1

THE NEVADA AFFORDABLE HOUSING ASSISTANCE CORPORATION’S 

Nevada’s Hope & Dignity for Homeowners Business Plan 

A response to the U.S. Treasury’s Request 

June 14, 2010 
2

ACKNOWLEDGEMENT

The Nevada Housing Division and the Nevada Affordable Housing Assistance Corporation 

gratefully acknowledge the participation and input we have received from the following in 

formulating this Business Plan: 

• THE CITIZENS OF NEVADA through their written and oral testimony and telephone 

and e-mails

• The Honorable Jim Gibbons, Governor and the Governor’s staff 

• The Director of the Nevada Department of Business & Industry, Dianne Cornwall

and the Director’s staff 

• The Administrator of the Nevada Financial Institutions Division Mr. George Burns

• The Nevada Congressional Delegation including input from: 

1. Senator Harry Reid and his staff 

2. Senator John Ensign and his staff 

3. Congresswoman Dina Titus and her staff 

• Speaker of the Nevada Assembly Barbara Buckley

• The many foreclosure mitigation agencies and counselors

• The national banks serving Nevada including: 

1. Wells Fargo and in particular Mr. Kirk Clausen 

2. Bank of America and in particular Ms. Dottie Sheppick and Ms. Margaret 

Guarino 

3. Citibank 

4. J.P. Morgan Chase 

• The Administrator Chas L. Horsey, III and enlightened and hard working staff of the 

Nevada Housing Division 

This plan is a compendium of inputs and research that we have attempted to incorporate 

into a functional and achievable business plan that can serve the goals and objectives of 

the U.S. Treasury’s Guidance. All errors in this document are solely those of the author. 
3

TABLE OF CONTENTS

 

PAGE #

Section #1: Executive Summary 4-9 

Section #2: Detailed Business Plan 10-35 

 a) Resource Allocations & Target Populations 9-11 

b) 1st Mortgage Principal Reduction Program 11-18 

c) Second Lien Relief Program 19-23 

d) Short-Sale Acceleration Program 24-27 

e) Foreclosure Mitigation Process 28-32 

Section #3: Master Budget & Programs Summary 32-36 

Section #4: Organizational Chart 38

Section #5: Implementation Time Line 39-40 
4

 

SECTION #1: EXECUTIVE SUMMARY

This Business Plan reflects thousands of inputs from more sources than we could 

possibly acknowledge here. Particular attention has been given to direct testimony and 

inputs from the citizens of Nevada who like so many other Americans are suffering 

mightily through the current real estate crises. While it can be said that some families are 

suffering from self-inflicted bad decisions or poor judgments relative to their current real 

estate circumstances, that is absolutely not the case for the majority of Nevada families 

either currently threatened with or enduring the foreclosure process. The overriding 

principal of this Business Plan is to address and to the fullest extent reasonably possible, 

reverse, prevent or help the qualified families stop the foreclosure process and to keep 

them in their homes if they are able to sustain their ownership over the long term. 

Particular attention in this Business Plan has been paid to the unemployed and 

underemployed Nevada families whose economic circumstances are not the result of their 

own making. 

Salient factors in this Business Plan design: 

1. Per Federal Reserve Bank data, Nevada state-wide has 1,120,945 homes; 70-80% 

of those same homes are underwater as of March, 2010 by an average of $30-

$50,000. Those homes purchased during the frenetic 2003-2007 period average 

over $100,000 in being underwater. That translates mathematically into a 

minimum of $23.5billion to a maximum of $44.8billion excess debt relative to 

current home values; 

2. As of March, 2010 the State’s unemployment data for Nevada show that there are 

189,000 workers who are not working/unemployed. In the Las Vegas-Paradise 

Valley SMSA area the unemployment rate is 13.9%. Between 52-61% [varies 

by month] of the unemployed are homeowners threatened with the loss of their 

homes within a short period of time; 

3. In interviews, surveys and round-table discussions with the Nevada Foreclosure 

Mitigation and Judicial Mediation industry, statewide less than 1,000 HAMP loan 

modifications have been effectuated/made it to permanent status through 

February, 2010; additionally there is a very high ‘confusion’ factor amongst 

troubled borrowers seeking help and or assistance, as well as a absolute lack of 

capacity to increase the foreclosure mitigation client through-put; 

4. Data from one major national bank shows that 21% of their HAMP failures in 

Nevada on the NPV testing were for <$10,000—this value exceeded all other of 

the 5-Hardest Hit States participating in the TARP program by more than 50%; 
5

5. In public hearings, multiple national, regional and local economists are predicting 

that Nevada’s unemployment levels will not dip below double digit levels until 

very late 2013 at the earliest; 

6. As many as 60% of the current 2nd liens on Nevada homes are held by State 

charted credit unions or banks, all of those in Clark County/Las Vegas area have 

virtually zero realizable real estate collateral to back those loans currently, with 

rare exception; 

7. Absentee buyers/investors are increasing their share of Las Vegas Valley housing 

market and constituted 45% of the properties sold in February, 2010 per MDA 

DataQuick. 

Basic Business Plan Components:

There are four primary program elements listed below in this summary that comprise the basic 

programs to be enacted through this Business Plan. They are listed in priority order regardless of 

the level of funding associated with them. 

• Mortgage modification with principal reductions and some forbearance. In 

conjunction with our fellow 5-Hardest Hit State’s Housing Finance Agencies, Nevada’s 

HFA and Nevada Affordable Housing Assistance Corporation have all concluded that 

some form of principal reduction program must be a necessary component of its 

Business Plan. Nevada contemplates that the principal reduction component of its 

Business Plan will be in the form of an earned forgiveness loan. Depending upon 

circumstances some forbearance may also be needed in targeted populations for this 

element the Nevada Business Plan. While this program element has been worked on 

diligently by the state’s HFA throughout the planning process and there is a general 

consensus on the basic underwriting and qualification criteria, there still exists 

institutional hurdles. Those hurdles may either delay or truncate a full and broad 

implementation for this programmatic element. Those hurdles revolve around enlisting 

sufficient numbers of participating banks and the Federally Chartered GSEs [Fannie 

Mae, Freddie Mac and Ginnie Mae]. The position Nevada and other states have taken on 

the mortgage modification with principal reduction program is that there must be a 

sharing of the costs related to each loan’s principal reduction. The other states and 

Nevada are looking for a minimum participation by the note holders of 50:50. Nevada is 

targeting a $50,000 maximum principal reduction [shared 50:50 between the TARP 

participant and with the note holding financial institution]. 

There also is a consensus that the principal must be on an ‘earned forgiveness basis’ it 

should be continued through modified homeowner payments over a 2-3 year minimum 

period at the recast mortgage level in order to earn the full and final principal reduction. 

This later element is to provide incentive to a borrower to stay in the home and stay 
6

current, versus flipping the home via sale once the economics are more favorable. The 

details of the underwriting and screening criteria are spelled out in the full description of 

this program element elsewhere in this Business Plan. The Nevada Business Plan calls 

for this Mortgage modification and principal reduction component to constitute the 

majority of the U.S. Treasury program dollars. It is expected that a minimum of 55% 

and a maximum of 60% of the program funds will be expended on this program 

element. It is a target performance indicator that a minimum of 40 families per million 

dollars of expenditures will be assisted with by program element. 

This program element will be both complex and expensive to administer. It is planned 

that the existing foreclosure mitigation industry will be the primary ‘in-take’ screener for 

eligible applicants to this element of the Nevada Business Plan. However, a cadre of 

experienced and well trained loan underwriters on the NAHAC side must be fully 

functional and capable of rapid and sophisticated interfacing with dedicated and 

designated [to the principal reduction program of the state HFAs] banking industry staff 

in carrying out these complex loan modifications, and alterations. The Nevada Affordable 

Housing Assistance Corporation [NAHAC] believes there must be both a judicious, 

careful yet timely expenditure of this large quantity of the U.S. Treasury’s TARP funds 

for this key Business Plan element. 

The expected outcome of this Business Plan program element is to ensure that nearly 

2,500 Nevada families are able to stay in their homes with a permanent change to their 

mortgages which more precisely reflect their true economic circumstances such that the 

chances of foreclosure or re-foreclosure are less than 40%. 

• Second mortgage reduction plan aimed at assisting borrowers who have a second 

lien interfering with either a short-sale or modification of the first mortgage. In 

numerous discussions and conferences with the banking regulators, the in-state banking 

associations as well as individual banks and credit unions of Nevada, it is all too 

apparent that there exists today a major problem with second liens. That problem is best 

summarized by indicating that a program qualified homeowner, with a second lien must 

either have it reduced in a major way or eliminated altogether or they could not hope to 

get a sustainable first mortgage loan modification. This problem is compounded by the 

fact that almost every second lien holder is virtually collateral-less in Nevada. This later 

matter threatens the very financial viability of many important Nevada financial 

institutions, especially the member owned credit unions. 

This Business Plan will allocate up to 20% of is available resources to enter into 

agreements with the primary second lien holder institutions of Nevada to make major 

reductions with lien releases or outright elimination of second liens on a shared basis for 

Business Plan qualified borrowers. Nevada’s Business Plan calls for these reductions to 
7

be in the form of earned forgiveness loans. The Business Plan calls for a maximum of a 

40:60 principal reduction sharing with the lien holder institutions. It has been determined 

that a 40% contribution of TARP funds to the 2nd lien reduction and lien removal or 

elimination is both fair to the borrower and a judicious use of the TARP funds. 

It is also expected that some though not all of the borrowers affected by the 2nd lien 

reduction program element may also qualify for 1st mortgage loan modifications under 

Business Plan element #1 described above. 

The expected outcome of this program element is to assist up to 1,200 families remove 

the impediment of a second lien on their property such that either a refinancing or first 

mortgage modification can be carried out and thus prevent a foreclosure. 

• Foreclosure mitigation capacity building. A near unanimous recommendation from 

borrowers, professionals in the foreclosure mitigation business, HUD officials, as well 

as a unanimous voice from elected officials, is for there to be a material expansion of the 

foreclosure mitigation efforts in Nevada with the TARP funds being made available. As 

such, this Business Plan is following and endorsing those recommendations by 

allocating up to 3.5% of the available TARP funding for this element. The funds 

will be allocated on a performance based set of contracts to HUD certified foreclosure 

counseling agencies with specific data reporting stipulations, screening tools and 

outcome expectations. It will be a primary responsibility of the foreclosure mitigation 

agencies awarded contracts under this element of the Business Plan to broaden their ‘intake’ capacities and to accelerate the preliminary determinations of eligible clients for 

HAMP, HAFA and Business Plan specific programs. All clients screened will have 

their data registered in a web-based data base created specifically for the Business Plan

to track progress and facilitate the flow of secure information. The HOPE Loan Port is 

currently being reviewed to be the systems tracking platform, if budgetarily acceptable. 

Specific borrower records will be scanned and associated files attached to the borrower’s 

secure record so that there will be one record accessible to lenders, program 

underwriters and intake personnel. This program design element should thus avoid the 

‘paper chase’ of missing records, a commonly heard complaint voiced in every hearing 

and roundtable discussion leading up to this Business Plan.

The expected outcome of this program element is measured in two metrics. First and 

foremost will be the number of families successfully entered into and completing a 

HAMP, HAFA or Business Plan program element. Here, it is expected that up to 1 in 9 

applicants screened through a fortified foreclosure mitigation program [up to a 

maximum of 8,815] will result in excess of 1,900 families aided or assisted to keep their 
8

homes and prevent a foreclosure. The second metric for this program element will be the 

actual number of families receiving ‘in-take assistance’. Here, it is expected that an 

average of 2,450 per million expended will receive services from a HUD certified credit 

counselor. 

• Short sale facilitation-aid to the unemployed. It has been pointed out both in hearings 

and round-table discussions held precedent to crafting this Business Plan, the existing 

system for processing short-sales is broken. Clearly, the just released H.A.F.A. program 

may help in a significant way. This Nevada Business Plan program element is designed 

to supplement and provide added impetus to the facilitation of the short-sale problems 

addressed in H.A.F.A. or create new solutions if the H.A.F.A. program proves 

inapplicable for a particular client/candidate. Nevada‘s Business Plan contemplates the 

supplement to the H.A.F.A. program to be in the form of outright direct assistance paid 

to vendors facilitating the short-sale or payments to either lenders or apartment 

facilities. While H.A.F.A. takes a $6,000/case approach to funding up relocation, 

document preparation etc. for eligible clients, the Nevada Business Plan will provide 

up to $8,025 in matching or equal amounts where the federal program’s limits are 

insufficient or in need of supplementation in order to expedite short-sale completion and 

relocation of the affected families to a more affordable circumstance. The Nevada 

Business Plan calls for financial institution incentive payments up to $1,500 or a 

maximum of $500/month for 90 days. This incentive payment to the note holding 

financial institution is designed to expedite the short-sale decision making and 

closing process, in addition to the assistance associated with completing the shortsale and matriculating the family into a rental unit. The Business Plan will be 

allocating up to 11.5% of its TARP funds for this program element.

It is expected that at a $8,025 level of average funding per family assisted with the shortsale program element in the Business Plan up to 1,713 families facing immanent 

foreclosure threat due to unemployment, will have the burden of their home mortgage 

eliminated and the threats of a default judgment removed.

 

The table below summarizes the goals for outcomes associated with the program 

elements embodied in this Business Plan. 
9

TABLE #1-Outcome ratios

Program Element Percentage of Funds Targeted # of Families Assisted/$million funded

Principal Reduction/mortgage 

modification 60% 40.0 

Second Mortgage Reduction 20% 60.6 

Short-sale facilitation 11.5% 166.7 

 

SECTION #2: DETAILED BUSINESS PLAN

GENERAL: As indicated in the Executive Summary above, the Nevada Business Plan 

contemplates four basic programmatic elements fundamental to both the U.S. Treasury’s 

Guidance as well as to the research and economic realities facing Nevada’s real estate 

market at this time-----and into the medium term future periods. In general, it is expected 

that program fiscal outlays will occur over a twenty-four (24) month period in perhaps,

somewhat uneven amounts per quarter. Secondly, Nevada’s Business Plan contemplates 

utilizing both ‘best purchasing and compliance practices’ relative to selecting, funding and 

tracking performances of participating lending institutions, foreclosure mitigation 

institutions as well as administrative services, data processing and general overhead cost 

consumption. It is expected that all borrower/homeowner recipients receiving either first 

mortgage and/or second lien program benefits will receive those benefits directly through 

either escrow account payments or direct banking institutional payments. However, in the 

case of the short-sale assistance recipients—payments will go directly to short-sale escrows 

and to the apartment complexes into which a homeowner will be matriculating. The Nevada 

Business Plan has zero intention of making direct borrower/recipient payments. 

RESOURCE ALLOCATIONS: Like our neighbor state Arizona, Nevada’s has two 

primary population centers and a number of smaller populations scattered in a very wide 

area throughout the rest of the non-urban centers. Therefore, in evaluating how the TARP 

funds are to be allocated under this Business Plan it was determined that we would 

aggregate our funding breakdowns into three primary geographic areas: Greater Las Vegas 

Valley or Clark County; Greater Reno-Sparks MSA; all rural areas including the Capitol 

City Carson City. Further, like the U.S. Treasury’s analysis in determining the original 

allocations to the 5-Hardest Hit States, the Nevada Business Plan will incorporate both the 

levels of foreclosures as well as the levels of unemployment. The table below summarizes 
10

this Business Plan resource breakdown. It should be pointed out that each of the three 

criteria [population, foreclosures, unemployment] are given equal weighting in the 

distribution calculation. 

TABLE #2-Allocation Criteria

Named Area Population* Foreclosures^ Unemployed+ 

 Clark County 

(Las Vegas areas) 

1,952,040 or 71.998% 13,970 or 82.2% 137,500 or 72.59% 

Washoe County 

 (Reno-Sparks areas) 

416,632 or 15.368% 2,055 or 12.1% 30,700 or 16.20% 

Rural Nevada + Capitol 342,534 or 12.634% 975 or 5.7% 21,220 or 11.21% 

Totals = 2,711,206 or 100% 17,000 or 100% 189,420 or 100% 

*Per State of Nevada Demographers Office; ^Per Federal Reserve Data 1/31/10; +Per Nevada Dept. of Employment 

Training and Rehabilitation at February, 2010. 

Based upon equal weighting of the population, foreclosure and unemployed percentages of 

the State’s totals, the resultant weighted average and programmatic dollar distributions are: 

TABLE #3-Budgeted Direct Cost Allocations

NAMED Weighted Avg. Principal 2nd Lien Short-sale Triage/Intake 

AREA % Allocated Reduction Program Relief Program Acceleration Program Process Totals 

 Clark 

County 

75.542% $46,594,306 $15,531,435 $8,930,474 $2,903,079 $73,959,294 

 Washoe 

County 

14.617% $9,015,766 $3,005,255 $1,728,018 $561,731 $14,310,770 

Capitol 

and rural 

Counties 

9.841% $6,069,928 $2,023,310 $1,163,508 $378,214 $9,634,970 

Totals = 100.0% $61.68million $20.56million $11.822million $3.843million $97.905million 
11

Outcomes expected, as a first approximation utilizing the funding allocations above in Table 

#3 combined with the families assisted column ratios shown in Table #1 above should yield 

the following levels of assistance to Nevada families: 

TABLE #4 – Families Assisted

NAMED Principal 2nd Lien Short-sale 

AREA Reduction Program Relief Program Acceleration Program Totals 

 Clark 

County 

1,864 941 1,036 3,841 

 Washoe 

County 

361 182 200 743 

Capitol and 

rural 

Counties 

243 123 135 501 

Totals = 2,468 1,246 1,371 5,085 

Principal Reduction Program Element:

The purpose and intent of the 1st Mortgage Principal Reduction program element is to assist 

the underemployed income restricted homeowner candidates to keep occupancy and 

ownership of their home. The expected target audience is believed to be the pool of 

underemployed families struggling to keep ownership of their home. This program element 

will be carried out through a series of direct partnership arrangements (contracts) with 

mortgage note holding financial institutions. Those same institutions will participate in a 

principal reduction strategy aimed at a dollar for dollar matching of the TARP funds with the 

bank’s internal funds. The goal of principal matching is to reduce the principal outstanding 

on a qualified mortgage sufficient to get the Loan-to-Value level to at least 1.15 or 115%. 

Further, the simultaneous goal is to ensure that the PITI ratio [principal + interest + 

insurance + property taxes] does not exceed 31% of gross family incomes. These twin 

objectives [LTV=<115% and PITI =<31%] represent the primary goals of this program 

element. 

This program may be viewed as a supplement to the newly modified federal H.A.M.P. 

program or on a stand-alone basis for those applicants who may not meet current H.A.M.P. 

guidelines but whose outcomes would meet the underwriting standards of this Business 
12

Plan program element. There will be the utilization of standard H.A.M.P. Net Present Value 

calculation methods the details of which will be shared between the participating financial 

institutions and the NAHAC underwriters. However, if an applicant has a NPV ‘fail’ for less 

than $5,000 then an ‘exceptions’ element will be added to the underwriting process in the 

form of possible added principal reduction from the TARP program, so long as the LTV and 

PITI ratios will be compliant with program underwriting guidelines. 

Phase I-Implementation: The first implementation steps for this program element are the 

parallel activities of completing contracts with participating financial institutions and 

finalizing and formalizing underwriting policies and procedures for use. Additionally, both 

web-based screening criteria and computer tracking and document retention systems must be 

programmed and implemented and participating institutions and underwriting staff trained in 

their correct utilization. 

The finalized underwriting policies and procedures will be drafted and incorporated into the 

loan servicer/participating financial institution contracts as well as the operating manuals to 

be utilized by the NAHAC loan underwriting staff. Following approval of this program 

element by the U.S. Treasury, lawyers will begin writing and negotiating contracts with the 

participating financial institutions. 

A key plank in the correct construction of the principal reduction element of this Business 

Plan will by necessity be a very well defined and controlled communication channel 

between the NAHAC underwriting staff and the financial institution’s actual loan 

modification decision makers. The financial institution’s program contracts will specify 

direct underwriter-to-underwriter communications in order to both facilitate and expedite 

applicant loan modification processes. Defined time frames for document verification, 

calculations and decision making will be defined contractual elements. Without direct 

underwriter-to-underwriter communication and strictly adhered to decision making time 

frames, many of the existing H.A.M.P. program bottlenecks and logjams will be repeated 

and an echo of existing programs’ criticisms will obtain. Therefore, particular attention to 

these program design essentials will be important in the financial institution contracts, initial 

participant training programs and properly drawn operating/underwriting manuals. Systems 

supporting the tracking of each decision node in the loan modification process will be 

necessary design elements. 

Additionally, borrower confidentiality releases, scanned source document records attached 

to the central document repositories will be program operational elements. During the initial 

phases of the principal reduction program, internal auditing procedures will be undertaken to 

test contract decision node/date compliance and process integrity. Violations by either the 

financial institution or internal underwriting staff will be brought to management’s attention 

for corrective action. 
13

Finally, data integrity checks will be undertaken by the program’s outside auditors at 

random 6 month intervals to insure proper data security and redundancy. Auditors will also 

obtain independent title search documents, employment verifications and review mortgage 

loan notes to ensure data input reliability in the independent determination of applicant 

eligibility and calculation of benefits derived. Any violations will invoke standard 

management direct intervention, corrective action and where indicated a potential fraud 

referrals to the Nevada Attorney General’s Fraud Investigation Unit. NAHAC insurance 

policies will be boosted in the areas of employee fraud, D&O liability and general liability 

areas to protect both the Business Plan and NAHAC. 

Phase II-Operations: NAHAC intends to run both a northern and southern Nevada office in 

support of the Business Plan. Due to the overwhelming majority of the Nevada population 

affected by the Business Plan program elements residing in Southern Nevada, the Southern 

Nevada office will maintain a staff approximately 2X as large as the Northern Nevada 

NAHAC office. The Northern Nevada office will be tasked with covering both the northern 

urban county (Washoe) as well as all of northern and rural Nevada from the City of Tonopah 

northward. The Southern Nevada office staff will cover both the urban Clark County area 

(Greater Las Vegas Valley) but also, all of southern rural Nevada up to the Tonopah area. 

This geographic bifurcation will facilitate easier access to NAHAC staffing and resources. 

Further, it will allow the two offices to access both 100% of the banking headquarters for the 

participating financial institutions as well as both HUD offices, state and federal court 

systems, as well as virtually all of the escrow and title companies domiciled in Nevada. 

Secure data links will be set up between both the NAHAC Southern Nevada and Northern 

Nevada offices to allow for migration and balancing of work flow. The protocols to be 

established for the TARP funded program will match State of Nevada Dept. of Information 

Technology system integrity protocols where affordable. 

The NAHAC staffing ratios and work-load criteria which will be utilized in staffing up the 

TARP funded program will match the Nevada HFA’s protocols. These protocols, ratios of 

line:supervisory staff, hours of operation and office confidentiality and security rules will be 

mirrors of the Nevada HFA’s operations. The TARP funded program flow of funds 

represents approximately a 1/3 year funding cycle at the Nevada HFA. The complexity of 

the Business Plan program elements mirror parallel activities of the Nevada HFA. 

Therefore, it has been determined that as many redundant policies, procedures and protocols 

as can be applied will happen in the NAHAC office environment also. Employees to be 

hired for the key underwriting, supervision, bookkeeping and accounting functions will have 

matching job descriptions to those at the Nevada HFA, where applicable save for state 

agency specific elements. All NAHAC employees will be required to undergo not only 

standard independent reference checking/verifications, but will be required to have Criminal 

Background Checks as well as credit history submissions. Besides standard employee theft 
14

and fraud insurance protections, NAHAC will obtain required worker’s compensation 

insurances. Work stations and if available, equipment will be purchased from the State of 

Nevada’s surplus property shop where available items can match operational needs. Outside 

vendor/supplier materials will be purchased using parallel vendor agreements to standard 

State of Nevada agency agreements. 

The staffing levels for the TARP funded principal reduction program will follow in 

conjunction with the labor needs for both the 2nd Lien Reduction program element and the 

Short-Sale program element discussed elsewhere in this Business Plan. To ensure 

redundancy and easy access between the intake function ( Foreclosure Mitigation services) 

and the NAHAC underwriting staff, all underwriters will be trained on all three program 

elements (principal reduction element,2nd lien relief element, short-sale element). Based 

upon projected volumes of activities for the three non-intake elements and funding, the 

Table #5 below outlines the staffing pattern expected to be in place during the 24 month core 

of the program. Lower start up volumes and program wind-up volumes will lead to staffing 

level adjustments. 

TABLE #5- STAFFING TABLE

Positions Southern Nevada Office Northern Nevada Office Totals 

Loan Underwriters 4.5 FTE 1.5 FTE 6.0 FTEs 

Underwriter 

Supervisor 

1.0 FTE 0.0 FTE 1.0 

Telephone 

Receptionists 

1.5 FTE 1.0 FTE 2.5 

Bookkeeper/data 

tracker 

1.0 FTE 1.0 FTE 2.0 

Staff Accounts 1.0 FTE 1.0 FTE 2.0 

Totals = 9.0 FTE 4.5 FTE 13.5 FTE 

All salary, fringe benefit, holiday and vacation policies will parallel the state of Nevada 

employee levels except for furlough days and pension benefits which will not be a paid nor 

will it be an offered benefit for the NAHAC employees hired and employed with this 
15

Business Plan. Further, because of the profound high levels of unemployment currently 

being suffered in Nevada, known good banking relationships between the Nevada HFA and 

Nevada based financial institutions will be tapped heavily to comb for a ‘best possible 

candidate pool’ on the underwriting and supervisory positions. 

From a timing perspective, it is expected and outlined on a time/responsibility chart, that all 

underwriting and supervisory positions will be filled within the first 30 days following 

approval of the Business Plan so that an intensive training, simulation exercises, telephone, 

network systems and work stations can be ordered, tested and verified prior to a kick-off 

date from program operations. 

The Program’s Business Plan will be achieved as approved by Treasury. Program 

leadership will come from the NAHAC Executive Committee. That Committee of the 

NAHAC Board of Directors has over 50 years housing finance agency management 

experience between its three members. The Nevada HFA’s Executive Director, Chief 

Financial Officer and Chief of Federal Programs constitute the Executive Committee of the 

NAHAC Board of Directors. It is also expected that both a Program Administrator position 

and a staff lawyers will be added to the Business Plan staffing, following the 

implementation and start-up phases. Further, an international auditing firm will be engaged 

for both performance and financial auditing during the life of this Business Plan. 

The key business relationships to be established in order to activate the Principal Reduction 

program element of this Business Plan will be the contracts with the financial institutions 

and possibly with the Governmental Sponsored Enterprises---Fannie Mae, Freddie Mac and 

Ginnie Mae once they or their conservator commit to participating with the Hardest Hit 

States. Each of these entities through their loan servicing entities has indicated they have a 

principal reduction programs either in place or in conjunction with the federal H.A.M.P. 

program. Thus, it is expected that the contracting process for a loan reduction program 

element should flow very quickly once each financial institution ‘signs-on’ to working with 

NAHAC on this Business Plan’s principal reduction program. NAHAC legal counsel will 

be engaged quickly and fully in working with the Executive Committee to ensure that 

participating financial institution contracts are given the highest priority on the 

implementation plan. Further and to the extent possible, the NAHAC will work with other 

states participating in the hardest hit TARP fund to duplicate contract language so as to 

expedite the process of completing contracts in the shortest possible time and standardizing 

underwriting criteria where it suites each state’s program. It is abundantly clear that the four 

largest national banking institutions [Bank of America, Wells Fargo, Citibank and J.P. 

Morgan Chase through its Chase Bank affiliate] constitute the largest servicing portfolios 

and in-house portfolios of troubled loans in Nevada. Thus, those four institutions plus the 

GSEs will represent the first priority group of financial institutions targeted for contracting 

with in the principal reduction element of the Business Plan. However, as pointed out by 
16

the Nevada regulator of state chartered financial institutions, the magnitude of the 

foreclosure problem is such in Nevada that if none of the four national banks and the GSEs 

were to participate, NAHAC could still be successful with this program element. Based upon 

the Nevada Chief of Financial Institutions input, there is a greater than 50% likelihood that 

state chartered financial institutions would be able to fully participate and absorb an in-kind 

principal matching program identical to this Business Plan program element. However, the 

speed and scope or breadth of families approved for funding under the NAHAC Business 

Plan’s principal reduction program would be distorted and possibly elongated and the 

demographic mix of applicants changed. Thus, while it is still a solution and possibly an 

excellent back-up plan, the NAHAC Business Plan calls for the first priority of contracting 

financial institutions to be the GSEs and the four largest national banking institutions. 

Phase III- Underwriting & Budget-Principal Reduction Program 

The principal reduction program is budgeted for a 24 month time horizon in this Business 

Plan. Included below is the program summary from the Business Plan’s Master Budget. 

Additionally, we deem it appropriate to include basic underwriting criteria to be utilized for 

this program, pending Treasury’s approval. 

Underwriting Standards

1. Owner occupied 

2. Legal US Resident 

3. Resident in Nevada 5 years in same dwelling 

4. Any cash out borrowing in past five years must be limited to: 

a. Home improvement----real, not personal property classification 

b. Medical bills---documented 

c. Paying off existing revolving debt---documented 

5. Must have only one existing mortgage 

6. Current income does not exceed 120% of Area Median Income (2010) 

7. Principal balance must not exceed 115% based upon current appraisal 

following principal balance reduction nor PITI exceed 31% 

8. Borrower must be facing eminent default, if delinquent cannot be more 

than 6 months maximum---target to be 3 months maximum 
17

9. Delinquency based on a financial hardship due to circumstances beyond 

the homeowner’s control (no contrived defaults allowed). Eligible 

hardships to include but not limited to the following: 

a. Underemployment 

b. Illness, disability or death of wage earner in family in possession 

c. Divorce or legal separation 

10. Current mortgage cannot be secured by one of the following entities 

FHA/VA, Fannie Mae, Freddie Mac if the existing loan qualifies for one 

of those entities existing programs (direct lender program option must be 

exhausted first). 

11. All modified mortgages will be changed to fixed rate 30 year or longer 

mortgages. 

Budget-Total Program Costs (including administrative) 

Program: Fiscal Year > Quarter 3‐'10 Quarter 4‐'10 Quarter 1‐'11 Quarter 2‐'11

Principal Reduction‐underemployed

Direct Principal payments on mortgages 2,702,000 $             $               8,136,171 $               8,151,171 $               8,151,171

Direct Public Notification/Education campaign 115,000 $                $                     50,000 $                     50,000 $                     50,000

Direct Contracting ‐ legal & ongoing 42,500 $                   $                     27,000 $                     12,000 $                     12,000

Direct Database building & maintenance 168,000 $                $                        8,000 $                        8,000 $                        8,000

Direct Banking 1,500 $                     $                           400 $                           400 $                           400

Direct Title & Escrow, Appraisal services 55,000 $                   $                   149,286 $                   149,286 $                   149,286

subtotal all directs + principal reduction = 3,084,000 $             $               8,370,857 $               8,370,857 $               8,370,857

Indirect Management/Admin. Cost allocation (5%)= 154,200 $                $                   418,543 $                   418,543 $                   418,543

Total Principal Reduction Program Costs = 3,238,200 $             $               8,789,400 $               8,789,400 $               8,789,400

Program: Fiscal Year > Quarter 3‐'11 Quarter 4‐'11 Quarter 1‐'12 Quarter 2‐'12 Totals

Principal Reduction‐underemployed

Direct Principal payments on mortgages 8,151,171 $                $               8,151,171 $               8,151,171 $               8,191,171 $                59,785,200

Direct Public Notification/Education campaign 50,000 $                      $                     50,000 $                     50,000 $                     10,000 $                425,000.00

Direct Contracting ‐ legal & ongoing $                     12,000 $                     12,000 $                     12,000 $                     12,000 $                141,500.00

Direct Database building & maintenance $                        8,000 $                        8,000 $                        8,000 $                        8,000 $                224,000.00

Direct Banking $                           400 $                           400 $                           400 $                           400 $                     4,300.00

Direct Title & Escrow, Appraisal services 149,286 $                    $                   149,286 $                   149,286 $                   149,286 $                   1,100,000

subtotal all directs + principal reduction = 8,370,857 $                $               8,370,857 $               8,370,857 $               8,370,857 $                61,680,000

Indirect Management/Admin. Cost allocation (5%)= 418,543 $                    $                   418,543 $                   418,543 $                   418,543 $                   3,084,000

Total Principal Reduction Program Costs = 8,789,400 $                $               8,789,400 $               8,789,400 $               8,789,400 $                64,764,000

Phase III-Monitoring, Tracking and Performance Measures: Presuming that Phase I and 

Phase II are implemented as planned, the third phase of operating the Principal Reduction 

element of the Business Plan will be the actual ongoing management monitoring, studying, 

adjusting and refining the program processes. It is the NAHAC’s intention to target program 

performance through a series of performance monitoring measures. Or as we call them in 

Nevada—‘performance indicators’. Performance Indicators for the principal reduction 
18

program are best summarized in three measures: (1) number of mortgages reduced via 

successful underwriting versus total applicants applying for the same program;(2) number of 

re-fails or recidivism to foreclosure;(3) time to complete from application through closure of 

principal reduced mortgage (date of escrow closing). 

Performance Indicator #1-successful mortgage reductions through to close versus number of 

applicants for the program is a simple ratio. The data will be tracked by the bookkeeper/data 

trackers by measuring number of loan packages/applications received for principal reduction 

versus the number of escrows funded. These data will be tracked four ways---by 

underwriter, by office location, by participating financial institution and by program in total. 

Variance in performance between underwriters and financial institutions will be monitored 

closely by the underwriting supervisor. Monthly the NAHAC Executive Committee will 

review all program performance indicators to evaluate program performance. Loan 

Supervisors will be required to report and analyze variances from program targets with 

allowances for start-up or new-hire efficiency. Trends will be monitored and graphed 

relative to contracted participating financial institutions. All re-foreclosure cases will be 

reviewed in case conferences between the Underwriter supervisors and the TARP program 

administrator and counsel. Reviewers will be tasked with paying particular attention to 

potential fraud, errors by underwriters and financial institution errors as well as documented 

borrower’s change in circumstances. Additionally, re-foreclosures will also be tracked by 

intake/foreclosure mitigation organization. Monthly reports on re-foreclosures and causes 

will be sent to the NAHAC Executive Committee. The Executive Committee will have a 

three-strike policy for financial institution errors leading to re-foreclosures. There will be a 

zero tolerance for underwriter staff fraud. Any foreclosure mitigation institution perpetrating 

a fraud with a stalking-horse false identity/loan profile will be turned over to the Attorney 

General’s Fraud Prevention Task Force. 

Finally, the Executive Committee will independently engage the international auditing firm 

to run a monitoring and compliance programs in addition to their semiannual audits of the 

NAHAC financials. System integrity checking, including blinded applications will be put 

through the in-house underwriting, tracking and accounting processes. Results will be 

reported directly to the NAHAC Executive Committee for review and possible action if 

indicated. 
19

Second Lien Relief Program Element

The purpose and intent of the Second Mortgage Reduction Plan element of this Business 

Plan is aimed at assisting borrowers who have a second lien interfering with either a shortsale or modification of the first mortgage. The expected applicant’s pool is believed to be 

both unemployed and underemployed families. As pointed out in Congressional hearings on 

the subject of 2nd Liens, on April 13, 2010----‘they are a serious problem interfering with 

first mortgage modifications and short-sales’. The NAHAC Business Plan calls for up to 

20% or $20.6million of the TARP resources available to be expended modifying or 

eliminating 2nd liens for eligible applicants. All 2nd liens obtaining relief through this 

program element will have an accompanying lien release and waiver of deficiency 

judgment rights. 

According to State of Nevada banking regulators, almost 50% of the 2nd liens recorded in 

Nevada are held by state chartered institutions with the balance scattered amongst the 

nationally chartered institutions. It is NAHAC’s goal to expend up to an average of $16,500 

per qualified client/applicant for principal reduction efforts on 2nd liens with the sole goal to 

remove them from interfering with first mortgage loan modifications and/or short-sale 

completions. Where ever possible, the 2nd lien extinguishments will be done in conjunction 

with a note holder institution providing 60% of the loan relief to 40% from the NAHAC’s 

Business Plan funded program element. The ceiling on this Business Plan’s funding will be 

a maximum of $16,500 per client/applicant. Thus, the relative maximum 2nd mortgage that 

could be extinguished under this program element would be approximately $41,250. Any 

amounts above that could be additionally written down by the participating note holders but 

the $16,500 ceiling per applicant relative to the TARP funding would remain. Full second 

lien releases and waivers of rights to deficiency judgments must accompany the closing 

package for all 2nd mortgages receiving the TARP funding. 

The primary objective of eliminating the interfering 2nd lien is to expedite movement of 

qualified applicants into a H.A.M.P. or Fannie Mae or Freddie Mac or FHA or private 

banking or TARP first mortgage modification process described above. Thus, NAHAC 

envisions a two-step approach to assisting qualified applicants/clients. First there would be 

a separate and unique process of cleaning off the 2nd lien from the subject’s property. Then a 

matriculation of the applicant/client into a H.A.M.P. or other type of first mortgage loan 

modification process. It is possible that this two-step process could increase total escrow 

costs, but unless the U.S. Treasury authorizes a one-step processing of the 2nd lien relief and 

a H.A.M.P. loan modification simultaneously, current rules appear to prohibit it. If the 

applicant/client is not qualified for any of the first mortgage loan relief programs following 

2nd lien relief, then the client/applicant will be guided through a short-sale/H.A.F.A. process 

(further described below). 
20

Phase I-Implementation: The first implementation steps for this program, just like the first 

mortgage principal reduction element described above, are the parallel activities of 

completing contracts with participating financial institutions and finalizing and formalizing 

underwriting policies and procedures for use. However, because approximately one-half of 

the recorded second lien loans in Nevada are held by state chartered institutions, it is 

expected that the contracting process will be quicker than the portion dealing with the 

nationally charted financial institutions on the subject of second lien relief/extinguishment 

and principal write-downs. Therefore, the Business Plan time-line for implementation of the 

contractual infrastructure for this program element is set for one-month to 45 days following 

approval from Treasury and NAHAC approval of the model contract form. 

Policies, procedures and training of participating foreclosure mitigation organizations as 

well as in-house underwriting staff should follow within a two-three week time frame 

following adoption by the NAHAC Board of the standard form 2nd lien relief contract. 

Underwriting goals i.e. 31% PITI maximum and 115% LTV maximums will continue to 

guide the underwriting processes. Thus, if relief from a second lien takes an LTV below 

115% or a PITI ratio below 31% that will be acceptable. However, it is not the goal of this 

program element to expect exactly the maximum of $16,500 per 2nd loan extinguishment. 

Rather, the goal is to remove the 2nd lien as an impediment from either effectuating 

qualification of the client/applicant for a H.A.M.P. or other form of first mortgage 

modification OR matriculation into a short-sale process should the first mortgage 

modification prove infeasible mathematically. During the implementation and training, 

phase of this Business Plan element, underwriters will be taught to review the client file for 

the feasibility of a H.A.M.P. like modification. If the fundamentals of the client property 

indicate a ‘fail’ under a H.A.M.P.- like first lien modification following removal of the 2nd

lien, then the client will be advised to explore the short-sale program. This matriculation of 

the client to a short-sale program, even while the 2nd lien is being extinguished is aimed at 

reducing the client’s ‘wait-time’ through the painful processing of winding up homeownership. 

Staffing of 2nd lien relief program 

The Business Plan calls for the same underwriting staff associated with the principal 

reduction program described above to do the underwriting of the 2nd lien relief program 

element. Staffing and supervision levels will be identical across all three direct servicing 

programs in this Business Plan. Thus, the same underwriting staff and supervisors, 

bookkeeping, data tracking and telephone receptionist staff serving the first mortgage 

reduction program will also serve the 2nd lien relief program as well as the short-sale 

program element described more fully below. It is expected that no more than five percent 

(5%) of the total 2nd lien relief program element will be associated with these indirect 

expenditures. However, actual program mix and volumes will lead to cost accounting 
21

allocations. The quarter to quarter variations in staff overhead loads by program element 

will be reviewed at the 6 month, 12 month and 18 month time periods and proper 

adjustments to allocations made to program budgets to more fully reflect actual costs of each 

program element. Underwriter work-time logs will be the prime source of staffing cost 

allocations. 

Phase II- Underwriting & Budget-2nd Lien Relief Program: The underwriting standards to 

be applied for the 2nd lien relief program are identical for standards #1- #9 shown above in 

the first mortgage principal reduction program. The underwriting standard associated with 

Fannie Mae, Freddie Mac or FHA (#10) does not apply nor does the re-casting of the 

mortgage into a fixed rate 30 year term (#11 above) apply. However, there is an added 

underwriting standard required for the 2nd lien relief program element not applicable to the 

first mortgage principal reduction program element. That is, the maximum 2nd lien size 

eligible for relief under this program element must be equal to or less than $41,250. 

Exceptions will be made to this standard only where the existing 2nd lien holder is willing to 

fund the difference between the maximum TARP funded limit of $16,500 and the total 2nd

lien principal outstanding. The same requirement for full lien release and waiver of 

deficiency judgment rights will be required, even if the note holder provides in excess of 

60% of the relief for 2nd note principal. 

The average eligible client/applicant case for the 2nd lien relief program will by definition be 

more complex than the first mortgage principal reduction program. This is due primarily to 

the addition of the 2nd lien associated with the same property with a distressed first 

mortgage. Therefore, total staffing hours per client may exceed that of the first mortgage 

principal reduction program. However, until actual material data are in hand that can be 

analyzed, the same 5% staffing and indirect expense load is being budgeted for the 2nd lien 

relief program element. The budget shown below carries out that allocation. 

Budget Total Program Costs (including administrative) 

Program: Fiscal Year > Quarter 3‐'10 Quarter 4‐'10 Quarter 1‐'11 Quarter 2‐'11

2nd Mortgage Relief Program‐underemployed

Direct Principal payments on mortgages 973,440 $                $               2,730,780 $               2,730,780 $               2,730,780

Direct Contracting ‐ legal & ongoing 33,500 $                   $                        3,500 $                        3,500 $                        3,500

Direct Banking 500 $                         $                           200 $                           200 $                           200

Direct Title & Escrow, Appraisal services 20,560 $                   $                     55,806 $                     55,806 $                     55,806

subtotal directs w/o principal = 54,560 $                   $                     59,506 $                     59,506 $                     59,506

sub total all directs  + 2nd loan payments = 1,028,000 $             $               2,790,286 $               2,790,286 $               2,790,286

Indirect Management/Admin. Cost Allocation (5%) = 51,400 $                   $                   139,514 $                   139,514 $                   139,514

Total 2ndLien Relief Program Costs = 1,079,400 $             $               2,929,800 $               2,929,800 $               2,929,800
22

Program: Fiscal Year > Quarter 3‐'11 Quarter 4‐'11 Quarter 1‐'12 Quarter 2‐'12 Totals

2nd Mortgage Relief Program‐underemployed

Direct Principal payments on mortgages 2,730,780 $                $               2,730,780 $               2,730,780 $               2,730,780 $                20,088,900

Direct Contracting ‐ legal & ongoing $                        3,500 $                        3,500 $                        3,500 $                        3,500 $                         58,000

Direct Banking $                           200 $                           200 $                           200 $                           200 $                           1,900

Direct Title & Escrow, Appraisal services $                     55,806 $                     55,806 $                     55,806 $                     55,806 $                      411,200

subtotal directs w/o principal = 5 $                      9,506 $                     59,506 $                     59,506 $                     59,506 $                      471,100

sub total all directs  + 2nd loan payments = 2,790,286 $                $               2,790,286 $               2,790,286 $               2,790,286 $                20,560,000

Indirect Management/Admin. Cost Allocation (5%) = 1 $                    39,514 $                   139,514 $                   139,514 $                   139,514 $                   1,028,000

Total 2ndLien Relief Program Costs = $               2,929,800 $               2,929,800 $               2,929,800 $               2,929,800 $                21,588,000

Phase III-Monitoring, Tracking and Performance Measures: Presuming Phase I and 

Phase II of the 2nd lien relief program element are successfully implemented, the issue of 

performance indicators (more fully described in the Principal Reduction Program Element 

above) must be considered, tracked and appropriate measures of success or failure defined. 

For purposes of the 2nd lien relief program, the first performance indicator is identical to that 

in the first mortgage principal reduction program above, i.e. number of successful cases 

closed through escrow versus applicant/client packages received. The second indicator from 

above does not apply---i.e. re-foreclosure incidence. However, the goal of the 2nd lien relief 

program is to help matriculate an applicant into either a first loan modification program or 

toward a successful short-sale. Thus, the second performance indicator (metric) for the 2nd

lien relief program will be the number of successful 1st mortgage loan modifications that 

follow 2nd lien relief or number of successful short-sales effectuated. This second 

performance indicator, by necessity may entail considerable lags in time relative to the first 

performance measure due to the complexity and time associated with each case’s 

conclusion. However, if the very purpose of the 2nd lien relief program element is not 

measured then there can be zero validation of the programs purpose. This also leads to the 

third and fourth performance indicators for the 2nd lien relief program element, the two time 

frames---one to complete a 2nd lien relief from time of application through escrow closing of 

the 2nd lien removal; secondly the time from close of the 2nd lien relief-- through conclusion 

of first mortgage relief and or short-sale completion. It is expected that the standard for a 

primary first mortgage principal reduction program client will match or nearly match the 

time for a candidate to matriculate from 2nd lien relief through finalization of first mortgage 

relief. Alternatively, if a 2nd lien relief client must matriculate into a short-sale program, 

then that indicator should most closely match that of the short-sale program time lines 

described below in that program element. 

Again in the 2nd lien relief program just like the principal reduction program above, the data 

will be tracked by the data tracking staff and computer systems. The data will be parsed into 

cases by underwriter, by financial institution and by originating foreclosure mitigation or 

mediation organization as well as by northern Nevada office and southern Nevada office. 

Data will be reported monthly to the NAHAC Executive Committee with analysis of 

variances and outliers provided by program staff. All instances of fraud by staff, financial 
23

institution or foreclosure mitigation or mediation program will lead to debarment from 

further program participation and referral to the Attorney General’s Fraud prosecution unit. 

Instances of carelessness, common errors or mistakes in judgment will be dealt with via 

progressive discipline if staff created. Errors associated with contracting parties will lead to 

first warnings, following by probationary status and reduced volumes if repeated. Should an 

institution violate policies and procedures three times, they will be terminated from further 

participation in the program. 

System integrity checking by international auditing firm engaged, including blinded 2nd lien 

relief applications will be put through the in-house underwriting, tracking and accounting 

processes. Results will be reported directly to the NAHAC Executive Committee for 

review and possible action if indicated. 
24

Short-sale Acceleration Program Element

The purpose and intent of the Short-sale Acceleration Plan element of this Business Plan is 

aimed at assisting borrowers who are beginning or need to initiate the short-sale process to 

relieve themselves of the mortgage burdens that they cannot sustain—even with a material 

loan principal reduction. The expected target audience for this service is primarily 

unemployed families sufficiently high up on the frustration/desperation scale as to have 

made the determination that they can no longer reasonably maintain home ownership. There 

may be some qualified applicants/clients for the short-sale program who simply do not 

qualify for any other legs of this Business Plan’s program elements, but who do have some 

existing form of sustainable income. However, the vast majority of the expected 

applicant/clients qualifying for the short-sale program element are expected to be registered 

unemployed families. 

Boiled down to its essence the short-sale program element in the Business Plan is a four 

pronged approach to assistance to the homeowners who for whatever reason(s) are 

abandoning hope of retaining their home. First, appraisal fees and necessary transaction and 

recording fees attendant to completing a short sale in Nevada are budgeted at $2,500/client 

as a form of outright assistance that will be paid into the closing escrow. Secondly, moving 

and first and last month rental payments are being made to the home-owner completing the 

short-sale. Those three fees are budgeted at $2,574 maximum and must be paid directly to 

either the moving company or to the rental property by the program. No funds will pass 

through the hands of the client per se. Additionally, these same fees will not be paid for a 

family exiting residence from Nevada. Thirdly, to the extent needed to get full financial 

institution cooperation with facilitating the short-sale in less than 90 days following 

completion of a buyer’s Offer-and-Acceptance, the program is prepared to pay up to 

$500/month to the financial institution for a maximum of 3 months. The full $1,500 will be 

paid into the sale escrow if the transaction is closed =<90 days. The bank will be free to 

apply the incentive payment to either the arrearage on the mortgage or treat it in other ways 

so long as the client receives full lien relief and a full waiver of deficiency judgment rights 

by the financial institution. The fee will be recaptured at close of escrow from the financial 

institution if the closing goes beyond 90 days---regardless of reason. Fourth, it has been 

pointed out repeatedly that legal involvement to assist the borrower/short-seller in their 

dealings with the financial institutions has been needed in virtually 100% of the cases in 

Nevada. Thus, a direct legal allowance of $1,450 has been budgeted for per short-sale case 

accepted. 

With regard to this third part’ (see paragraph immediately above regarding the ‘incentive’) 

of the short-sale program element, the data simply are unclear and the recently announced 

H.A.F.A. program is too new, to be able to ascertain whether or not existing 

structures/mechanisms are sufficient to reduce the typical 1-year long ‘process’ to complete 
25

a short sale and thus reduce the seller’s uncertainty, anxiety and anguish. Therefore, in an 

attempt to be both responsive to public outcry on this issue as well as offer creative solutions 

to problems vexing the foreclosure/real estate crises, this Business Plan is making a 

dedicated budgetary and programmatic commitment to try something new----an incentive 

payment aimed at shortening the short-sale process or to accelerate it. 

Phase I-Implementation: The implementation of the short-sale acceleration program will by 

necessity begin simultaneously with the financial institutions and the foreclosure mediation 

and mitigation agencies serving under this Business Plan. Specifically, it is believed that 

this leg of the Business Plan could have a more accelerated implementation schedule versus 

the other legs due to the fact that we will begin by contacting all H.A.F.A. participating 

financial institution’s real estate disposition groups serving Nevada. The goal is to literally 

start with borrowers who meet the same basic underwriting criteria #1 through #5 in the 

Principal Reduction Program (for purposes of being judicious in composition, we will not 

repeat those same criteria from above once again). Additionally, the client/applicant must 

have an agreement with the note holder accepting the result of a short-sale. If that is still in 

an indeterminate state, a form will be created by staff legal counsel and sent for immediate 

execution. 

 The screening process for current eligible’s, should be a more accelerated vetting process 

than the more extensive principal reduction or 2nd lien relief processes. Thus, it would be 

anticipated that a goodly number of the clients served in the first Business Plan calendar 

quarter would be short-sale client/applicants. Overt attempts at both public notification/ads 

as well as outreach classes will be implemented very early in the Business Plan with 

particular attention being paid to early success/volumes of clients eligible for this 

service/plan benefit. This will be particularly important to the families with school aged 

children. That is because of the obvious summer period and possible need to relocate 

children into different schools. This Business Plan will be particularly sensitive to this issue 

by focusing on clearing as many short-sales in its early months as possible. 

Staffing of Short-Sale Program 

The staffing plan indicated above under the Principal Reduction element of this Business 

Plan will hold for this third element also. Thus, the staff of underwriters, bookkeeper/data 

trackers, telephone receptionists and supervisory personnel will not change as a result of this 

third program/work element. However, it is totally possible that assigned legal staff may 

have a greater portion of their allocated time associated with this program element in the 

first two quarters of this Business Plan due to the higher amount of legal analysis and real 

estate law matters for each short-sale client/applicant. This could be attributed to the mere 

fact that some of the short-sale client/applicants will be ‘in process’ versus just beginning 
26

the process of arranging a short-sale. It is expected that those analysis/legal process will 

become procedures for the underwriting staff once a more normal flow of work is achieved. 

Phase II- Underwriting & Budget-Short-sale program element: As indicated earlier in this 

detailed program description relative to the Short-Sale Program, Underwriting standards #1-

#5 will be applicable. In addition, there will be the added requirement for the short-sale 

program of ‘proof of unemployment’ through confirmation with the Nevada Unemployment 

Insurance program. Thus, it will be necessary to have executed privacy wavers in place 

before confirming the unemployment situation. In sum then, there will be the two added 

elements: (1) short-sale agreement between the mortgage note holder and borrower; (2) the 

confirmation of unemployment. These two added underwriting criteria in addition to 

standard program underwriting criteria #1- #5 will constitute the screening and eligibility 

criteria for determining program eligibility for the short-sale program element. 

Budget Total Program Costs (including administrative) 

The Business Plan budget for the short-sale acceleration program element is as follows: 

Program: Fiscal Year > Quarter 3‐'10 Quarter 4‐'10 Quarter 1‐'11 Quarter 2‐'11

Short‐sale acceleration Program‐ unemployed

Direct Incentive to banks for =<90 day performance 103,500 $                $                   279,000 $                   279,000 $                   279,000

Direct Legal & Banking processes 99,398 $                   $                   269,793 $                   269,793 $                   269,793

Direct Title & Escrow, Appraisal services 178,230 $                $                   483,767 $                   483,767 $                   483,767

Direct Moving  and storage expenses $                  34,175 $                     92,761 $                     92,761 $                     92,761

Direct Rental unit payments (1st & last month) $               176,448 $                   478,929 $                   478,929 $                   478,929

Direct subtotal directs  = 488,250 $                $               1,325,251 $               1,325,251 $               1,325,251

Management/Admin. Cost Allocation (5%) = 24,413 $                   $                     66,263 $                     66,263 $                     66,263

Indirect Total Short‐sale acceleration Program Costs= 512,663 $                $               1,391,513 $               1,391,513 $               1,391,513

Program: Fiscal Year > Quarter 3‐'11 Quarter 4‐'11 Quarter 1‐'12 Quarter 2‐'12 Totals

Short‐sale acceleration Program‐ unemployed

Direct Incentive to banks for =<90 day performance 279,000 $                    $                   279,000 $                   279,000 $                   279,000 $                   2,056,500

Direct Legal & Banking processes 269,793 $                    $                   269,793 $                   269,793 $                   269,793 $                   1,987,950

Direct Title & Escrow, Appraisal services 483,767 $                    $                   483,767 $                   483,767 $                   483,767 $                   3,564,600

Direct Moving  and storage expenses 92,761 $                      $                     92,761 $                     92,761 $                     92,761 $                      683,500

Direct Rental unit payments (1st & last month) 478,929 $                    $                   478,929 $                   478,929 $                   478,929 $                   3,528,954

Direct subtotal directs  = $               1,325,251 $               1,325,251 $               1,325,251 $               1,325,251 $                11,821,504

Management/Admin. Cost Allocation (5%) = 6 $                      6,263 $                     66,263 $                     66,263 $                     66,263 $                      591,075

Indirect Total Short‐sale acceleration Program Costs= 1,391,513 $                $               1,391,513 $               1,391,513 $               1,391,513 $                12,412,579

Phase III-Monitoring, Tracking and Performance Measures: Realistic metrics that 

measure the success of a short-sale program fall into two primary categories for the Nevada 

Business Plan. First, how many folks make it through the process successfully relative to 

the number of families qualifying and starting the process. Secondly, and as an overt 

method [metric] of determining the ‘incentive/acceleration processes’ success----how many 
27

are actually completed within a 90 day window from the point of Offer and Acceptance 

execution? 

Like both the Mortgage Principal Reduction program element as well as the 2nd Lien Relief 

program element, staff data trackers will compile the start-finish times on an ongoing basis 

for eligible and accepted client/applicants. These completion times will be parsed by 

underwriter, by participating financial institution and by referring mortgage mitigation or 

mediation agency. Performance levels will be reviewed monthly by the NAHAC Executive 

Committee and where indicated personnel added training or progressive discipline will be 

applied. With regard to financial institution performance, legal staff will undertake contract 

performance reviews. If indicated, financial institutions and foreclosure mitigation and 

foreclosure mediation agencies will be put under scrutiny with specific ‘times to cure’ 

warnings issued. Repeat offenders, absent compelling data to the contrary will be 

terminated from participation in the program and their funding cutoff. 

System integrity checking for fraud, abuse and process modification will be part of the 

international auditing firm’s engagement for this program element also. These checks will be 

performed at the 6, 12 and 18 month program intervals. 
28

Foreclosure Mitigation Process & Client Triage:

INTRODUCTION: The purpose and intent of the Foreclosure Mitigation process of this 

Business Plan is aimed at assisting borrowers who are beginning or need to initiate all of 

the previous three primary program elements mentioned above including a H.A.M.P. a 2nd

lien relief or short-sale process to relieve themselves of the mortgage burdens that they 

cannot sustain. The expected target audience is believed to be the pool of underemployed 

families struggling to keep ownership of their home. 

There has been a near unanimous voice from the public at hearings and in written form, 

from Congressional and State elected officials all begging that NAHAC “ boost up the 

foreclosure mitigation businesses if possible” with the TARP program dollars where 

feasible. The genesis of this tsunami of input, has been a near unanimous perception that 

there exists mass confusion amongst troubled homeowners. That confusion is on the part 

of the suffering home owners facing eminent defaults or in some state of foreclosure 

processing. The acute problems in Nevada relative to foreclosure have been muddied by 

‘scam artists’ offering to ‘fix your loan problems’ for a small fixed front end fee. HUD 

itself with its own resources or in conjunction with state and other federal programs is 

unable to drown out this distorting white noise that is leading to the confusion and 

keeping legitimate H.A.M.P. processes or private label bank modification processes from 

being heard clearly. Per multiple discussions with our peer states in the Hardest Hit 

States, this same message about confusion and fraud process has been heard throughout 

the country. 

It must be pointed out here that the mass confusion on finding methods and ways to 

legitimately seek relief from potential foreclosures is being amplified by failed or suboptimal existing processes and the constant press stories about dealing with financial 

institutions by the troubled home owners. Therefore, another key component of this 

Business Plan program element will be an overt attempt at consistent simple and rational 

directions giving. “We are going to tell them, tell them again and tell them we told 

them.” This pubic information component of the foreclosure mitigation and mediation 

efforts will be via joint public information messaging with HUD and the Foreclosure 

Prevention Task Force in Nevada. At its core, this program element will aim squarely at 

developing clear and clean lines of where to get ‘known good help’ and what to expect in 

the way of help/processes and what a borrower is responsible for doing themselves. HUD 

has indicated that they will try and generate a matched funding to the budget amount in 

this program of about $200,000. The information campaign will be designed around a 

constant, broad and simple message: “get legitimate help and answers from clearly 

identified sources and be prepared to be involved in the process. Home buying is 

complicated at its core and fixing a bad mortgage situation takes time and effort.” 
29

The final area needing discussion/explanation relative to the program element foreclosure 

mitigation is in the ‘intake-screening’ area. The Business Plan calls for a ‘ramping up’ 

of the ability of the HUD certified foreclosure mitigation industry to handle a larger 

volume of potential clients----up to 10,000 – 15,000 more over the 24 month funding 

horizon we have chosen for this Business Plan. This Business Plan will devote a 

reimbursement mechanism similar to existing Neighbor-works methods, a total of 

$3.64million dollars aimed at providing increased intake/triage services to borrowers in 

need of some form of mortgage relief or help. HUD officials in Nevada have assured 

NAHAC that the training programs available will be sufficient and timely to allow for the 

material increase in certified counselors. For purposes of this program, the triage/intake 

function will focus on determining eligibility for the above listed three programs 

[principal reduction for non-HAMP qualified borrowers; 2nd lien relief program or a 

short-sale program]. The funding contracts will specify data collection and direction to 

the applicable program, be it the programs of this Business Plan or others more 

appropriate for the borrower’s circumstances. 

Phase I-Implementation: The implementation phase of this Business Plan program 

element will be contracting first following immediately thereafter with policy and 

procedure training for the affected provider parties. The ‘intake process’ will be the 

screener and driver of volumes to and through the other Business Plan program 

elements. Thus, it will be strategically vital to the overall success of the program that 

screening personnel in the foreclosure mitigation area be intimately familiar with the 

programs and how to matriculate eligible families to and through them. 

Classroom and on-line training and testing will be established and carried out by 

supervisory people in NAHAC soon after Treasury approval of this Business Plan. The 

training will include actual case history/analysis and simulations into the program 

screening system and data storage sub-system. Finally, program material drafts will be 

reviewed and where input is relevant tweaked into a more ‘user friendly’ fashion. The 

overt and urgent goal of the implementation phase of the foreclosure mitigation process 

is clarity, simplicity and creating a sense of assurance in the customer/applicant. That 

sense of assurance/reassurance to be imparted by the intake process will be focused on 

factually pointing out that specific help is available, the processes are known and 

understood and the applicable one can be gotten through in a reasonable time frame. The 

overriding caveat that must be imparted by intake personnel is that borrower involvement 

has just begun. Further, the intake process must provide reasonable time and cost 

estimates for the customer appropriate avenue of aid. Further, the focus will be on 
30

teaching the client/applicants how and what materials are needed to be gathered in order 

to move the processes forward----and the deadlines by when they are needed. It is 

expected that the training portion of the implementation phase will take 60-90 days to 

complete due to the varied amount of time necessary for the RFP selected agencies to 

complete their hiring and basic HUD certified training. 

Phase II- Staffing & Budget-Foreclosure Mitigation process and borrower triage

process: The staffing levels at the RFP selected agencies involved in Foreclosure 

Mitigation will be at a ratio of 1:1,200 intake customers/year. It is felt that a standard of 

about 25 applicants/week is a fair intake work load ratio based upon round-table 

discussions with the foreclosure mitigation industry leaders. In following basic 

demographic data, there will be a requirement of 1:4 Bilingual new hires placed in the 

contract requirements. Further, similar criminal background checks and credit checks will 

be necessary elements for the agencies contracting for in-take services under this 

Business Plan. These later two contract elements are specifically designed as a fraud 

preventative and risk management tool. Because of the critical nature of the intakeprocess in driving potential client/applicants into the Business Plan program elements----

and other programs perhaps more appropriate for the client’s needs, the first 120 days 

will be full of direct NAHAC activities and training processes. Thus, training materials, 

methods and system’s set ups and simulations will be hugely important to having a 

program perceived as well running in both the marketplace and in the public’s 

perceptions. While all ‘new processes’ are fraught with issues, the foreclosure mitigation 

process is already reasonably well established. Thus, the focus on incremental changes 

brought on by the Business Plan’s new programs should not ‘clog up the works’ if 

properly prepared materials are timely put in place and training correctly carried out. 

Both the underwriting supervisory staff of NAHAC as well as the Executive Committee 

of NAHAC will be working together very closely to ensure a successful launch through 

the selected ‘intake mechanisms’ of the ramped up foreclosure mitigation industry. 

The existing foreclosure fraud prevention task force established in joint action with local 

jurisdictions and the federal NSP program and HUD has already prepared an extensive 

outreach and media program. Thus, the Business Plan should not have to ‘reinvent the 

wheel’ on the media outreach element of this part of the Plan. Rather, it has already been 

discussed and will be planned for in further detail once Treasury authorizes the Business 

Plan. It is expected that media buys and e-mail blast schedules should follow shortly 

after the Business Plan is approved and funding mechanisms put in place. 
31

Budget Total Process Costs (including administrative) 

The multi-threaded elements of the foreclosure mitigation and foreclosure mediation and 

outreach program are budgeted as follows: 

Program: Fiscal Year > Quarter 3‐'10 Quarter 4‐'10 Quarter 1‐'11 Quarter 2‐'11

Foreclosure Mit.

Direct Mitigation Services Intake Services 181,940 $                $                   493,837 $                   493,837 $                   493,837

Direct Foreclsoure Prevention Info Program w/ HUD 25,557 $                   $                     25,557 $                     25,557 $                     25,557

Direct subtotal directs = $               207,497 $                   519,394 $                   519,394 $                   519,394

Indirect Management/Admin. Cost Allocation (5%) = $                  10,375 $                     25,970 $                     25,970 $                     25,970

Total Mitigation Program Costs = $               217,872 $                   545,364 $                   545,364 $                   545,364

Program: Fiscal Year > Quarter 3‐'11 Quarter 4‐'11 Quarter 1‐'12 Quarter 2‐'12 Totals

Foreclosure Med/Mit.

Mitigation Services Intake Services 493,837 $                    $                   493,837 $                   493,837 $                   493,837 $                   3,638,800

Direct Foreclsoure Prevention Info Program w/ HUD $                     25,557 $                     25,557 $                     25,557 $                     25,557 $                      204,456

Direct subtotal directs = $                   519,394 $                   519,394 $                   519,394 $                   519,394 $                   3,843,256

Indirect Management/Admin. Cost Allocation (5%) = $                     25,970 $                     25,970 $                     25,970 $                     25,970 $                      192,163

Total Mediation/Mitigation Program Costs = $                   545,364 $                   545,364 $                   545,364 $                   545,364 $                   4,035,419

Phase III-Monitoring, Tracking and Performance Measures: It is the NAHAC’s 

intention to target program performance through a series of performance monitoring 

measures. The performance indicators set for the previous three programmatic elements 

of this Business Plan [Principal Reduction;2nd lien relief; short-sale acceleration] have a 

high degree of carry-over into this program element. Thus, they will not be repeated 

here. 

We will instead focus on the marginal and unique performance indicators [metrics] 

particular to just the Foreclosure mitigation and foreclosure mediation elements as well as 

the media outreach elements. 

 Specifically, in the foreclosure mitigation process there will be a performance indicator 

measuring intake times per client/applicant. Further, Neighbor-works level one and level 

two definitions will apply [for reference see the National Foreclosure Mitigation 

Counseling Program ‘Funding Announcement-Round 3’ document]. These measures of 

intake process productivity should, over a large enough sample size, center on values 

comparable to what exist in the Neighbor-works data for similar services. Variances 

[beyond the ramp-up phase] from the standard will be monitored and where indicated 

contracting agencies will receive counseling, added training and higher levels of 

oversight. Deteriorating performances will lead to either financial penalties or 

termination of the foreclosure mitigation services contract. Monthly reports on these 

metrics/performance indicators will be reviewed monthly by the Executive Committee of 

the Board. Further, the Grant Thornton LLP performance evaluation services contract 

will cover both a verification of proper revenue and expense allocations to the Business 
32

Plan program, but also do integrity checking and verification of systems input data, client 

record completeness. 

Again, data will be tracked monthly on the mediation program performance indicators 

and variances monitored for possible intervention. Reports and graphical tracking of the 

indicators will be provided to the Executive Committee of the NAHAC Board of 

Directors. 

One added contractual control will also be in place for the foreclosure mediation 

program. Specifically, the same hiring requirements for criminal background checks, 

credit history (Dunn & Bradstreet) as well as current status with the Nevada bar 

association for the lawyers engaged will be contractual obligations to the RFP selected 

mediation agencies. 

BUSINESS PLAN PROGRAM SUMMARY:

As indicated throughout the body of this Response to the U.S. Treasury’s Guidelines for 

the HFA Proposal Submission, the already existing Nevada Affordable Housing 

Assistance Corporation organization will be the corporate vehicle through which this 

Business Plan will be carried out from inception through wrap up. At the request of U.S. 

Treasury officials (via e-mail from Mr. Ron Ferlazzo dated 4/15/10 at 10:14 a.m. PDT) 

we are repeating our submission of the Nevada Affordable Housing Assistance 

Corporation’s: 501(c)3 Determination Letter from the IRS dated June 13th, 2003; the 

current Corporate Bylaws; the original, 2003 Articles of Incorporation. The electronic file 

is labeled NAHAC-orgDocs and incorporated fully herein. 

Master Budget:

The Master Budget for all four programmatic elements within the Business Plan is 

shown below. Each detailed program description above had the individual program’s 

more detailed budgets embedded in those program descriptions. The detailed 

overhead/administrative budget, which is allocated out to the individual programs on a 

5% of program element cost basis is shown below the Master Budget including 

discussion thereon. 
33

 

Program: Fiscal Year > Quarter 3‐'10 Quarter 4‐'10 Quarter 1‐'11 Quarter 2‐'11

Principal Reduction‐underemployed

Total Principal Reduction Program Costs = 3,238,200 $             $               8,789,400 $               8,789,400 $               8,789,400

2nd Mortgage Relief Program‐underemployed

Total 2ndLien Relief Program Costs = 1,079,400 $             $               2,929,800 $               2,929,800 $               2,929,800

Short‐sale acceleration Program‐ unemployed

Total Short‐sale acceleration Program Costs= 512,663 $                $               1,391,513 $               1,391,513 $               1,391,513

Foreclosure Med/Mit.

Total Mediation/Mitigation Program Costs = 217,872 $                $                   545,364 $                   545,364 $                   545,364

Grand Total Budget for HOPE  & Dignity for Nevada Program = $ 5,048,135 $  13,656,077 $  13,656,077 $  13,656,077

Program: Fiscal Year > Quarter 3‐'11 Quarter 4‐'11 Quarter 1‐'12 Quarter 2‐'12 Totals

Principal Reduction‐underemployed

Total Principal Reduction Program Costs = 8,789,400 $                $               8,789,400 $               8,789,400 $               8,789,400 $                64,764,000

2nd Mortgage Relief Program‐underemployed

Total 2ndLien Relief Program Costs = 2,929,800 $                $               2,929,800 $               2,929,800 $               2,929,800 $                21,588,000

Short‐sale acceleration Program‐ unemployed

Total Short‐sale acceleration Program Costs= 1,391,513 $                $               1,391,513 $               1,391,513 $               1,391,513 $                12,412,579

Foreclosure Med/Mit.

Total Mediation/Mitigation Program Costs = 545,364 $                    $                   545,364 $                   545,364 $                   545,364 $                   4,035,419

Grand Total Budget for HOPE  & Dignity for Nevada Program = $  13,656,077 $  13,656,077 $  13,656,077 $  13,656,077 $  102,799,998

The Administrative & Overhead Budget:

The NAHAC administrative and overhead budget is premised upon four fundamental 

objectives: (1) strict financial controls and operational controls;(2) quick and thorough 

access via secure data links to a master client data base;(3) utilization of outside 

professional services with specific relevant expertise versus reliance on in-house staff 

building;(4) lean but adequate staff to carry-out the fundamental functions of 

underwriting, data-tracking and process supervision. Finally, organizationally the U.S. 

Treasury’s special Hardest Hit TARP funded program may not rely upon any crossfunding sources with either the Nevada Housing Division nor the Nevada Affordable 

Housing Assistance Corporation and therefore, must pay for itself completely. 

Staffing: The staffing of direct NAHAC employees was outlined in Table #5 above is 

repeated here:
34

STAFFING TABLE

Positions Southern Nevada Office Northern Nevada Office Totals 

Loan Underwriters 4.5 FTE 1.5 FTE 6.0 FTEs 

Underwriter 

Supervisor 

1.0 FTE 0.0 FTE 1.0 

Telephone 

Receptionists 

1.5 FTE 1.0 FTE 2.5 

Bookkeeper/data 

tracker 

1.0 FTE 1.0 FTE 2.0 

Staff Accounts 1.0 FTE 1.0 FTE 2.0 

Totals = 9.0 FTE 4.5 FTE 13.5 FTE 

The purpose of this ‘in-house staffing’ is focused primarily in two areas—hardcore loan 

underwriting and modification calculations with daily interfacing with financial 

institution’s underwriting staffs. Secondly, direct control and relations with the 

contracting servicers, agencies and financial institutions attendant to operationalizing the 

four programmatic tenants of this Business Plan. 

The salary levels and benefits levels for each of the four categories of proposed hires is 

listed below 

Table #6- Budgeted Staff Salaries/year 

[number of employees X max salary levels] 

Loan Underwriters $402,600 

Underwriter supervisor $75,600 

Telephone Receptionists $79,300 

Bookkeeper/data trackers $141,520 

Program Manager $85,000 

Staff Accounts $151,200 

Totals = $935,220

In addition to the line staff indicated immediately above plus the program manager who 

will be engaged following the 2nd quarter of operation, NAHAC will hire on contract 2.0 

FTEs of staff real estate and contract specialty lawyers for the first year, at an amount not 
35

to exceed $100,000 in total compensation. Depending upon work- loads, the second staff 

lawyer may not be necessary for the full second year of the Business Plan. Thus, total 

staff expenses for year #1 of this Business Plan will be $1,135,220 and up to 

$1,135,220 in the second year of the Business Plan. 

The second obvious component for the administrative budget is the rentals for the two 

office spaces. One NAHAC office will be in Southern Nevada covering all of Southern 

Nevada up to the city of Tonopah. The second office will be in Reno covering 

everything from the Oregon border in the north down to the city of Tonopah. Both 

offices will be linked via both computer network and video conference facilities. The 

estimated budget for these two offices [larger in the south, smaller in the north] is 

$78,000 for each of the two years of this Business Plan. The expected cost per square 

foot is approximately $1.60-$1.65 on a net:net:net basis. 

The third administrative budget expense of a material nature is the systems area. Here 

both programming costs and equipment costs will be built into the admin budget from the 

getgo so that as hiring begins, equipment is ready to begin the training processes and the 

data links to the contracting parties who will be funneling client/applicants through the 

Business Plan processes. The programming needed for the below particularized system 

has received a review by the Nevada Housing Division’s EDP staff and the State 

Department of Information Technology. While it can be addressed on an expeditious 

basis, the very first contract issued once this Business Plan is approved by Treasury will 

be the programming contract followed immediately by the equipment contracts. The 

system programming, web design and documentation contract is estimated currently at 

$140,000-$145,000. The equipment for the employee work stations, software and 

networking equipment are currently priced at $2,300/employee or a total first year cost of 

$36,800. Leasing of telephone, copying, scanning and printing devices for the two offices 

are priced at $28,000/year. Therefore, total EDP costs are expected in the first year to 

total a maximum of $209,800 but only $28,000 in the second year. 

The fourth administrative expense budget area in this Business Plan is the use by the 

NAHAC of outside counsel in preparing initial contracts for service by type as well as 

assistance to the project leader and staff lawyers in negotiating original and renewals. 

While the in-house legal staff lawyers are expected to be expert in Nevada real estate law, 

it would not be possible, at the budgeted compensation levels projected to have national 

banking experienced lawyers, real estate specialists, federal administrative law specialists 

and tax law specialists. Thus, during the initial phases of implementation, two national 

law firms will be engaged where their specialties may be tapped for specific needs. The 

expected costs budgeted for these highly specialized services is $200,000 in the first 

year and 1⁄2 of that in the second year or $100,000. 
36

The fifth administrative expense budget area in this Business Plan is the highly 

specialized performance audit and financial audit function. After a review of the unique 

nature of the performance audits---which are spelled out in detail in each Program 

Element section above, the budget for these services has been quoted at $183,000 in 

both year #1 and year #2. The semiannual financial audits are part of these quotes as 

well as the quarterly performance audits by program element. 

The six, seven and eighth administrative expense items are the standard insurances 

required by corporate policy, the general office supply and services attendant to running 

an loan underwriting operation as well as the standard travel and training costs. The total 

of these three items constitutes a budget impact of $394,198 over the biennium of 

this Business Plan. 

The ninth administrative budget category is one that has been highly recommended by 

both foreclosure mitigation industry professionals, legal experts and in public testimony. 

That is a special ‘contingency amount’ that can be utilized to expedite unique hardship 

cases who do not exactly fit into the standardized underwriting criteria of each of the 

above listed Business Plan program elements. It has been determined that approximately 

1% of the program budget should be set aside for those unique client/applicant cases 

which might warrant unique consideration. However, the utilization of this fund will not 

be to undermine underwriting standards applicable to all clients/applicants, rather it will 

be applied on an ‘appeal process basis’ directly to the NAHAC Board Executive 

Committee. Each appeal will require full write up by the underwriter, underwriter 

supervisor and a explanation as to why added funding is needed to make the uniqueness 

argument valid and worthy of special financial consideration. 

In sum, the administrative budget details are particularized below: 

Admin expenses totals: Year #1 Year #2 Biennial Total

less: Salaries & Benefits $            1,135,220 $               1,135,220 $               2,270,440

         Office Rents (@ $1.6/sq.ft net:net:net) N+S $                  78,400 $                     78,400 $                   156,800

        Computersystems and equipment $               209,800 $                     28,000 $                   237,800

        Outside legal counsel $               200,000 $                   100,000 $                   300,000

        Audit and compliance contract $               183,000 $                   183,000 $                   366,000

        Insurances (D&O, Gen. Liab, WC, Property $                  68,213 $                     68,213 $                   136,426

        Gen Office supplies & services $               117,286 $                   117,286 $                   234,572

        Training, travel & auto reimbursement $                  11,600 $                     11,600 $                     23,200

Underwriting exceptions fund(unique hardship cases) 585,000 $                $                   585,000 $               1,170,000

Totals expenses = 2,588,519 $             $               2,306,719 $               4,895,238
37

System Design

As indicated in the administrative budget narrative above, there was one theme repeated 

over and over again. It rivals the often heard complaint about ‘not sending another dime 

to the Wall Street bank’. Rather the overwhelming area of failure/complaint heard in 

hearings testimony, relative to developing this Business Plan, multiple round table 

discussions and in direct written or e-mail appeals to NAHAC---‘do something about the 

lack of communication between people seeking assistance and the banks and help us keep 

from having to send in the same documents 3,4 or 5 times.’ The crude system layout 

shown below is aimed at addressing this problem directly. It lays out the flow of 

applicant/clients through the Business Plan as well as to demonstrate where a common 

document repository will reside and have copies of all relevant underwriting documents 

on a client file basis. 
38

NAHAC Organizational Chart 

Board of Directors of NAHAC

Board Executive Committee

Nevada NN H.F.A.

Consulting

Southern Nevada Office Northern Nevada Office

Underwriting Supervisor

Underwriter

Underwriter

Underwriter

Underwriter

Underwriter .5 FTE

Accountant

Bookkeeper/Data Tracker

Telephone/Receptionist

Tel/Receptionist  .5 FTE

Staff Lawyer Staff Lawyer

Underwriter

Underwriter  .5 FTE

Accountant

Bookkeeper/Data Tracker

Telephone/Receptionist

Auditors/compliance

consultants

Outside legal

counsel