Downpayment Plus Programs Program Guide 2020

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Downpayment Plus? Programs Program Guide 2021

Updated January 2021

Table of Contents

I.

PROGRAM OVERVIEW

Program Description

3

How to Participate

3

Timeline

3

Summary of Key Changes for 2021

4

II. PROGRAM REQUIREMENTS

Subsidy

5

Member Requirements

6

Homebuyer Requirements

6

Homebuyer Education and Counseling

7

Homebuyer Contribution

7

Property Requirements

8

Eligible/Ineligible Uses of Subsidy Funds

8

First Mortgage Requirements

9

III. STEP-BY-STEP OVERVIEW

Member Enrollment

10

Member Reservation of DPP Funds

10

Prepare to Close

10

Member Closing of Mortgage Loan & Request for Funding of DPP Grant

11

IV. DETERMINING INCOME ELIGIBILITY

12

V. RETENTION AND MONITORING REQUIREMENTS

Foreclosure, Death, or Assignment to HUD

13

Home Equity Loans

13

Refinance

14

Repayments

14

VI. FORMS, PROCEDURES & INFORMATION LINKS

15

Member Enrollment Forms

Household Application/Income Forms and Links to Information Closing and Retention

Document Forms and Links

Procedures

Other Documents and Links

Copyright ? 2021, Federal Home Loan Bank of Chicago. "Downpayment Plus," "DPP," "Downpayment Plus Advantage," and "DPP Advantage" are registered trademarks of the Federal Home Loan Bank of Chicago.

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I. PROGRAM OVERVIEW

The Federal Home Loan Bank of Chicago's (FHLBC) 2021 Affordable Housing Program Implementation Plan establishes the initial requirements of the Bank's set-aside program. The Downpayment Plus? (DPP?) Programs are the set-aside programs established by the Bank.

Program Description

Downpayment Plus? (DPP?) is a matching program funded by the FHLBC that provides down payment and closing cost assistance for income-eligible homebuyers. Funds are available to qualifying borrowers through participating FHLBC member financial institutions. The assistance provided is in the form of a forgivable grant (subsidy) paid on behalf of the borrower at the time the borrower closes on first mortgage financing with a participating FHLBC member financial institution. The DPP Program is a purchase program, not a refinance program. Additionally, the property being purchased must be owner- occupied. Downpayment Plus Advantage? (DPP Advantage?) is a similar program, but assists income- eligible homebuyers participating in homeownership programs offered by nonprofit organizations that provide mortgage financing directly to the homebuyer. Nonprofit organizations providing direct first mortgage financing, such as Habitat for Humanity, must partner with a participating FHLBC member financial institution in order to access DPP Advantage.

How to Participate

Any eligible FHLBC member institution may apply to participate in the DPP Programs. Members wishing to participate in the DPP Programs must execute a Program Agreement with the FHLBC.

The DPP Programs are accessed through eBanking, the FHLBC's member-only website. The institution's Member Security Administrator must authorize one or more individuals to conduct DPP transactions in eBanking.

Upfront review of homebuyer eligibility and program compliance are crucial since the member must disburse subsidies to homebuyers before receiving the funds from the FHLBC. Ineligible use of DPP funds or compliance violations may result in a reduction or denial of reimbursement.

Timeline ? Annual Program

The DPP Programs typically open for reservations of funds in January and continue until funds are exhausted or December 31st, whichever comes first.

Annual Certification

In order to participate in the DPP programs, member institutions who provided DPP funds in the previous year, must submit an Annual Certification Form before making any new reservations of funds this year. Additionally, acquirers of (former) members with DPP grants within the 5 year retention period are required to complete the annual certification form.

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Summary of Key Changes for 2021

? Annual Certification Form (new requirement for 2021) - In order to participate in the 2021 DPP programs, member institutions who provided DPP funds in 2020, must submit an Annual Certification Form before making any new reservations of funds in 2021. Additionally, acquirers of (former) members with DPP grants within the 5 year retention period are required to complete the annual certification form.

? Retention Agreement Form Change - The retention agreement for Illinois and Wisconsin properties has been updated to remove the member's signature. This new Retention Agreement is required for all new reservations effective with the 2021 DPP Programs. Since this retention agreement is for Illinois or Wisconsin properties only, please review and update any retention agreement forms used for properties in other states.

? Beneficiary Questionnaire form change ? Effective with the 2021 DPP Program reservations, the Household Member Questionnaire replaces the Beneficiary Questionnaire form.

? HUD approved Counseling Providers: Effective with the 2021 DPP Program reservations, members may use a HUD approved counseling agency to meet the Pre-purchase home buyer education or Pre-purchase counseling requirement.

? Repayment Worksheet Form Change ? The Repayment Worksheet, with Instructions has been updated based on further FHFA guidance during 2020. The updates include:

- Updated Net Proceeds Calculation - Updated Household Investment Calculation

We encourage members to review our updated recorded video providing guidance on how to complete the repayment worksheet to report retention vehicle release activity within the 5 year retention period. Members may also use the instructions link within the Repayment Worksheet.

? Demographic data: Effective with the 2021 DPP Program reservations, members are required to provide demographic data in DPP Online. The information is typically found in the mortgage loan application ? Fannie Mae form 1003. DPP Online allows up to two borrowers' demographic information. The new fields include:

- Ethnicity - Sex - Race

? Electronic Signatures ? For all DPP Program documents except the Retention Agreement, electronic signatures are acceptable.

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II. PROGRAM REQUIREMENTS

Subsidy

Terms and Documentation

The subsidy is provided in the form of a forgivable grant that is secured with a retention agreement between the homebuyer and the member and forgiven on a pro rata basis over five years.

The grant must be identified on the Closing Disclosure as "FHLBC DPP Grant" or "FHLBC DPP Advantage Grant." Failure to properly identify the DPP grant may result in delay of the member's reimbursement.

More information on the retention period and repayment requirements is found in Section V and the Retention Agreement template for properties in Illinois and Wisconsin is found in Section VI. The member shall be responsible for ensuring that the retention agreement is enforceable under applicable law, is in the proper form for recording under applicable law, and is properly recorded in the member's name.

Maximum Grant per Household

The maximum grant per household is determined annually and may be modified during the year.

For the DPP general pool, the maximum grant per eligible household is the lesser of:

(1) Three times the homebuyer's contribution (2) $6,000 or

(3) 25% of the first mortgage amount.

For the DPP Advantage pool, the maximum grant per eligible household is the lesser of: (1) $6,000 or (2) 25% of the first mortgage amount.

Members will not be reimbursed for grant amounts in excess of the maximum allowable grant amount.

DPP and DPP Advantage funds may not be used with other FHLBC AHP subsidies for down payment, closing-cost assistance, or homeownership counseling costs for the same borrower in the same transaction.

If the household received a DPP/Competitive Affordable Housing Program (AHP) grant to purchase a property within the past five years, the household is not eligible for a DPP or DPP Advantage grant.

Maximum Subsidy per Member

DPP: The 2021 DPP per-member cap is $420,000, and may be modified during the year. The funds are made available on a loan-by-loan, first-come, first-served basis until the annual DPP allocation is exhausted.

DPP Advantage: There is no limit on the number of DPP Advantage subsidies one member can provide in a program year. The funds are made available on a loan-by-loan, firstcome, first- served basis until the annual allocation is exhausted.

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