NACA post-purchase program (MAP) vs. mortgage insurance
The post-purchase services take the place of Mortgage Insurance, which a borrower with less than a 20% down payment is required to purchase in traditional mortgages. Mortgage Insurance costs thousands of dollars, and the borrower receives none of the benefits: it is insurance that protects a lender or investor against loss if a borrower does not make their mortgage payments. In fact, if a borrower is in foreclosure, a mortgage insurance policy creates an incentive for lenders to sell the property as quickly as possible in order to keep their losses from exceeding the total amount they can collect on the policy.
Emergency financial assistance
If you encounter serious difficulties, NACA’s MAP provides you with access to funds to make up to three months of mortgage payments. Each month’s payment requires a separate application. Requests for financial assistance need to be approved by a Peer Lending Committee, which is made up of your fellow NACA homeowners, and NACA’s National Staff. Peer Lending Committees are responsible for ensuring that the funds will be used as a part of your determined effort to keep your home. You have access to the assistance for as long as you have a mortgage through NACA. If you are interested in serving on the Peer Lending Committee, please contact MAP in NACA’s National office, or your local NACA office.
Once you have received three monthly payments worth of assistance, you are not eligible for any further funds until you repay at least one monthly payment worth of assistance. You should repay the total amount of assistance provided as soon as possible to restore the assistance safety net.
You must meet the following conditions before you can apply for financial assistance:
- Reside in the house from the date of purchase.
- Be at least 30 days late on the mortgage payment.
- Meet with a NACA Mortgage or Home Save Consultant.
- Complete an application for financial assistance.
The assistance must be used to make your mortgage payment. Although no interest accrues on the funds provided, you will need to sign the Neighborhood Stabilization Agreement when you submit your mortgage application. This will create a lien on your property until the amount provided is repaid; if it has not been repaid by the time you sell or refinance your home, that amount will be deducted from the proceeds of the sale or the new mortgage amount. Except in extraordinary circumstances, to receive assistance you must also provide a matching mortgage payment.
If the assistance and matching payment do not bring your mortgage current, you must agree to a forbearance agreement. A forbearance agreement is a payment plan that allows you to make regular payments, plus additional monies toward the arrears, to become current over a period of time. If you are unable to become current with a forbearance agreement, you may be able to modify your loan by adding the arrears to the loan and re-amortizing it. This marginally increases your mortgage payment, but brings your mortgage current.
If you have refinanced the mortgage obtained through NACA with another company, you are no longer eligible for financial assistance. If your mortgage was transferred or sold by the lender, however, you remain eligible.
Procedures for receiving assistance
Should you require assistance, please follow the procedure outlined below:
Step 1: Contact NACA’s Home Save Department
Contact the Home Save Department at 281-968-6222 (NACA) or your local office as soon as you know that you may have a problem making a mortgage payment.If you are late making a mortgage payment, you should contact the MAP department immediately. You may also be contacted by a NACA staff person to determine the cause of the delinquency. If the issue arises from administrative problems with the lender, NACA will work to correct them and prevent your credit from being adversely affected. If the issue is an oversight, you will be encouraged to make timely payments because late payments can seriously damage your credit. If the problem has to do with poor financial planning, job loss, an emergency or other issues, then NACA will work with you to develop and implement a plan to protect your home from foreclosure.
Step 2: Counseling Session(s)
All borrowers on the mortgage application should attend the counseling sessions. A NACA Home Save Consultant or Mortgage Consultant will help you develop a financial plan to get you back on track with your payments. If you are having problems with income, a Home Save Consultant can help you arrange rent collection from delinquent tenants. If you have unaffordable expenses, a Home Save consultant can work with you to develop a realistic budget using the NACA Budget Form.
In cases where you are unable to immediately become current on your mortgage, the lender will require a Forbearance Agreement, which specifies an increased payment plan that brings you up to date. In it, you agree to make certain payments on specific dates. In certain circumstances, a loan modification may be possible.
After your counseling session, you can request financial assistance. A Home Save Consultant will help you prepare an application for financial assistance. When all the necessary information has been gathered, you must submit the application to the Peer Lending Committee. You should also request continued counseling, including ongoing financial planning.
Step 3: Peer Lending Committee Meeting
Committee meetings take place on the second Tuesday of each month. Only Homeowner Members who are current on their mortgage can actively participate on a Peer Lending Committee. Applications for assistance must be submitted to the committee by the first Thursday of the month. All borrowers and co-borrowers, when possible, must attend the Peer Lending Committee meeting. If you cannot attend and must reschedule for the following month, make every effort to keep up with your mortgage payments until you are able to apply for assistance.
When making their decision, the Peer Lending Committee considers your current financial situation, financial history, spending habits, plans to rectify your situation, plans to prevent future problems and other relevant factors. The Committee may also review your hardship letter, Budget Form, forbearance agreements and other documents. They will ask you questions about why your difficulties occurred and what you are doing to remedy your situation. Financial assistance will usually not be approved when mortgage payments can be made from other available funds, or when existing expenses can be reduced. Unless explicitly waived, approvals are always conditioned on the applicant making a payment to match the financial assistance. They may also take into account your adherence to the Participation Pledge.
The Peer Lending Committee can approve an application, approve the application with conditions, or deny the application. You can only be approved for one month of assistance at a time. This allows the Lending Committee to review your situation to determine the effectiveness of the assistance and whether you require further assistance. Decisions by the Committee become void if you provide false or misleading information or material. All decisions by the Committee are subject to review and approval by NACA’s national office.
Step 4: Disbursement of Funds
If the Committee approves your application, you must fulfill all the conditions of the approval before receiving the financial assistance. The national office will then make a payment directly to the lender. Before the funds are disbursed, you will first need to provide the following:
- Signed Forbearance Agreement, if necessary.
- Signed Neighborhood Stabilization Agreement and Security Agreement.
- Matching funds (in the form of money order or equivalent).
NACA is not responsible for late penalties on payments made after the 15th of the month or attorney’s fees for loans in foreclosure. Members who want to avoid these fees should meet any conditions as soon as possible to reduce the chances that these fees will be imposed.