Section One 

On February 19, 2010, President Obama announced $1.5 billion in funding to help families in the 

five states that have been hit the hardest by the combination of housing price declines and 

unemployment. Florida Housing Finance Corporation (“Florida Housing”) appreciates the 

confidence that the Treasury has shown in State Housing Finance Agencies by directing $418 

million in Hardest Hit Fund funding to Florida for use in addressing the mortgage foreclosure 

crisis that Florida is facing. We held a public workshop on this initiative and had numerous 

meetings with counseling agencies, local governments, housing advocates, attorneys and others 

to ask questions and gain valuable insight into the complexity of the mortgage foreclosure 

problems here in Florida. We submitted our original proposal to Treasury on April 16, 2010. In 

the original proposal, we advocated for three strategies that we believed worked in tandem to 

address some of the needs in Florida. Unfortunately, both the Legal Representation and 

Downpayment Assistance strategies were deemed not in compliance with EESA by Treasury’s 

counsel. Therefore, upon Treasury’s request, we are submitting this revised proposal that deletes 

the two disallowed strategies and revises the Mortgage Intervention strategy to incorporate 

changes discussed with Treasury. As an alternative to the disallowed strategies, Florida Housing 

intends to submit a proposed term sheet to implement an innovative strategy related to short sales 

at a date in the near future. 

In our strategy, the Mortgage Intervention Strategy, Florida Housing proposes to help 

unemployed or underemployed homeowners achieve the goal of sustainable homeownership by 

partnering with banks and credit unions as well as mortgage investors, such as Fannie Mae and 

Freddie Mac, to extend the time period for homeowners to become re-employed at a salary that 

is sufficient to either resume making full mortgage payments or qualify for a mortgage 

modification that will lower the payments and terms of the mortgage to an affordable level. 

Florida Housing will use these funds to pay up to nine months of mortgage payments on behalf 

of a homeowner in return for the lender or investor forgiving up to nine months of payments. 

Florida Housing recognizes that not every homeowner facing difficulties making their mortgage 

payments will qualify for this strategy. That is why we propose partnering with local housing 

counseling agencies to meet with interested homeowners and provide for intake and application 

processing. These counselors will be able to look at individual homeowners’ circumstances and 

determine the best course of action. Some other possible outcomes for these homeowners could 

be a loan modification without the unemployment assistance, a short sale, deed-in-lieu of 

foreclosure or a referral to an attorney who could assist with issues relating to mortgage fraud or 

predatory lending. Each homeowner would be offered assistance with whatever circumstances 

they are facing provided that funds received from Treasury through the Hardest Hit Fund will 

only be used to support counseling relating to HAMP, the Mortgage Innovation Strategy, another 

making Home Affordable Initiative or another TARP funded modification program. 

Overview of Florida’s Economic and Housing Status 

The impacts of the national economic crisis have hit Florida hard. Across all measures of 

concern, including housing price decline, unemployment and foreclosures, Florida ranks 

consistently in the top few states in the country. Housing prices soared in the mid-2000s, 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 1 
sparked by residents and investors buying homes and developers building new units and 

converting thousands of rental units into condos. In 2004 alone, 47 percent of all apartment sales 

were for conversions in Broward County, 43 percent in Palm Beach County and 82 percent in 

Miami-Dade County. 

While state median prices for existing single family housing peaked in August 2006, Florida 

Realtor Association data show that prices had begun to tumble in some markets earlier that year, 

and home sales were off as early as late 2005. Prices have fallen from a statewide median high 

of $248,400 in August 2006 to $141,800 in February 2010 – a 57 percent drop – and housing 

prices are continuing to decrease. 

According to RealtyTrac.com, over 54,000 properties received a foreclosure filing during 

February 2010. This was an increase from January 2010 and a more than 16 percent increase 

from one year ago. 

The economic slowdown has also impacted jobs. The U.S. Bureau of Economic Analysis 

estimates that Florida’s personal income fell in 2009 by 2.7 percent, mainly due to 

manufacturing and construction losses. In February 2010, the state unemployment rate hit a new 

seasonally adjusted high of 12.2 percent, with over 1.1 million workers seeking jobs. This does 

not count the estimated 8 percent of “discouraged” workers – those people who have dropped out 

of the job market or who are underemployed. It is now believed that many new loan 

delinquencies and foreclosures are the result of job loss. 

Section Two 

A: Overview of Program - Mortgage Intervention Strategy 

Florida Housing is proposing a strategy focused on a sustainable solution to keep homeowners in 

their current homes by helping those who are struggling to make their current mortgage 

payments because of hardships sustained since purchasing the home. These circumstances may 

include: unemployment, reduction of income, underemployment, death or disability in family, 

unforeseen medical bills, unforeseen costly home repairs, and divorce. Many homeowners are 

struggling to keep current on their mortgage payments. 

Most loss mitigation options on mortgage loans only allow for a limited forbearance, typically 

four months, when a borrower becomes unemployed. After that point, the loan is sent to 

foreclosure. In the current economic environment in the hardest hit markets of Florida, four 

months is not enough time for a borrower to become re-employed at a salary that is sufficient to 

continue making mortgage payments. Moreover, loss of income is the leading reason why 

homeowners are unable to qualify for a modification of their mortgage under the federal Home 

Affordable Modification Program (HAMP). 

Florida Housing is currently in negotiations with mortgage investors and lenders to provide 

matching funds for these homeowners. These matching funds would lengthen the amount of 

time a homeowner could receive assistance to become re-employed at a salary that is sufficient 

to either resume making full mortgage payments or qualify for a mortgage modification that will 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 2 
Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 3 

lower the payments and terms of the mortgage to an affordable level. Florida Housing anticipates 

using these funds to pay up to nine months of mortgage payments on behalf of a homeowner. 

This period of time may vary, depending on the willingness of the servicer or mortgage investor 

to participate in this strategy. 

Florida Housing may also assist underemployed homeowners. If the homeowner is in an 

underemployed situation, where they may have a job but are making less than they were when 

they bought their house, the home may be at risk of foreclosure. Florida Housing intends to take 

into consideration their current income compared to their housing debt and possibly supplement 

the homeowner’s own housing payment in an amount that ensures that the homeowner is not 

being over subsidized. 

Florida Housing is not currently considering making upfront arrearage payments on behalf of a 

homeowner. Typical loss mitigation techniques for arrearages include adding the arrearages 

back into the loan and reamortizing the loan when eligible for modification. The purpose of this 

strategy is to give homeowners more time to get back on their feet. Allowing for the payment of 

arrearages would shorten the amount of time the strategy could help the homeowner. However, if 

such payment is needed in order to effectuate a successful mortgage modification, it may be 

allowed. 

Our intake of prospective clients will begin at the local level. We will work with local housing 

counselors and units of local government with housing departments experienced in administering 

the State Housing Initiatives Partnership (SHIP) program, the federal HOME Investment 

Partnerships Program and Community Development Block Grant Program, especially in areas 

where there is a lack of counseling infrastructure, to facilitate the intake process. All 67 Florida 

counties and 53 cities participate in the SHIP program, which has provided funding to support 

local housing strategies since 1992. 1

 These local governments have housing departments 

experienced in administering a variety of housing strategies under the SHIP program, including 

downpayment assistance and foreclosure prevention. Administration of these strategies includes 

application intake, income qualification and loan closing activities, and most of these local 

governments work closely with local housing counseling agencies to ensure that those who are 

being assisted receive necessary support for homeownership. 

Housing counselors and units of local government that perform housing counseling services will 

be used to make the determination whether the prospective client is eligible to receive the 

Mortgage Intervention Strategy funding. The Mortgage Intervention Strategy detailed here will 

not be able to help all people, but we believe it is critical that this strategy should offer those who 

seek help assistance in determining the best course of action for their situations. For some 

homeowners, the best strategy may be a short sale or a deed-in-lieu of foreclosure. Florida 

Housing would like to ensure that, when a homeowner seeks assistance through one of the 

participating agencies, all viable options will be made available to them provided that funds 

received from Treasury through the Hardest Hit Fund will only be used to support counseling 

relating to HAMP, the Mortgage Innovation Strategy, another making Home Affordable 

Initiative or another TARP funded modification program. The Mortgage Intervention Strategy is 

                                                           

1 Due to serious budget constraints, the Florida Legislature provided extremely limited funding for this program last year and 

none this year.
one additional tool that can be offered by counselors to assist homeowners if their situation 

meets program requirements. 

If the local housing counseling agency believes that the homeowner may be eligible for the 

Mortgage Intervention Strategy, the counselor will be required to assemble the following 

information which will be used to make eligibility decisions: 

• Application; 

• Property Deed; 

• Real Estate Tax information (if not escrowed); 

• Homeowner’s Letter of Circumstance; 

• Verification of Circumstances (layoff notice, letter from doctor, receipts, etc.); 

• Client Information Release Authorization Form; 

• Mortgage Verification; 

• Employment / Unemployment Verification; 

• Deposit/Loan Verification; 

• Income Verification (paystubs, checks, income statements); 

• Federal Income Tax Returns (last 3 years); 

• Monthly Statements of Charge Accounts and Loans; 

• Foreclosure Notice (if filed); 

• Homeowner’s Insurance policy, 

• Bankruptcy Information (if applicable); 

• Credit Report; 

• Other Documentation; and 

• Counselor recommendation based on facts provided. 

Before a client may be considered for the Mortgage Intervention Strategy, the homeowner 

must first be screened for eligibility under HAMP. 

HAMP is designed to help financially struggling homeowners avoid foreclosure by modifying 

loans to a level that are affordable for borrowers now and sustainable over the long term. The 

program provides clear and consistent loan modification guidelines that the entire mortgage 

industry can use. 

Borrower eligibility is based on meeting specific criteria including: 

• Borrower has a loan that is being serviced by a HAMP participant or the mortgage 

investor is a HAMP participant. 

• Borrower is delinquent on their mortgage or faces imminent risk of default. 

• Property is occupied as borrower's primary residence. 

• Mortgage was originated on or before January 1, 2009, and unpaid principal balance must 

be no greater than $729,750 for one-unit properties. 

• The borrower has a mortgage payment that is not affordable due to a financial hardship 

that can be documented. 

• The borrower has a monthly mortgage payment greater than 31 percent of gross monthly 

income. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 4 
If the borrower meets the minimum eligibility criteria: 

• Ask the borrower and all co-borrowers about current income, assets and expenses, as well 

as any specific hardship circumstances to determine if they are unable to make the 

mortgage payment. (Servicers may initially accept verbal income and expense 

information. However, borrowers will need to provide verifying documentation before a 

permanent modification is approved.) 

• Determine if the borrower’s front-end debt-to-income (“DTI”) ratio is greater than 31 

percent. If so, apply the standard modification waterfall steps to reduce the borrower’s 

monthly mortgage payment to a point that it represents no more than 31 percent of the 

borrower’s gross monthly income. 

• Apply a Net Present Value (“NPV”) test to determine whether the value of the loan to the 

investor will be greater if the loan is modified (factoring in the government’s incentive 

payments). If the modified loan is not of greater value, the investor and servicer may still 

modify the loan. However, modification in such cases is not required. If the modified 

loan is of greater value, the servicer must offer a HAMP modification to the borrower, 

and, if the borrower accepts the offer, the servicer will put the borrower on a trial 

modification (typically three months) at the new payment level. 

• If the borrower makes all of the required trial payments during the trial period and the 

income and expense information provided by the borrower is determined to be accurate, 

the servicer will execute a permanent modification agreement. 

The local housing counseling agencies will make the determination of eligibility of the client. 

There are certain standard requirements that Florida Housing will require the homeowner to 

satisfy in order to receive funding from the Mortgage Intervention Strategy. These requirements 

include that the mortgage being paid by the Mortgage Intervention Strategy funds is for the 

homeowner’s principal residence and the residence is located in Florida. The maximum income 

level for participation will be 140% of the Area Median Income (AMI). It is anticipated that 

most or all participants in an unemployment / underemployment situation will at the time of 

application be below this income level. Florida Housing intends to take this into account by 

implementing a maximum mortgage amount that will be assisted under this strategy. The 

maximum mortgage amount will vary depending on location of the home. Table 1 provides the 

maximum mortgage amount based on the county where the home is located. 

Housing counselors will be required to take into account the circumstances that brought the 

homeowner to their current situation. The local housing counseling agency will be required to 

document that the homeowner’s current situation is due to suffering a hardship. When making 

this determination, we propose that the local housing counseling agency should consider the 

following examples as circumstances beyond the homeowner’s control which could result in 

financial hardship: 

• Unemployment or underemployment through no fault of the homeowner; 

• Loss, reduction or delay in receipt of federal, state or other government benefits (Social 

Security, Supplemental Security Income, Public Assistance, Government Pensions) or of 

private benefit payments (pensions, annuities, retirement plans); 

• Loss, reduction or delay in receipt of income because of the death or disability of a 

person who contributed to the household income; 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 5 
• Expenses actually incurred related to uninsured damage or costly repairs to the 

mortgaged premises affecting its habitability; 

• Expenses related to death or illness in the homeowner’s household or of family members 

living outside the household which reduce the amount of household income; and 

• Loss of income or substantial increase in total housing expenses because of a divorce 

from a spouse or failure to receive required support. 

The following items should be considered as circumstances not beyond the control of the 

homeowner and may be cause for rejection of the application by the local housing counseling 

agency: 

• Mortgaging of the property for commercial or business purposes; 

• Termination of employment by the homeowner without a necessitous cause or 

termination of the homeowner’s employment by an employer for willful misconduct; 

• The homeowner had sufficient income to pay the mortgage but failed to do so – in this 

regard, if the homeowner’s total housing expense is less than or equal to 31% of 

calculated income, and no reasonable cause for financial hardship is demonstrated by the 

homeowner, then the nonpayment of the mortgage debt will not be considered to be a 

circumstance beyond the homeowner’s control; and 

• The homeowner’s financial hardship was a result of money mismanagement or an over 

extension of credit to the homeowner – in this regard, debts incurred or expenditures 

made by the homeowner for nonnecessities, prior or during the financial hardship, which 

exceeded the homeowner’s ability to pay, will be considered evidence of poor financial 

management. 

Other items the local housing counseling agency should consider when determining program 

eligibility include: 

• Whether the borrower’s home is currently underwater, meaning how much is owed on the 

mortgage(s) compared to the current value of the house; 

• If the borrower was to gain better employment, would they be able to qualify for a 

mortgage modification (if necessary) based on the current value of the home? There will 

be some circumstances in which the home value is currently too low. 

• Did the homeowner earn enough wages at the time of the original mortgage closing to 

cover the mortgage payments? If not, what is the probability that the homeowner will be 

able to earn enough to do so in the near future; and 

• Was the original mortgage amount within program guidelines? 

Once the local housing counseling agency determines eligibility, the agency will either send or 

upload the required data points to Florida Housing in standardized Excel format. A web-based 

tracking system will reserve the amount necessary for the payment of up to nine months of 

mortgage payments from the correct funding pool based on borrower location. Florida Housing 

may decide to utilize an Escrow Agent for the disbursement of mortgage payments for the 

borrowers served under this strategy. 

The funds used by homeowners under this strategy will be in the form of a zero-percent interest, 

forgivable loan with a term up to 78 months. Once the homeowner resumes making mortgage 

payments, which are anticipated to start at or before month 18, the loan will be forgiven 20 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 6 
percent at the end of each 12 month period. The effect will be up to 18 months of payments 

made by Florida Housing and the servicer or investor and 20 percent being forgiven at the end of 

each of the remaining 5 years as long as the borrower remains current on their first mortgage and 

continues to live in the house as their principal residence. If the homeowner sells the home 

during any part of the 78 month term, the remaining principal balance will be due to Florida 

Housing and recycled back into the program. If there is not enough equity in the home to repay 

the entire amount due, Florida Housing may forgive a portion or all of the remaining principal 

balance so as to not create additional hardships on the seller at closing. 

This loan will be evidenced by a Note and Mortgage. The local housing counseling agency or 

unit of local government will facilitate the closing of the mortgage and have the proper staff on 

hand to witness and notarize the closing documents. When the closing package is finalized, the 

local housing counseling agency or unit of local government will forward the documents to 

Florida Housing for further processing, including recordation of the Mortgage with the 

appropriate authorities. 

At each mortgage payment, the local housing counseling agency or unit of local government 

must determine that the homeowner still needs the mortgage intervention funds. The local 

housing counseling agency or unit of local government must verify that the homeowner is still 

unemployed or underemployed by checking unemployment records or other appropriate 

documentation. Also, the local housing counseling agency or unit of local government must 

verify the steps the homeowner has taken to find a job or earn more income. 

Once the homeowner has regained substantive employment, funds may be made available for 

either a principal write-down or a second mortgage lien reduction. Florida Housing intends to 

provide an average amount (maximum amounts will depend on location of the home as listed in 

Table 1) of $25,000 for a principal write-down, a second mortgage lien reduction or a 

combination of the two. 

To receive a principal write down, Florida Housing will only consider the amount necessary to 

make a modification possible. Florida Housing and the other hardest hit HFAs are currently in 

negotiations with mortgage investors and lenders to provide matching funds for these 

homeowners. The average amount, which can vary depending on area the home is located, 

supplied by Florida Housing will be approximately $25,000. 

If the homeowner has subordinate liens that are impeding a successful first mortgage 

modification, Florida Housing will consider offering a subordinate lien reduction in an amount 

which will help facilitate successful modification but not to exceed an average amount, again 

which may vary due to location, of $25,000. Florida Housing will only offer these funds if the 

subordinate lien holder(s) is willing to take the amount supplied by Florida Housing, plus any 

other funds that can be used to pay down the subordinate liens, to extinguish the debt to allow 

the first mortgage to be modified. If the subordinate lien holder is unwilling to extinguish the 

debt, Florida Housing’s funds will not be offered. 

Both the principal write-down and the subordinate lien reduction payments will be added to the 

original recorded mortgage under the same terms. Florida Housing will again have the local 

housing counseling agency or unit of local government facilitate the additional signatures 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 7 
Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 8 

necessary by having the proper staff on hand to witness and notarize the modification documents 

of the original recorded mortgage. When the modification package is finalized, the local housing 

counseling agency or unit of local government will forward the documents to Florida Housing 

for further processing, including recordation of the modification documents with the appropriate 

authorities. 

While the homeowners are in the first year of the program, they will be required to regularly 

meet with their housing counselor. After stabilization, Florida Housing will be making annual 

residency verifications to ensure continued principal residence status and will also be checking 

with their mortgage company to verify payment history during the previous 12 month period. 

These additional points of contact will help determine the effectiveness of the program. 

B. Population Served and Allocation Methodology

To determine geographic targeting for Hardest-Hit funding, Florida Housing carried out an 

analysis of data, relying on data similar to that used by Treasury to allocate funding, to determine 

the hardest hit areas of the state. We evaluated three measures across all 67 Florida counties – 

Housing Price Decline from peak prices, Unemployment Rate and Seriously Delinquent 

mortgage loans – and then combined ratios for each to create an allocation methodology that will 

guide how funding is geographically targeted. Table 2 provides this information, as explained 

below. 

Housing Price Decline is a measure of the change in housing prices over a period of time. 

Florida’s methodology reflects the percentage of price decline from the peak single family 

housing price, whenever that occurred in each county. Housing prices in Florida peaked as early 

as the first quarter of 2006 and as late as the second quarter of 2007. The Housing Price Decline 

ratio developed for each county shows the relationship of each county's decline compared to the 

largest price decline in any county (in this case, Lee County). The table provides additional 

notes on the data source and how the data were used for this purpose. 

The Unemployment Rate shows the proportion of workers who are without employment over a 

certain period. Florida’s methodology uses the average annual 2009 rate for each county.2

 To 

get a ratio for each county, we compared the county rate to the average 2009 statewide rate of 

10.5% and then multiplied by two (2). The doubling of this ratio increases the weight of 

unemployment in the methodology, which Florida believes is important in light of the state’s 

proposed strategy to focus on unemployed homeowners. The table provides additional notes on 

the source of data and how the data were used. 

Seriously Delinquent Loans equal all active loans in a county that are 90+ days past due or are in 

foreclosure.3

 Using January 2010 data, we arrived at the Seriously Delinquent ratio by dividing 

the proportion of all loans in a county that were seriously delinquent by the proportion of 

                                                           

2

 Florida evaluated whether to use a more current one-month unemployment rate or the 2009 annualized rate. The annualized 

rate was chosen because this 12-month rate averages any large losses or gains due to big business closings, seasonal fluctuations 

and other short term impacts. 

3 This does not include REO properties. 
seriously delinquent loans across the state (18%). This ratio is meant to compare the percentage 

of active loans that were past due, rather than the gross number of overdue loans in a county. 

The data cover all seriously delinquent loans, not just those for homesteaded properties. Florida 

Housing did evaluate loan delinquency data that categorized active loan borrowers into primary 

homes, second homes, non-owner (investment) homes and unknown borrowers, with the hope of 

basing our allocation solely on primary home loans that were seriously delinquent. However, 

disaggregating the loan data provided very low numbers (and sometimes no information) for 

each borrower category in the smaller counties. Thus, Florida Housing decided that the primary 

home data alone could not be relied on to be accurate for allocation purposes. Because of 

concerns that some counties would receive higher allocations mainly due to high counts of 

delinquent investment properties, we evaluated this information, particularly for the counties that 

have a higher share of the seriously delinquent problem, as shown in Table 2. The analysis 

showed that there is minimal impact to the allocation from non-primary home property 

delinquencies. 

Once Florida Housing arrived at ratios for Housing Price Decline, Unemployment Rate and 

Seriously Delinquent Loans, we added the three ratios together. Then we multiplied the number 

of seriously delinquent loans in each county by the sum of the three ratios to create a weighted 

number of loans. Finally, we divided each county’s weighted number of loans by the state 

weighted loan total to get a final weighted percentage for each county. 

Once Florida Housing makes final program decisions, we will use this methodology to allocate 

program funding across all three strategies. Note that funding may not be allocated strictly based 

on the final weighted percentages in the allocation table, as Florida Housing will evaluate 

existing local infrastructure and capacity as part of its final decision. In addition, a portion of the 

funding is likely to be provided in a funding pool as a first come, first served allocation, perhaps 

for the smaller or rural areas of the state, to ensure that the funding is getting out timely. 

Estimated Number of Households that the Mortgage Intervention Strategy will Target

The $ 380 million allocation (excluding administrative expenses) to the Mortgage Intervention 

Strategy is anticipated to be disbursed over a five year period. Florida Housing anticipates that 

this strategy will be able to serve approximately 1,500 to 2,500 homeowners a year for a total of 

7,500 to 12,500 homeowners over the five year period. 

Timeline for Deployment of Funds for Mortgage Intervention Strategy

Pre-Award Request Board approval for the issuance of solicitations for Housing Counseling 

Agencies and Units of Local Governments as program participants, Compliance 

Monitoring Servicers and other professionals as necessary. 

Start Date Grant Agreement executed 

Month 1 Issue solicitation for Local Housing Counseling Agencies / Units of Local 

Government 

Hold public workshop(s) 

Month 3 Complete scoring for Local Housing Counseling Agencies / Units of Local 

Government solicitation 

Issue solicitation for Compliance Monitoring Servicer 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 9 
Month 4 Begin Pilot Program 

Month 5 Complete scoring for Compliance Monitoring Servicer solicitation 

Month 6 Complete Pilot Program 

Month 7 Begin to close loans with eligible homeowners 

Month 8 Begin quarterly reporting to Treasury on program 

Month 12 Begin monitoring of Local Housing Counseling Agencies / Units of Local 

Government (ongoing through life of program) 

Month 24 First borrowers to receive all 18 months of mortgage assistance payments, 

possibly the start of adding principal write-down / subordinate lien reduction 

payments (this could occur sooner as employment is gained) 

Ongoing Conduct annual residency verifications 

Implementation Obstacles

There are several implementation obstacles that will extend the time it will take for Florida 

Housing to deploy the HFA Hardest Hit Funds. 

Florida Administrative Procedure Act: Florida Housing is an agency for purposes of the 

Administrative Procedure Act, Chapter 120, Florida Statutes. Sec. 120.54(1)(a), Florida Statutes, 

reads “Rulemaking is not a matter of agency discretion. Each agency statement defined as a rule 

by s. 120.52 shall be adopted by the rulemaking procedure provided by this section as soon as 

feasible and practicable”. This would appear to require Florida Housing to promulgate rules to 

allocate or expend the HFA Hardest Hit funds. 

This mandatory rulemaking process, from the first required notice of rule development through 

filing for adoption, takes 60-120 days. Any affected party may challenge a proposed rule; the 

rulemaking process is halted as a matter of law upon filing of a petition challenging the rule. 

The rule challenge process adds a minimum of 60 days to the rulemaking process. If the 

challenge is successful, the process must begin again. 

Competitive Solicitation/Bid Protest Process: An alternative to the rulemaking process 

described above is to employ a Request for Proposal (RFP) or other competitive solicitation 

process to allocate funds. Florida Housing is seeking a legislative clarification that it has 

statutory authority to allocate federal funds that have no corresponding program in Florida 

Statutes by RFP or other competitive solicitation. The Legislature should act on this proposal by 

April 30, 2010, the end of Florida’s legislative session. 

Due to notice requirements, it typically takes 60 days or more to publish and receive responses. 

Any potential respondent may protest the terms of the RFP within 10 days after publication. 

Such protests are expedited, but typically add at least another 60 days to the process. Once 

responses are received, about 30 days after publication, absent a protest, unsuccessful 

respondents may challenge the selection for awards. As with a protest of the terms, award 

protests typically add a minimum of 60 days to the process. See sec. 120.57(3), Florida Statutes, 

regarding the bid protest process. 

SAFE Act Licensing Requirements: The Secure and Fair Enforcement for Mortgage Licensing 

(“SAFE”) Act of 2008 imposed more stringent licensing requirements on loan originators. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 10 
Florida Statutes, at sec. 494.00115, exempt inter alia, any state, county, or municipal 

government; or any quasi-governmental agency; and those acting solely under contract and as an 

agent for federal, state, or municipal agencies for the purpose of servicing mortgage loans. In 

January, 2010, by letter to Thomas Cardwell, Commissioner of the Florida Office of Financial 

Regulation, the U.S. Department of Housing and Urban Development advised that to the extent 

that Florida’s exemptions apply to individual employees of otherwise exempt entities, the 

“exemption may differ from the SAFE Act and HUD’s proposed rule when such employees are 

engaged in the business of loan originator”. Florida Housing has operated its first time 

homebuyer education, consumer credit counseling, and more recently its foreclosure mitigation 

counseling under the National Foreclosure Mitigation Counseling (NFMC) program through a 

network of not-for-profit entities around Florida. As provided above, the individual counselors 

have not heretofore been required to be licensed mortgage brokers or loan originators. The 

ultimate decision by HUD to require strict adherence to the SAFE Act licensing requirements for 

those employed by or under contract with Florida Housing who provide mortgage foreclosure 

counseling services could result in delay while those individuals go through the licensing 

process, and loss of capacity (and concomitant delay) where individuals choose not become 

licensed to perform those services. 

Leveraging of Resources

As part of our strategies, Florida Housing plans on leveraging both lender and servicer resources 

along with state resources when implementing this HFA Hardest Hit Fund Proposal. For the 

Mortgage Intervention Strategy, Florida Housing intends to work with lenders and servicers to 

provide matching monthly mortgage payments on behalf of qualified borrowers. Only lenders 

and servicers willing to make this matching payment will be allowed to work with the program. 

C: Demonstration of Capacity to Implement 

As the state’s housing finance agency, Florida Housing has a long, proven track record of 

efficiently providing financing to a range of development organizations to provide different types 

of housing. Florida Housing administers the state’s largest federal and state affordable housing 

programs. We work in partnership with a variety of entities to provide affordable housing to 

Floridians: 

• Providing mortgage financing along with downpayment assistance through participating 

private lenders; 

• Providing funding to homeownership counseling agencies to support their activities; 

• Providing training to lenders and Realtors to ensure that homebuyers have access to 

lenders and real estate professionals who are knowledgeable about the state’s affordable 

housing programs; 

• Providing financing to small and large developers, both non-profit and for-profit, to build 

and redevelop rental and homeowner housing to meet a variety of needs; and 

• Administering state funding to 120 local governments to carry out locally determined 

housing strategies. 

These activities require Florida Housing to have knowledge of and carry out hundreds of tasks to 

provide financing and compliance monitoring across the platform of varied programs that we 

administer. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 11 
Florida Housing is a state HFA intermediary for the NFMC Program. The initial funding for the 

NFMC program was provided by Congress in the fiscal year 2008 Consolidated Appropriations 

Act. Additional funding was provided through the Housing and Economic Recovery Act 

(HERA) of 2008 and the Omnibus Appropriations Act of 2009. The NFMC program is 

administered through a competitive application process by NeighborWorks® America, within 

guidelines defined by Congressional legislation. NeighborWorks® America is an independent, 

congressionally chartered non-profit organization based in Washington, DC, with a mission to 

provide access to sustainable homeownership and safe, affordable rental housing. 

In the first round of funding (2008), Florida Housing received $1,015,389 of the $4.8 million in 

total funding Florida received. This grant allowed Florida Housing to serve as an intermediary 

for 19 local housing counseling agencies that provided foreclosure prevention and intervention 

services to more than 2,500 homeowners in 2008 and 1,000 more during 2009. 

 

A second round of funding was made available in mid-2008 and Florida Housing was awarded 

$2,294,700 of the $9.5 million Florida received. These funds were used to increase the number 

of counseling providers from 19 to 26, which resulted in housing counselors serving more than 

8,000 families. 

As part of the funding Florida Housing received through the second round of the NFMC 

program, Florida Housing and Florida Legal Services received an award of $1.5 million to 

provide legal assistance to more than 2,700 homeowners at risk of foreclosure. 

A third round of funding was made available in 2009. Florida Housing awarded $1,805,370 of 

the $3.78 million Florida received. These funds were provided to 32 sub-grantees and are 

anticipated to serve more than 6,500 families statewide. 

Florida Housing applied for a fourth round of NFMC funding in February 2010 and expects to 

receive notification from NeighborWorks regarding the possibility of funding mid-April 2010. 

Florida Housing has managed the FTHB Program for many years and has long-term 

relationships with participating lenders and real estate professionals statewide. Florida Housing 

has the experience required to manage this program across a number of arenas, including: 

• Management of the single family indenture, including bond structure and sales, financial 

soundness, loan securitization, arbitrage rebate analysis, cash flows to meet the 

requirements of the indenture, rating agency requirements and management of contracts 

for professionals outside of Florida Housing needed to operate the indenture; 

• Organization and tracking of mortgage flow in the program via pipeline management; 

working with lending partners and servicers to clear conditions on mortgage files; and 

monitoring administrators/servicers for compliance with state, federal and programmatic 

regulations and requirements; 

• Monitoring documentation and loan files for the downpayment assistance programs, 

including maintenance of a database to track applications and funding status, and 

carrying out liaison duties to oversee the approval and tracking process for new 

participating lender applications; 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 12 
• Maintaining a current database of HUD- and SHIP-approved Homebuyer Counseling 

Agencies throughout the state that are approved by Florida Housing to provide such 

counseling; 

• Maintaining a database of mortgage insurance providers participating in FTHB program, 

their ratings and any developments that would impact their ability to write coverage for 

program borrowers; and 

• Maintaining constant communication with participating lenders and Realtors. 

Florida Housing’s FTHB program has supplied over $2 billion in first mortgage assistance to 

over 16,800 households since inception. We have the allocation and capacity to issue an 

additional $1 billion of tax-exempt mortgage revenue bonds for first mortgages. With an 

average FTHB Program first mortgage loan amount currently at $100,539, we have the resources 

and a lender base sufficient to remove in excess of 10,700 homes from the existing housing stock 

in the targeted counties. 

Key Staff for the HFA Hardest Hit Fund 

Barbara Goltz, Chief Financial Officer

Barbara E. Goltz has held the position of Chief Financial Officer of Florida Housing since 

September 2000. Prior to accepting her position at Florida Housing, Ms. Goltz was a senior 

manager for the Florida Lottery from 1987 until 2000. She also held senior management 

positions with the Department of Education from 1975-1987. Ms. Goltz is a Certified Public 

Accountant and received a Bachelor of Science degree in Accounting from Florida State 

University. 

David Westcott, Director of Homeownership Programs 

David Westcott became Director of Homeownership Programs at Florida Housing in October 

2005. In this capacity, he oversees the First Time Homebuyer Program, the Down Payment 

Assistance Program, the Homeownership Pool Program, the HOME Again Disaster Recovery 

Loan Program, the Community Land Trust Program, and the Community Workforce Housing 

Innovation Pilot Program. Prior to his appointment as Director, he served as Florida Housing’s 

Multifamily Mortgage Revenue Bonds Program Administrator for four years and was 

responsible for administering all aspects of that program. Before that, he practiced real property 

and administrative law in both the public and private sectors. Mr. Westcott received his BS in 

Political Science in 1988 and his JD in 1991 from Florida State University. As a member of the 

Senior Management team, Mr. Westcott is responsible for the shaping, development and 

management of all Homeownership Program initiatives in coordination with other Florida 

Housing programs; providing information and support to the legislative and executive branches 

of government as well as local governments; and consulting with and directing activities of 

counsel, underwriters, environmental consultants and other parties as necessary. 

Nicole Gibson, Homeownership Programs Administrator 

Nicole Gibson is the Homeownership Programs Administrator at Florida Housing Finance 

Corporation. Ms. Gibson has been with Florida Housing for seven years and is responsible for 

the day-to-day administration of various homeownership programs, including the 

Homeownership Pool Program, HOME Again, the Community Workforce Housing Innovation 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 13 
Pilot Program and Community Land Trusts. Additionally, she is responsible for the 

administration of the Florida Housing’s ongoing National Foreclosure Mitigation Counseling 

grant. Ms. Gibson received a BA degree in Business Administration and Accounting from 

Flagler College and her MBA at Florida State University. She has been recognized by HUD as a 

Certified HOME Program Specialist – Regulations. 

Diane Carr, Servicing Administrator

Ms. Carr has been employed by Florida Housing for ten years and has acted as the liaison with 

HUD for most of those years. As the primary HUD contact, Ms. Carr monitors activities with 

HUD, works with Florida Housing staff to ensure the accurate and timely maintenance of HUD’s 

reporting system and monitors all HUD resources, commitments and spending for all 

departments within Florida Housing. Ms. Carr’s work experience includes 18 years of banking 

and eight years in real estate sales. Ms. Carr will supervise loan servicing activities and will also 

carry out Quality Assurance activities. Ms. Carr has a BS degree in Accounting and Finance 

from Florida State University. 

Laura J. Cox, Director of Asset Management and Guarantee Fund

Before joining Florida Housing Finance Corporation in July 2002, Ms. Cox practiced real estate, 

corporate, transactional and financial services regulatory law. Her practice included advising 

financial institutions on a broad spectrum of matters from governance and regulatory compliance 

to issues arising in the ordinary course of business. She has also previously held management 

positions in the banking industry, most recently as Chief Operating Officer and Chief Financial 

Officer. Ms. Cox earned her MBA (Banking) degree in 1988 and her JD degree in 1999 from 

Nova Southeastern University. She will be responsible for general management and oversight of 

compliance monitoring activities to ensure compliance with federal laws and regulations. 

Robin Grantham, Compliance Monitoring Administrator

Ms. Grantham joined Florida Housing in April 1996 and currently serves as Compliance 

Monitoring Administrator, responsible for directing all activities of the Compliance Department. 

She is a Certified Occupancy Specialist. Ms. Grantham’s experience includes over four years in 

several of Florida Housing’s program areas, and eight years in the Florida Housing General 

Counsel’s Office as Contracts Administrator. Her day-to-day activities include the supervision 

and coordination of compliance monitoring activities for programs, including Multifamily 

Mortgage Revenue Bonds, State Apartment Incentive Loans, HOME, HUD Risk Sharing and the 

Davis-Bacon Act. 

Stephanie Sgouros, Inspector General

Ms. Sgouros has been at Florida Housing since 2000, and has over 20 years experience as an 

auditor. She previously worked at the Florida Office of the Comptroller (now the Chief 

Financial Officer) where she developed audit/review programs and conducted and supervised 

compliance, performance and operational audits, drafted reports and made recommendations to 

improve state operations. Prior to that, she worked for the Florida Office of the Auditor General 

where her duties included assisting in audits of various federal financial assistance programs, 

such as JTPA, EDWAA and VR. Ms. Sgouros received her BS degree in Accounting from 

Florida State University in 1987 and her CPA certification in 1991. Ms. Sgouros currently 

manages Florida Housing’s Office of Internal Audit, which monitors Florida Housing’s risks, 

internal controls, procedures and accounting and operational practices. The Internal Audit Office 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 14 
is independent, reporting organizationally to the Board and day-to-day to the Executive Director. 

Ms. Sgouros oversees various financial, operational, performance and compliance audits/reviews 

of Florida Housing’s operations and programs, both state and federal, including HOME and Low 

Income Housing Tax Credits. She also conducts investigations of internal and external 

complaints of fraud, abuse, waste, etc. 

Sheila A. O’Kane, Systems Auditor

Ms. O’Kane has been at Florida Housing since 2000, and has over 20 years experience as an 

auditor. She performs operational, performance, compliance and financial audits/reviews of 

various state and federal programs, such as HOME, and investigates internally and externally 

generated complaints. She previously worked at the Florida Office of the Comptroller where she 

developed audit/review programs and conducted compliance, performance and operational 

audits, drafted reports and made recommendations to improve state operations. Prior to that, Ms. 

O’Kane worked for the Office of the Auditor General where she performed Information 

Technology audits of federally funded programs. Ms. O’Kane received her BS degree in 

Accounting from Florida State University in 1987 and her Certified Information Systems Auditor 

certification in 1995. 

Compliance Infrastructure

Florida Housing outsources many of our current monitoring requirements to third parties. We 

anticipate that our current monitoring contracts will not encompass the new programs designed 

for the HFA Hardest Hit Fund, but we have the necessary technical expertise to design and 

implement new contracts for the Compliance Monitoring of the HFA Hardest Hit Fund 

requirements. Additionally, Florida Housing has an internal Quality Assurance Review Program 

that routinely determines whether contracted servicers perform complete, accurate and timely 

work consistent with the terms of each contract, including the stated scope of work. All servicers 

are subject to a Quality Assurance Review (QA Review) for all areas of servicing. The scope 

and frequency of the QA Reviews are risk-based, as determined from time to time by Florida 

Housing through an analysis of the loan programs offered. During each QA Review, 

inconsistencies, deficiencies and discrepancies identified are reported to Florida Housing’s 

senior management. 

Audit and Internal Controls and Fraud Risk Mitigation

Policies, procedures and internal controls required to implement the HFA Hardest Hit Fund will 

be modeled on processes that are already in place and operating as intended. The HFA Hardest 

Hit Fund will be added to our Office of Internal Audit’s work plan and Internal Audit Risk 

Assessment. Florida Housing’s Office of Internal Audit will review our partners’ oversight 

activities, including related working papers, internal controls, etc., for sufficiency. 

Reporting Protocols

Florida Housing will begin establishing reporting protocols based on existing requirements. For 

the Mortgage Intervention Strategy, Florida Housing already receives 45 different data points for 

reporting under the NFMC program including demographic information, mortgage information 

including lender, monthly PITI and additional lien information. For participants in the Mortgage 

Intervention Strategy, Florida Housing intends to supplement data captured at homeowner 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 15 
closeout, including mortgage modification information or other resolution, types of counseling 

received and any other pertinent data to help assess program and participant success. 

Metrics Regarding Efficacy

Florida Housing has met or exceeded all of its statutorily mandated performance targets for the 

programs we administer every year since the targets were implemented in 1998. Current metrics 

and goals of Florida Housing include: 

Goal: To maximize the capacity of local governments and the private sector, both for profit and 

nonprofit, to develop and preserve affordable housing. 

Objective 1: To maximize targeted dollars that are allocated to the targeted population. 

Outcome 1: Percent of statutorily targeted dollars that are allocated to the targeted population. 

Objective 2: To maximize leveraging of state recourses. 

Outcome 2: Ratio of non-state resources to state-appropriated dollars. 

Objective 3: To maximize the percentage of set-aside units at designated percentages of median 

income to total units. 

Outcome 3: Percent of units exceeding statutory set asides. 

D: Staffing and Business Partners 

Key Outside Relationships for the Mortgage Intervention Strategy

Florida Housing intends to issue at least two solicitations for services to implement the Mortgage 

Intervention Strategy. The first solicitation will be for contracting with the local housing 

counseling agencies and units of local government. We would look for agencies that have 

demonstrated experience in delivering housing counseling activities, capacity to add the 

Mortgage Intervention Strategy to their current delivery system and a plan to reach out to the 

homeowners in their local community. The Mortgage Intervention Strategy relies heavily on the 

work of these partners to provide intake and screening of eligible applicants, to walk the 

homeowners through the program and provide guidance and education. Also, these agencies will 

work with the homeowners to help modify their current mortgage. Florida Housing anticipates 

using a fee-for-service structure for implementation of this program. Fee arrangements have not 

been secured, but using the NFMC program as a guide, Florida Housing believes the following 

services and corresponding fees to be appropriate for the delivery of the program: 

• Client intake - $100 per homeowner 

• Determination if homeowner meets program requirements and loan closing - $200 per 

homeowner 

• Monthly case management - $75 per month per homeowner 

• Successful outcome / mortgage modification - $250 per outcome 

• Program related support for entities that perform all case management duties - $1,200 per 

entity per month 

• Program related support for entities that perform limited case management duties - $600 

per entity per month 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 16 
The second solicitation will be for Compliance Monitors. Florida Housing has successfully 

negotiated Compliance Monitoring contracts with organizations across the state for a number of 

years. It is anticipated that our current Compliance Monitoring contracts will not cover the 

monitoring requirements of the Mortgage Intervention Strategy. Again, fee arrangements have 

not been finalized, but based on our past experience in contracts for Compliance Monitors, the 

following fees are considered to be appropriate for the monitoring requirements: 

• Desk Review – $75 per file reviewed 

• On-Site Review – $1,500 flat fee plus $75 per file reviewed 

A possible third solicitation may be necessary. Florida Housing may decide to use an Escrow 

Agent or Trustee to facilitate the homeowner mortgage payments to each lender on a monthly 

basis depending on the final program payment system selected.

We will be providing training to our local housing counseling agencies and units of local 

government participating in this program. The first round of training will encompass the specific 

details and program metrics that the local housing counseling agencies and units of local 

government will need to consider when evaluating each homeowner. We will also need to train 

on the reporting requirements and ongoing case management requirements of the program. After 

this immediate training need is met, Florida Housing intends to supply ongoing training related 

to the current foreclosure crisis. 

Florida Housing currently has a Foreclosure Prevention Training Services contract with a 

nationally recognized NeighborWorks® trainer, the Mortgage and Credit Center. Under this 

contract, we have provided both classroom-based and web-based training. The web-based 

training has proven to be beneficial because it allows more housing counselors to access the 

trainings at no cost. Some of the previous training included topics such as “Using the Decision 

Tree as a Counseling Intake Tool”, “The Role of Counselors in Foreclosure Counseling” and 

“Update to Making Home Affordable”. In 2010, our trainer will add video podcasts, available at 

any time, as a new way to enhance outreach to our subgrantees. 

Under this current contract the fee schedule is as follows: 

Webinars - $2,800 per webinar 

Three-day in-person workshops - $15,970 per workshop 

Video Podcast - $2,500 per podcast 

To support Florida’s affordable housing delivery system, Florida’s Affordable Housing Catalyst 

Program provides training and technical assistance to non-profit organizations, local 

governments and other community based organizations on all aspects of federal and state 

housing programs. In the past, the array of workshops has included topics such as homebuyer 

education, understanding the income qualification process, program administration, acquiring 

foreclosure affected properties for affordable housing, preserving existing affordable units and 

foreclosure mitigation. For this initiative, Florida Housing will work with the state’s Catalyst 

Program provider, the non-profit Florida Housing Coalition, to develop a set of workshops 

targeted directly at providing training and technical assistance to providers of related services on 

topics pertinent to the HFA Hardest Hit Program. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 17 
Founded in 1982, the Florida Housing Coalition is a nonprofit, statewide membership 

organization whose mission is to act as a catalyst to affordable housing. The Florida Housing 

Coalition has seven offices throughout Florida and a technical assistance staff of seven. The 

Coalition is currently under contract with Florida Housing for Catalyst as well as two other 

programs, and provides technical assistance through a contract with the Florida Department of 

Community Affairs on the Neighborhood Stabilization Program. The Coalition also carries out 

technical assistance on housing matters through other partnerships. 

Under the current contract the fee schedule is as follows: 

New One Day Workshop (statewide) $9,600 (drops to $7,825 after first occurrence) 

New Two Day Workshop $12,975 (drops to $10,400 after first occurrence) 

Clinic 1-day (regional small group) $7,100 

Clinic 2-day $4,828 

E. Administrative Expenses 

Program Duration (years) 5 

 

One-time / Start-Up Expenses: 

Initial Personnel $17,000

Building, Equipment, Technology $0

Professional Services $300,000

Travel $50,000

Website Development /Translation $22,500

 Subtotal $389,500

 

Operating / Administrative Expenses: 

Salaries for 3.55 Direct FTE and 8.15 Indirect FTE $7,470,000

Professional Services (Legal, Compliance, Audit, Monitoring) $1,700,000

Travel $200,000

Buildings, Leases & Equipment $680,000

Information Technology & Communications $260,500

Office Supplies/Postage and Delivery/Subscriptions $51,000

Risk Management / Insurance $90,000

Training $1,243,800

Marketing / PR $54,000

Miscellaneous Operational Overhead $630,000

Key Business Partners On-Going $7,950,000

 Subtotal $20,329,300

 

 Transaction Expenses: 

Recording Fees $766,000 

 Units Served 10,000 

 Cost/Unit $75 

Contingency for Recording Fees $16,000 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 18 
Decision Costs $2,046,000 

 Units Served 10,000 

 Cost/Unit $200 

Contingency for Decision Costs $46,000 

Wire Transfer Fees $50,000 

 Units Served 5,000 

 Cost/Unit $10 

File Intake $3,069,000 

 Units Served 30,000 

 Cost/Unit $100 

Contingency for File Intake $69,000 

Successful File $11,764,000 

 Units Served 10,000 

 Cost/Unit $1,150 

Contingency for Successful File $264,000 

 Subtotal $17,695,000

 

 Grand Total $38,413,800

 

% of Total Award 9.19%

Award Amount $418,000,000 

Average Annual Expenses $7,682,760 

F. Overview of Risk Management / Fraud Prevention 

Florida Housing intends to comply with all requirements under Emergency Economic 

Stabilization Act of 2008 (EESA) including but not limited to, allowing full compliance and 

oversight by the Treasury, the Comptroller General of the United States, Government 

Accountability Office, Congressional Oversight Panel and the Special Inspector General of the 

Troubled Asset Relief Program as to the application of any EESA funds. All books, 

communications and records regarding the use of EESA funds by Florida Housing will be made 

available for review by any of these entities upon request. 

Compliance Monitoring by Florida Housing Finance Corporation for the Mortgage Intervention 

Strategy

Florida Housing outsources much of the participant eligibility verification and compliance 

monitoring required for programs that it administers to third parties with long-standing 

relationships with Florida Housing. Florida Housing’s compliance monitors will perform 

periodic on-site and desktop reviews of Service Providers. These reviews will include, but not 

be limited to: 

a. Review of written procedures regarding all program processes, including intake and 

screening; 

b. Review of service providers’ record keeping including tracing a sample of reported 

items to supporting documentation and vice versa; 

c. Review of client files to determine that sufficient documentation is included; 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 19 
d. Verification of homeowner eligibility, including verification of income or lack 

thereof; 

e. Verification of home purchase price limits; 

f. Verification that individual mortgages do not exceed the maximum allowable amount 

for the county; 

g. Verification that mortgage expenditures do not exceed the stated required payments; 

h. Verification of whether the applicant was ever able to afford the home in question; 

i. Recalculation of 

i. current loan-to-value; 

ii. level of consumer debt; 

iii. number of months in arrears; and 

iv. any other items to help determine whether sustainable homeownership is a 

realistic goal for the applicant; and 

j. Determination that award limits were not exceeded. 

Florida Housing Servicer Oversight for the Mortgage Intervention, Strategy. Florida Housing’s 

Quality Assurance Review Program routinely determines whether contracted servicers perform 

complete, accurate and timely work consistent with the terms of each contract, including the 

stated scope of work. All servicers are subject to a QA Review for all areas of servicing. The 

scope and frequency of the QA Reviews are risk-based, as determined from time to time by 

Florida Housing through an analysis of the loan programs offered. During each QA Review, 

inconsistencies, deficiencies and discrepancies identified are reported to Florida Housing’s 

senior management. In addition, all servicers may be audited or reviewed by Florida Housing’s 

Internal Audit (IA) office. These audits/reviews may be triggered by a request from Florida 

Housing staff or its servicer(s), a QA report or finding, an anonymous complaint or IA’s own 

risk assessment. These reviews of contracted service providers will include, but not be limited 

to: 

a. Periodic reviews of contracted service providers to ensure compliance with all 

contract terms and Program requirements. 

b. Review of all compliance monitoring reports issued by its contracted service 

providers. Florida Housing will take appropriate action whenever warranted, such as 

scheduling a follow-up review or technical assistance, or suspending or terminating 

the reviewed party. 

c. Performing analytical procedures to assist in detecting fraud, abuse, waste, 

irregularities and areas of risk. 

d. Florida Housing will use a risk-based approach in planning reviews. 

e. Florida Housing’s Office of Internal Audit may perform an audit or review of any 

contracted service provider or other party at any time at Florida Housing’s discretion. 

Internal Audit Plan for the HFA Hardest Hit Fund

Policies, procedures and internal controls required to implement the HFA Hardest Hit Fund will 

be modeled on processes that are already in place and operating as intended. IA will review our 

partners’ oversight activities, including related working papers, internal controls, procedures, 

checklists, etc., for sufficiency. IA’s Inspector General and/or staff will carry out the following 

steps for the HFA Hardest Hit Fund: 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 20 
• Evaluate policies, procedures and internal controls for compliance with program 

requirements; 

• Identify any internal control weaknesses that may result in fraud, waste, abuse or loss of 

funds or other assets and recommend improvements and/or compensating controls; 

• Test, analyze and/or perform other appropriate procedures to ensure proper accountability 

and transparency for the funds disbursed to assess: 

o Timely expenditure of funds; 

o Quality expenditure of funds; 

o Budget/cost compliance; 

o Adequate tracking of funds received by partners; 

o Adequate documentation of expenditures by partners; 

o Adequate procedures and documentation of client eligibility, housing eligibility 

and determination of downpayment assistance/subsidy limits by partners; 

o Legal compliance; and 

o Fraud prevention strategies; 

• Evaluate each partner’s compliance with applicable laws, rules, regulations and contract 

provisions; 

• Notify senior management and/or the Florida Housing Board of Directors of any risky 

management practices, missing or ineffective internal controls, instances of noncompliance with program requirements or ineffective or inefficient practices related to 

the HFA Hardest Hit Fund; and 

• Investigate complaints of alleged fraud, abuse and waste in the allocation and use of the 

HFA Hardest Hit Fund funds both by Florida Housing and its partners. 

G. Tracking / Reporting 

Florida Housing intends to monitor and evaluate the following metrics: 

• Proportion of HFA Hardest Hit funds used by program strategy per quarter compared to 

program goals; 

• Number of service providers participating in the program including legal service 

providers, local governments, counseling providers and lenders; 

• Clients served by program strategy per quarter compared to program goals; 

• Foreclosures avoided by strategy; and 

• Homes purchased by first time homebuyers. 

Florida Housing uses Great Plains software for financial accounting which offers the ability to 

track funding sources, export data and provide ad hoc reporting. Florida Housing contracts with 

an independent audit firm to carry out annual audits of the financial statements. The independent 

auditor opines on the financial statements; internal control over financial reporting and on 

compliance and other matters; and compliance and internal control applicable to each major 

federal award program. Florida Housing will maintain a separate budget for the HFA Hardest 

Hit Fund program, and all Treasury funds provided to implement this plan will be used solely to 

fund the HFA Hardest Hit Fund program and related expenses. Florida Housing adheres to 

OMB A-133 audit requirements, OMB Circular A-102 state government administrative 

requirements, and OMB Circular A-87 cost principles for governmental entities. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 21 
Florida Housing proposes to submit the following reports to Treasury on a quarterly basis or as 

requested: 

• Demographic information on all clients served by the HFA Hardest Hit Fund; 

• Status and final outcomes of clients served by the Mortgage Intervention Strategy; 

• Quarterly progress reports comparing performance to program goals; 

• Quarterly expenditure reports for the use of the HFA Hardest Hit funds detailing 

expenses for each strategy and program administration; and 

• Other ad hoc reports as requested. 

Tracking Systems for the Mortgage Intervention Strategy

Qualification and intake data will be entered into existing third-party service provider systems 

(CounselorMax, Home Counselor Online or other compatible system) already in service by the 

local housing counseling agencies. The data will be exported in a standardized Excel format and 

submitted to Florida Housing monthly via a web-based upload interface. The data will then be 

compiled and stored in a relational database for reporting purposes. 

Florida Housing will collect detailed demographic information on all clients served at time of 

intake. In addition, program milestones such as loan closing, employment verification and final 

outcome will be tracked and reported through a web-based interface. Table 3 provides a data 

dictionary of proposed homeowner data elements to be captured for the Mortgage Intervention 

Strategy. 

Loan closing, employment verification and final outcome data will be captured via a web-based 

interface to be created by Florida Housing. Local housing counseling agencies and units of local 

government will authenticate and input data as processing events occur. 

H. Overview of Risk Management/Fraud Prevention 

1. Business Partner Selection – Describe the selection process including: 

a. What are the criteria for the selection? 

Florida Housing intends to use its competitive solicitation process to select its 

business partners. 

b. Who will review/approve selection? 

Florida Housing’s Executive Director will establish a review committee composed 

only of employees of Florida Housing to evaluate responses to the competitive 

solicitation. The review committee will provide findings, recommendations, or both 

to Florida Housing’s Board of Directors. 

c. What due diligence will be performed, and by whom? 

The Quality Assurance section will perform periodic review of Florida Housing’s 

business partners to determine whether work performed is in accordance with the 

terms of each contract, as stated in the scope of work. Any findings will be followed 

up on by the Quality Assurance staff. Any serious findings or concerns or complaints 

will be handled by Florida Housing’s Internal Audit Office. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 22 
d. What are the risks identified for the business process(es) performed by the 

business partners? 

Risks include but are not limited to: poorly designed or implemented process flows; 

employee(s) lacking necessary knowledge/skills; lack of capacity; duties not properly 

segregated. 

 

e. What are the identified potential conflicts of interest for each business partner? 

How will these risks be mitigated? Who will evaluate the mitigation and perform 

on-going monitoring? 

Potential conflicts of interest include but are not limited to: business partner employee 

may also work for a competitor; or be related to a contractor or their employee; or 

steer clients toward programs/products that are not as beneficial to the client. 

Mitigating controls include but are not limited to: business partner’s employees are 

limited to an agreed upon client caseload; business partner’s employees sign a 

statement that clients will not be referred to a competitor or other program/product if 

it is not in the client’s best interest; business partner certifies that its employees will 

not be allowed to serve/approve any relatives to receive funds under this program; 

business partners will be provided with appropriate checklists and training as 

necessary. 

Florida Housing’s monitoring agents will monitor and evaluate the service providers 

(such as counseling agencies). The Quality Assurance section will perform periodic 

reviews of Florida Housing’s monitoring agents. If severe deficiencies and/or 

discrepancies are noted or suspected by either the monitoring agents or Quality 

Assurance staff, Florida Housing’s Internal Audit will perform appropriate 

procedures. 

2. Program Compliance – Describe the compliance approach and methodology 

including: 

a. What are the criteria and associated data elements to be used? 

Internal Audit will evaluate policies, procedures and internal controls for compliance 

with program requirements. Data elements would include but is not limited to: loan 

file/client files that should include income verified with pay stubs, income statements; 

credit report exist, homeowners’ insurance policy; unemployment compensation 

documentation. 

b. What is the method that will be employed (e.g. random sampling, reperformance, on-site reviews)? 

Florida Housing’s Internal Audit will use a risk based methodology to select business 

partners for Florida Housing’s monitoring agents to review either on-site or remotely. 

Internal Audit will use a combination of random and judgmental sampling in selecting 

the client files for the monitoring agents to review. 

c. What is the frequency of each method? 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 23 
Internal Audit and Quality Assurance will conduct up to 10 reviews a year of business 

partners (including monitoring agents) either on-site or remotely. Florida Housing’s 

monitoring agents will perform a minimum of one review for each business partner 

that served at least one client during the first year. Subsequent review frequencies will 

be risk-based and determined partly by the number of clients served and the number 

and severity of any previous review findings. 

d. Who will perform compliance monitoring for adherence to program guidelines? 

Florida Housing will issue a competitive solicitation and contract with several 

organizations across the state for compliance monitoring. Such organizations may 

likely include organizations that currently perform compliance monitoring duties for 

other Florida Housing programs. 

e. If compliance is outsourced, how will it be monitored? Describe metrics and 

associated data elements as well as methods (e.g., random sampling, reperformance). 

The Quality Assurance section will perform periodic review of Florida Housing’s 

monitoring agents and any other business partners handling compliance to determine 

whether work performed is in accordance with the terms of each contract, as stated in 

the scope of work, and therefore in compliance with the Program. Quality Assurance 

will conduct up to 10 reviews a year of business partners (including monitoring 

agents) either on-site or remotely. Reviews will be scheduled using a risk-based 

methodology. Quality Assurance staff reviews will include the examination of a 

random sample of back-up documentation for the monitoring agents’ review reports as 

well as their procedures and processes. If severe deficiencies and/or discrepancies are 

noted or suspected by the Quality Assurance staff or Program staff or if any 

whistleblower or public complaints are received, Florida Housing’s Internal Audit will 

perform appropriate procedures. 

3. Readiness Assessments – Describe the process the eligible entity will take to ensure 

that it can successfully implement the program, handle the capacity, and monitor the 

program including: 

a. What independent party will perform the assessment? 

b. What criteria will be used to assess people, processes and technology? 

c. How ill outsourcing arrangements be assessed? 

d. When will the assessment be started and completed? 

e. How will the assessment timeline impact the program launch? 

Florida Housing proposes conducting our readiness assessment via a pilot program. 

We propose to implement the Mortgage Intervention Strategy in Lee County, Florida. 

Florida Housing focused in on an area that would have a good number of eligible 

recipients for the Mortgage Intervention Strategy. Lee County has experienced the 

largest housing price decline from peak in Florida at 49.7%. Twenty-two percent of 

all loans in Lee County are considered seriously delinquent while the average annual 

unemployment rate for 2009 stood at 12.4%. 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 24 
Based on our working template for the methodology for allocating funds to impacted 

areas in Florida, Lee County is slated to receive approximately $23 million of 

Florida’s HFA Hardest Hit Funds for the Mortgage Intervention Strategy. 

We anticipate that this pilot program will last for about 60 – 90 days prior to the 

statewide implementation of the program. It is not anticipated that the entire $23 

million allocation to Lee County will be encumbered during this pilot program. We 

will start the pilot as per the Program Inception described in the Term Sheet. It is 

anticipated that it will take two months to issue and process the necessary RFQ for 

Housing Counseling Agencies. Florida Housing anticipates that the RFQ will be 

finalized, scored and presented to the Board of Directors at the end of July 2010. 

We will be working with the identified counseling agencies that service Lee County to 

have the contracts signed and ready as soon as possible. We will also need to provide 

training to the identified counseling agencies on the mechanics of the program 

including client intake, HAMP eligibility screening, determination requirements and 

reporting requirements of the program. It is expected that this process will start 

shortly after the contracts are signed. The pilot program is anticipated to be functional 

by September 1, 2010. 

Based on this pilot program, Florida Housing will be able to identify and address any 

potential problems that could occur when implementing this program. We will be able 

to gauge potential statewide demand for the program based on the demand 

experienced in Lee County. Also, we may be able to better predict the capacity 

needed of our counseling agencies when the program is launched statewide and assess 

areas where additional capacity may be needed based on results achieved in Lee 

County. Also, we may identify and provide additional opportunities for training based 

on the outcomes experienced in Lee County. 

4. On-going Internal Controls – Describe the process the eligible entity will take to 

ensure effectiveness of its on-going internal controls? 

a. What independent party will perform the assessment? 

In addition to any review of the program performed by Florida Housing’s External 

Auditors, Florida Housing’s Internal Audit Office will review processes, procedures, 

contracts and general internal controls over the program to determine program 

compliance. 

b. What criteria/methods will be used to ensure the effectiveness of the entity’s 

internal controls including but not limited to: monitoring outsourced 

relationships; expenses; allocation of monies, repayments (if applicable); books 

and records; compliance? 

Florida Housing’s monitoring agents, Quality Assurance section and, where needed, 

Internal Audit office will monitor outsourced relationships. Florida Housing’s 

program staff will review all compliance (and any other) reports issued by the 

monitoring agents, and Quality Assurance and Internal Audit staff. Such reviews will 

Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 25 
Florida Housing Finance Corporation – HFA Hardest Hit Fund Proposal Page 26 

include a review of expense and allocation documentation, the business partner’s 

books and records and their compliance with the program. 

In addition, Florida Housing’s program and accounting staff will review all expenses 

submitted for reimbursement, and any repayments, if required. Furthermore, Florida 

Housing’s financial records related to the program will be audited by its external 

auditors each year. 

c. How will outsourcing arrangements’ internal controls be assessed? 

Florida Housing’s monitoring agents will review business partners’ process 

procedures, their files and filing system and their books and records for sufficiency.