Third Amendment to HPA — Kentucky 

TAMPA/175782.2

THIRD AMENDMENT TO 

COMMITMENT TO PURCHASE FINANCIAL INSTRUMENT 

and 

HFA PARTICIPATION AGREEMENT 

This Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation 

Agreement (the “Third Amendment”) is entered into as of the date set forth on Schedule A

attached hereto as the Third 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, as previously amended by that certain First Amendment to Commitment to 

Purchase Financial Instrument and HFA Participation Agreement (the “First Amendment”), and 

as further amended by that certain Second Amendment to Commitment to Purchase Financial 

Instrument and HFA Participation Agreement (the “Second Amendment”; and together with the 

Original HPA as amended thereby and by the First Amendment, the “Current HPA”), dated as of 

their respective dates as set forth on Schedule A attached hereto, 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 (P.L. 110-343), as amended, as the same may be amended 

from time to time (“EESA”); 

WHEREAS, HFA and Eligible Entity submitted a request to Treasury to make certain revisions 

to their Service Schedules and Permitted Expenses and Treasury has agreed to the same; 

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

document all approved modifications to the Service Schedules and Permitted Expenses; 

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. Definitions. All references in the Current HPA to the “Agreement” shall mean the 

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

HPA to Schedules A, B or C shall mean the Schedules A, B or C attached to this Third 
- 2 - 

TAMPA/175782.2

Amendment. All references herein to the “HPA” shall mean the Current HPA, as further 

amended by this Third Amendment. 

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

and replaced with Schedule A attached to this Third Amendment. 

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

and replaced with Schedule B attached to this Third Amendment. 

D. Schedule C. Schedule C attached to the Current HPA is hereby deleted in its entirety 

and replaced with Schedule C attached to this Third Amendment. 

2. 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 Third Amendment and any other closing documentation delivered to 

Treasury in connection with this Third Amendment, and to perform its obligations 

hereunder and thereunder. 

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

Third Amendment and any other closing documentation delivered to Treasury in 

connection with this Third Amendment, and to perform its obligations hereunder and 

thereunder. 

3. Miscellaneous

A. The recitals set forth at the beginning of this Third 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. 
- 3 - 

TAMPA/175782.2

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 Third 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 Third Amendment shall be treated as originals for all purposes. 

[SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE 

INTENTIONALLY LEFT BLANK] 
[Signature Page to Third Amendment to HPA — Kentucky] 

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

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

Instrument and HFA Participation Agreement as of the Amendment Date. 

HFA: TREASURY: 

KENTUCKY HOUSING CORPORATION UNITED STATES DEPARTMENT OF THE 

TREASURY 

By: /s/ Richard L. McQuady By: 

Name: Richard L. McQuady Name: Timothy G. Massad 

Title: Chief Executive Officer Title: Acting Assistant Secretary for 

 Financial Stability 

 

ELIGIBLE ENTITY:

KENTUCKY HOUSING CORPORATION 

By: /s/ Richard L. McQuady 

Name: Richard L. McQuady 

Title: Chief Executive Officer 

 

TAMPA/175782.2

EXHIBITS AND SCHEDULES

Schedule A Basic Information 

Schedule B Service Schedules 

Schedule C Permitted Expenses 
TAMPA/175782.2

SCHEDULE A

BASIC INFORMATION

Eligible Entity Information: 

Name of the Eligible Entity: Kentucky Housing Corporation1

Corporate or other organizational form: independent, de jure Municipal Corporation

Jurisdiction of organization: Kentucky

Notice Information: 

 

 

 

 

HFA Information: 

Name of HFA: Kentucky Housing Corporation1

Organizational form: independent, de jure Municipal Corporation 

Date of Application: September 1, 2010 

Date of Action Plan: September 1, 2010 

Notice Information: Same as notice information for Eligible 

 Entity. 

Program Participation Cap: $148,901,875.00 

Portion of Program Participation Cap 

Representing Original HHF Funds: $55,588,050.00 

Portion of Program Participation Cap 

Representing Unemployment HHF Funds: $55,588,050.00

Permitted Expenses: $15,351,875.00

 

1 References in the Agreement to the term “HFA” shall mean the Kentucky Housing Corporation (“KHC”) 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 KHC, in its capacity as Eligible Entity as such term is used in the Agreement. 
TAMPA/175782.2

Closing Date: September 23, 2010 

First Amendment Date: September 29, 2010 

Second Amendment Date: December 16, 2010 

Third Amendment Date: March 31, 2011 

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. 
TAMPA/175782.2

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. 
TAMPA/175782.2

SERVICE SCHEDULE B-1

KENTUCKY HOUSING CORPORATION 

KENTUCKY UNEMPLOYMENT BRIDGE PROGRAM 

Summary Guidelines 

1. Program Overview The Kentucky Housing Corporation’s (KHC) Kentucky 

Unemployment Bridge Program (UBP) will provide funds to 

lenders and servicers on behalf of qualified homeowners who 

are delinquent on their mortgage payments or anticipate default 

due to unemployment or substantial underemployment (loss of 

income). Maximum assistance per household is set at $20,000. 

There is a time limit of 12 months for households to utilize the 

assistance – assistance ends at the earlier to occur of 12 months 

from the loan closing or receipt of $20,000 in assistance, so long 

as other conditions of eligibility are met and continue. Funds 

will be available on a first-come/first-served basis. 

Borrowers will enter the UBP through the statewide 

Homeownership Protection Center operated by KHC. 

Applications will be processed by housing counseling agencies 

who will return the application to KHC for final underwriting, 

loan closing, disbursements and loan servicing. Borrowers will 

not be required to make any portion of the monthly payment. If 

a household qualifies for the UBP, program funds will be used 

for 100 percent of the monthly payment and up to $7,500 in 

reinstatement fees to include homeowner’s delinquent balance 

late fees, penalty interest, taxes, insurance and protective 

advances. 

2. Program Goals To prevent avoidable foreclosure for homeowners who have 

experienced loss of income due to unemployment or substantial 

underemployment by providing funds to reinstate, pay the 

household’s mortgage payments during the period of 

unemployment/underemployment and for two months after reemployment, if needed, up to the maximum dollar threshold for 

assistance of $20,000. 

3. Target Population / 

Areas 

The UBP will be available statewide. No specific population is 

targeted. During the first 12 months of the UBP, $10,000,000 

will be set aside to serve rural counties. 

4. Total Allocation 

(Excluding 

Administrative 

$133,550,000.00 
TAMPA/175782.2

Expenses) 

5. Borrower Eligibility 

Criteria 

All borrowers must submit a hardship affidavit documenting 

inability to pay their mortgage. 

Housing counselors and KHC will determine eligibility for the 

UBP. Eligible households must meet ALL of the following 

requirements: 

• The homeowners must be legal U.S. residents. 

• The financial hardship (loss of employment income) 

must have occurred after January 1, 2009. 

• Monthly payment of principal, interest, taxes and 

insurance (PITI) including both first and second lien 

mortgages must exceed 31 percent of the borrower’s 

monthly gross income at time of application for the HHF 

funds, including any unemployment benefits, or the 

homeowner must be experiencing at least a 15% 

reduction in income. 

• The homeowner’s cash reserves cannot exceed six 

months, excluding retirement. For purposes of the UBP, 

“cash reserves” is defined as non-retirement liquid assets 

sufficient to pay the household’s PITI for their home 

mortgage(s). 

• The homeowner must be experiencing a financial 

hardship due to involuntary loss or reduction in 

homeowner's income documented by an executed 

hardship affidavit. Unemployment or underemployment 

as the result of a documented short-term disability will 

also qualify. 

• The homeowner must contact KHC or their counselor if 

there is a change in income or employment during the 12 

months of UBP participation. 

• The homeowner must be currently seeking employment 

and/or participating in a job training/educational 

program with the goal of obtaining employment during 

the term of assistance. 

6. Property / Loan 

Eligibility Criteria 

Property/Loan Eligibility Requirements: 

• Owner-occupied primary residence located in Kentucky. 

• Existing single-family homes or condominiums (attached 

or detached) and manufactured or mobile homes on 
TAMPA/175782.2

foundations permanently affixed to real estate owned by 

the borrower. 

7. Program Exclusions A household is not eligible for the UBP if: 

• Borrower’s total unpaid principal balances exceed 

$275,000, including first and second mortgages 

combined. 

• Borrower owns other real property. 

• Borrower’s hardship is a result of voluntary resignation 

of employment or voluntary reduction in hours or 

income. 

• Borrower’s application is for a second home or 

investment properties. 

• Borrower does not occupy the property as its primary 

residence. 

• Borrower’s present household income is sufficient to pay 

mortgage expenses (mortgage payment does not exceed 

31 percent of gross income) or the Borrower has not 

experienced at least a 15 percent reduction in income. 

The UBP will not fund job training costs. 

8. Structure of Assistance All assistance will be structured as a 0% interest, nonamortizing, forgivable, nonrecourse loan, secured by a junior 

lien on the property, which will be forgiven 20 percent each year 

over five years. 

The loan will only be repayable if the borrower sells the 

property before the period expires and there is sufficient equity 

to pay the loan. 

All funds returned to the UBP may be recycled until December 

31, 2017, thereafter they will be returned to Treasury. 

9. Per Household 

Assistance 

Estimated Median - $9,600

Maximum Assistance - $20,000 

10. Duration of Assistance Payment of assistance will end on the first to occur of: (1) 12 

months from assistance loan closing date, (2) two months after 

re-employment, (3) the expenditure of the maximum amount of 

assistance ($20,000) or (4) the household no longer complies 

with other required program provisions. 
TAMPA/175782.2

In the case of a new qualifying event of unemployment or 

underemployment, the household may re-apply for assistance. 

Provided, however that new assistance will be made available 

only to the extent assistance is available, up to the maximum 

total assistance for the household and the maximum time period 

for assistance has not been exhausted. 

11. Estimated Number of 

Participating 

Households 

KHC is estimating that between 6,250 and 13,000 households 

will be served over the term of the UBP. 

12. Program Inception / 

Duration 

KHC implemented the UBP in two stages. This first phase of 

the UBP began January 3, 2011 to serve as a pilot period. Full 

implementation to all qualified borrowers statewide will begin 

April 1, 2011. The program will expire December 31, 2017. 

13. Program Interaction 

with Other Programs 

(e.g. other HFA 

programs) 

The UBP will be leveraged with existing programs including the 

Homeownership Protection Center (HPC), the Homeownership 

Education and Counseling Program funded through HUD and 

KHC and the NeighborWorks Foreclosure Mitigation 

Counseling Program (NFMC). Homeowners who participate in 

the UBP will work with a KHC-approved counselor and utilize 

the Homeownership Protection Center website for their initial 

information. 

14. Program Interactions 

with HAMP 

KHC and housing counselors will analyze borrowers for their 

eligibility for the Hardest Hit Unemployment Bridge Program as 

well as any other loss mitigation options that may be available to 

them. Where possible, HHF assistance will precede HAMP UP.

15. Program Leverage with 

Other Financial 

Resources 

No investor match is required for this program. 

This program will not be combined with other financial 

resources. 

16. Qualify as an 

Unemployment 

Program 

; Yes  No 
TAMPA/175782.2

SCHEDULE C

PERMITTED EXPENSES

Kentucky 

One-time / Start-Up Expenses: 

Initial Personnel $0

Building, Equipment, Technology $115,100

Professional Services $1,900

Supplies / Miscellaneous $1,500

Marketing /Communications $100,000

Travel $0

Website development /Translation $0

Contingency $0

 Subtotal $218,500

Operating / Administrative 

Expenses: 

Salaries $6,674,068.66

Professional Services (Legal, 

Compliance, Audit, Monitoring) $4,076,225.00

Travel $29,750.00

Buildings, Leases & Equipment $274,870.00

Information Technology & 

Communications $0.00

Office Supplies/Postage and 

Delivery/Subscriptions $64,961.34

Risk Management/ Insurance $0.00

Training $80,000.00

Marketing/PR $300,000.00

Miscellaneous $0.00

 Subtotal $11,499,875.00

Transaction Related Expenses: 

Recording Fees $106,250.00

Wire Transfer Fees $89,750.00

Counseling Expenses 

File Intake $0.00

Decision Costs $0.00

Successful File $3,437,500.00

Key Business Partners On-Going $0.00

 Subtotal $3,633,500.00

 Grand Total $15,351,875.00

% of Total Award 10.31%

$148,901,875