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TWELFTH AMENDMENT TO

COMMITMENT TO PURCHASE FINANCIAL INSTRUMENT

and

HFA PARTICIPATION AGREEMENT

This Twelfth Amendment to Commitment to Purchase Financial Instrument and HFA

Participation Agreement (this “Amendment”) is entered into as of the date set forth on

Schedule A attached hereto as the Twelfth Amendment Date (the “Amendment Date”), by

and among the United States Department of the Treasury (“Treasury”), the undersigned

party designated as HFA whose description is set forth in Schedule A attached hereto (for

convenience, a “state housing finance agency” or “HFA”) and the undersigned institution

designated by HFA to participate in the program described below (“Eligible Entity”). 

Recitals

WHEREAS, Treasury, HFA and Eligible Entity entered into that certain Commitment to 

Purchase Financial Instrument and HFA Participation Agreement (the “Original HPA”) dated 

as of the Closing Date set forth on Schedule A attached hereto, as previously amended by those

certain Amendments to Commitment to Purchase Financial Instrument and HFA Participation

Agreement dated as of their respective dates as set forth on Schedule A attached hereto (each, 

an “Amendment” and together with the Original HPA as amended thereby, the “Current

HPA”), in connection with Treasury's federal housing program entitled the Housing Finance

Agency Innovation Fund for the Hardest Hit Housing Markets (the “HHF Program”), which

was established pursuant to the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 

5201 et seq.), as amended, and as the same may be amended from time to time (“EESA”);

WHEREAS, on February 19, 2016 Treasury announced that it would (i) extend the HHF 

Program through 2020, and (ii) make $2 billion of additional assistance available under the HHF 

Program (the “Fifth Round Funding”) to help prevent foreclosure and stabilize housing markets

in certain states that had previously received HHF Program funding for such purposes; and

WHEREAS, Treasury, HFA and Eligible Entity wish to enter into this Amendment to 

memorialize the extension of the HHF Program, increase the amount of HHF Program funds

available to Eligible Entity hereunder, and make certain other changes to the terms of the Current 

HPA and the Exhibits and Schedules attached thereto.

Accordingly, in consideration of the representations, warranties, and mutual agreements set forth 

herein and for other good and valuable consideration, the receipt and sufficiency of which

are hereby acknowledged, Treasury, HFA and Eligible Entity agree as follows.

Agreement

1. Amendments

A. End of Term. The definition of End of Term in Section 2(A)(14) of the Current 

HPA is hereby deleted and replaced with the following: 
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“End of Term” shall mean the last day of the calendar month in which the Eligible Entity 

makes the last disbursement of HHF Program funds in furtherance of the Services, which

shall occur no later than December 31, 2021 (or such later date as Treasury may 

determine in its sole discretion with written notice to Eligible Entity and HFA). For the 

sake of clarity, Capital Draws shall not be permitted after the End of Term other than for 

payment of Permitted Expenses.

B. Bring Down Certificate. Section 2(A)(15) of the Current HPA is hereby amended 

by (i) striking “on each anniversary of the Effective Date during the Term (as defined 

below)” and replacing it with “on each anniversary of the Effective Date through

September 30, 2016, and from and after October 1, 2016, no later than one hundred 

twenty (120) days after the end of each of their respective fiscal years”, and (ii) by adding 

to the end “A final certification shall be delivered by each of HFA and Eligible Entity on 

the Final Repayment Date (as defined in the Financial Instrument).”

C. Program Participation Cap. Section 3(D) of the Current HPA is hereby deleted in 

its entirety and replaced with the following: 

D. The value of this Agreement is limited to the amount set forth in Schedule A as the 

Program Participation Cap, as may be adjusted from time to time as set forth on Schedule 

F attached hereto (the “Program Participation Cap”). Notwithstanding anything to the 

contrary contained herein, the aggregate Purchase Price payable to Eligible Entity under 

this Agreement with respect to all Services described on the Service Schedules may not 

exceed the amount of the Program Participation Cap.

D. Performance Reports. Section 4(A) is hereby amended by (i) striking the third 

sentence and replacing it with “HFA shall submit the Performance Report to Treasury or 

its designee no later than forty-five (45) days after the end of each calendar quarter and 

otherwise as requested by Treasury. After Treasury has communicated in writing that the 

Performance Report is in a form acceptable to Treasury, HFA shall promptly post the 

Performance Report to its website”; and (ii) adding to the end “A final Performance 

Report shall be delivered no later than forty-five (45) days after the end of the calendar 

quarter in which the End of Term occurs.”

E. Financial Reporting. Section 4(G) of the Current HPA is hereby deleted in its 

entirety and replaced with the following:

G. Each of HFA and Eligible Entity shall provide annual audited financial 

statements to Treasury no later than one hundred twenty (120) days after the end of 

its respective fiscal year, commencing with the first fiscal year ending after the 

Effective Date, and concluding with the fiscal year in which the End of Term occurs. 

Eligible Entity shall provide quarterly unaudited financial statements to Treasury no 

later than forty-five (45) days after the end of each quarter, commencing with the 

first full quarter ending after the Effective Date and concluding with the quarter in 

which the End of Term occurs.
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F. Term. Section 5(A) of the Current HPA is hereby deleted in its entirety and 

replaced with the following:

(A) The term of this Agreement (“Term”) shall begin on the Effective Date and 

extend to the End of Term, or earlier termination of this Agreement by Treasury 

pursuant to the provisions hereof, or earlier suspension or termination of the Services 

by Treasury. Subject to the foregoing, new Services may be undertaken (e.g., 

approval of assistance actions with respect to unique homeowners or properties, 

including, where applicable, final underwriting decisions and payment schedules), 

through and including December 31, 2020 (or such later date as may be determined 

by Treasury in its sole discretion upon prior written notice to Eligible Entity). It is 

understood and agreed that certain administrative, monitoring, reporting, compliance 

and oversight obligations and requirements set forth in this Agreement and the 

Financial Instrument survive the expiration or termination of this Agreement or the 

End of Term, and that funds are to be reserved as set forth in Schedule C to pay for 

the cost of the same, through and including the Final Repayment Date.

G. Modifications. 

(a) Section 9(A) of the Current HPA is hereby amended by inserting “and except as 

expressly set forth herein,” after “Subject to Section 9.B.,”

(b) Section 9(B) of the Current HPA is hereby amended by adding the following at the 

end: 

Notwithstanding anything to the contrary contained herein, Treasury may approve 

revisions proposed by Eligible Entity and HFA to any Schedule or Exhibit attached 

hereto, by written notice to Eligible Entity and HFA, pursuant to a procedure 

established by Treasury in its sole discretion and provided to Eligible Entity and 

HFA. The applicable Schedule or Exhibit shall be deemed modified for all 

purposes hereunder as of the date such written notice is received pursuant to 

Section 8 hereof.

(c) Section 9(C) of the Current HPA is hereby amended by deleting the last sentence 

in its entirety.

H. Exhibit A. Exhibit A attached to the Current HPA is hereby deleted in its entirety 

and replaced with Exhibit A attached to this Amendment.

I. Schedule A. Schedule A attached to the Current HPA is hereby deleted in its

entirety and replaced with Schedule A attached to this Amendment.

J. Schedule B. Schedule B attached to the Current HPA is hereby deleted in its

entirety and replaced with Schedule B attached to this Amendment.

K. Reserved. 
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L. Schedule F. A new Schedule F is added to the Current HPA in the form attached 

to this Amendment as Schedule F.

M. Definitions. All references in the Current HPA to the "Agreement" shall mean the 

Current HPA, as further amended by this Amendment; all references in the Current HPA 

to the “Financial Instrument” shall mean the Amended and Restated Financial Instrument 

in the form attached to this Amendment as Exhibit A; and all references in the Current 

HPA to Exhibit A or Schedules A, B or F shall mean the Exhibit A or Schedules A, B or 

F attached to this Amendment. All references herein to the "HPA" shall mean the 

Current HPA, as further amended by this Amendment.

2. Substitution of Financial Instrument. 

Eligible Entity shall deliver to Treasury on the date hereof an Amended and Restated 

Financial Instrument in the form attached to this Amendment as Exhibit A. By executing 

this Amendment, Treasury, HFA and Eligible Entity authorize The Bank of New York 

Mellon to cancel the Financial Instrument previously delivered under the Current HPA 

against delivery of such Amended and Restated Financial Instrument and direct The Bank 

of New York Mellon to return the cancelled Financial Instrument to (or at the direction 

of) the Eligible Entity.

3. Representations, Warranties and Covenants

A. HFA and Eligible Entity. HFA and Eligible Entity, each for itself, make 

the following representations, warranties and covenants to Treasury and the truth and

accuracy of such representations and warranties and compliance with and performance of

such covenants are continuing obligations of HFA and Eligible Entity, each as to itself. 

In the event that any of the representations or warranties made herein cease to be true and

correct or HFA or Eligible Entity breaches any of its covenants made herein, HFA or

Eligible Entity, as the case may be, agrees to notify Treasury immediately and the same

shall constitute an Event of Default under the HPA.

(1) HFA and Eligible Entity each hereby certifies, represents and warrants as of

the date hereof that each of the representations and warranties of HFA or Eligible

Entity, as applicable, contained in the HPA are true, correct, accurate and complete in

all material respects as of the date hereof. All covenants of HFA or Eligible Entity,

as applicable, contained in the HPA shall remain in full force and effect and neither

HFA, nor Eligible Entity is in breach of any such covenant.

(2) Eligible Entity has the full corporate power and authority to enter into,

execute, and deliver this Amendment, the Amended and Restated Financial Instrument, 

and any other closing documentation delivered to Treasury in connection therewith, 

and to perform its obligations hereunder and thereunder.

(3) HFA has the full legal power and authority to enter into, execute, and deliver

this Amendment and any other closing documentation delivered to Treasury in 

connection therewith, and to perform its obligations hereunder and thereunder.
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4. Miscellaneous

A. The recitals set forth at the beginning of this Amendment are true and accurate and

are incorporated herein by this reference.

B. Capitalized terms used but not defined herein shall have the meanings ascribed

to them in the HPA.

C. Any provision of the HPA that is determined to be prohibited or unenforceable in

any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such

prohibition or unenforceability without invalidating the remaining provisions of the HPA,

and no such prohibition or unenforceability in any jurisdiction shall invalidate such

provision in any other jurisdiction.

D. This Amendment may be executed in two or more counterparts (and by 

different parties on separate counterparts), each of which shall be deemed an original, but

all of which together shall constitute one and the same instrument. Facsimile or

electronic copies of this Amendment, the Amended and Restated Financial Instrument, and 

any other closing documentation delivered in connection therewith, shall be treated as originals

for all purposes.

[SIGNATURE PAGE FOLLOWS;REMAINDER OF PAGE 

INTENTIONALLY LEFT BLANK]
[Signature Page to Twelfth Amendment to HPA – North Carolina]

In Witness Whereof, HFA, Eligible Entity and Treasury by their duly authorized officials 

hereby execute and deliver this Twelfth Amendment to Commitment to Purchase Financial 

Instrument and HFA Participation Agreement as of the Amendment Date.

HFA: TREASURY:

NORTH CAROLINA HOUSING FINANCE 

AGENCY

UNITED STATES DEPARTMENT OF THE 

TREASURY

By: /s/ A. Robert Kucab By:

Name: A. Robert Kucab Name: Mark McArdle

Title: Executive Director Title: Deputy Assistant Secretary for 

Financial Stability

ELIGIBLE ENTITY:

NORTH CAROLINA HOUSING FINANCE 

AGENCY

By: /s/ A. Robert Kucab

Name: A. Robert Kucab

Title: Executive Director
EXHIBITS AND SCHEDULES

Exhibit A Form of Amended and Restated Financial Instrument

Schedule A Basic Information

Schedule B Service Schedules

Schedule F HHF Fifth Round Funding Reallocation Model
EXHIBIT A

FORM OF AMENDED AND RESTATED FINANCIAL INSTRUMENT

This Amended and Restated Financial Instrument is delivered by the undersigned party 

(“Eligible Entity”) as provided in Section 1 of the Commitment to Purchase Financial Instrument 

and HFA Participation Agreement (the “Commitment”), entered into as of the Effective Date, as 

modified by those certain Amendments to Commitment to Purchase Financial Instrument and 

HFA Participation Agreement dated as of the dates set forth on Schedule A to the Commitment

(together, the “Agreement”), by and among the United States Department of the Treasury 

(“Treasury”), the party designated as HFA in the Commitment (“HFA”) and Eligible Entity. 

This Amended and Restated Financial Instrument is effective as of April 1, 2016. All of the 

capitalized terms that are used but not defined herein shall have the meanings ascribed to them in 

the Agreement.

Recitals

WHEREAS, Eligible Entity executed and delivered that certain Financial Instrument dated as of 

the Effective Date to Treasury (“Original Financial Instrument”); and

WHEREAS, Treasury and Eligible Entity desire to amend certain terms of the Original Financial 

Instrument regarding repayment of the Purchase Price in connection with the extension of the 

HHF Program through 2020 and availability of additional assistance under the HHF Program

Fifth Round Funding; and

WHEREAS, Treasury and the Eligible Entity desire to restate and replace the Original Financial 

Instrument in its entirety.

Accordingly, for good and valuable consideration, the receipt and sufficiency of which are 

hereby acknowledged, Eligible Entity agrees as follows:

1. Eligible Entity Obligation; Purchase Price Consideration.

(a) Eligible Entity shall perform all Services described in the Service Schedules in 

consideration for the Purchase Price described in subsection (b) below, in 

accordance with the terms and conditions of the Agreement, to the satisfaction of 

Treasury. The conditions precedent to the payment by Treasury of the Purchase 

Price with respect to the Services are set forth in Section 3(B) of the Agreement.

(b) This Amended and Restated Financial Instrument is being purchased by Treasury 

pursuant to Section 3 of the Agreement through the payment by Treasury of 

various payments referred to collectively in the Agreement as the “Purchase 

Price”. This Amended and Restated Financial Instrument is being purchased by 

Treasury in connection with Eligible Entity’s participation in the Housing Finance 

Agency Innovation Fund for the Hardest Hit Housing Markets program (the 

“HHF Program”) created under the Emergency Economic Stabilization Act of 
2008 (12 U.S.C. 5201 et seq.) as amended, as the same may be amended from 

time to time (“EESA”).

2. Repayment of Purchase Price. 

If a recipient of HHF Program funds repays any or all of the funds received from Eligible 

Entity in connection with the Services (“Repaid Funds”), and such repayment occurs on 

or before the Final Repayment Date (hereinafter defined), Eligible Entity shall deposit 

such Repaid Funds in the Depository Account and use such Repaid Funds to provide 

Services or to fund the Permitted Expenses to the extent the full amount as indicated on 

Schedule C to the Agreement has not been drawn from Treasury pursuant to Section 3(A) 

of the Agreement. Any Repaid Funds retained by Eligible Entity to fund Permitted 

Expenses shall correspondingly reduce the amount that Eligible Entity may draw from 

Treasury pursuant to Section 3(A) of the Agreement to fund Permitted Expenses.

For the sake of clarity, if a recipient of HHF Program funds repays any or all of the funds 

received from Eligible Entity in connection with the Services, and such repayment occurs 

after the Final Repayment Date, such repaid funds shall not be considered HHF Program 

funds. 

3. Final Repayment. In the event Eligible Entity is holding any HHF Program funds, 

including, but not limited to, amounts reserved for payment of Permitted Expenses and 

Repaid Funds, as of the date that is ninety (90) days after the End of Term (the “Final 

Repayment Date”), all such funds shall be returned to Treasury or its designee prior to

1:00pm Eastern Time on the Final Repayment Date. For the sake of clarity, no Capital 

Draws will be permitted after the Final Repayment Date.

4. Security Interest. As security for the performance of the Services and the other 

obligations of Eligible Entity under the Agreement, as such obligations are evidenced in 

this Amended and Restated Financial Instrument, Eligible Entity has granted to Treasury 

a first lien priority security interest in the Depository Account and in any moneys, or 

investments, if any, held therein.

5. Representations, Warranties and Covenants. Eligible Entity represents and warrants that 

the representations and warranties set forth in the Agreement, on the date hereof, are, and 

on the date of each Capital Draw hereunder, shall be, true, correct, accurate and complete 

in all material respects. The truth and accuracy of such representations and warranties 

are continuing obligations of Eligible Entity. Additionally, all covenants of Eligible 

Entity set forth in Section 2 of the Agreement are incorporated herein by reference and 

Eligible Entity, on the date hereof, is not, and on the date of each Capital Draw 

hereunder, shall not be in breach of any such covenants. In the event that any of the 

representations or warranties made herein or in the Agreement cease to be true and 

correct, or the Eligible Entity breaches any of the covenants made herein or in the 

Agreement, Eligible Entity agrees to notify Treasury immediately and the same shall 

constitute an Event of Default hereunder. 
6. Limitation of Liability 

IN NO EVENT SHALL TREASURY, OR ITS OFFICERS, EMPLOYEES, AGENTS 

OR AFFILIATES BE LIABLE TO ELIGIBLE ENTITY WITH RESPECT TO THE 

SERVICES OR THE AGREEMENT, OR FOR ANY ACT OR OMISSION 

OCCURRING IN CONNECTION WITH THE FOREGOING, FOR ANY DAMAGES 

OF ANY KIND, INCLUDING, BUT NOT LIMITED TO DIRECT DAMAGES, 

INDIRECT DAMAGES, LOST PROFITS, LOSS OF BUSINESS, OR OTHER 

INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY 

NATURE OR UNDER ANY LEGAL THEORY WHATSOEVER, EVEN IF ADVISED 

OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER 

OR NOT THE DAMAGES WERE REASONABLY FORESEEABLE; PROVIDED, 

HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT TREASURY’S 

OBLIGATION TO REMIT PURCHASE PRICE PAYMENTS TO ELIGIBLE ENTITY 

IN ACCORDANCE WITH THE AGREEMENT.

7. Indemnification 

Eligible Entity agrees as set forth on Schedule E to the Agreement, which Schedule E is 

hereby incorporated into this Amended and Restated Financial Instrument by reference.

IN WITNESS WHEREOF, Eligible Entity hereby executes this Amended and Restated Financial 

Instrument on the date set forth below.

[INSERT FULL LEGAL NAME OF ELIGIBLE ENTITY]

By:

Name: 

Title: 

Date: ____________ __, 2016
A-1

SCHEDULE A

BASIC INFORMATION

Eligible Entity Information:

Name of the Eligible Entity: North Carolina Housing Finance Agency1

Corporate or other organizational form: a body politic and corporate under the laws of 

the State of North Carolina pursuant to N. C. G. 

S. Chapter 122A

Jurisdiction of organization: North Carolina

Notice Information:

With a copy to: 

HFA Information:

Name of HFA: North Carolina Housing Finance Agency1

Organizational form: a body politic and corporate under the laws of 

the State of North Carolina pursuant to N. C. G. 

S. Chapter 122A

Date of Application: June 1, 2010

Date of Action Plan: September 1, 2010

Notice Information:

Program Participation Cap: $560,798,231.00

Portion of Program Participation Cap

Representing Original HHF Funds: $159,000,000.00

Portion of Program Participation Cap 

Representing Unemployment HHF Funds: $120,874,221.00

Rounds 1-4 Funding Allocation: $482,781,786.00

 

1 References in the Agreement to the term “HFA” shall mean North Carolina Housing Finance Agency (“NCHFA”) in its 

capacity as HFA as such term is used in the Agreement; and references in the Agreement to the term “Eligible Entity” 

shall mean NCHFA, in its capacity as Eligible Entity as such term is used in the Agreement. 
A-2

Round 5 Funding Allocation: $78,016,445.00

Permitted Expenses: Amount on file with Treasury

Closing Date: August 3, 2010

First Amendment Date: September 23, 2010

Second Amendment Date: September 29, 2010

Third Amendment Date: December 16, 2010

Fourth Amendment Date: May 25, 2011

Fifth Amendment Date: January 25, 2012

Sixth Amendment Date: August 9, 2013

Seventh Amendment Date: December 12, 2013

Eighth Amendment Date: June 25, 2015

Ninth Amendment Date: July 30, 2015

Tenth Amendment Date: August 21, 2015

Eleventh Amendment Date: December 18, 2015

Twelfth Amendment Date: April 1, 2016

Eligible Entity Depository Account Information: See account information set forth in the 

Depository Account Control Agreement between 

Treasury and Eligible Entity regarding the HHF 

Program.
SCHEDULE B

SERVICE SCHEDULES

The Service Schedules attached as Schedule B to the Current HPA are hereby deleted in their 

entirety and replaced with the attached Service Schedules (numbered sequentially as Service 

Schedule B-1, Service Schedule B-2, et. Seq.), which collectively comprise Schedule B to the 

HPA.
B-1-1

SERVICE SCHEDULE B-1

North Carolina Housing Finance Agency’s

Mortgage Payment Program (MPP-1) 

Summary Guidelines

1. Program Overview Because unemployed homeowners are not eligible for most loss 

mitigation programs, NCHFA proposes to use a majority of our 

HFA Hardest Hit Funds (HHF) to create the Mortgage 

Payment Program (MPP-1). 

This program will provide loans to unemployed homeowners 

and others who, through no fault of their own, are financially 

unable to make their mortgage payments and are in danger of 

losing their homes to foreclosure. 

Loan proceeds will be used to pay mortgage and mortgagerelated expenses (i.e. property taxes, homeowner insurance,

homeowner dues) for eligible homeowners. 

2. Program Goals To assist 6,448 homeowners. The following types of assistance 

will be provided:

Job Search or Short-term Assistance

To help homeowners while they look for a new job or have 

experienced a temporary reduction in income.

Job Training or Long-term Assistance

To help homeowners while they complete a job 

training/education program to help secure a new job including 

veterans who are honorably or medically discharged from the 

military.

Reinstatement Only or One-time Assistance

To help homeowners who can resume future payments but need 

help to bring their mortgage current.

3. Target Population/ 

Areas

Homeowners who are unemployed, underemployed, suffered 

another temporary hardship, and/or are able to resume future 

payments but need help bringing their mortgage current. 

This Program will be available in all North Carolina counties.

4. Program Allocation 

(Excluding 

Administrative 

Program allocation amount on file with Treasury.
B-1-2

Expenses)

5. Borrower Eligibility 

Criteria

Homeowners who are unemployed, underemployed, or have 

suffered another eligible temporary hardship, who, through no 

fault of their own, are unable to make their mortgage payments 

and are at risk of a foreclosure. Homeowners will be required 

to provide a financial hardship affidavit with appropriate 

documentation on the cause of their hardship, per program 

guidelines.

Homeowners who are delinquent because of a prior job loss or 

other program eligible hardship but who can resume future 

payments without additional assistance. 

Satisfactory mortgage payment history.

All principal, interest, taxes, homeowner insurance, mortgage 

insurance, homeowner association dues, and the cost of 

utilities > 25% of household income after job loss/loss of 

income. 

Borrowers must meet program underwriting criteria. 

Eligibility for program assistance will be determined primarily 

by participating foreclosure prevention partners. 

Funds will be allocated on a first come/first ready, first served 

basis.

6. Property/Loan 

Eligibility Criteria

Existing single-family homes, duplexes or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower.

North Carolina owner-occupied, primary residences only.

7. Program Exclusions Total Unpaid Principal Balances > $300,000.

 

Manufactured homes not considered real property.

Non-legal U.S. resident.

8. Structure of 

Assistance

10 year, 0% interest, non-recourse, deferred-payment forgivable 

subordinate loan. A forgiveness clause will reduce the loan 

amount by 20% a year for every year the borrower stays in the 

home after five years. At the end of the 10 years, the note will 

be considered satisfied, and NCHFA will release the lien 
B-1-3

securing the note.

All or a portion of the unforgiven loan funds are due and 

payable to NCHFA if home is sold, refinanced or no longer 

owner occupied (unless otherwise prohibited under applicable 

federal law). Loans are repayable only from proceeds to the 

borrower from a sale or refinance. If the property is sold or 

refinanced and has not increased in equity to the degree 

necessary to repay the loan, all or a portion of the loan 

remaining unpaid after the proceeds are applied will be 

forgiven. 

NCHFA will agree to subordinate the MPP-1 Loan for 

borrowers who refinance their mortgage(s) to receive more 

favorable loan terms. If a borrower refinances their loan to 

consolidate debt or receives cash out, the borrower would be 

required to repay the MPP-1 Loan according to the loan terms. 

All deferred, subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the property. 

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

9. Per Household 

Assistance 

The average loan amount will be $20,000 per borrower.

Effective for all loans closed after January 31, 2012:

Maximum assistance up to $36,000 and not to exceed 36 

months per household. 

10. Duration of Assistance Effective for all loans closed after January 31, 2012:

Up to 36 months for those in job training/education program.

Up to 18 months for those in a job search.

11. Estimated Number of 

Participating 

Households

6,448 homeowners. 

Estimated number served based on average loan amount of 

$20,000 per homeowner.

12. Program Inception/ 

Duration

Program began October 18, 2010. Recaptured funds shall be 

recycled and used in the program in accordance with the 

Agreement.

13. Program Interactions 

with Other Programs 

Borrowers can access more than one of our HHF programs, if 

needed and appropriate. For example, a borrower can receive 
B-1-4

(e.g. other HFA 

programs)

MPP-1 assistance while they look for a new job and then 

receive Second Mortgage Refinance Program or Modification 

Enabling Pilot Program assistance once they can resume future

payments without additional assistance. Homeowners who 

continue to struggle with unaffordable mortgage payments may 

be eligible to participate in the Principal Reduction Recast/Lien 

Extinguishment for Unaffordable Mortgages Program. 

Maximum total assistance amount per household is $75,000 if 

participating in multiple HHF programs.

14. Program Interactions 

with HAMP

The MPP-1 would help borrowers who need more than the 3-6 

months of assistance available through the new Home 

Affordable Unemployment Program (UP), which began August 

1, 2010. 

Borrowers who are eligible for MPP-1 would not be required to 

participate in UP prior to receiving assistance with MPP-1. 

In addition, MPP-1 would also help borrowers who don’t 

qualify for assistance under the new UP because they are more 

than 3 months behind in mortgage payments and/or they are not 

currently receiving unemployment (i.e., self-employed 

homeowners).

Finally, borrowers can receive HAMP assistance prior to or 

after receiving Hardest Hit Fund assistance. For example, a 

borrower may receive UP assistance for 3-6 months and then 

receive MPP-1 assistance for several more months, if needed. 

MPP-1 assistance will not be available to a borrower who is in a 

trial loan modification. MPP-1 assistance may be available to a 

borrower who has received a permanent loan modification if the 

borrower has a need.

Once MPP-1 assistance has ended, a borrower may be eligible 

to receive a loan modification from HAMP, if needed and 

eligible.

15. Program Leverage 

with Other Financial 

Resources

None
B-2-1

SERVICE SCHEDULE B-2

North Carolina Housing Finance Agency’s

Mortgage Payment Program (MPP-2) 

Summary Guidelines

1. Program Overview The North Carolina Housing Finance Agency (NCHFA) 

Mortgage Payment Program (MPP-2) will provide loans to 

unemployed or substantially underemployed homeowners who, 

through no fault of their own, are financially unable to make 

their mortgage payments and are in danger of losing their homes 

to foreclosure. 

Loan proceeds will be used to pay all mortgage and mortgagerelated expenses (i.e. property taxes, homeowner insurance, 

mortgage insurance and homeowner association dues), including 

subordinate mortgage loans, until the homeowner secures 

employment or completes training for a new career. 

2. Program Goals To assist 13,869 homeowners. The following types of 

assistance will be provided:

Job Search or Short-term Assistance

To help homeowners while they look for a new job.

Job Training or Long-term Assistance

To help homeowners while they complete a job 

training/education program to help secure a new job.

Reinstatement Only or One-time Assistance

To help homeowners who have found a new job but need help 

to bring their mortgage current due to arrearages accumulated

during a period of unemployment.

3. Target 

Population/Areas

Homeowners who are unemployed, or substantially 

underemployed, and/or reemployed but need help bringing their 

mortgage current.

 

This Program will be available in all North Carolina counties.

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

Program allocation amount on file with Treasury.

5. Borrower Eligibility 

Criteria

Unemployed or substantially underemployed homeowners who, 

through no fault of their own, are unable to make their mortgage 
B-2-2

payments and are at risk of a foreclosure. Homeowners will be 

required to provide a financial hardship affidavit with 

appropriate documentation of unemployment, per program 

guidelines. 

Homeowners who are delinquent due to arrearages accumulated 

during a period of unemployment but who can resume future 

payments without additional assistance. 

Satisfactory mortgage payment history.

All principal, interest, taxes, homeowner insurance, mortgage 

insurance, homeowner association dues, and the cost of 

utilities > 25% of household income after job loss/loss of 

income. 

Borrowers must meet program underwriting criteria.

Eligibility for program assistance will be determined primarily 

by participating foreclosure prevention partners. 

Funds will be allocated on a first come/first ready, first served 

basis.

6. Property/Loan 

Eligibility Criteria

Existing single-family homes, duplexes or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower. 

North Carolina owner-occupied, primary residences only.

7. Program Exclusions Total Unpaid Principal Balances > $300,000.

 

Manufactured homes not considered real property.

Non-legal U.S. resident.

8. Structure of 

Assistance

10 year, 0% interest, non-recourse, deferred-payment, 

forgivable, subordinate loan. A forgiveness clause will reduce 

the loan amount by 20% a year for every year the borrower 

stays in the home after five years. At the end of the 10 years, the 

note will be considered satisfied, and NCHFA will release the 

lien securing the note.

All or a portion of the unforgiven loan funds are due and 

payable to NCHFA if home is sold, refinanced or no longer 

owner-occupied (unless otherwise prohibited under applicable 
B-2-3

federal law). Loans are repayable only from proceeds to the 

borrower from a sale or refinance. If the property is sold or 

refinanced and has not increased in equity to the degree 

necessary to fully repay the loan , all or the excess portion of the 

loan remaining after the proceeds are applied will be forgiven. 

NCHFA will agree to subordinate the MPP-2 Loan for 

borrowers who refinance their mortgage(s) to receive more 

favorable loan terms. If a borrower refinances their loan to 

consolidate debt or receives cash out, the borrower would be 

required to repay the MPP-2 Loan according to the loan terms. 

All deferred, subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the property. 

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

9. Per Household 

Assistance

The average loan amount is expected to be $20,000 per 

borrower.

Effective for all loans closed after January 31, 2012:

Maximum assistance up to $36,000 and not to exceed 36 months 

per household. 

10. Duration of Assistance Effective for all loans closed after January 31, 2012:

Up to 36 months for those in job training/education program.

Up to 18 months for those in a job search.

11. Estimated Number of 

Participating 

Households

13,869 homeowners.

Estimated number served based on average loan amount of 

$20,000 per homeowner.

12. Program Inception/ 

Duration

Program began November 7, 2011. Recaptured funds shall be 

recycled and used in the program in accordance with the 

Agreement.

13. Program Interaction 

with Other HFA 

Programs

Borrowers can access more than one of our HHF programs, if 

needed and appropriate. For example, a borrower can receive 

MPP-2 assistance while they look for a new job and then receive 

Second Mortgage Refinance Program or Modification Enabling 

Pilot Program assistance once they secure a new job.

Homeowners who continue to struggle with unaffordable 

mortgage payments may be eligible to participate in the

Principal Reduction Recast/Lien Extinguishment for 
B-2-4

Unaffordable Mortgages Program. 

Maximum total assistance amount per household is $75,000 if 

participating in multiple HHF programs.

14. Program Interaction 

with HAMP

The MPP-2 would help borrowers who need more than the 3-6 

months of assistance available through the new Home 

Affordable Unemployment Program (UP), which began in 

August, 2010. 

Borrowers who are eligible for MPP-2 would not be required to 

participate in UP prior to receiving assistance with MPP-2. 

In addition, MPP-2 would also help borrowers who don’t 

qualify for assistance under the new UP because they are more 

than 3 months behind in mortgage payments and/or they are not 

currently receiving unemployment (i.e. self-employed 

homeowners).

Finally, borrowers can receive HAMP assistance prior to or 

after receiving Hardest Hit Fund assistance. For example, a 

borrower may receive UP assistance for 3-6 months and then 

receive MPP-2 assistance for several more months, if needed. 

MPP-2 assistance will not be available to a borrower who is in a 

trial loan modification. MPP-2 assistance may be available to a 

borrower who has received a permanent loan modification if the 

borrower has a need.

Once MPP-2 assistance has ended, a borrower may be eligible 

to receive a loan modification from HAMP, if needed and 

eligible.

15. Program Leverage 

with Other Financial 

Resources

None
B-3-1

SERVICE SCHEDULE B-3

North Carolina Housing Finance Agency’s

Second Mortgage Refinance Program (SMRP) 

Summary Guidelines

1. Program Overview Government officials have estimated about 50% of troubled 

borrowers have a second mortgage. Homeowners are frequently 

unable to make their second mortgage payment and are in 

danger of losing their homes to foreclosure. 

The Second Mortgage Refinance Program (SMRP) will 

benefit homeowners with second mortgages who, through no 

fault of their own, are financially unable to make their mortgage 

payment because of a prior job loss, reduced income, or other 

program-eligible hardship. 

This program will provide a more affordable housing expense 

by refinancing the second mortgage to a 0%-interest, nonrecourse, deferred-payment subordinate loan.

2. Program Goals To assist 267 homeowners facing foreclosure in all 100 North 

Carolina counties.

The goal of this program is to extinguish the existing second 

mortgage and replace it with a 0%-interest, non-recourse, 

deferred-payment subordinate loan. This will reduce the 

borrower’s monthly mortgage payment and in some instances 

may expedite movement of a qualified applicant into a HAMP 

first mortgage modification process. 

3. Target Population/ 

Areas

Our target population will be homeowners facing foreclosure in 

all 100 North Carolina counties who have a 1st and 2nd mortgage 

whereby the total mortgage payment is causing the home to be 

unaffordable under program guidelines. 

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

Program allocation amount on file with Treasury.

5. Borrower Eligibility 

Criteria

Eligible homeowners must be those facing foreclosure due to 

recent unemployment, loss of income, reduction in income, or 

other demonstrated financial hardships. Homeowners will be 

required to provide a financial hardship affidavit with 

appropriate documentation on the cause of the hardship.
B-3-2

Satisfactory mortgage payment history. 

All principal, interest, taxes, homeowner insurance, mortgage 

insurance, homeowner association dues, and the cost of 

utilities > 25% of household income after job loss/loss of 

income.

Extinguishment of second loan with SMRP will only occur if 

the first mortgage loan is current.

Borrowers must meet program underwriting criteria. 

Funds will be allocated on a first come/first ready, first served 

basis.

6. Property/Loan 

Eligibility Criteria

Existing single-family homes, duplexes or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower.

North Carolina owner-occupied, primary residences only. 

7. Program Exclusions Total Unpaid Principal Balances > $300,000.

Manufactured homes not considered real property.

Second Mortgage Refinance will not be available to a 

homeowner that is eligible or participating in 2MP. 

Non-legal U.S. resident.

8. Structure of 

Assistance

30 year, 0%-interest, non-recourse, deferred-payment 

subordinate loan. 

All loan funds are due and payable to NCHFA if home is sold, 

refinanced or no longer owner-occupied (unless otherwise 

prohibited under applicable federal law). Loans are repayable 

only from proceeds to the borrower from a sale or refinance. If 

the property is sold or refinanced and has not increased in 

equity to the degree necessary to repay the loan, all or a portion 

of the loan remaining unpaid after the proceeds are applied will 

be forgiven. 

NCHFA will agree to subordinate the SMRP Loan for 

borrowers who refinance their mortgage(s) to receive more 

favorable loan terms. If a borrower receives cash out with a 
B-3-3

refinance, the borrower would be required to repay the SMRP 

Loan according to the loan terms.

All deferred subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the property. 

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

 

9. Per Household 

Assistance 

Under this program, eligible borrowers may receive up to 

$50,000 plus all related fees as a subordinate loan. 

If $50,000 is insufficient to extinguish the second mortgage, the 

Agency will only offer these funds if the second lien holder is 

willing to take the amount supplied to extinguish the debt 

without a deficiency judgment. 

The average loan amount is expected to be $25,000 per borrower. 

10. Duration of Assistance Assistance under SMRP is a one-time payment. 

11. Estimated Number of 

Participating 

Households

267 homeowners.

12. Program Inception/ 

Duration

The program began June 6, 2011. Recaptured funds shall be 

recycled and used in the program in accordance with the 

Agreement.

 

13. Program Interactions 

with Other Programs 

(e.g. other HFA 

programs)

Homeowners who participate in the Mortgage Payment 

Program (MPP) may be eligible to participate in SMRP if the 

borrower has the ability to resume first mortgage payment yet 

second mortgage payment remains unaffordable. Eligible 

delinquent borrowers will be brought current with MPP OneTime Reinstatement if necessary and then are eligible for 

SMRP. Homeowners struggling with unaffordable mortgage 

payments may be eligible to participate in the Principal 

Reduction Recast/Lien Extinguishment for Unaffordable 

Mortgages Program and SMRP program to achieve an 

affordable mortgage payment.

Maximum total assistance amount per household is $75,000 if 

participating in multiple HHF programs.

14. Program Interactions 

with HAMP

Extinguishing the second mortgage may expedite movement of 

qualified applicants into a HAMP first modification process. 
B-3-4

15. Program Leverage 

with Other Financial 

Resources

If $50,000 is insufficient to extinguish the second mortgage, the 

Agency will only offer these funds if the second lien holder is 

willing to take the amount supplied to extinguish the debt 

without a deficiency judgment.
B-4-1

SERVICE SCHEDULE B-4

North Carolina Housing Finance Agency's

Modification Enabling Pilot Program (MEP) 

Summary Guidelines 

1. Program Overview The Modification Enabling Pilot Program (“MEP”) is being 

administered by the North Carolina Housing Finance Agency 

(“NCHFA”) in partnership with National Community Capital II 

LLC (“NCC”). Funding under this Pilot Program is designed to 

provide directed assistance to eligible borrowers under the NCC 

ReStart Program with the intent to permanently modify and 

reduce the borrower’s loan amount to an affordable level to 

achieve a monthly total housing payment that does not exceed 

35% of the borrower’s monthly income. Borrowers meeting the 

eligibility requirements described in Section 5 below may be 

eligible for MEP assistance through the NCC ReStart Program. 

Eligible loan pools under this MEP Pilot Program include loans 

in North Carolina sold under the Department of Housing and 

Urban Development’s (“HUD”) Distressed Asset Stabilization 

Program (“DASP”) and other loan sales that are purchased by 

NCC. 

The NCHFA agreement with the NCC ReStart Program will be 

used to enable and facilitate permanent modifications by 

advancing a forgivable loan to eligible borrowers in an amount 

not to exceed $36,000 to enable a loan modification to occur 

immediately. MEP funding may not be used to reduce the 

principal balance of an eligible borrower’s mortgage loan below 

100% of the current market value of the property. However, the 

NCC ReStart Program may reduce the principal amount of an 

eligible borrower’s mortgage loan below 100% of the 

property’s current market value to achieve a permanently 

modified mortgage loan as long as it uses its own capital and 

not MEP funding. As the funding formula for the maximum 

amount MEP assistance expressly states a floor of 100% of the 

property’s current market value the MEP assures that its 

assistance is limited to funding principal reduction for eligible 

borrowers only down to 100% of the property’s current market 

value. 

Consistent with the terms of MEP, the NCC ReStart Program 

may permanently modify and reduce the existing first mortgage 

loan to an amount whose net present value does not exceed the 
B-4-2

lesser of: 

• A loan amount equal to 100% of the current market 

value of the property; or 

• A loan amount with a net present value (using a 30 year 

amortization at an interest rate equal to 300 basis points 

above the 30 year FHA rate as quoted by Wells Fargo 

Mortgage) that results in a monthly total housing 

payment that does not exceed 35% of the borrowers 

adjusted gross monthly income. 

In order to make the mortgage payments affordable to the 

borrower, the MEP forgivable second mortgage loan will be 

made to eligible borrowers for up to $36,000 to fund a 

modification of the mortgage loan amount to an amount equal 

to 100% of the current market value (or as close to 100% of the 

current market value as the $36,000 in MEP assistance will 

permit and as long as the reduced mortgage loan amount results 

in a total housing payment not greater than 35% of the 

borrower’s adjusted gross monthly income). 

There is a required dollar-for-dollar private capital match under 

the NCC Restart Program. As a result of this private capital 

match, the final amount of MEP assistance will be determined 

by subtracting the Current Market Value of the property from 

borrower’s Unpaid Principal Balance (UPB) times 50% or 

$36,000, whichever is less. 

The structure of the MEP assistance is described in Section 8. 

2. Program Goals The central goal of MEP is to help homeowners avoid 

foreclosure by permanently modifying a borrower’s primary 

mortgage to achieve a monthly total housing payment that does 

not exceed 35% of the borrower’s adjusted gross monthly 

income. 

3. Target 

Population/Areas

The targeted populations are households whose loans NCC is 

able to acquire under the HUD DASP. 

4. Program Allocation 

(Excluding Administrative 

Expenses)

Program allocation amount on file with Treasury.

5. Borrower Eligibility 

Criteria

Eligible Borrowers under MEP must meet the following 

criteria:

• Must be a legal U.S. Citizen or lawful permanent 
B-4-3

resident

• Demonstrate an ability to maintain a financial obligation 

for the home based upon an affordable mortgage with a 

total monthly housing payment equal to or less than 

35% of their gross monthly income. 

• Must meet the LTV requirements described in this 

Section.

Borrowers with current UPBs equal to or greater than 105% of 

the property’s current market value are eligible for MEP 

assistance if they meet one of the following financial hardships 

and provide a financial hardship affidavit. Eligible financial 

hardships include reduced income due to: 

• Changes in employment

• Medical condition(s) 

• Divorce

• Death 

Borrowers who are unable to document any of these financial 

hardships may be eligible for MEP assistance if their current 

UPB is equal to or greater than 125% of the property’s current 

market value. 

6. Property/Loan 

Eligibility Criteria

• Property must be the borrowers principal residence, located 

in North Carolina and may not be abandoned, vacant or 

condemned. 

• The property must be a single family home, duplex, a 

condominium, a townhome, a manufactured or mobile home 

on foundation permanently affixed to real estate owned by 

the mortgagor, or a 2-4 family dwelling unit of which one 

unit is occupied by the mortgagor as their principal 

residence that is owner-occupied with a UPB equal to or 

less than $300,000.

• Mortgage must be a distressed loan with a UPB that equals 

or exceeds the required percentages described in Section 5 

above. Market value will be established by a FIRREAcompliant appraisal completed by an appraiser licensed and 

in good standing under the North Carolina statutes for NCC

at the time the appraisal is performed. 

7. Program Exclusions Borrowers whose current loan-to-value is less than 105% of the 

property’s current market value.
B-4-4

Borrowers who are in an active Chapter 7 bankruptcy. 

8. Structure of Assistance 10 year, 0% interest, non-recourse, deferred-payment forgivable 

subordinate loan. A forgiveness clause will reduce the loan 

amount by 20% a year for every year the borrower stays in the 

home after five years. At the end of the 10 years the note will 

be considered satisfied and NCHFA will release the lien 

securing the note.

All or a portion of the unforgiven loan funds are due and 

payable to NCHFA if home is sold, refinanced or no longer 

owner occupied (unless otherwise prohibited under applicable 

federal law). Loans are repayable only from proceeds to the 

borrower from a sale or refinance. If the property is sold or 

refinanced and has not increased in equity to the degree 

necessary to repay the loan, all or a portion of the loan 

remaining unpaid after the proceeds are applied will be 

forgiven. 

All deferred subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the property.

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

9. Per Household 

Assistance

Under this program, eligible borrowers may receive up to 

$36,000. The estimated Median Amount of Assistance is 

$18,500.

10. Duration of Assistance Assistance under MEP is a one-time payment on behalf of 

qualified applicants of NCC ReStart Program. 

11. Estimated Number of 

Participating Households

It is anticipated that the MEP will assist 50 households in 

avoiding imminent foreclosures.

12. Program 

Inception/Duration

The program will be available approximately in January 2014 

and is anticipated to run for a two-year period of time. 

Recaptured funds shall be recycled and used in the program in 

accordance with the Agreement.

13. Program Interactions 

with Other Programs (e.g. 

other HFA programs)

MEP will interact with NCHFA’s MPP-1, MPP-2, and SMRP 

in the following manner. At the time NCC assesses the 

borrower for eligibility under MEP, if it finds that the borrower 

is not eligible for MEP it will then assess whether the borrower 
B-4-5

is eligible for MPP-1, MPP-2 and/or SMRP assistance. If the 

borrower is eligible for MPP-1, MPP-2 and/or SMRP, the 

application and approval process will be completed in the 

manner prescribed by NCHFA. 

Homeowners who have participated in the Mortgage Payment 

Programs may be eligible to participate in MEP if the borrower 

has become reemployed or secured other source(s) of fixed 

income and has demonstrated a qualifying hardship. 

Maximum total assistance amount per household is $75,000 if 

participating in multiple HHF programs.

14. Program Interactions 

with HAMP

None.

15. Program Leverage 

with Other Financial 

Resources

As the NCC ReStart Program will reduce the existing first 

mortgage loan in accordance with the MEP there will be a 

minimum 1:1 private capital leveraged match. However, as the 

NCC ReStart Program will likely fund with private capital 

additional principal reductions for eligible borrowers below 

100% of the property’s current market value in order to achieve 

a principal reduction it is expected that the leveraged match of 

private funds to MEP will be closer to 3 to 1. Lender match 

amounts shall be documented at the time of closing of the 

modification. 
B-5-1

SERVICE SCHEDULE B-5

North Carolina Housing Finance Agency's

Principal Reduction Recast/Lien Extinguishment for Unaffordable Mortgages (PRRLE) 

Program

Summary Guidelines 

1. Program Overview The Principal Reduction Recast/Lien Extinguishment for 

Unaffordable Mortgages (PRRLE) will provide eligible 

homeowners a principal reduction and reamortization (recast) of 

the remaining principal balance or a full lien extinguishment. 

As applicable, PRRLE will also be used to pay all delinquent 

first mortgage and mortgage-related expenses (i.e. property 

taxes, homeowner insurance, homeowner dues) in conjunction 

with the principal reduction and recast or full lien 

extinguishment. The program will provide the homeowner an 

affordable and long term sustainable monthly mortgage expense 

payment. The PRRLE program is available to North Carolina 

homeowners who are financially unable to make their mortgage 

payments due to a qualifying hardship event.

2. Program Goals To assist 848 homeowners facing foreclosure.

The goal of the program is to decrease the number of home 

owners losing their homes to foreclosure by providing longterm housing payment sustainability. Secondary goals include 

stabilization of neighborhoods and protecting home values of 

surrounding properties. 

This program will provide immediate mortgage payment relief 

and stable long term mortgage or mortgage expense payments 

for the homeowner.

3. Target Population/ 

Areas

Homeowners suffering a program eligible financial hardship, as 

defined in the program guidelines, related to reduction of 

income or other demonstrated financial hardship. 

This Program will be available in all North Carolina counties.

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

Program allocation amount on file with Treasury.

5. Borrower Eligibility 

Criteria

Eligible homeowners must be those with program eligible 

financial hardship due to unemployment, loss of income, 

reduction of income, or other demonstrated financial hardships

through no fault of their own. Homeowners will be required to 

provide a financial hardship affidavit with appropriate 

documentation on the cause of the hardship.
B-5-2

All eligible homeowners must meet the following criteria:

• Satisfactory mortgage payments prior to job loss, loss of 

income, reduction in income or other program eligible 

hardship. 

• Homeowner has become re-employed or secured a fixed 

income source.

• Current housing debt-to income ratio > 25%.

• Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues ≤ 36% of gross monthly 

household income.

Homeowners eligible to receive a full lien extinguishment must 

meet these additional following criteria:

• Primary income source for household is from a fixed 

income source as defined in the program guidelines.

• Gross household income is equal to or lesser than 125% 

of the state median income limit in North Carolina.

• Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues ≤ 36% of gross monthly 

household income.

Homeowners eligible to receive a principal reduction and recast

and receiving a fixed income source as primary income must 

meet these additional following criteria:

• Primary income source for household is from a fixed 

income source as defined in the program guidelines.

• Gross household income is equal to or lesser than 125% 

of the state median income limit in North Carolina.

• Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues ≤ 36% of gross monthly 

household income.

Homeowners eligible to receive a principal reduction and recast 

and not receiving a fixed income source as primary income 

must meet these additional following criteria:

• Pre-assistance LTV >80%.

• Post assistance LTV >80%.
B-5-3

• Post assistance LTV may go below 80% only if exactly 

$10,000 in assistance is provided in order to achieve a 

post assistance housing debt-to-income ratio between 

25% and 36%.

• Post assistance monthly housing ratio target is 25% but 

may not exceed 36%.

• Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues > 25% of gross monthly 

household income.

Homeowners must meet program underwriting criteria. Funds 

will be allocated on a first come/approved, first served basis.

6. Property/Loan 

Eligibility Criteria

• Existing single-family homes duplexes, or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower.

• North Carolina owner-occupied, primary residences only. 

• Homeowners with a fixed rate or adjustable rate mortgage.

• Homeowners with interest-only or negative amortization 

mortgage can qualify if the recast results in a fully 

amortizing loan.

7. Program Exclusions Total Unpaid Principal Balances > $300,000.

Manufactured homes not considered real property.

Non-legal U.S. resident.

8. Structure of 

Assistance

10 year, 0% interest, non-recourse, deferred-payment forgivable 

subordinate loan. A forgiveness clause will reduce the loan 

amount by 20% a year for every year the borrower stays in the 

home after five years. At the end of the 10 years the note will 

be considered satisfied and NCHFA will release the lien 

securing the note.

All or a portion of the unforgiven loan funds are due and 

payable to NCHFA if home is sold, refinanced or no longer 

owner occupied (unless otherwise prohibited under applicable 

federal law). Loans are repayable only from proceeds to the 

borrower from a sale or refinance. If the property is sold or 

refinanced and has not increased in equity to the degree 

necessary to repay the loan, all or a portion of the loan 

remaining unpaid after the proceeds are applied will be 

forgiven. 
B-5-4

All deferred subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the property. 

Any funds returned according to established program 

guidelines will be recaptured and used to assist additional 

homeowners in accordance with the Agreement.

9. Per Household 

Assistance 

Under this program, each eligible borrower may receive no less 

than $10,000 and no more than $75,000 structured as a 

subordinate loan.

Eligible homeowners may receive no more than $50,000 to be 

applied toward a principal reduction and recast or to a lien 

extinguishment.

Eligible homeowners with a delinquent first mortgage may be 

brought current with up to $36,000 in PRRLE funds.

The average loan amount is expected to be $50,000 per 

borrower. 

10. Duration of 

Assistance

Assistance under PRRLE is a one-time payment to the servicer. 

11. Estimated Number of 

Participating 

Households

We anticipate approximately 848 homeowners will be helped. 

Program will be piloted with select servicers, NCHFA portfolio 

and existing HHF portfolio. Program may be expanded to other 

servicers if pilot is successful and funds are available. 

12. Program Inception/ 

Duration

The program will be available in July 2015. Recaptured funds 

shall be recycled and used in the program in accordance with 

the Agreement.

13. Program Interactions 

with Other Programs 

(e.g. other HFA 

programs)

Homeowners who have participated in the Mortgage Payment 

Program (MPP) or the Second Mortgage Refinance Program 

(SMRP) may be eligible to participate in PRRLE if the 

borrower has become reemployed or secured other source(s) of 

fixed income and has demonstrated a qualifying hardship. 

Maximum total assistance amount per household is $75,000 if 

participating in multiple HHF programs. 

14. Program Interactions 

with HAMP

Lien Extinguishment:

• No HAMP interaction

Principal Reduction and Recast:

• Borrowers suffering a program eligible financial 

hardship after the HAMP modification effective date are 
B-5-5

eligible for PRRLE.

15. Program Leverage 

with Other Financial 

Resources

We will not require investors to match the contributions that are 

made with the Hardest Hit Funds for the Principal Reduction 

Recast/Lien Extinguishment Program. 
B-6-1

Doc#: US1:10549450v4

SERVICE SCHEDULE B-6

North Carolina Housing Finance Agency’s

Down Payment Assistance (DPA)

Program Summary Guidelines

1. Program

Overview

The Down Payment Assistance (DPA) Program will 

provide an incentive to qualified homebuyers to purchase a 

primary residence in targeted areas in North Carolina. 

Providing incentives to qualified homebuyers in housing 

markets that have been hardest hit by serious delinquency, 

negative equity, distressed sales, and foreclosures will 

strengthen demand in those areas, stabilize housing prices 

and prevent future foreclosures. This program will initially 

be offered as a pilot that includes five North Carolina 

counties.

2. Program Goals The goal of the DPA Program is to prevent future 

foreclosures by assisting with the stabilization of housing 

prices in targeted areas. NCHFA will identify meaningful 

indicators that will enable them to track and quantify the 

DPA Program’s impact in the targeted areas.

3. Target

Population/Areas

Targeted areas are the following counties: Johnston, 

Mecklenburg, Guilford, Cumberland, Cabarrus (“Targeted 

Area”). For these five counties, NCHFA evaluated five 

housing market distress indicators across all 100 North 

Carolina counties—seriously delinquent mortgage loans, 

negative equity, short sales, REO sales, and foreclosures—

as well as loan origination volume for the NCHFA’s N.C. 

Home Advantage Mortgage program. Each Targeted Area 

county contains at least four zip codes that exceeded the 

statewide rate in at least four out of the five distressed 

housing market indicators, and a minimum threshold 

origination volume was achieved in these counties from 

January 1, 2014 through March 31, 2015.

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

Program allocation amount on file with Treasury.
B-6-2

Doc#: US1:10549450v4

5. Borrower Eligibility 

Criteria

Eligible borrowers must qualify for and meet all

requirements of a N.C. Home Advantage Mortgage, with 

an additional requirement of meeting the Mortgage Credit 

Certificate income and sales price limits. Allowable first 

mortgage loans are 30-year, fixed-rate loans from the

Federal Housing Administration (FHA), U.S. Department 

of Veterans Affairs (VA), U.S. Department of Agriculture

– Rural Development (RD), Fannie Mae and Freddie Mac.

Eligible borrowers must also meet the following criteria:

• Must meet income and sales price limits in the 

Mortgage Credit Certificate program, which reflect 

income limits under IRC Section 143(f)(1). The 

area median income (AMI) for borrowers varies 

depending on county and family size, but in no 

instance do the limits exceed 140% of AMI. 

• Must be First-Time Homebuyers. For purposes of 

the DPA Program, a First-Time Homebuyer is 

someone who has not had an ownership interest in 

their primary residence in the past three years, 

unless qualifying under a Veteran’s Exception or 

purchasing a home in a Federally Designated 

Targeted Area as specified in the DPA Program 

Guide.

• Must complete a pre-purchase homebuyer

education course.

• Must be legal U.S. citizens or lawful permanent 

residents or otherwise meet the applicable Agency

(FHA, VA, USDA-RD) or GSE (Fannie Mae or 

Freddie Mac) requirements.

• Borrowers must be able to provide a Dodd-Frank 

affidavit as specified in the DPA Program Guide.

• Borrowers must be credit-worthy and meet 

minimum FICO scores, and have a maximum 

debt-to-income (DTI) ratio no greater than 45%, 

as specified in the DPA Program Guide.
B-6-3

Doc#: US1:10549450v4

6. Property/Loan

Eligibility Criteria

• The property must be a single-family home, a 

condominium unit, a townhome, or a two-four family 

dwelling unit of which one unit is to be occupied by 

the mortgagor as his or her principal residence.

• Must be the borrower’s primary residence.

• Property must be located in a Targeted Area.

• Meet all applicable DPA Program, Ginnie Mae (FHA, 

VA, USDA-RD) or GSE (Fannie Mae & Freddie Mac) 

underwriting guidelines.

• Property must be existing construction, not new 

construction.

• Property must meet the MCC Program purchase price 

limits as established in the DPA Program Guide.

7. Program Exclusions • Borrowers, properties and loans not meeting N.C. 

Home Advantage Mortgage program eligibility

requirements as specified in the DPA Program Guide 

or GSE underwriting criteria.

• Dodd-Frank exclusion for having been convicted of a 

mortgage-related felony in the past ten years.
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8. Structure of Assistance 5 year, 0% interest, non-recourse, deferred-payment 

forgivable subordinate loan. A forgiveness clause will 

reduce the loan amount by 20% a year for every year the 

borrower stays in the home. At the end of the 5 years, the 

note will be considered satisfied and NCHFA will release 

the lien securing the note.

All or a portion of the unforgiven loan funds are due and 

payable to NCHFA if home is sold, refinanced or no longer 

owner occupied (unless otherwise prohibited under 

applicable federal law). Loans are repayable only from 

proceeds to the borrower from a sale or refinance. If the 

property is sold or refinanced and has not increased in 

equity to the degree necessary to repay the loan, all or a 

portion of the loan remaining unpaid after the proceeds are 

applied will be forgiven. 

All deferred subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the 

property. 

Any funds returned according to established program 

guidelines will be recaptured and used to assist additional 

homeowners in accordance with the Agreement.

9. Per Household

Assistance

$15,000.00

10. Duration of Assistance DPA Program funds will be used to reimburse participating

lenders who table fund the loan at closing once it is

determined that all DPA program requirements have

been met.

11. Estimated Number of 

Participating 

Households

It is anticipated that the DPA Program will assist

approximately 2,000 households.

12. Program

Inception/Duration

The DPA Program will begin in September 2015 and it is

projected that assistance will be expended through as late 

as 2021.
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13. Program Interactions 

with Other Programs 

(e.g. other HFA 

programs)

The DPA Program will take advantage of an existing 

infrastructure of participating lenders who are already

actively originating N.C. Home Advantage Mortgage loans.

If the borrower has received HHF assistance under any

other HHF program, the maximum amount of all

assistance may not exceed $75,000.

Any borrower receiving funds from the DPA Program 

will not be eligible for other down payment assistance 

programs offered by NCHFA.

14. Program Interactions 

with HAMP

None.

15. Program Leverage 

with Other Financial 

Resources

A borrower who obtains the $15,000 DPA may also be 

evaluated for the Mortgage Credit Certificate Program 

(MCC). However, they will not be eligible for any other 

down payment assistance offered by NCHFA. 
F-1

SCHEDULE F

HHF FIFTH ROUND FUNDING REALLOCATION MODEL

This Schedule F describes a uniform model (the “Reallocation Model”) designed to maximize 

the utilization of the $2 billion made available under the HHF Program Fifth Round Funding. In 

general, the Reallocation Model reallocates unused Fifth Round funding to states participating in 

the HHF Program that meet certain defined criteria for utilization of HHF Program funds. The 

aggregate amount obligated under the Fifth Round Funding will not increase at any time.

I. Definitions

(a) “2016 Utilization Threshold” shall mean having Drawn at least 70% of the Rounds 1-4 

Funding Allocation.

(b) “2017 Utilization Threshold” shall mean having Drawn at least 95% of the Rounds 1-4 

Funding Allocation.

(c) “2018 Utilization Threshold” shall mean having Drawn at least 80% of the Program 

Participation Cap.

(d) “Annual Reallocation Amount” shall mean the aggregate amount, if any, by which the 

Program Participation Caps set forth in all HFA Participation Agreements are reduced 

pursuant to the Reallocation Model, as applied with respect to each Utilization Threshold.

(e) “Drawn” shall mean having made Capital Draws pursuant to Section 3(A) of the 

Agreement.

(f) “HFA Participation Agreements” shall mean, collectively, the Commitments to Purchase 

Financial Instrument and HFA Participation Agreements entered into by the States, as 

amended from time to time.

(g) “Population” shall mean the most recent Annual Estimate of the Resident Population for 

a State as determined by the United States Census Bureau from time to time.

(h) “Recipient State” shall mean each State that has achieved the Utilization Threshold for 

the applicable year, provided that such State is not then in default under its HFA 

Participation Agreement. Notwithstanding the foregoing, in the event a State declines an 

increase to its Program Participation Cap and Round 5 Funding Allocation for which it is 

eligible pursuant to this Schedule F, such State shall not be considered a Recipient State. 

(i) “Rounds 1-4 Funding Allocation” is the amount set forth on Schedule A as “Rounds 1-4 

Funding Allocation.”

(j) “Round 5 Funding Allocation” is the amount set forth on Schedule A as “Round 5 

Funding Allocation”, as adjusted from time to time in accordance with this Schedule F.
F-2

(k) “Share of Annual Reallocation Amount” shall mean a Recipient State’s share of the 

applicable Annual Reallocation Amount, as determined using the methodology described 

in Section IV below. If the Annual Reallocation Amount is zero, then the Share of 

Annual Reallocation Amount will be zero for the applicable year.

(l) “State” shall mean any or each of Alabama, Arizona, California, Florida, Georgia, 

Illinois, Indiana, Kentucky, Michigan, Mississippi, New Jersey, Nevada, North Carolina, 

Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, D.C.

(m)“Utilization Threshold” means each of the 2016 Utilization Threshold, the 2017 

Utilization Threshold and the 2018 Utilization Threshold.

II. Reduction of Program Participation Cap and Round 5 Funding Allocation:

(a) If Eligible Entity does not achieve the 2016 Utilization Threshold on or before December 

31, 2016, each of the Program Participation Cap and Round 5 Funding Allocation shall 

be reduced by an amount equal to 50% of the Round 5 Funding Allocation as of such 

date.

(b) If Eligible Entity does not achieve the 2017 Utilization Threshold on or before December 

31, 2017, each of the Program Participation Cap and the Round 5 Funding Allocation 

shall be reduced by up to 100% of the Round 5 Funding Allocation as of such date.

(c) If Eligible Entity does not achieve the 2018 Utilization Threshold on or before December 

31, 2018, each of the Program Participation Cap and Round 5 Funding Allocation shall 

be reduced by an amount equal to that portion of the Round 5 Funding Allocation which 

has not yet been Drawn nor obligated with respect to a unique homeowner or property as 

of such date.

III. Increase of Program Participation Cap and Round 5 Funding Allocation:

(a) If Eligible Entity achieves the 2016 Utilization Threshold on or before December 31, 

2016, each of the Program Participation Cap and Round 5 Funding Allocation shall be 

increased by the State’s Share of the Annual Reallocation Amount with respect to such 

date.

(b) If Eligible Entity achieves the 2017 Utilization Threshold on or before December 31, 

2017, each of the Program Participation Cap and the Round 5 Funding Allocation shall 

be increased by the State’s Share of the Annual Reallocation Amount with respect to 

such date.

(c) If Eligible Entity achieves the 2018 Utilization Threshold on or before December 31, 

2018, each of the Program Participation Cap and Round 5 Funding Allocation shall be 

increased by the State’s Share of the Annual Reallocation Amount with respect to such 

date.

IV. Methodology for Determining Recipient State’s Share of Annual Reallocation Amount
F-3

If Eligible Entity has achieved the Utilization Threshold and the Annual Reallocation Amount 

is greater than zero for the applicable year, the Program Participation Cap and Round 5 

Funding Allocation will be increased by an amount calculated as follows: 

First, calculate the “Per Capita Amount” for each Recipient State. The Per Capita Amount

shall be calculated as the Annual Reallocation Amount divided by the sum of the Population 

of all Recipient States.

Second, calculate the “Utilization Percentage” for each Recipient State. 

The Utilization Percentage with respect to the 2016 Utilization Threshold and the 2017 

Utilization Threshold shall be calculated as the lesser of (I) the ratio of (x) aggregate Capital 

Draws made by the Recipient State under its HFA Participation Agreement as of December 

31, 2016 and December 31, 2017, respectively, to (y) the Recipient State’s Rounds 1-4 

Funding Allocation as of such dates, or (II) 100%. 

The Utilization Percentage with respect to the 2018 Utilization Threshold shall be calculated 

as the ratio of (x) aggregate Capital Draws made by the Recipient State under its HFA 

Participation Agreement as of December 31, 2018, to (y) such Recipient State’s Program 

Participation Cap as of such date.

Third, calculate a “Utilization Score” for each Recipient State by standardizing the Utilization 

Percentages using the z-score methodology, a standard statistical standardization procedure. 

The Utilization Score for each Recipient State is calculated as (I)(x) the Utilization Percentage 

for such Recipient State, less (y) the mean Utilization Percentage for all Recipient States 

(“Average”), divided by (II) the standard deviation of the Utilization Percentages for all 

Recipient States. If a Recipient State’s Utilization Percentage is greater than the Average, the 

Utilization Score will be positive. If a Recipient State’s Utilization Percentage is less than 

Average, the Utilization Score will be negative.

Fourth, calculate a “Need Factor” for each Recipient State. The Need Factor is a fixed dollar 

amount which will be multiplied by each Utilization Score to determine the dollar amount by 

which each Recipient State’s Per Capita Amount will be adjusted. The Need Factor is

calculated as the dollar amount that would result in the highest adjusted Per Capita Amount 

for a Recipient State being no more than three (3) times that of the lowest adjusted Per Capita 

Amount for a Recipient State (i.e., a Min/Max Factor of 3).

Fifth, calculate an “Adjusted Per Capita Amount” for each Recipient State by adding to or 

subtracting from the Recipient State’s Per Capita Amount the product of (x) the Need Factor 

and (y) the Recipient State’s Utilization Score. Recipient States with positive Utilization 

Scores will have dollars added to the Recipient State’s Per Capita Amount, and Recipient 

States with negative Utilization Scores will have dollars subtracted from the Recipient State’s 

Per Capita Amount.

Sixth, calculate the “Share of the Annual Reallocation Amount” for each Recipient State by 

first multiplying the Recipient State’s Adjusted Per Capita Amount by the Recipient State’s
F-4

Population to arrive at a “Preliminary Share”. The Preliminary Share for each Recipient State 

is then normalized to arrive at the Share of the Annual Reallocation Amount by multiplying 

(x) a ratio, the numerator of which is the Preliminary Share for such Recipient State and the 

denominator of which is the sum of the Preliminary Shares for all Recipient States, and (y) the 

Annual Reallocation Amount.

V. Notices; Modifications

(a) Treasury will notify Eligible Entity in writing of any adjustment to the Program 

Participation Cap and Round 5 Funding Allocation pursuant to this Schedule F. Related 

adjustments to program allocations and other amounts set forth in the Service Schedules, 

and Permitted Expenses set forth on Schedule C, shall be made as set forth in such 

written notice.

(b) For the avoidance of doubt, a written amendment to the Agreement shall not be required 

to effectuate an adjustment of the Program Participation Cap or Round 5 Funding 

Allocation pursuant to this Schedule F. The Program Participation Cap and Round 5 

Funding Allocation set forth on Schedule A to the Agreement shall be deemed to be 

modified upon receipt of the written notice sent pursuant to Section V (a) above. 

 

(c) Treasury reserves the right to unilaterally modify or supplement the terms and provisions 

of this Schedule F, at any time with prior written notice to the Eligible Entity.