Miami-Dade Housing Agency Second Mortgage Program
Recommendations for Change and Improvement
Submitted by a committee of participating lenders on May 27, 2004



The Context

Housing values in Miami-Dade County have steadily increased in the past five years, making homeownership a huge challenge for potential low-income buyers. In one year from 2002 to 2003 the average sales price in Miami-Dade County increased from $154,000 to $174,000. Assessed values of properties have increased as they are sold, thereby making real estate taxes higher. Insurance premiums have also continued to increase.

In this context of rising housing prices, Miami-Dade Housing Agency (MDHA) is charged with the responsibility of using Surtax, SHIP, and HOME programs to make homeownership affordable for qualifying low-income families through a second mortgage. In an effort to maximize the limited funds, MDHA has required borrowers to pay the highest monthly payment for which they qualify. All of this makes it difficult for low-income borrowers to bridge the gap between the increasing market value and their stagnate income.

The Problems

MDHA has chosen to use policies and procedures for second mortgage loan approval and funding that are too slow and unclear, include unnecessary steps or documents, and ask lenders to do things that violate federal law.

Proposals for Change

The context and the problems with the second mortgage program at MDHA cry out for change and improvements. The original concept for the second mortgage program is exactly what Miami-Dade County needs. Those people who created the program were visionary people who know what this community needed. The following are two options to improve the delivery of the funds to eligible homebuyers.

Option One

MDHA makes the required changes and improvements to the program and the process in order to overcome the problems and close loans in a timely manner.

Option Two

MDHA does not re-underwrite the loan, instead, MDHA bootstraps onto the underwriting that has already been done for that transaction.

Many of the bullet points of Option One apply for this option, including the monthly meeting with lenders and CDCs.

Conclusion

It is clear that the management and implementation of the second mortgage program at Miami-Dade Housing Agency has reached a crisis point. Unlike the present situation, the lender partners associated with the program must be allowed a material role in the policy and decision making process involving these and any agency-recommended policy and procedure changes going forward. As lender partners we assert that our position is valid based on individual and corporate experience. As regulated financial institutions with a federally legislated mandate to serve this vital segment of the population, we can no longer continue our support of a Miami-Dade County housing assistance program whose often uninformed policies and arbitrary decisions directly and adversely affect our ability to serve the needs of homebuyers of low and moderate income. To perpetrate such an environment will only continue to erode each of our institutions hard-earned corporate goodwill with the citizens of our community.