Hardest Hit Fund Proposal 

September 1, 2010 
2 | Page THDA

INTRODUCTION 

The Tennessee Housing Development Agency (THDA) appreciates the opportunity to participate 

in the third round of Treasury’s HFA Hardest Hit Fund (HHF). THDA is uniquely qualified to 

develop and administer programs to utilize the Hardest Hit Fund dollars, as it is a leader in 

designing and implementing programs to help families stay in their homes and to prevent 

avoidable foreclosures. 

THDA administers the National Foreclosure Mitigation Counseling (NFMC) program which 

provides foreclosure counseling and budgeting assistance to homeowners at risk of losing their 

homes. Since 2008, more than 6,400 Tennessee homeowners have received services under this 

program. In order to administer this program, THDA has developed a strong network of partners 

to assist homeowners in need. Collectively, THDA has over 60 NeighborWorks Certified 

counselors in a statewide network of 19 counseling agencies. 

In partnership with housing counseling agencies and others, THDA has designed a program 

using the Hardest Hit Fund. This initiative will help struggling Tennessee homeowners avoid 

foreclosure, when possible, and may help stabilize neighborhoods impacted by large numbers of 

foreclosures. 

THDA has used the following guiding principles in developing its proposed program: 

• Foreclosure Prevention – The primary intent is to preserve homeownership and prevent a 

foreclosure. 

• Inclusion – THDA wants to include as many homeowners as possible in defining program 

eligibility assistance. 

• Simplicity – The program should be easy to explain to homeowners, easy for homeowners to 

apply for, and easy to administer and monitor. 

• Timeliness – The program should begin assisting homeowners quickly (e.g., within 60-90 

days of program approval by Treasury). 

• Scale/Impact – The program should have a measurable impact on the foreclosure crisis, 

particularly hardest hit/target counties, in Tennessee. 

• Concentration on “Hardest Hit” – Workers suffering job loss will be the primary 

beneficiaries of our program. 

Although HHF assistance will be available statewide, homeowners living in distressed (“hardest 

hit”) counties will be eligible to receive additional assistance. 

THDA received input from THDA’s lending partners and counselors in THDA’s network of 

foreclosure counselors through various phone calls and a joint conference call. These efforts 

produced insightful questions and valuable suggestions that have been considered/incorporated 

into the overall THDA strategy and program development. In addition, THDA’s internal 

leadership team and Board of Directors (which represents a variety of housing organizations 

statewide) played a key role in developing the proposed program. As a result, the THDA 

proposal draws on the considerable knowledge and experience of THDA staff and of 

representatives of housing organizations across the state. 

 
3 | Page THDA

Item A: 

OVERVIEW OF PROGRAM 

Based on feedback from THDA’s Board of Directors and other industry partners, THDA will 

focus on the following needs: 

• Unemployed homeowners who, through no fault of their own, are unable to make their 

mortgage payments and are in danger of losing their homes to foreclosure. 

• Underemployed homeowners struggling with unaffordable mortgages as the result of an 

uncontrollable decrease in income and/or an uncontrollable increase in household expense. 

THDA proposes to use HHF to create a program to address these needs. HHF will provide a 0% 

interest, non-recourse, deferred-payment, subordinate loan that will be forgiven after 5 years. 

The loans will assist an estimated 11,211 homeowners who are unemployed or are substantially 

underemployed. Loan funds will pay monthly mortgage and mortgage-related expenses (i.e., 

property taxes, homeowner insurance and homeowner dues) while the homeowner seeks or trains 

for a new job. Loan funds will also help cover past-due mortgage payments (arrearages). 

Homeowners in “hardest hit” counties will be eligible to receive up to $20,000 (not to exceed 18 

months of assistance). Homeowners in other counties will be eligible for up to $15,000 (not to 

exceed 12 months of assistance). 

THDA estimates that the remaining $25.4 million (11.73%) of HHF will be used to cover 

administrative costs and partner expenses. 

Background on Unemployment and Foreclosures in Tennessee

The current recession has posed significant challenges for the state and the nation, but in many 

respects Tennessee was already in the midst of a broad economic shift before the recession hit. 

Tennessee traditionally has had a heavy concentration of manufacturing jobs, but it has been 

losing manufacturing jobs for at least the past two decades. In 1990, the state had nearly 500,000 

manufacturing jobs, accounting for one in four jobs in the State (23%). By 2001, 43,300 of those 

jobs had been lost, but the biggest declines were yet to come. The national recession in 2001 hit 

non-durable goods producing industries especially hard in Tennessee, shedding 98,300 jobs from 

1990 to the end of 2007. By January of 2008, only 380,000 manufacturing jobs remained in the 

state. In the current two-year downturn, another 70,300 manufacturing jobs have been lost. 

Across all sectors, more than 178,500 jobs were lost between 2007 and 2009. Not surprisingly, 

unemployment rates are high statewide, although there are distinct differences among counties. 

Tennessee is made up of 95 counties, some urban and some rural. For instance, Nashville, 

Memphis, and Knoxville are major regional centers in middle, west, and east Tennessee, 

respectively. Other outlying areas are largely rural. Many rural areas have not participated in the 

shift to the knowledge-based economy that has prospered in the urban areas of the state and, in 

many instances, they have also suffered declines due to loss in traditional manufacturing jobs, 

such as textiles and apparels. Rural Tennessee counties have less diversified economies; in 

certain counties the entire county economy heavily depended on one large manufacturing 

company. For example, in 65 out of 95 counties, 1 in every 3 jobs was in the manufacturing 

sector in 2001. When these plants close, there are often literally no other employers in the town. 

Also, the jobs have tended to be low-skill and to require only a low level of education. Once laid 
4 | Page THDA

off from their factory job, few of these workers can find another job without some form of 

education or retraining. 

In the current recession, unemployment rates rose very quickly. From January 2008 through June 

2010, the state unemployment rate increased from 6.1% to 10.0%. The statewide average 

unemployment rate masks the depth of the crisis for some Tennessee counties. In 2009, 60 

counties had unemployment rates higher than 11.5%, 1 percentage point above the state average 

unemployment rate, and 31 counties had rates higher than 13.5%, 3 percentage points higher 

than the state average. Many of these high-unemployment counties are the same counties where 

manufacturing was most heavily concentrated, so workers face a double burden—the loss of 

their jobs, coupled with the knowledge that few, if any, of these jobs will return. Because the job 

loss is concentrated, there is a high risk that whole communities may be destabilized. 

In 2009, Haywood County, in the rural west portion of the state had an unemployment rate of 

16.2%, and 7.2 % of the loans in the county were 30 or more days delinquent (according to data 

from the Federal Reserve Bank of New York). Neighboring Lauderdale County had an 

unemployment rate of 18.9% and a 30-day delinquency rate of 6.5%. In the past two years, 

Lauderdale County lost 565 jobs, including 550 in the manufacturing sector. 

Tennessee’s traditional textile, apparel, and furniture industries are visible casualties of the 

economic downturn, but the current recession has also hit the state’s transportation equipment 

manufacturing sector, along with motor vehicle and parts dealers. Between 2007 and 2009, more 

than 25,000 Tennessee jobs were eliminated in those sectors. Many of these jobs were located in 

the middle Tennessee area, and this concentrated impact has been especially hard on the 

communities there. Recent research confirms the key role that unemployment and loss of 

income play in home foreclosures. According to data from Freddie Mac, 58% of all 

delinquencies are triggered by unemployment or a curtailment of income. Not surprisingly, many 

Tennessee counties with the highest unemployment rates have experienced a large number of 

mortgage delinquencies or foreclosures. Between December 2008 and December 2009, the 

number of loans that were more than 90 days delinquent increased from 3.16% to 4.77% (MBA 

quarterly surveys Q408 to Q409). 

The design of THDA’s Hardest Hit Fund Program (HHFP) is based on THDA’s understanding 

of the foreclosure crisis in Tennessee. The following indicators illustrate the extent of the crisis: 

• An estimated 121,324 homes in Tennessee will be lost through foreclosure between 2009 and 

2012, according to the Center for Responsible Lending. 

• Foreclosure filings for 2009 reached 40,733, with 61 of 95 counties recording an increase. 

This represents an 8% increase over the number of filings in 2008. Moreover, the pace of 

foreclosure filings is increasing. For the second quarter of 2010, the 11,944 foreclosure 

filings represent a 14% increase over the second quarter of 2009. (RealtyTrac: Properties 

with foreclosure filings).

• Declining real estate values limit the ability of many homeowners to refinance their 

mortgage. According to an August 2010 report by First American CoreLogic, at the end of 

the second quarter of 2010 there were 131,786 borrowers in Tennessee who were 

“underwater” (i.e., homes are worth less than the balance of the mortgage). This comprises 

13.8% of all residential properties with a mortgage. 
5 | Page THDA

In addition, most unemployed homeowners either do not qualify for existing loss mitigation 

programs, or the assistance does not last long enough for them to find a new job. A substantial 

number of Tennessee homeowners are more than three months behind in their mortgage 

payments, and they may need more than three to six months to find another job. THDA’s 

proposed HHFP will provide more extensive assistance to unemployed homeowners and others 

suffering a temporary financial hardship due to substantial underemployment (those experiencing 

a reduction in income of 50% or greater). Loan proceeds will be used to pay their mortgage and 

mortgage-related expenses while the homeowners look for a job or train for a new one. The 

initiative THDA is proposing will have a significant impact on these problems, will improve the 

outlook for Tennesseans who have suffered unemployment, and will strengthen communities 

experiencing high rates of foreclosure. 

Item B: 

PROPOSED HHFP DETAILS AND ALLOCATION METHODOLOGY 

THDA proposes one program to assist homeowners across the state. As previously described, the 

majority of Treasury funds will help unemployed and/or underemployed borrowers stay in their 

homes. The HHFP provides assistance for unemployed and/or underemployed borrowers while 

they look for a job or retrain for a new career. 

The following section describes the proposed program in more detail, outlines the specific goals, 

and how progress will be measured. This section also describes the population that the program 

will serve, provides a timeline for fund deployment and implementation and identifies possible 

obstacles the program may encounter. 

THDA’s proposed HHFP will assist an estimated 11,211 unemployed and/or underemployed 

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

and are in danger of losing their home to a foreclosure. THDA will provide assistance to 

qualified homeowners to achieve the following goals: 

• Assist homeowners while they look for a new job 

• Assist homeowners while they complete a job training or education program that will 

enhance their job skills 

• Assist homeowners who are re-employed but need help to bring their mortgage current 

Tennessee has one of the highest unemployment rates in the country. As of June 2010, the 

unemployment rate was 10.0%, which translates into more than 304,683 people out of work. The 

number would be much greater if it included individuals who have given up looking for work, 

have not filed an unemployment claim as of yet or the self- employed whose businesses have 

virtually closed and therefore are not captured in the official unemployment rate. 

To help eligible homeowners apply for assistance, THDA will build upon the existing statewide 

network of housing counseling partners who have participated in our foreclosure prevention 

program, the National Foreclosure Mitigation Counseling (NFMC) program, which we have 

administered since 2008. Over 6,400 homeowners have received foreclosure counseling and 

budgeting services from the NFMC program. Our current NFMC partners employ more than 60 
6 | Page THDA

foreclosure counselors/specialists with an extraordinary amount of experience. Based on the 

success of the NFMC program and the partnership networks created to implement them, THDA 

is confident it can quickly and effectively assemble a network to administer the proposed HHFP. 

The HHFP will provide a 0% interest, non-recourse, deferred-payment, subordinate loan that will 

be forgiven in years one through five at a rate of 20% per year. THDA will use loan proceeds to 

pay the homeowner’s mortgage and mortgage-related expenses (i.e., property taxes, hazard 

insurance and homeowner association dues). The loan proceeds can be used for payments as 

well as any arrearages while staying within the confines of the maximum benefit. These 

payments will be made directly to the Servicer, not to the borrower. The following types of 

assistance will be available: 

• Standard benefit counties: $15,000 up to 12 months 

• Targeted benefit counties: $20,000 up to 18 months 

Loan funds are due and payable if the property is sold, refinanced or no longer owner-occupied 

(unless otherwise prohibited under applicable federal law). Loans are repayable only from 

proceeds to the borrower from a sale or refinance. If the property is sold or refinanced and has 

not increased in equity to the degree necessary to repay the note, all or a portion of the note will 

be forgiven. 

Goal 

THDA estimates 11,211* unemployed or underemployed homeowners will be assisted over a 

three-year period. Our projected annual goals for HHFP are as follows: 

Year 1 4,768 homeowners assisted 

Year 2 4,768 homeowners assisted 

Year 3 1,675 homeowners assisted 

We have budgeted $191,827,011 million, or 88.27% of HHF, to support the program. This 

allocation assumes HHFP loans with 44% at $20,000 and 56% at $15,000, resulting in an 

average loan amount of $17,200. 

Measuring Program Success/Progress 

Progress will be measured by the total number of foreclosures prevented. THDA will collect the 

following metrics (discussed in greater detail in Tracking & Reporting – Item C on page 12): 

• Number of homeowners assisted 

• Number of homeowners assisted who were six or more months delinquent and in imminent 

danger of a foreclosure 

*Our estimate of 11,211 loans is based on an analysis of number of active loans, using data from the NY Federal Reserve Bank, the 

unemployment rates for each county, and county delinquency rates. We developed a share of potential program beneficiaries from the targeted 

counties (44%) and the non-targeted counties (56%). Assuming each homeowner would use the maximum benefit available, we estimated the 

number of potential beneficiaries from each group of counties, with an estimated total number of 11,211. 
7 | Page THDA

• Number of homeowners assisted who were six or more months unemployed 

• Number of homeowners who completed a job search or job training program and secured 

employment within two months of their assistance ending 

In addition, THDA will look at the number of homeowners assisted in targeted “hardest hit” 

counties for all the above metrics to measure the effectiveness of the targeting effort.

Target Populations 

For HHFP, the target population is unemployed and/or substantially underemployed 

homeowners (those experiencing a reduction in income of 50% or greater), who are financially 

unable to make their payments and are in danger of losing their home. This includes homeowners 

who have suffered a program-eligible hardship. There are combined household income 

limitations of $74,980 and the total combined outstanding mortgage amount cannot exceed 

$226,100. 

While HHFP assistance will be available statewide, a larger benefit will be available to 

homeowners living in targeted or “hardest hit” counties. “Hardest hit” counties are designated 

by THDA as counties with at least two of these three factors: 

• with 2009 unemployment rates higher than the statewide average of 10.6%;

• a high percentage of the state’s foreclosure filings;

• or a high rate of mortgage loans that are 30-90+ days delinquent. 

See Exhibit C for Map. 

Timeline 

THDA expects to implement the program within 60-90 days of approval by Treasury. 

 

Implementation will include developing a software program and web portal for the homeowner, 

counselors, and THDA, preparation of marketing materials, legal documentation, and monitoring 

tools. It will also include training for housing counseling partners. When the HHF funds 

become available in Tennessee, THDA anticipates an initial surge in demand due to the high 

number of homeowners who are already at risk of default or foreclosures. Therefore, THDA 

anticipates approving approximately 4,768 participants in the first year of the program, 4,768 in 

the second year and 1,675 in the third year. THDA will draw funds monthly. The HHFP will 

continue using recycled funds until 2017 when all funds must be returned to Treasury. 

Obstacles 

The greatest obstacle we anticipate is the dramatic increase in the volume of applications to be 

reviewed and loans to be delivered. Our housing counselor partners have indicated they 

currently have the capacity to handle increased volume, however, we will need to build our own 

capacity and help our partners further build theirs in order to assure the appropriate management 

of the increased volume of applications and loans. 
8 | Page THDA

We are exploring ways to strengthen and streamline the approval, closing, and payment 

documentation processes in order to handle the increased volume efficiently. We are planning to 

use a web-based portal to receive, underwrite and track applications electronically. We will also 

need to add staff to assist with intake, application review, and closing the loans. 

To determine how best to help partner agencies increase their capacity we have sought their 

ideas through conference calls and individual agency/partner discussions. We have also utilized 

our Lender Advisory Board to receive feedback and suggestions. 

Leveraging of Other Resources 

The proposed HHFP builds upon the expertise of THDA staff, including its Single Family 

Programs division which includes the Homebuyer Education Initiative encompassing 

Foreclosure Prevention, as well as a strong network of housing counseling partners. HHFP also 

builds upon THDA’s experience in successfully managing the National Foreclosure Mitigation 

Counseling (NFMC) program in Tennessee. 

Any funds returned according to established program guidelines will be used to assist additional 

homeowners through December 31, 2017. After December 31, 2017, any remaining or 

recaptured funds will be returned to Treasury. 

Item C: 

DEMONSTRATION OF CAPACITY TO IMPLEMENT 

The Tennessee Housing Development Agency (THDA) was created in 1973 by the Tennessee 

General Assembly as a self-supporting entity to provide access to affordable housing for 

Tennesseans with low and moderate incomes. To accomplish its mission, THDA provides capital 

and technical expertise and builds private and public partnerships, matching its resources with 

the resources of lenders, builders, local governments, and housing producers throughout the 

state. 

THDA’s programs are funded primarily through federal programs (Mortgage Revenue Bonds, 

HOME, Low Income-Housing Tax Credits, etc.). THDA uses its resources to fund housing 

development activities in homeownership, rental production, rehabilitation, rental assistance and 

supportive housing. 

Since its creation, THDA has provided financing for real estate activity valued at $6.9 billion and 

helped 177,030 households obtain safe, decent, and affordable housing. During 2009 THDA 

provided financing and tax credits to support $175.8 million of real estate development. This 

investment created or rehabilitated 6,825 homes and apartments. THDA also provides housing 

and rental assistance for 36,343 Tennessee households with low and moderate incomes. 

THDA has business processes in place to receive and disburse funds to minimize the risk for 

fraud, waste, abuse, or mismanagement of funds. THDA has separation of duties between the 

program groups who underwrite and approve the loans and the finance group that accounts for 

and disburses the funds. For the past several years, THDA has received no findings during its 

annual financial audit. (Audit, internal controls, and fraud risk mitigation are discussed in greater 

detail in Item F.) 
9 | Page THDA

THDA has built a statewide partnership network of counselors to help facilitate the successful 

administration of the National Foreclosure Mitigation Counseling Grant program (NFMC). 

THDA has received NFMC grants in 2008, 2009, and 2010. Sponsored by NeighborWorks, the 

NFMC program provides funding for a variety of loss mitigation services by participating 

housing counseling partners. 

Finally, THDA has a seasoned staff of experienced underwriters, outreach and business 

development personnel, closing and legal staff. Its capabilities include an effective quality 

control process and staff who monitor the performance of THDA’s portfolio and staff activities. 

Qualification As An Eligibility Entity 

In accordance with the HHF Guidelines published by the US Department of Treasury, each 

recipient of funding from the HHF must qualify as an “Eligible Entity.” An “Eligible Entity” is a 

“financial institution”, as that term is defined in the Emergency Economic Stabilization Act 

(“EESA”). The Tennessee Housing Development Agency (“THDA”) is an “Eligible Entity” for 

purposes of the Hardest Hit Fund Initiative. THDA is a body, politic and corporate, established 

under Tennessee Code Annotated, Section 13-23-101, et seq. THDA is regulated by the State of 

Tennessee as demonstrated in Tennessee Code Annotated Section 13-23-107, that provides for 

the appointment of 14 Board members by the Governor, the Speaker of the House and the 

Speaker of the Senate, and Tennessee Code Annotated Section 13-23-106, that provides for the 

state treasurer, the state comptroller of the treasury, the state commissioner of finance and 

administration, the secretary of state and a staff assistant to the Governor to be THDA Board 

members. THDA has the power to (i) receive funds from the US Treasury, (ii) enter into 

contracts, and (iii) operate independently. 

Key Staff 

Ted R. Fellman, Executive Director 

Ted R. Fellman was appointed as the Executive Director of the Tennessee Housing Development 

Agency (THDA) in 2005. Ted has been responsible for transforming THDA into a leader in 

affordable housing and a resource for housing providers and advocates. Under his leadership 

THDA has created a housing trust fund to provide grant funds for Tennesseans of very low 

income, with special needs or above 60 years of age. THDA has received numerous accolades, 

including for program excellence and management innovation from the National Council of State 

Housing Agencies (NCSHA). Ted is a 25-year veteran of state government and has worked at 

THDA in leadership capacities since 1995. He has a master of public administration from 

Tennessee State University. He currently serves on the Board of Directors for the NCSHA. 

Lynn Miller, Deputy Executive Director and General Counsel 

Lynn Miller has been with THDA for 17 years and is responsible for all legal issues in all 

matters related to THDA. Her responsibilities include providing legal and programmatic advice 

for decision-making with respect to structuring and implementing all THDA programs. Ms. 

Miller is knowledgeable about federal and state laws, regulations and various funding sources 

and programs related to housing, including Mortgage Revenue Bonds, Low-Income Housing Tax 

Credits, Tax Credit Assistance Program (TCAP), Grants to States for Low-Income Housing 

Projects In Lieu of Low Income Housing Tax Credit Allocation (Section 1602), HOME, 
10 | Page THDA

Neighborhood Stabilization Program (NSP), National Foreclosure Mitigation Counseling 

(NFMC), Homelessness Prevention and Rapid Rehousing Program (HPRP). Prior to joining 

THDA, Ms. Miller’s law practice centered on commercial real estate, commercial real estate 

financing and construction with Boult, Cummings, Conners & Berry in Nashville, TN. Prior to 

practicing law, Ms. Miller was Director of Advance Planning for the Chattanooga-Hamilton 

County Regional Planning Commission in Chattanooga, Tennessee and was a principal planner 

with the Tennessee State Planning Office. Ms. Miller earned a Bachelor of Arts degree from 

Wittenberg University; a Master of Science in Planning degree from the University of 

Tennessee; and a Doctor of Jurisprudence degree from Vanderbilt University. 

Trent Ridley, Chief Financial Officer 

Trent Ridley has been with THDA for four years as its Chief Financial Officer. As a member of 

THDA’s Senior Executive Team, Trent is responsible for ensuring the integrity of all the 

financial systems, transactions and reports of the organization. This position is also responsible 

for managing the administrative functions of the organization, including the Finance, Fiscal 

Administration, and Information Technology divisions. Prior to his employment with THDA, he 

held positions with the State of Tennessee, including the Department of Health, Rehabilitative 

Initiative in Correction, and the Department of Finance and Administration. Trent is a graduate 

of Middle Tennessee State University with a bachelor of business administration. 

Lorrie Shearon, Chief Strategy Officer 

Lorrie Shearon, a 14-year veteran of THDA, is responsible for developing and leading execution 

of strategy for THDA, ensuring that decisions continue to be made in alignment with the 

organization’s mission. As a member of THDA’s Senior Executive Team, Lorrie oversees 

management of information on the housing industry as well as public policy research on housing 

issues. She works with other agencies in coordinating community development activities. She 

also coordinates the work of the statewide affordable housing coalition, along with its 

chairperson, and has established industry specific advisory boards to work with THDA. Lorrie’s 

previous experience includes the State Administrative Office of the Courts as well as the Federal 

Energy Regulatory Commission in Washington, D.C. She holds a master’s degree from George 

Washington University. 

Laura Sinclair, Senior Director of Single & Multifamily Programs 

Laura Sinclair oversees the THDA mortgage loan portfolio consisting of over 26,000 loans 

totaling $2.6 billion. Laura is responsible for oversight of the origination, servicing, business 

development, the Homebuyer Education Initiative (HBEI) of the Mortgage Revenue Bond 

program at THDA as well as the administration of the BUILD and Preserve loan programs for 

non-profits. In addition, Laura is responsible for the National Foreclosure Mitigation Counseling 

Grant. Furthermore, Laura oversees the Multifamily Development Program for THDA. Laura 

has over 25 years of experience in the Mortgage Banking industry, including loan origination, 

underwriting, secondary marketing, information technology, operations management, and the 

administration and management of Single Family Programs within the Housing Finance Agency 

arena. Prior to joining THDA, she was with Columbia National Mortgage, the New Mexico 

Mortgage Finance Authority (HFA), North American Mortgage Company and PaineWebber 

Mortgage Finance Company. Laura earned her bachelor’s degree in economics from the 

University of New Mexico. 
11 | Page THDA

Bill ClenDening, Foreclosure Prevention Manager 

Bill ClenDening is the primary administrator of the National Foreclosure Mitigation Counseling 

Program and works closely with THDA’s network of Foreclosure Prevention counselors through 

this grant. With the addition of the HHF Program, Bill’s role will be expanding to enable him to 

manage the day to day operations of the HHF Program, working closer with THDA’s counseling 

agency network, providing ongoing training and support as well as managing the in-house 

counseling and underwriting departments. Bill has served as a Homebuyer Education Initiative 

(HBEI) Specialist at THDA where he was responsible for providing support to the overall 

administration of the HBEI program and is the primary contact for THDA’s BUILD Loan 

Program. Bill’s previous experience includes several years as a REALTOR® and serving as the 

Chief of Operations/Vice President of a real estate company. He has a Bachelor of Science 

degree from Middle Tennessee State University. 

Nicole Lucas, Director of Information Technology 

As the Director of Information Technology, Nicole is responsible for planning, establishing the 

strategy, short and long term directions, policies and procedures, and providing administrative 

and technical direction to the Information Technology (IT) staff. Nicole plans, evaluates, 

procures, and assists in designing, developing, and implementing technology-related systems 

throughout the organization. Nicole has worked in the field of information technology for over 

13 years. She received her bachelor of science from Western Kentucky University and is 

currently pursuing a master of public administration degree at Tennessee State University. 

Joe Brown, Director of Finance and Controller 

Joe Brown has been THDA for 18 years. Joe oversees THDA’s financial operations, accounting, 

purchasing, contracting, and facilities. His prior experience includes Comptroller of the Treasury 

of Tennessee in the Division of State Audit as a Legislative Auditor performing financial and 

compliance audits of the State’s Departments, educational institutions, and other State agencies. 

Joe is a Certified Public Accountant in the State of Tennessee. He has a B.S. from East 

Tennessee State University. 

Tracye Mayolo, Director of Human Resources 

As the Director of Human Resources, Tracye provides vision and leadership for THDA’s current 

and future human resource needs. She oversees all human resources activities for the 

organization, including recruitment, retention, compensation, benefits, employee relations, 

training, and legal and regulatory compliance. Tracye has more than 20 years of experience in 

leading the HR functions in both the private and public sector. Tracye has a bachelor of business 

administration degree from Middle Tennessee State University and has obtained several industry 

certifications including the Senior Professional in Human Resources (SPHR). 

Mary McLennan, Director of Research and Planning 

Mary McLennan has ten years of experience with THDA. She is primarily responsible for 

working with other agencies to coordinate community development activities, including 

developing comprehensive state housing plans, tracking statewide housing program activity, and 

encouraging and providing technical assistance to outside groups to initiate housing programs. 

She oversees THDA’s research on housing issues, including tracking and compiling information 

on housing programs statewide, their level of activity, and comparisons to plans. Mary’s 
12 | Page THDA

previous experience includes 20 years in community development with a regional council of 

governments. Mary has a master’s degree in public administration from Georgia State 

University. 

Patricia M. Smith, Director of Public Affairs 

Patricia M. Smith directs THDA’s efforts with internal and external communications to make 

THDA’s services more widely known with elected officials, business partners and the general 

public. She has 20 years of experience with THDA. She also was a communications professional 

for the American Red Cross. She holds a B.S. degree from George Peabody College at 

Vanderbilt University. 

Wayne Beard, Director of Finance 

Wayne Beard directs THDA’s debt management and investment of funds, including THDA’s 

mortgage revenue bond program. The organization has $1.9 billion in outstanding bonds and an 

investment portfolio valued at $600 million. Wayne has 25 years of experience with THDA. 

Wayne is a Certified Public Accountant in the State of Tennessee. He holds a B.S. degree from 

Tennessee Technology University. 

Ron Erickson, Director of Internal Audit 

Ron Erickson directs THDA’s internal audit division and reviews all THDA programs and 

servicing institutions. Ron has 30 years of governmental audit experience, including the recent 

ten years with THDA. Ron’s previous experience includes Audit Director for the State 

Department of General Services as well as Legislative Auditor for the State Comptroller of the 

Treasury. Ron is a Certified Public Accountant in Tennessee as well as a Certified Government 

Financial Manager. He holds a bachelor of business administration degree from Austin Peay 

State University. 

Tracking & Reporting 

THDA maintains a sophisticated in-house software program, also known as MITAS. The 

MITAS system provides the ability to record and track all financial data, borrower/household 

data, and other organizational entity data as explained below. 

A separate budget will be maintained for the Hardest Hit funds and every transaction against 

these funds will be tracked within the MITAS system. This system is used to track all revenues 

and expenses relating to THDA’s Mortgage Revenue Bond Program. All MITAS transactions 

are imported into the organization’s financial accounting and reporting system, Microsoft 

Dynamics SL, for inclusion in the organization’s financial statements, which are audited by the 

State of Tennessee Comptroller’s Office. 

THDA will utilize our existing MITAS system for program management and the 

tracking/recording of pertinent data fields for Hardest Hit programs. This system will be 

leveraged as built or modified as needed to support the Hardest Hit programs. It records and 

tracks multiple layers of property and borrower data fields, including, but not limited to the 

following: property address, appraised values, income, number of occupants, age of occupants, 

and loan-to-values (LTVs). This system has multiple pre-formatted reports and report generation 

capabilities for parsing data as needed on an ad hoc basis. 
13 | Page THDA

In addition, THDA plans to use a web-based portal to facilitate the promotion and collaboration 

among all key stakeholders including counseling agencies, servicers, lenders, and borrowers. 

Data and documentation from the web-based portal will be downloaded to THDA’s MITAS 

system at the appropriate time to support program management and borrower/case review, 

underwriting, loan closings, etc. 

THDA proposes the following program success metrics to be reported quarterly or as requested 

by Treasury: 

• Expected vs. actual figures for funds disbursed and homeowners assisted 

For existing homeowners assisted: 

• Number of unemployed who were six months or more delinquent in their mortgage and 

in imminent danger of foreclosure 

• Number who completed a job search and/or job training/education program and secured 

employment within two months of assistance ending 

• Number assisted within targeted counties 

Item D: 

STAFFING & BUSINESS PARTNERS 

To implement the Hardest Hit Fund programs, THDA will use a combination of existing 

employees, outside contractors, and external partners. THDA has an experienced staff and a 

history of successfully implementing programs in collaboration with other Tennessee state 

agencies and external partners. The staffing plans for our programs are as follows: 

Hardest Hit Fund Program 

THDA anticipates first utilizing existing staff to facilitate preparation for the program. THDA's 

Single Family Mortgage Programs staff is able to absorb initial planning functions as well as 

years 4-7 as the program winds down. In addition, THDA plans to utilize the experience and 

knowledge of its Foreclosure Prevention staff to manage the day-to-day operations of the 

program. An IT Developer will be hired to assist in developing the software program necessary 

to manage the collaboration and communication between THDA, the counselor, and the 

homeowner. Several contract/temporary foreclosure prevention staff positions will be dedicated 

to this program. THDA will hire contractors/temporary employees to assist with an HHF call 

center, IT, accounts payable, underwriting loans, preparing loans documents, and closing loans. 

These staffing estimates are based on THDA's experience managing our existing Single Family 

Mortgage Program. See Exhibit D for a detailed organizational chart. 

Counseling Network 

In order to provide the highest level of service to Tennessee homeowners, THDA has chosen to 

utilize its existing, proven network of foreclosure counseling agencies to implement the 

counseling components of Tennessee’s HHFP. 
14 | Page THDA

With nineteen agencies and sixty plus counselors distributed throughout the state, this group has 

provided foreclosure counseling to over 6,400 homeowners over the past two years. Residents of 

92 of the 95 Tennessee counties have benefited from this effort. 

Through the implementation of the National Foreclosure Mitigation Counseling Program as 

administered by THDA as a grantee, and sponsored by NeighborWorks, these agencies and 

counselors have evolved and grown, as has the relationship between them and THDA. To date, 

more than $3.2 million has been provided to help these agencies expand their foreclosure 

prevention services. The program requires careful client tracking, which is monitored and 

coordinated through an online information system shared by the counseling agencies and THDA. 

Of that amount, THDA has provided more than $498,000 in match funding, a tangible 

manifestation of THDA’s commitment to Tennessee homeowners, resulting in significant 

additional counseling funds for our agencies as well as ongoing training and educational and 

networking events. 

Taking advantage of this already established collective of experience and knowledge both 

simplifies and strengthens Tennessee’s HFFP, greatly increasing the chances of success for these 

homeowners and the success of the entire effort. 

The utilization of this existing network will expedite the rollout of the program, and given the 

extreme time constraints involved, will afford the earliest possible start date. 

Following are the agencies that comprise this network, along with their base city and region: 

Agency City Region 

Chattanooga Neighborhood Enterprise Chattanooga East 

Clinch Powell RC&D Rutledge East 

Eastern Eight CDC Johnson City East 

Knox Housing Partnership Knoxville East 

Knoxville Area Urban League Knoxville East 

Affordable Housing Resources Nashville Middle 

Citizens for Affordable Housing Nashville Middle 

Dominion Financial Management Smyrna Middle 

GAP Community Development Resources Franklin Middle 

Life of Victory International Christian Ministries La Vergne Middle 

Residential Resources, Inc. Nashville Middle 

The Housing Fund, Inc. Clarksville Middle 

Woodbine Community Organization Nashville Middle 

Binghampton Development Corporation Memphis West 

Financial Counselors of America Memphis West 

Jackson Housing Authority Jackson West 

Memphis Area Legal Services, Inc. Memphis West 

Southeast Memphis CDC Memphis West 

United Housing, Inc. Memphis West 
15 | Page THDA

In order to determine expected production and an initial startup allocation for our agencies in our 

foreclosure counseling network, we have chosen to employ the following methodology: 

Since all of these agencies have participated in one or more rounds of the National Foreclosure 

Mitigation Counseling program and we have recently generated production projections for each 

agency by metropolitan statistical area for the current round of NFMC funding, we are choosing 

to employ the percentages derived by the historical trends of these agencies. 

By taking the overall production numbers from the applicable rounds for each agency and 

dividing these agency figures by the aggregate numbers for all of the MSA’s, we derive a 

percentage. 

We can therefore apply this percentage for each agency to the overall number of loans we expect 

to make over the life of the program to determine an allocated number of loan units. 

Adjustments based on overlaying the distressed counties can then be made if needed. 

Once the overall number of loans per agency is allocated and multiplied by $1,000.00, we can 

multiply the total allocated dollar amount by 10% to derive an upfront initial disbursement. 

As the agencies close loans, the per loan amount is debited against their initial disbursement 

balance until the amount earned is equal to the initial disbursement balance. At that point, 

production-based disbursements will begin. This will provide the counseling agencies with 

initial start-up funds needed to implement the program. 

Agency % # of Loans-11,211 Region 

Chattanooga Neighborhood Enterprise 7.73 867 East 

Clinch Powell RC&D 4.18 469 East 

Eastern Eight CDC 5.5 617 East 

Knox Housing Partnership 3.16 354 East 

Knoxville Area Urban League 1.51 169 East 

Affordable Housing Resources 5.46 612 Middle 

Citizens for Affordable Housing 3.62 406 Middle 

Dominion Financial Management 5.41 607 Middle 

GAP Community Development Resources 5.93 665 Middle 

Life of Victory International Christian Ministries 7.62 854 Middle 

Residential Resources, Inc. 2.22 249 Middle 

The Housing Fund, Inc. .93 104 Middle 

Woodbine Community Organization 8.34 935 Middle 

Binghampton Development Corporation 1.85 207 West 

Financial Counselors of America 18.61 2086 West 

Jackson Housing Authority .7 78 West 

Memphis Area Legal Services, Inc. 10.7 1200 West 

Southeast Memphis CDC 1.75 196 West 

United Housing, Inc. 4.77 535 West 
16 | Page THDA

NOTE: For units that do not come to fruition, yet the counselor has determined HAMP 

eligibility, we have allocated $100 per unit for those cases. 

In addition to this network, THDA also proposes to add an in-house staff led by an experienced 

counselor who will act as counseling team leader and coordinator. This counseling team will be 

the core staff for the HHF call center and will also provide an additional layer of counseling for 

our network, assisting those homeowners with special circumstances, i.e. self- employed, etc. 

and also supporting the efforts of those in the counseling network. 

While the call center staff will also act in a triage capacity, gathering basic intake to prepare the 

file and the homeowner for the counseling effort, they will also provide technical assistance for 

those homeowners who need some guidance through the online application process.

Title Companies 

THDA will issue an RFP to title underwriters with agencies located in the state of Tennessee 

and/or individual title agencies to provide closing and documentation recordation services. 

Compensation is estimated to be $150 per closed file plus recording fees. 

Program Flow Charts 

Flow charts showing the roles of the homeowner, housing counselor, THDA and the servicer are 

attached. See Exhibit F for Flow Chart. 

 

Item E: 

ADMINISTRATIVE EXPENSES

THDA has budgeted $25,488,581 million to cover estimated costs over the next seven years. 

These costs include, but are not limited to, salaries (Please see Exhibit E for staffing projections), 

marketing, auditing, and technology. Also included in this figure is $15,147,677 million to cover 

our partners’ costs. This amount also includes the cost of recording and wire transfer fees for all 

of the loans. Please refer to Exhibit B for a complete breakdown of Administrative Expenses. 

Item F: 

OVERVIEW OF RISK MANAGEMENT/FRAUD PREVENTION

Tennessee Housing Development Agency intends to comply with all requirements of the 

Emergency Economic Stabilization Act of 2008 (EESA) including but not limited to, allowing 

full compliance oversight by the Treasury, the Comptroller General of the United States, 

Government Accountability Office, Congressional Oversight Panel and the Special Inspector 

General of the Troubled Asset Relief Program (SIGTARP) as to the application of any EESA 

funds. All books, records and communications regarding the use of EESA funds by THDA will 

be made available for review by any of these entities upon request. 

THDA will accomplish compliance oversight, internal controls and fraud prevention through 

several means. Policies, procedures and internal controls required to implement our HHF 

program will be modeled on processes that are already in place and operating as intended. Our 

Internal Audit division prepares an audit plan each fiscal year based on a risk assessment of all 

programs and activities within THDA. This risk assessment includes a number of factors, such 
17 | Page THDA

as previous audit results, time since last audit, length of program existence, assets or dollars 

associated with the program, and a number of other factors that lead to projects selected for 

review each year. Our audit plan will be expanded to include the review of internal and partner’s 

HHFP activities. 

THDA performs a periodic assessment and monitoring of internal controls developed and 

implemented through the annual Enterprise Risk Management process, to ensure that THDA’s 

internal controls in effect adequately safeguard assets, and when taken as a whole provide 

reasonable assurance of the proper recording of financial transactions, compliance with 

applicable laws, regulations, rules, contracts and grant agreements, and support the achievement 

of operational objectives. This internal control review process, which will also be performed for 

the HHFP, is designed to minimize the risk of fraud, mitigate conflicts of interest, and maximize 

operational efficiency and effectiveness. Our process includes the following steps as defined 

below: 

• Knowing the Internal Environment – Management obtaining the “big picture” of the 

organization to direct efforts towards the largest risk areas. 

• Setting Objectives - Identify why the organization exists, what needs to be done, and 

what activities are necessary to achieve business processes in strategic, operational, 

reporting, and compliance categories. 

• Event Identification – Identify events and then the risks that are produced as a result of 

those events that would impede the organization in meeting its objectives. 

• Likelihood/Impact – For each risk identified in Step 3, document management’s 

assessment on the likelihood and impact of the risk. 

• Control Activities and Risk Response – Identify the control activities. This is where the 

internal control evaluation takes place. Each risk previously identified should have a 

corresponding internal control established to mitigate the effect, or lessen the probability 

of its occurrence. This is also the area where management tests of the controls document 

operating effectiveness. 

• Final Evaluation – Evaluate the residual risks in the aggregate to determine if total 

residual risks are within the organization’s risk appetite. 

• Report Results – complete a management report including proposed internal control 

improvements that is shared with the Audit & Budget Committee of the THDA Board of 

Directors, senior executives and external auditors. 

THDA proposes to underwrite each HHFP loan before closing. We will also actively monitor 

the counseling agencies and will receive periodic updates from them on the success of the 

borrowers who have been assisted. THDA will perform the following activities to ensure that 

eligible borrowers are receiving the assistance: 

• Underwriting of each loan by HHFP staff. 

• Verification of the recipient’s identity at closing. 

• Working with the Tennessee Department of Labor and Workforce Development to ensure 

appropriate notifications of unemployment benefits, changes, and sharing of continued 

eligibility information. 

• THDA quality control to verify: 

o Borrower Eligibility Criteria 
18 | Page THDA

o Property/Loan Criteria 

o Program Exclusions 

o Program Duration/Extension 

 Specifically relating to the prevention, detection and deterrence of fraud, THDA’s Internal Audit 

division takes affirmative action each year to remind all staff of required actions for formally and 

promptly addressing any allegations of fraud, waste or abuse. As excerpted from the American 

Institute of Certified Public Accountants’ Statement on Auditing Standards Number 99, 

Consideration of Fraud in a Financial Statement Audit, the document entitled “Management 

Antifraud Programs and Controls” is made available to all THDA employees as a tool to help set 

the framework to prevent, detect and deter fraud. This document will also be provided to our 

partners to ensure that appropriate oversight is provided to prevent, detect and deter instances of 

fraud, waste and abuse of HHF funds. 

In addition to the above, as THDA is a component unit of the State of Tennessee, we are 

subjected to annual financial and compliance audits conducted pursuant to Section 4-3-304, 

Tennessee Code Annotated, which authorizes the Department of Audit of the Comptroller of the 

Treasury to “perform currently a post-audit of all accounts and other financial records of the state 

government, and of any department, institution, office, or agency thereof in accordance with 

generally accepted auditing standards and in accordance with such procedures as may be 

established by the comptroller.” Section 8-4-109 of the aforementioned Code authorizes the 

Comptroller of the Treasury to audit any books and records of any governmental entity that 

handles public funds when the Comptroller considers an audit to be necessary or appropriate. 

These audits are performed after each fiscal year (June 30), and have the following objectives: 

• To consider the THDA’s internal control over financial reporting as a basis for 

designing auditing procedures for the purpose of expressing an opinion on the 

financial statements; 

• To determine compliance with certain provisions of laws, regulations, contracts, 

and grant agreements; 

• To determine the fairness of the presentation of the financial statements; and 

• To recommend appropriate actions to correct any deficiencies. 

Although these audits are not intended to serve as an organization-wide audit as described in the 

Single Audit Act, as amended by the Single Audit Act Amendments of 1996, and Office of 

Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and NonProfit Organizations, they include tests of compliance with applicable federal laws and 

regulations and consideration of internal control used in administering federal financial 

assistance programs. These audits are a segment of the organization-wide audit of the State of 

Tennessee, which is conducted in accordance with the Single Audit Act. THDA has not received 

any findings in these audits for the past several years. 

Section 13-23-128, Tennessee Code Annotated, and the THDA Staff and Board Disclosure 

Policies, require annual disclosure of potential conflicts of interest. These documents are 

analyzed by the THDA General Counsel and Audit Director to determine whether there are any 

situations that present an apparent conflict of interest. The analysis process is performed with a 

final report presented to the Audit & Budget Committee of the THDA Board of Directors each 

year. These reports are included in the official minutes of the THDA Board of Directors. Staff 
19 | Page THDA

with potential conflicts or indirect interests that create an apparent conflict, even if there is no 

prohibited interest, are to refrain from discussion or participation in THDA activity in connection 

with the identified conflict. Board members that have actual conflicts are to refrain from 

discussion and voting on the matter that causes the potential conflict to become an actual 

conflict. Also, in accordance with the requirements of the THDA Code of Conduct adopted by 

the THDA Board of Directors on March 15, 2007, even where no actual conflict exists, THDA 

Board members and staff must refrain from any appearance of impropriety. 

In addition to the statutory requirements of Tennessee Code Annotated and the Staff and Board 

Disclosure Policies, certain federal programs administered by THDA have conflicts of interest 

provisions that apply to THDA Board members, staff and program participants. These 

provisions are also included in the annual analysis submitted to the THDA Board of Directors. 
20 | Page THDA