HHF North Carolina Date: August 18, 2017

SERVICE SCHEDULE B-1

North Carolina Housing Finance Agency’s

Mortgage Payment Program (MPP-1) 

Summary Guidelines

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

mitigation programs, NCHFA proposes to use a majority of our 

HFA Hardest Hit Funds (HHF) to create the Mortgage 

Payment Program (MPP-1). 

This program will provide loans to unemployed homeowners 

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

unable to make their mortgage payments and are in danger of 

losing their homes to foreclosure. 

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

homeowner dues) for eligible homeowners. 

2. Program Goals To assist 10,372 homeowners. The following types of assistance 

will be provided:

Job Search or Short-term Assistance

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

experienced a temporary reduction in income.

Job Training or Long-term Assistance

To help homeowners while they complete a job 

training/education program to help secure a new job including 

veterans who are honorably or medically discharged from the 

military.

Reinstatement Only or One-time Assistance

To help homeowners who can resume future payments but need 

help to bring their mortgage current.

3. Target Population/ 

Areas

Homeowners who are unemployed, underemployed, suffered 

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

payments but need help bringing their mortgage current. 

This Program will be available in all North Carolina counties.

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

$ 207,430,765
B-1-2

5. Borrower Eligibility 

Criteria

Homeowners who are unemployed, underemployed, or have 

suffered another eligible temporary hardship, who, through no 

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

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

to provide a financial hardship affidavit with appropriate 

documentation on the cause of their hardship, per program 

guidelines.

Homeowners who are delinquent because of a prior job loss or 

other program eligible hardship but who can resume future 

payments without additional assistance. 

Satisfactory mortgage payment history.

All principal, interest, taxes, homeowner insurance, mortgage 

insurance, homeowner association dues, and the cost of 

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

income. 

Borrowers must meet program underwriting criteria. 

Eligibility for program assistance will be determined primarily 

by participating foreclosure prevention partners. 

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

basis.

6. Property/Loan 

Eligibility Criteria

Existing single-family homes, duplexes or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower.

North Carolina owner-occupied, primary residences only.

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

 

Manufactured homes not considered real property.

Non-legal U.S. resident.

8. Structure of 

Assistance

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

subordinate loan. A forgiveness clause will reduce the loan 

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

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

be considered satisfied, and NCHFA will release the lien 

securing the note.
B-1-3

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

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

owner occupied (unless otherwise prohibited under applicable 

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

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

refinanced and has not increased in equity to the degree 

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

remaining unpaid after the proceeds are applied will be 

forgiven. 

NCHFA will agree to subordinate the MPP-1 Loan for 

borrowers who refinance their mortgage(s) to receive more 

favorable loan terms. If a borrower refinances their loan to 

consolidate debt or receives cash out, the borrower would be 

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

All deferred, subordinate mortgages will be evidenced by a 

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

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

9. Per Household 

Assistance 

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

Effective for all loans closed after January 31, 2012:

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

months per household. 

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

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

Up to 18 months for those in a job search.

11. Estimated Number of 

Participating 

Households

10,372 homeowners. 

Estimated number served based on average loan amount of 

$20,000 per homeowner.

12. Program Inception/ 

Duration

Program began October 18, 2010. Recaptured funds shall be 

recycled and used in the program in accordance with the 

Agreement.

13. Program Interactions 

with Other Programs 

(e.g. other HFA 

programs)

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

needed and appropriate. For example, a borrower can receive 

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

receive Second Mortgage Refinance Program or Modification 

Enabling Pilot Program assistance once they can resume future
B-1-4

payments without additional assistance. Homeowners who 

continue to struggle with unaffordable mortgage payments may 

be eligible to participate in the Principal Reduction Recast/Lien 

Extinguishment for Unaffordable Mortgages Program. 

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

participating in multiple HHF programs.

14. Program Interactions 

with HAMP

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

months of assistance available through the new Home 

Affordable Unemployment Program (UP), which began August 

1, 2010. 

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

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

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

qualify for assistance under the new UP because they are more 

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

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

homeowners).

Finally, borrowers can receive HAMP assistance prior to or 

after receiving Hardest Hit Fund assistance. For example, a 

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

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

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

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

borrower who has received a permanent loan modification if the 

borrower has a need.

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

to receive a loan modification from HAMP, if needed and 

eligible.

15. Program Leverage 

with Other Financial 

Resources

None
B-2-1

SERVICE SCHEDULE B-2

North Carolina Housing Finance Agency’s

Mortgage Payment Program (MPP-2) 

Summary Guidelines

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

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

unemployed or substantially underemployed homeowners who, 

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

their mortgage payments and are in danger of losing their homes 

to foreclosure. 

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

mortgage insurance and homeowner association dues), including 

subordinate mortgage loans, until the homeowner secures 

employment or completes training for a new career. 

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

assistance will be provided:

Job Search or Short-term Assistance

To help homeowners while they look for a new job.

Job Training or Long-term Assistance

To help homeowners while they complete a job 

training/education program to help secure a new job.

Reinstatement Only or One-time Assistance

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

to bring their mortgage current due to arrearages accumulated

during a period of unemployment.

3. Target 

Population/Areas

Homeowners who are unemployed, or substantially 

underemployed, and/or reemployed but need help bringing their 

mortgage current.

 

This Program will be available in all North Carolina counties.

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

$ 277,381,786

5. Borrower Eligibility 

Criteria

Unemployed or substantially underemployed homeowners who, 

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

payments and are at risk of a foreclosure. Homeowners will be 
B-2-2

required to provide a financial hardship affidavit with 

appropriate documentation of unemployment, per program 

guidelines. 

Homeowners who are delinquent due to arrearages accumulated 

during a period of unemployment but who can resume future 

payments without additional assistance. 

Satisfactory mortgage payment history.

All principal, interest, taxes, homeowner insurance, mortgage 

insurance, homeowner association dues, and the cost of 

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

income. 

Borrowers must meet program underwriting criteria.

Eligibility for program assistance will be determined primarily 

by participating foreclosure prevention partners. 

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

basis.

6. Property/Loan 

Eligibility Criteria

Existing single-family homes, duplexes or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower. 

North Carolina owner-occupied, primary residences only.

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

 

Manufactured homes not considered real property.

Non-legal U.S. resident.

8. Structure of 

Assistance

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

forgivable, subordinate loan. A forgiveness clause will reduce 

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

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

note will be considered satisfied, and NCHFA will release the 

lien securing the note.

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

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

owner-occupied (unless otherwise prohibited under applicable 

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

borrower from a sale or refinance. If the property is sold or 
B-2-3

refinanced and has not increased in equity to the degree 

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

loan remaining after the proceeds are applied will be forgiven. 

NCHFA will agree to subordinate the MPP-2 Loan for 

borrowers who refinance their mortgage(s) to receive more 

favorable loan terms. If a borrower refinances their loan to 

consolidate debt or receives cash out, the borrower would be 

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

All deferred, subordinate mortgages will be evidenced by a 

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

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

9. Per Household 

Assistance

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

borrower.

Effective for all loans closed after January 31, 2012:

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

per household. 

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

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

Up to 18 months for those in a job search.

11. Estimated Number of 

Participating

Households

13,869 homeowners.

Estimated number served based on average loan amount of 

$20,000 per homeowner.

12. Program Inception/ 

Duration

Program began November 7, 2011. Recaptured funds shall be 

recycled and used in the program in accordance with the 

Agreement.

13. Program Interaction 

with Other HFA 

Programs

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

needed and appropriate. For example, a borrower can receive 

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

Second Mortgage Refinance Program or Modification Enabling 

Pilot Program assistance once they secure a new job.

Homeowners who continue to struggle with unaffordable 

mortgage payments may be eligible to participate in the

Principal Reduction Recast/Lien Extinguishment for

Unaffordable Mortgages Program. 

Maximum total assistance amount per household is $75,000 if 
B-2-4

participating in multiple HHF programs.

14. Program Interaction 

with HAMP

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

months of assistance available through the new Home 

Affordable Unemployment Program (UP), which began in 

August, 2010. 

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

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

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

qualify for assistance under the new UP because they are more 

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

currently receiving unemployment (i.e. self-employed 

homeowners).

Finally, borrowers can receive HAMP assistance prior to or 

after receiving Hardest Hit Fund assistance. For example, a 

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

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

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

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

borrower who has received a permanent loan modification if the 

borrower has a need.

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

to receive a loan modification from HAMP, if needed and 

eligible.

15. Program Leverage 

with Other Financial 

Resources

None
B-3-1

SERVICE SCHEDULE B-3

North Carolina Housing Finance Agency’s

Second Mortgage Refinance Program (SMRP) 

Summary Guidelines

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

borrowers have a second mortgage. Homeowners are frequently 

unable to make their second mortgage payment and are in 

danger of losing their homes to foreclosure. 

The Second Mortgage Refinance Program (SMRP) will 

benefit homeowners with second mortgages who, through no 

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

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

program-eligible hardship. 

This program will provide a more affordable housing expense 

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

2. Program Goals To assist 260 homeowners facing foreclosure in all 100 North 

Carolina counties.

The goal of this program is to extinguish the existing second 

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

deferred-payment subordinate loan. This will reduce the 

borrower’s monthly mortgage payment and in some instances 

may expedite movement of a qualified applicant into a HAMP 

first mortgage modification process. 

3. Target Population/ 

Areas

Our target population will be homeowners facing foreclosure in 

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

whereby the total mortgage payment is causing the home to be 

unaffordable under program guidelines. 

4. Program Allocation 

(Excluding 

Administrative 

Expenses)

$ 5,960,000

5. Borrower Eligibility 

Criteria

Eligible homeowners must be those facing foreclosure due to 

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

other demonstrated financial hardships. Homeowners will be 

required to provide a financial hardship affidavit with 

appropriate documentation on the cause of the hardship.

Satisfactory mortgage payment history. 
B-3-2

All principal, interest, taxes, homeowner insurance, mortgage 

insurance, homeowner association dues, and the cost of 

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

income.

Extinguishment of second loan with SMRP will only occur if 

the first mortgage loan is current.

Borrowers must meet program underwriting criteria. 

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

basis.

6. Property/Loan 

Eligibility Criteria

Existing single-family homes, duplexes or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower.

North Carolina owner-occupied, primary residences only. 

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

Manufactured homes not considered real property.

Second Mortgage Refinance will not be available to a 

homeowner that is eligible or participating in 2MP. 

Non-legal U.S. resident.

8. Structure of Assistance 30 year, 0%-interest, non-recourse, deferred-payment 

subordinate loan. 

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

refinanced or no longer owner-occupied (unless otherwise 

prohibited under applicable federal law). Loans are repayable 

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

the property is sold or refinanced and has not increased in 

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

of the loan remaining unpaid after the proceeds are applied will 

be forgiven. 

NCHFA will agree to subordinate the SMRP Loan for 

borrowers who refinance their mortgage(s) to receive more 

favorable loan terms. If a borrower receives cash out with a 

refinance, the borrower would be required to repay the SMRP 
B-3-3

Loan according to the loan terms.

All deferred subordinate mortgages will be evidenced by a 

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

Any funds returned according to established program guidelines 

will be recaptured and used to assist additional homeowners in 

accordance with the Agreement.

 

9. Per Household 

Assistance 

Under this program, eligible borrowers may receive up to 

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

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

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

willing to take the amount supplied to extinguish the debt 

without a deficiency judgment. 

The average loan amount is expected to be $22,900 per borrower. 

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

11. Estimated Number of 

Participating 

Households

260 homeowners. 

12. Program Inception/ 

Duration

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

recycled and used in the program in accordance with the 

Agreement.

 

13. Program Interactions 

with Other Programs 

(e.g. other HFA 

programs)

Homeowners who participate in the Mortgage Payment 

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

borrower has the ability to resume first mortgage payment yet 

second mortgage payment remains unaffordable. Eligible 

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

SMRP. Homeowners struggling with unaffordable mortgage 

payments may be eligible to participate in the Principal 

Reduction Recast/Lien Extinguishment for Unaffordable 

Mortgages Program and SMRP program to achieve an 

affordable mortgage payment.

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

participating in multiple HHF programs.

14. Program Interactions 

with HAMP

Extinguishing the second mortgage may expedite movement of 

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

15. Program Leverage 

with Other Financial 

Resources

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

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

willing to take the amount supplied to extinguish the debt 

without a deficiency judgment.
B-5-1

SERVICE SCHEDULE B-4

North Carolina Housing Finance Agency's

Modification Enabling Pilot Program (MEP) 

Summary Guidelines 

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

administered by the North Carolina Housing Finance Agency 

(“NCHFA”) in partnership with National Community Capital 

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

designed to provide directed assistance to eligible borrowers 

under the NCC ReStart Program with the intent to 

permanently modify and reduce the borrower’s loan amount 

to an affordable level to achieve a monthly total housing 

payment that does not exceed 35% of the borrower’s 

monthly income. Borrowers meeting the eligibility 

requirements described in Section 5 below may be eligible 

for MEP assistance through the NCC ReStart Program. 

Eligible loan pools under this MEP Pilot Program include 

loans in North Carolina sold under the Department of 

Housing and Urban Development’s (“HUD”) Distressed 

Asset Stabilization Program (“DASP”) and other loan sales 

that are purchased by NCC. 

The NCHFA agreement with the NCC ReStart Program will 

be used to enable and facilitate permanent modifications by 

advancing a forgivable loan to eligible borrowers in an 

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

to occur immediately. MEP funding may not be used to 

reduce the principal balance of an eligible borrower’s 

mortgage loan below 100% of the current market value of 

the property. However, the NCC ReStart Program may 

reduce the principal amount of an eligible borrower’s 

mortgage loan below 100% of the property’s current market 

value to achieve a permanently modified mortgage loan as 

long as it uses its own capital and not MEP funding. As the 

funding formula for the maximum amount MEP assistance 

expressly states a floor of 100% of the property’s current 

market value the MEP assures that its assistance is limited to 

funding principal reduction for eligible borrowers only down 

to 100% of the property’s current market value. 

Consistent with the terms of MEP, the NCC ReStart Program 

may permanently modify and reduce the existing first 

mortgage loan to an amount whose net present value does 

not exceed the lesser of: 
B-5-2

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

value of the property; or 

 A loan amount with a net present value (using a 30 

year amortization at an interest rate equal to 300 basis 

points above the 30 year FHA rate as quoted by 

Wells Fargo Mortgage) that results in a monthly total 

housing payment that does not exceed 35% of the 

borrowers adjusted gross monthly income. 

In order to make the mortgage payments affordable to the 

borrower, the MEP forgivable second mortgage loan will be 

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

modification of the mortgage loan amount to an amount 

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

100% of the current market value as the $36,000 in MEP 

assistance will permit and as long as the reduced mortgage 

loan amount results in a total housing payment not greater 

than 35% of the borrower’s adjusted gross monthly income). 

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

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

capital match, the final amount of MEP assistance will be 

determined by subtracting the Current Market Value of the 

property from borrower’s Unpaid Principal Balance (UPB) 

times 50% or $36,000, whichever is less. 

The structure of the MEP assistance is described in Section 

8. 

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

foreclosure by permanently modifying a borrower’s primary 

mortgage to achieve a monthly total housing payment that 

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

monthly income. 

3. Target 

Population/Areas

The targeted populations are households whose loans NCC is 

able to acquire under the HUD DASP. 

4. Program Allocation 

(Excluding 

Administrative Expenses)

$ 790,000

5. Borrower Eligibility 

Criteria

Eligible Borrowers under MEP must meet the following 

criteria:

 Must be a legal U.S. Citizen or lawful permanent 

resident

 Demonstrate an ability to maintain a financial 

obligation for the home based upon an affordable 
B-5-3

mortgage with a total monthly housing payment equal 

to or less than 35% of their gross monthly income. 

 Must meet the LTV requirements described in this 

Section.

Borrowers with current UPBs equal to or greater than 105% 

of the property’s current market value are eligible for MEP 

assistance if they meet one of the following financial 

hardships and provide a financial hardship affidavit. Eligible 

financial hardships include reduced income due to: 

 Changes in employment

 Medical condition(s) 

 Divorce

 Death 

Borrowers who are unable to document any of these 

financial hardships may be eligible for MEP assistance if 

their current UPB is equal to or greater than 125% of the 

property’s current market value. 

6. Property/Loan 

Eligibility Criteria

 Property must be the borrowers principal residence, 

located in North Carolina and may not be abandoned, 

vacant or condemned. 

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

condominium, a townhome, a manufactured or mobile 

home on foundation permanently affixed to real estate 

owned by the mortgagor, or a 2-4 family dwelling unit of 

which one unit is occupied by the mortgagor as their 

principal residence that is owner-occupied with a UPB 

equal to or less than $300,000.

 Mortgage must be a distressed loan with a UPB that 

equals or exceeds the required percentages described in 

Section 5 above. Market value will be established by a 

FIRREA-compliant appraisal completed by an appraiser 

licensed and in good standing under the North Carolina 

statutes for NCC at the time the appraisal is performed. 

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

the property’s current market value.

Borrowers who are in an active Chapter 7 bankruptcy. 

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

forgivable subordinate loan. A forgiveness clause will 
B-5-4

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

borrower stays in the home after five years. At the end of the 

10 years the note will be considered satisfied and NCHFA 

will release the lien securing the note.

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

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

owner occupied (unless otherwise prohibited under 

applicable federal law). Loans are repayable only from 

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

property is sold or refinanced and has not increased in equity 

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

the loan remaining unpaid after the proceeds are applied will 

be forgiven. 

All deferred subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the 

property.

Any funds returned according to established program 

guidelines will be recaptured and used to assist additional 

homeowners in accordance with the Agreement.

9. Per Household 

Assistance

Under this program, eligible borrowers may receive up to 

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

$18,500.

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

qualified applicants of NCC ReStart Program. 

11. Estimated Number of 

Participating Households

It is anticipated that the MEP will assist 49 households in 

avoiding imminent foreclosures.

12. Program 

Inception/Duration

The program will be available approximately in January 

2014 and is anticipated to run for a two-year period of time. 

Recaptured funds shall be recycled and used in the program 

in accordance with the Agreement.

13. Program Interactions 

with Other Programs (e.g. 

other HFA programs)

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

SMRP in the following manner. At the time NCC assesses 

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

borrower is not eligible for MEP it will then assess whether 

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

assistance. If the borrower is eligible for MPP-1, MPP-2 

and/or SMRP, the application and approval process will be 

completed in the manner prescribed by NCHFA. 

Homeowners who have participated in the Mortgage 
B-5-5

Payment Programs may be eligible to participate in MEP if 

the borrower has become reemployed or secured other 

source(s) of fixed income and has demonstrated a qualifying 

hardship. 

Maximum total assistance amount per household is $75,000 

if participating in multiple HHF programs.

14. Program Interactions 

with HAMP

None.

15. Program Leverage 

with Other Financial 

Resources

As the NCC ReStart Program will reduce the existing first 

mortgage loan in accordance with the MEP there will be a 

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

the NCC ReStart Program will likely fund with private 

capital additional principal reductions for eligible borrowers 

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

to achieve a principal reduction it is expected that the 

leveraged match of private funds to MEP will be closer to 3 

to 1. Lender match amounts shall be documented at the time 

of closing of the modification. 
B-5-6

SERVICE SCHEDULE B-5

North Carolina Housing Finance Agency's

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

Program

Summary Guidelines 

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

Unaffordable Mortgages (PRRLE) will provide eligible 

homeowners a principal reduction and re-amortization (recast)

of the remaining principal balance or a full lien extinguishment. 

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

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

taxes, homeowner insurance, homeowner dues) in conjunction 

with the principal reduction and recast or full lien 

extinguishment. Eligible homeowners may receive no more 

than $50,000 to be applied toward principal reduction and 

recast or to a lien extinguishment. Eligible homeowners with a 

delinquent first mortgage may be brought current up to $36,000 

with PRRLE funds not to exceed total assistance of $75,000. 

The program will provide the homeowner an affordable and 

long term sustainable monthly mortgage expense payment. The 

PRRLE program is available to North Carolina homeowners 

who are financially unable to make their mortgage payments 

due to a qualifying hardship event.

2. Program Goals To assist 883 homeowners facing foreclosure.

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

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

stabilization of neighborhoods and protecting home values of 

surrounding properties. 

This program will provide immediate mortgage payment relief 

and stable long term mortgage or mortgage expense payments 

for the homeowner.

3. Target Population/ 

Areas

Homeowners suffering a program eligible financial hardship, as 

defined in the program guidelines, related to reduction of 

income or other demonstrated financial hardship. 

This Program will be available in all North Carolina counties.

4. Program Allocation 

(Excluding Administrative 

Expenses)

$ 44,136,765

5. Borrower Eligibility 

Criteria

Eligible homeowners must be those with program eligible 

financial hardship due to unemployment, loss of income, 
B-5-7

reduction of income, or other demonstrated financial hardships

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

provide a financial hardship affidavit with appropriate 

documentation on the cause of the hardship.

All eligible homeowners must meet the following criteria:

 Satisfactory mortgage payments prior to job loss, loss of 

income, reduction in income or other program eligible 

hardship. 

 Homeowner has become re-employed or secured a fixed 

income source.

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

 Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues ≤ 36% of gross monthly 

household income.

Homeowners eligible to receive a full lien extinguishment must 

meet these additional following criteria:

 Primary income source for household is from a fixed 

income source as defined in the program guidelines.

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

of the state median income limit in North Carolina.

 Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues ≤ 36% of gross monthly 

household income.

Homeowners eligible to receive a principal reduction and recast

and receiving a fixed income source as primary income must 

meet these additional following criteria:

 Primary income source for household is from a fixed 

income source as defined in the program guidelines.

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

of the state median income limit in North Carolina.

 Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues ≤ 36% of gross monthly 

household income.

Homeowners eligible to receive a principal reduction and recast 

and not receiving a fixed income source as primary income 
B-5-8

must meet these additional following criteria:

 Pre-assistance LTV >80%.

 Post assistance LTV >80%.

 Post assistance LTV may go below 80% only if no more 

than $10,000 is provided toward a principal reduction in 

order to achieve a post assistance housing debt-toincome ratio between 25% and 36%.

 Post assistance monthly housing ratio target is 25% but 

may not exceed 36%.

 Post assistance monthly housing related expenses 

including principal and interest on all liens attached to 

the property, property taxes, homeowners insurance and 

homeowners association dues > 25% of gross monthly 

household income.

Homeowners must meet program underwriting criteria. Funds 

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

6. Property/Loan 

Eligibility Criteria

 Existing single-family homes duplexes, or condominiums 

(attached or detached) including manufactured homes on 

foundations permanently affixed to real estate owned by the 

borrower.

 North Carolina owner-occupied, primary residences only. 

 Homeowners with a fixed rate or adjustable rate mortgage.

 Homeowners with interest-only or negative amortization 

mortgage can qualify if the recast results in a fully 

amortizing loan.

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

Manufactured homes not considered real property.

Non-legal U.S. resident.

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

subordinate loan. A forgiveness clause will reduce the loan 

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

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

be considered satisfied and NCHFA will release the lien 

securing the note.

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

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

owner occupied (unless otherwise prohibited under applicable 

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

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

refinanced and has not increased in equity to the degree 
B-5-9

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

remaining unpaid after the proceeds are applied will be 

forgiven. 

All deferred subordinate mortgages will be evidenced by a 

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

Any funds returned according to established program 

guidelines will be recaptured and used to assist additional 

homeowners in accordance with the Agreement.

9. Per Household 

Assistance 

Under this program, each eligible borrower may receive no 

more than $75,000 structured as a subordinate loan.

Eligible homeowners that have recovered with a fixed income 

may receive no more than $50,000 to be applied toward a 

principal reduction and recast or to a lien extinguishment. In 

addition, a delinquent first mortgage may be brought current 

with up to $36,000 in PRRLE funds.

Eligible homeowners that have recovered through full time 

reemployment may receive no more than $50,000 to be applied 

toward a principal reduction and recast. The principal reduction 

can be no more than $10,000 when the post assistance LTV is 

less than 80%. In addition, a delinquent first mortgage may be 

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

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

borrower. 

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

11. Estimated Number of 

Participating Households

We anticipate approximately 883 homeowners will be helped. 

Program will be piloted with select servicers, NCHFA portfolio 

and existing HHF portfolio. Program may be expanded to other 

servicers if pilot is successful and funds are available. 

12. Program Inception/ 

Duration

The program will be available in July 2015. Recaptured funds 

shall be recycled and used in the program in accordance with 

the Agreement.

13. Program Interactions 

with Other Programs (e.g. 

other HFA programs)

Homeowners who have participated in the Mortgage Payment 

Program (MPP) or the Second Mortgage Refinance Program 

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

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

fixed income and has demonstrated a qualifying hardship. 

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

participating in multiple HHF programs. 
B-5-10

14. Program Interactions 

with HAMP

Lien Extinguishment:

 No HAMP interaction

Principal Reduction and Recast:

 Borrowers suffering a program eligible financial 

hardship after the HAMP modification effective date are 

eligible for PRRLE.

15. Program Leverage 

with Other Financial 

Resources

We will not require investors to match the contributions that are 

made with the Hardest Hit Funds for the Principal Reduction 

Recast/Lien Extinguishment Program. 
B-6-1

SERVICE SCHEDULE B-6

North Carolina Housing Finance Agency’s

Down Payment Assistance (DPA)

Program Summary Guidelines

1. Program

Overview

The Down Payment Assistance (DPA) Program will 

provide an incentive to qualified homebuyers to purchase a 

primary residence in targeted areas in North Carolina. 

Providing incentives to qualified homebuyers in housing 

markets that have been hardest hit by serious delinquency, 

negative equity, distressed sales, and foreclosures will 

strengthen demand in those areas, stabilize housing prices 

and prevent future foreclosures. This program will initially 

be offered as a pilot that includes five North Carolina 

counties.

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

foreclosures by assisting with the stabilization of housing 

prices in targeted areas. NCHFA will identify meaningful 

indicators that will enable them to track and quantify the 

DPA Program’s impact in the targeted areas.

3. Target Population/Areas Targeted areas are the following counties: Johnston, 

Mecklenburg, Guilford, Cumberland, Cabarrus (“Targeted 

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

housing market distress indicators across all 100 North 

Carolina counties—seriously delinquent mortgage loans, 

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

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

Home Advantage Mortgage program. Each Targeted Area 

county contains at least four zip codes that exceeded the 

statewide rate in at least four out of the five distressed 

housing market indicators, and a minimum threshold 

origination volume was achieved in these counties from 

January 1, 2014 through March 31, 2015.

4. Program Allocation 

(Excluding Administrative 

Expenses)

$ 75,000,000
B-6-2

5. Borrower Eligibility 

Criteria

Eligible borrowers must qualify for and meet all

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

an additional requirement of meeting the Mortgage Credit 

Certificate income and sales price limits. Allowable first 

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

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

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

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

Eligible borrowers must also meet the following criteria:

 Must meet income and sales price limits in the 

Mortgage Credit Certificate program, which reflect 

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

area median income (AMI) for borrowers varies 

depending on county and family size, but in no 

instance do the limits exceed 140% of AMI. 

 Must be First-Time Homebuyers. For purposes of 

the DPA Program, a First-Time Homebuyer is 

someone who has not had an ownership interest in 

their primary residence in the past three years, 

unless qualifying under a Veteran’s Exception or 

purchasing a home in a Federally Designated 

Targeted Area as specified in the DPA Program 

Guide.

 Must complete a pre-purchase homebuyer

education course.

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

residents or otherwise meet the applicable Agency

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

Freddie Mac) requirements.

 Borrowers must be able to provide a Dodd-Frank 

affidavit as specified in the DPA Program Guide.

 Borrowers must be credit-worthy and meet 

minimum FICO scores, and have a maximum 

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

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

6. Property/Loan Eligibility 

Criteria

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

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

dwelling unit of which one unit is to be occupied by 

the mortgagor as his or her principal residence.

 Must be the borrower’s primary residence.

 Property must be located in a Targeted Area.

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

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

underwriting guidelines.

 Property must be existing construction, not new 

construction.

 Property must meet the MCC Program purchase price 

limits as established in the DPA Program Guide.

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

Home Advantage Mortgage program eligibility 

requirements as specified in the DPA Program Guide 

or GSE underwriting criteria.

 Dodd-Frank exclusion for having been convicted of a 

mortgage-related felony in the past ten years.
B-6-4

8. Structure of Assistance 5 year, 0% interest, non-recourse, deferred-payment 

forgivable subordinate loan. A forgiveness clause will 

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

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

note will be considered satisfied and NCHFA will release 

the lien securing the note.

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

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

owner occupied (unless otherwise prohibited under 

applicable federal law). Loans are repayable only from 

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

property is sold or refinanced and has not increased in 

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

portion of the loan remaining unpaid after the proceeds are 

applied will be forgiven. 

All deferred subordinate mortgages will be evidenced by a 

promissory note and secured by a deed of trust on the 

property. 

Any funds returned according to established program 

guidelines will be recaptured and used to assist additional 

homeowners in accordance with the Agreement.

9. Per Household Assistance $15,000.00

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

lenders who table fund the loan at closing once it is

determined that all DPA program requirements have

been met.

11. Estimated Number of 

Participating Households

It is anticipated that the DPA Program will assist

approximately 5,000 households.

12. Program

Inception/Duration

The DPA Program will begin in September 2015 and it is

projected that assistance will be expended through as late 

as 2021.
B-6-5

13. Program Interactions 

with Other Programs (e.g. 

other HFA programs)

The DPA Program will take advantage of an existing 

infrastructure of participating lenders who are already

actively originating N.C. Home Advantage Mortgage loans.

If the borrower has received HHF assistance under any

other HHF program, the maximum amount of all

assistance may not exceed $75,000.

Any borrower receiving funds from the DPA Program 

will not be eligible for other down payment assistance 

programs offered by NCHFA.

14. Program Interactions 

with HAMP

None.

15. Program Leverage with 

Other Financial Resources

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

evaluated for the Mortgage Credit Certificate Program 

(MCC) unless the first mortgage associated with the DPA 

is financed with tax-exempt bond proceeds. However, 

they will not be eligible for any other down payment 

assistance offered by NCHFA. 
C-1

 Schedule C

Permitted Administrative Expenses

North Carolina

 

One-time / Start-Up Expenses:

Initial Personnel $216,523.00

Building, Equipment, Technology $101,651.00

Professional Services $3,551.00

Supplies / Miscellaneous $4,764.00

Marketing /Communications

Travel $1,757.00

Website development /Translation

Contingency $0.00

Subtotal $328,246.00

Operating / Administrative 

Expenses:

Salaries $36,755,620.00

Professional Services (Legal, 

Compliance, Audit, Monitoring)

$1,159,050.00

Travel $289,612.00

Buildings, Leases & Equipment $4,149,934.00

Information Technology & 

Communications

$8,405,442.00

Office Supplies/Postage and 

Delivery/Subscriptions

$1,339,710.00

Risk Management/ Insurance $111,017.00

Training $811,466.00

Marketing/PR $3,701,031.00

Miscellaneous $348,403.00

Subtotal $57,071,285.00

Transaction Related Expenses:

Recording Fees $1,293,483.00

Wire Transfer Fees $411,096.00

Counseling Expenses

File Intake 

Decision Costs

Successful File $30,301,111.00
C-2

Key Business Partners On-Going $6,403,027.00

Subtotal $38,408,717.00

Grand Total $95,808,248.00

% of Total Award 13.56%

Award Amount $706,507,564.00