should be removed, or you should write clearer guidelines on proving and validating DC residency (like the DMV). Current guidelines say someone has to be an established DC resident, but ‘established’ is not defined. Does someone with EAHP get to bypass the residency requirement? EAHP is DC Gov’t employees only.
– Update the checklists to include all the documentation that is actually requested by processors and underwriters (loan disclosures, credit report, condo questionnaire)
-Make it so the 8 hour housing counseling class lasts 2 years rather than 1. IZ allows 2 yrs, HPAP allows 1.
Inspections
-Investigate with termite inspection companies whether it’s appropriate to eliminate the requirement to complete a termite inspection on a condo/co-op unit that doesn’t touch the ground (which is what the VA requires). Right now 3rd floor and below a termite is required
-Write guidelines on the home inspection form/home inspection. Currently, there’s vastly different interpretations inspector to inspector http://www.dchfa.org/wp-content/uploads/2018/06/hpap-inspection-authorization-fillable.pdf
Post closing
-For current homeowners, audit their residency just like with IZ and tax abatement so that people don’t fraudulently move out and rent their homes. HPAP money is due back in full upon moving out.