Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets

Alabama Housing Finance Authority

Submission to the U.S. Department of Treasury | August 31, 2010
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INTRODUCTION

In August 2010, the U.S. Department of Treasury announced $2 billion in funding to provide 

additional assistance targeted at unemployed homeowners in states with the highest 

unemployment rates. The Housing Finance Agency Innovation Fund for the Hardest Hit Housing 

Markets (HHF) gives HFAs in 17 states and the District of Columbia, including the Alabama 

Housing Finance Authority (AHFA), the opportunity to develop innovative programs to help 

unemployed homeowners avoid foreclosure. Each state is directed to use the funds to provide 

temporary assistance to homeowners by offering a standard unemployment bridge program that 

will pay the homeowner’s mortgage payment while they are unemployed.

Responsible families across the country have found themselves unable to pay their mortgages

due to unemployment. The economic downtown has led to a record number of workers suffering 

from long-term unemployment, and millions more are working part-time because they cannot 

find full-time or otherwise adequate work. Homeowners who have experienced an involuntary 

loss of income are at a high risk of foreclosure, particularly in an environment of declining home 

values. Homeowners who have experienced a temporary loss of income may benefit from shortterm assistance to help bridge the gap until they have restored their income. This assistance is 

designed to help thousands of families stay in their homes until they can they find work.

This additional funding for HHF is designed to provide targeted relief to unemployed 

homeowners, while allowing HFAs to retain the flexibility to tailor the assistance to the needs of 

each participating state. This program will pay a homeowner’s mortgage payment for a period to 

be determined by the HFA to allow a homeowner to secure employment.

The 18 states and jurisdictions eligible for this additional funding had sustained unemployment 

rates over the last 12 months (through June 2010) that were at or above the national average.

HHF is an extension of the Troubled Asset Relief Program (TARP); therefore, all programs must 

satisfy funding requirements under the Emergency Economic Stabilization Act of 2008 (EESA). 

EESA purposes are to restore liquidity and stability to the financial system and to use TARP 

funds in a manner that among other things, protects home values, preserves homeownership, 

promotes jobs and economic growth and provides public accountability.

To receive funding from HHF, a program must satisfy the requirements for funding under EESA. 

These requirements include that the recipient of funds must be a financial institution, as defined 

by EESA, and that the funds must be used to pay for a program designed to prevent avoidable 

foreclosures and other permitted uses under EESA.
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AHFA appreciates the opportunity to help homeowners avoid foreclosure using resources from 

HHF. AHFA is uniquely qualified to develop and administer programs to utilize HHF dollars, as 

it is a leader in designing and implementing programs to meet the housing needs of Alabama’s 

low- to moderate-income families.

OVERVIEW OF PROGRAM

For HHF, HFAs must create and implement a single unemployment bridge program that pays an

unemployed homeowner’s mortgage while they search for work. All assistance must be 

structured as a non-recourse loan, secured by a junior lien on the property, which will be 

forgivable over a period not to exceed 10 years. This loan will only be repayable if the 

homeowner sells or refinances the property before the forgiveness period expires and there are 

sufficient equity proceeds from the sale to pay all or part of the portion of the loan that has not 

yet been forgiven.

The HFAs should obtain documentation of unemployment from all participating homeowners. 

The HFAs may determine the eligibility criteria to use for this program to better ensure that this 

assistance has the maximum local impact and leads to sustained homeownership.

Each program must be in full compliance with all federal, state, and local laws, including, but not 

limited to, the Equal Credit Opportunity Act and the Fair Housing Act that prohibit

discrimination on a prohibited basis in connection with mortgage transactions. These programs

are subject to the fair lending laws, and HFAs should ensure that the programs do not treat a

homeowner less favorably than other homeowners on grounds such as race, religion, national 

origin, sex, marital or familial status, age, ability, or receipt of public assistance income in 

connection with any program.

The purpose of HHF is to help families stay in their homes or otherwise avoid preventable 

foreclosure. To do so, AHFA proposes to administer HHF—as Hardest Hit for Alabama’s 

Unemployed Homeowners—to provide direct assistance to pay an eligible unemployed 

homeowner’s current mortgage payment and all other mortgage-related expenses, including 

payments on any subordinate liens. Alabama’s program will be available statewide and focused 

on unemployed homeowners who are at risk of mortgage loan default or foreclosure due to a 

reduction in income.

Responsible families across the state have found themselves unable to pay their mortgages due to 

unemployment. The economic downturn has led to a record number of workers suffering from 
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long-term unemployment. Unemployed homeowners are generally not eligible for loan 

modifications, but they are at substantial risk of mortgage default and foreclosure.

In Alabama, the average yearly unemployment rate reached 10.8 percent in 2009, higher than the 

national average of 9.8 percent. As of June 2010, 46 of Alabama’s 67 counties had double-digit 

unemployment rates, and an estimated 100,000 citizens were actively receiving unemployment 

benefits.

The recession has posed significant challenges for the state and the nation, compounding the 

housing issues already facing Alabama families. Alabama ranks low on various socioeconomic 

criteria compared to other states, including median family income (fourth lowest of all states 

over the 2005-2007 timeframe) and poverty (sixth highest rate in the U.S. in 2007). The median 

household income for the state remains at about 80 percent of the U.S. median, or about the same as 

it was at the beginning of the decade.

Any job gains in Alabama in 2010 are expected to be concentrated in retail, steel and auto 

manufacturing, though those increases are not expected to dramatically improve Alabama’s 

unemployment rate. So workers face a double burden—the loss of their jobs, coupled with the 

knowledge that few, if any, of these jobs will return.

While a majority of Alabama’s population is classified as “urban,” 50 of its 67 counties remain 

predominantly rural. However, nearly 71 percent of all occupied housing units in Alabama are 

owned, with homeownership proportionately higher in the rural areas of the state than in urban 

locales—making foreclosure mitigation/prevention a priority.

As of the fourth quarter of 2009, the Mortgage Bankers Association reported that in Alabama, 

11.45 percent (higher than the national average of 10.44 percent) of the 595,620 loans serviced 

were past due, with 6.79 percent of those loans classified as seriously delinquent—meaning that 

for an estimated 40,400 Alabama families foreclosure was imminent.

HHF will assist the homeowner in retaining homeownership by subsidizing 100 percent of their 

mortgage payment and all other mortgage-related expenses (including subordinate liens, if 

applicable) during the time that they are eligible to receive unemployment compensation. The 

assistance will not exceed a total of 12 consecutive monthly payments (including all payments 

needed to bring loans current) or $15,000 per household. Alabama’s HHF will provide a 

payment (not to exceed the lesser of six monthly payments plus fees and costs or $7,500) to a 

participating homeowner’s servicer to help bring the homeowner current on his or her delinquent 

mortgage(s). This payment could cover principal, interest, fees, escrow/impound expenses, 

delinquent taxes or escrow shortage for taxes and homeowners insurance.

AHFA will use a web-based portal to receive and track applications electronically. Approved 

homeowners will be expected to submit certain information documenting their inability to pay 
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their mortgage and supporting their mortgage claims. Once in the program, homeowners will be 

expected to re-certify their continued eligibility to receive unemployment compensation and 

continued residence in the home on a monthly basis no less than five days before the due date of 

their mortgage payment. Each homeowner’s eligibility to receive unemployment compensation 

must be confirmed by the Alabama Department of Industrial Relations. HHF payments will be 

distributed to servicers on a monthly basis, contingent upon homeowner recertification and DIR 

eligibility confirmation.

Homeowners receiving assistance will execute a note and subordinate mortgage in favor of 

AHFA. Loans will be zero percent and non-amortizing. Loans originated between the pilot 

program commencement and December 31, 2012 will be forgiven over a five-year term at 20 

percent per year. Loans originated between January 1, 2013, and December 31, 2013, will be 

forgiven over a four-year term at 25 percent per year. Loans originated between January 1, 2014, 

and December 31, 2014, will be forgiven over a three-year term at 33.3 percent per year. No 

loans will be originated after December 31, 2014, and any recaptured funds will be returned to 

Treasury on or before December 31, 2017. The forgiveness period commences on the date of 

execution of the HHF note and mortgage. 

The loans will be repayable only if the homeowner sells the property before the forgiveness 

period expires and there is sufficient equity to pay all or part of the loan, which has not been 

forgiven at the time of the sale of the property. Repayment of the funds will be re-invested back 

into new homeowner assistance. Mortgages will be recorded in public records, and ongoing 

monitoring, repayments and satisfactions will be conducted through AHFA.

Assistance will continue for no more than 12 consecutive monthly payments (including two 

months following re-employment), not to exceed $15,000, or until the property ceases to be the 

homeowner’s primary residence. The maximum amount will not exceed $15,000, even if the 

total amount is advanced in less than 12 months. Assistance will last only as long as the 

maximum available amount (which will be $15,000 less all total due payments required to bring 

the homeowner current on eligible mortgage loans) covers 100 percent of the household’s 

monthly mortgage payments. Assistance will cease two months after homeowner returns to 

work, regardless of whether the maximum available benefits have been received. 

This assistance is eligible for Home Affordable Modification Program (HAMP) loans as well as 

non-HAMP loans. As AHFA has access to the largest concentration of low- to moderate-income 

homeowners with an in-house servicing portfolio of 21,000 loans, we anticipate that a number of 

existing AHFA customers will use HHF assistance.

HHF will be available to homeowners after approval by Treasury and will last as long as funds 

are available. After successful completion of a pilot program, AHFA anticipates that funds will 
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be available statewide on or about February 1, 2011. Implementation will include preparation of 

marketing materials, legal documentation, and monitoring tools.

When HHF becomes available in Alabama, AHFA anticipates an initial surge in demand due to 

the high number of homeowners who are already at risk of default or foreclosure. AHFA expects 

the initial funding allocation to be expended within three years, though any funds returned 

according to established guidelines will be used to assist additional homeowners until December 

31, 2014. On or before December 31, 2017, any remaining funds will be returned to Treasury. 

Because repayments will only occur if a homeowner sells or refinances a home before the loan is 

entirely forgiven, and only if there are sufficient net proceeds, very few repayments are expected.

The greatest obstacle anticipated by AHFA is the dramatic increase in the volume of applications 

to be reviewed and loans to be delivered, as compared with current AHFA loan products. We 

will need to build our own capacity in order to manage the increased volume of applications and 

loans. We will also need to add staff to assist with intake, counseling, application review, and 

closing the loans.

To test readiness of HHF, AHFA plans to perform a pilot evaluation on a sampling of its 21,000-

loan in-house servicing portfolio. As soon as feasible after Treasury approval, AHFA plans to 

issue no more than 20 percent of the HHF allocation ($9.8 million to an estimated 650

households) by advertising the program via a mail campaign and/or referrals by AHFA customer 

service and default staff.

Conducting the pilot evaluation prior to statewide release allows AHFA staff adequate time to 

follow a loan through the entire process. AHFA expects the pilot to uncover potential flaws in 

the process and expose any need for additional staff capacity prior to statewide implementation.

POPULATION SERVED & ALLOCATION METHODOLOGY

Treasury has directed that the target population for HHF should be limited to residences with 

unpaid principal balances equal to or less than the current GSE conforming limit of $729,750. 

However, HFAs may target low- and moderate-income homeowners at their discretion consistent 

with that HFA’s state enabling legislation. The HFAs may determine the eligibility criteria to use 

for this program to better ensure that this assistance has the maximum local impact and leads to 

sustained homeownership. AHFA will be using the current Mortgage Revenue Bond program 

maximum sales price limit for a non-target area of $258,691. The homeowner’s unpaid principal 

balance of all mortgages may not exceed this amount.
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Alabama homeowners who qualify to receive state unemployment compensation benefits may

apply for HHF assistance through AHFA. This program will assist low- to moderate-income 

families in Alabama. To qualify, applicants must have a total household income of less than 140 

percent of the state median income. Using this calculation establishes the program’s maximum 

income limit at $75,740, as of the date of this proposal. AHFA may change this income limit 

annually when new income data becomes available from the U.S. Department of Housing and 

Urban Development.

The homeowner must currently occupy the property as their primary residence, and the residence 

must be located within the state of Alabama. Eligible structures include single-family homes, 

attached or detached, and manufactured housing attached to real property. All existing mortgage 

loans must have an unpaid principal balance totaling no more than $258,691. Second homes or 

investment properties will not be eligible for HHF assistance. Alabama HHF will be available 

only for mortgages executed and recorded on or before September 1, 2010.

Homeowners will be required to provide a financial hardship affidavit documenting inability to 

pay their mortgage. HHF will be available on a first-come, first-served basis.

AHFA does not anticipate targeting this assistance on a geographic basis. However, AHFA 

intends to use targeted outreach strategies, which may include events, informational materials 

and collaboration with local media outlets, to inform the public of Alabama’s HHF.

Based upon maximum assistance of $15,000 per household, it is projected that an estimated 

3,500 households may be assisted. If the average assistance per household is $10,000, 

approximately 5,200 households may be assisted.

As AHFA is our state’s largest servicer of low- to moderate-income residential mortgage loans, 

we calculated the average loan amounts and monthly payments of the homeowners in our 

portfolio. Using an average loan amount of $90,617 and an average monthly payment of $748, 

AHFA set the assistance cap at $15,000 to ensure that the typical homeowner would be aided in 

keeping their home.

DEMONSTRATION OF CAPACITY TO IMPLEMENT

AHFA was created in 1980 by Act No. 80-585 of the Alabama Legislature. AHFA is a public 

corporation and instrumentality of the State of Alabama dedicated to serving the housing needs 

of low- and moderate-income Alabamians. 
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By statute, AHFA is governed by a Board of Directors that provides policy direction, authorizes 

bond issues and program development, and evaluates AHFA’s efforts. Its appointed members 

serve staggered seven-year terms. The governor appoints one person from each of the seven 

congressional districts—two home builders, two real estate brokers, a lender, a mayor and a 

county commissioner—and one from the state at large. The lieutenant governor and speaker of 

the House each appoint two members. The state finance director, treasurer and superintendent of 

banks serve as ex officio members.

AHFA creates housing opportunities for low- and moderate-income Alabamians through the 

affordable financing of single- and multifamily housing. To accomplish our mission, AHFA 

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. Our programs have helped more than 116,500 families find homes they 

could afford. 

Through its First Step and Step Up financing programs, AHFA offers affordable interest rates 

and entry cost assistance on 30-year, fixed-rate mortgage loans to low- and moderate-income 

homebuyers. Since 1980, AHFA has financed $3.7 billion in home mortgage loans, helping 

55,600 Alabama families.

Working together with Habitat for Humanity, AHFA purchases mortgages from Alabama’s 36 

Habitat affiliates. AHFA has provided funding of approximately $16 million toward this 

program, the first of its kind in the nation, purchasing 400 loans since 1992.

Expanding its focus of long-term mortgage solutions, AHFA now services its loans in-house, 

managing a portfolio of 21,000 outstanding mortgage loans, totaling $1.2 billion.

ServicingSolutions offers residential mortgage servicing for financial institutions. AHFA’s 

servicing division is approved as a FHA, VA, Rural Development, Fannie Mae and Ginnie Mae 

servicer. The servicing department received the highest designation of Tier 1 Servicer from the 

U.S. Department of Housing and Urban Development—one of only nine state housing finance 

agencies to do so. 

AHFA’s multifamily programs help developers buy land or buildings and build or repair housing 

to create affordable, rental property for Alabama’s low-income families. These financial 

incentives encourage developers to increase the supply of rental housing for economically 

disadvantaged families. Combined, AHFA’s rental financing programs have allocated $1.3 

billion in HOME funds, Housing Credits and/or Multifamily Bonds to create 60,500 units of 

affordable housing for the residents of our state.
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With AHFA’s extensive experience in administering state and federal housing programs, AHFA 

has proven itself as a leader in the design and implementation of innovative programs to address 

housing issues, particularly for Alabama’s low- to moderate-income families.

AHFA’s key staff members that will be involved with HHF are as follows:

• Robert Strickland, Executive Director

Bob became the first employee of AHFA in 1987 after a 14-year career in commercial 

banking and now leads its efficient 68-member staff. His responsibilities include 

statewide oversight of affordable housing construction and renovation efforts and 

administration of single-family programs geared toward first-time and low- to moderateincome homebuyers. He currently serves as a Director on the Federal Home Loan Bank 

of Atlanta’s Board of Directors and on the FHLBank Atlanta’s Executive Committee and 

chairs the organization’s Housing Committee. He held the position of president of the 

Board of Directors of the National Council of State Housing Agencies for two terms. Bob 

is a graduate of Auburn University with major studies in sociology and business 

administration. He also completed the University of Oklahoma’s National Commercial 

Lending School and the University of Notre Dame’s Executive Development Seminar.

• Michael J. King, Single-Family Administrator

Mike oversees all aspects of AHFA’s single-family division, including the issuance of 

tax-exempt mortgage revenue bonds, mortgage products and all homeownership efforts. 

In addition, he directs AHFA’s servicing department, which currently manages a 

portfolio of more than 21,000 mortgage loans, has been approved by FHA, VA, Rural 

Development, Fannie Mae and Ginnie Mae, and is designated a Tier 1 Servicer by the 

U.S. Department of Housing and Urban Development. The 1980 Auburn University 

graduate, who earned a bachelor’s degree in business administration with an emphasis on 

finance and marketing, accumulated 16 years of mortgage banking experience prior to 

joining AHFA in 1988. Mike has been active with the Homebuilders Association of 

Alabama, various Boards of Realtors, and the Montgomery YMCA. He currently serves 

on the National Advisory Council for Genworth Financial and has completed the 

University of Notre Dame’s Executive Development seminar.

• Cathy James, Affordable Housing Coordinator

Cathy is responsible for loan reservation and approval for the First Step Mortgage 

Revenue Bond, Step Up, Mortgage Credit Certificate and Habitat for Humanity Loan 

Purchase programs. Additionally, she is the primary promoter of AHFA’s programs at 

tradeshows and conferences and through homebuyer and financial education seminars. 

She has served on the governor’s committee to improve affordable housing in Alabama’s 

Black Belt counties. Cathy has been employed with AHFA since 1999 and has more than
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15 years’ experience in the mortgage banking industry. She is a graduate of Jacksonville 

State University, where she earned a Bachelor of Science degree with an emphasis on 

marketing.

• Neal Acker, General Counsel

Neal was employed as general counsel of AHFA in January 2003. Prior to joining AHFA, 

he was in private law practice for 35 years. He was a shareholder in Capell & Howard, 

P.C., which represented AHFA as its general counsel for more than 10 years. Neal has a 

Bachelor of Science in Accounting and a Juris Doctor, both from the University of 

Alabama, and a Master of Laws in Taxation from New York University. He is a member 

of the Alabama State Bar and the National Association of Bond Lawyers.

• John Weissend, Internal Audit 

John Weissend has been with the AHFA for a little more than one year as its Internal 

Auditor. John oversees the quality control function for its single-family operations and 

performs audits for targeted areas. Additionally, support is given to executive 

management by helping create solid policies and procedures to enhance AHFA’s internal 

controls. Prior to his employment with AHFA, John held various positions including 

mortgage division accounting manager, financial systems director and accounting 

corporate projects director more than 14 years at a top 100 bank. John also worked for 

four years in public accounting at PriceWaterhouseCoopers (PWC). He is a graduate of 

Auburn University with a Bachelors of Science in Business Administration with an 

emphasis in Accounting and is a member of the American Institute of CPAs and the 

Alabama Society of CPAs.

• C. Wesley Oden, Accountant

Wes is responsible for reconciling and reviewing operating cash, investments, fixed 

assets and program fees and expenses as well as reconciling and compiling financials of 

AHFA’s bond issues. Additionally, he assists in the preparation of Arbitrage Rebate 

calculations and cash flow reports of bond issues; and he assists in the preparation of 

annual financial statements and helps to ensure compliance with Federal and State 

reporting requirements. Wes is a graduate of both Auburn University and Troy University 

and is a member of the American Institute of CPAs and the Alabama Society of CPAs.

• Gary Donegan, Research & Planning Administrator

Gary joined AHFA in 1993 to write the Comprehensive Housing Affordability Strategy 

(CHAS) for the State of Alabama. He continues to be responsible for the housing portion 

of the State of Alabama Consolidated Plan, a HUD-required planning document and a 

pre-requisite for the receipt of more than $50 million annually for the state’s HOME 
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program. In addition to theses duties, Gary also oversees AHFA’s information 

technology and communications departments. Gary also serves as a trustee for the 

Alabama Center for Real Estate (ACRE) at the University of Alabama and a member of 

the Planning Council for the State of Alabama Department of Mental Health. He holds a 

Bachelor of Science degree in Business Administration from Troy University.

• Alison Ingle, Communications Manager

Alison heads AHFA’s communications staff, which oversees AHFA’s marketing, public 

relations, communications, event management and legislative affairs. Prior to joining 

AHFA in 2006, she held previous positions in marketing and advertising specializing in 

real estate development and served as the Director of Communications for Alabama 

Bankers Association. She is a graduate of Auburn University Montgomery and is a 

member of the Public Relations Council of Alabama as well as the Southern Public 

Relations Federation.

In accordance with HHF Guidelines published by the U.S. Department of Treasury, each 

recipient of funding from HHF must qualify as an Eligible Entity. This is a “financial 

institution,” as that term is defined in the EESA. AHFA is an Eligible Entity for purposes of the 

HHF initiative because it was duly established in 1980 by the Alabama legislature as a public 

corporation and instrumentality of the State of Alabama and is regulated by the State of 

Alabama, for purposes of EESA, through the appointment (and removal as provided by state 

law) of all members of its Board of Directors. Under its enabling act (Ala. Code §24-1A-1 et

seq.), AHFA has the power to receive funds from Treasury, enter into contracts, and operate 

independently of any principal state department.

AHFA intends to comply with all requirements under EESA and will accomplish compliance 

oversight, internal controls and fraud prevention through several means. Policies, procedures and 

internal controls required to implement Alabama’s HHF will be modeled on processes that are 

already in place and operating as intended. AHFA’s Internal Audit division will expand its work 

plan to include the review of both internal and external partners’ program activities.

Internal audit will evaluate all policies, procedures and internal controls established specifically 

for HHF prior to implementation. Internal Audit will test controls and processes as a part of the 

ongoing audit process of AHFA. Additionally, an annual review will be performed on the cost 

allocation plan as presented in compliance with OMB A-87. Finally, AHFA’s external audit will 

be performed as required by OMB A-133.

It is the policy of AHFA to immediately report any indication of fraud, waste, abuse, or 

potentially criminal activity pertaining to federal funds to the appropriate federal department and 

the cognizant inspector general of such department.
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AHFA will track costs associated with HHF in a manner consistent with its existing practices for 

tracking administrative costs for other federally funded programs. These processes are consistent 

with the cost principles outlined in OMB Circular A-87.

AHFA will be required to develop and maintain operational and performance metrics, have a 

detailed financial reporting system, and track homeowners helped through its program. AHFA

will report data to Treasury on a periodic basis, including metrics used to measure program 

effectiveness against stated objectives. Treasury will provide a list of metrics that have to be 

reported to Treasury on a regular basis. Treasury may make any or all data reported by AHFA 

available to the public. 

Though not all specifics are available from Treasury, AHFA expects to comply fully with 

tracking and reporting requirements provided by Treasury. Additionally, program participants 

will be required to provide authorizations to release information allowing AHFA to track 

outcomes on a file-by-file basis. 

Progress will be measured by the total number of homeowners assisted and the number of 

homeowners who resumed mortgage payments and successfully remained in their home one to 

five years after the assistance ended.

AHFA maintains compliance with the requirements described in the OMB Circular A-133 that 

apply to its major federal programs. In this respect, AHFA is responsible for establishing and 

maintaining effective internal controls over compliance with the requirements of laws, 

regulations, contracts and grants applicable to federal programs such as the HOME Investment 

Partnerships Program and the Low-Income Housing Tax Credit Program.

AHFA will require the use of a secure, web-based client management system to provide client 

level information in real time. AHFA anticipates selecting a third-party vendor to develop the 

online system for eligibility of applicants and as the tracking mechanism for available funds. 

This online system will also facilitate homeowner intakes, referrals and submissions to servicers. 

AHFA will treat the development and ongoing costs associated with implementing the system as 

a reimbursable administrative cost.

AHFA will review each loan before closing. In addition, AHFA will service each of the loans 

that are originated with HHF. The following are activities AHFA will perform to ensure that 

eligible homeowners are receiving the assistance:

1. File intake will be performed via web-interface.

2. AHFA staff will review all loan packages for completeness.

3. AHFA will review each loan.
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4. AHFA will verify the recipient’s identity at closing through its agents.

5. Loan servicing will be performed in-house by AHFA.

Quality Control will review 10 percent of all applications for program compliance. Prior to the 

implementation date of the program, AHFA will provide extensive training with its internal staff 

regarding policies and procedures to be followed. AHFA will also provide outreach to 

Alabamians prior to and during implementation to ensure homeowners receive accurate 

information.

STAFFING & BUSINESS PARTNERS

AHFA has an experienced staff and a history of successfully implementing programs in 

collaboration with other Alabama state agencies and external partners. However, to implement 

HHF, AHFA will use a combination of employees and outside contractors. 

AHFA anticipates the need for additional clerical positions to effectively administer HHF. The 

program is expected to begin in February 2011. The following clerical positions will be filled by 

outside contractors:

• HHF Customer Service Representative (6)—The HHF Customer Service Representative 

will answer phone calls and general customer inquiries. In preparation for the initial

influx of phone calls, the CSR positions may be temporary.

• HHF Intake Clerk (10)—The HHF Clerk responsibilities include answering general 

questions about the program, loan file setup, matching loan documents to loan files, and 

completing follow-up with homeowners and outside contacts.

• HHF Compliance Examiner (4)—The HHF Compliance Examiner will review 

homeowners’ financial plans, validate homeowners’ eligibility for the program, issue 

loan commitments, initiate loan closing, and conduct closed file follow-up.

The following new employee positions will be created at AHFA:

• HHF Accountant (1)—The HHF Accountant will be responsible for all remittances to the 

servicers, all receipts from Bank of New York, the tracking of budget expenditures, and 

financial reporting.
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• HHF Information Systems Associate (1)—The HHF IS Associate will provide routine 

operational customer support on a limited scope with active supervision for information 

systems resources and services.

The following HHF positions will utilize existing AHFA employees:

• HHF Coordinator (1)—The HHF Coordinator will organize day-to-day operations of the 

HHF program, coordinate training for AHFA staff and outside partners, produce reports 

specific to the HHF program for internal and external use, approve requests for funding, 

and monitor program funding allocation.

• HHF Compliance Examiner (1)—The HHF Compliance Examiner will review 

homeowners’ financial plans, validate homeowners’ eligibility for the program, issue 

loan commitments, initiate loan closing, and conduct closed file follow-up.

AHFA will arrange with outside contractors to conduct certain professional services. AHFA 

expects to contract with up to three or four title companies across the state to conduct limited 

title searches for all HHF loans before closing and to assist in the closing and to record HHF 

documents. In addition, AHFA will enlist an employment agency to aid with clerical staffing

needs, as set forth above, and anticipates using a third-party vendor to carry out quality assurance 

functions.

ADMINISTRATIVE EXPENSES

AHFA will be eligible to receive funds for administrative expenses necessary to achieve the 

program goals and as approved by Treasury.

Alabama

One-time/Start-Up Expenses:

Initial Personnel $ 652,500

Building, Equipment, Technology 250,000

Professional Services 75,000

Supplies/Miscellaneous 50,000

Marketing/Communications 130,000

Travel 5,000

Website Development/Translation 0

Contingency 50,000
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Subtotal $ 1,213,000

Operating/Administrative Expenses:

Salaries $ 4,375,500

Professional Services (Legal, Compliance, Audit, Monitoring) 500,000

Travel 10,000

Buildings, Leases & Equipment 0

Information Technology & Communications 485,000

Offices Supplies/Postage and Delivery/Subscriptions 56,600

Risk Management/Insurance 0

Training 0

Marketing/PR 0

Miscellaneous 200,000

Subtotal $ 5,627,100

Transaction-Related Expenses:

Recording Fees $ 260,000

Wire Transfer Fees 20,000

Counseling Expenses:

File Intake 800,000

Decision Costs 0

Successful File 260,000

Key Business Partners On-Going 3,484,000

Subtotal $ 4,824,000

Grand Total $11,664,100

% of Total Award 19.2%

Award Amount $60,672,471

AHFA anticipates HHF administrative expenses will be utilized as described in the following 

timeline:

Per fiscal year beginning each October 1 Amount

Year 1 $ 6,415,300

Year 2 3,585,800

Year 3 875,000

Year 4 465,000

Year 5 230,000

Year 6 58,000
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Year 7 35,000

All Future Years 0

Total $11,664,100

OVERVIEW OF RISK MANAGEMENT/FRAUD PREVENTION

AHFA will comply with all requirements under EESA, including but not limited to, allowing full 

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

Government Accountability Office, Congressional Oversight Panel, and the Special Inspector 

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

books, communications and records regarding the use of EESA funds will be available for 

review by any of these entities upon request.

In addition, AHFA will be required to design a program, establish monitoring mechanisms, and 

implement a system of internal controls, which minimize the risk of fraud, mitigate conflicts of 

interest, and maximize operational efficiency and effectiveness. A system of internal controls 

should encompass AHFA’s processes, their business partnerships and relationships and any 

constituency being aided through this program. AHFA will test, certify, and verify the 

effectiveness of these controls at least annually and conduct an assessment prior to program 

launch to ensure AHFA has taken appropriate steps to meet program objectives, as well as to 

provide annual audited financial statements to Treasury.

A multiple-discipline group was created to review the steps to be taken for this new funding 

source to include the areas of Executive Management, Internal Audit, Accounting, Legal, 

Research & Planning and Single-Family. The task force will analyze the requirements of the 

program and ensure that all areas are working to meet them. Task force members will develop 

policies and procedures under HHF guidelines. The task force operates under the direction and 

approval of the executive director.

AHFA will operate the program and will be responsible for the monitoring and administration of 

the program’s guidelines, in relation to OMB Circulars A-133, A-87 and any other federal/state 

regulation. The accounting department functions are segregated to monitor cash receipts and 

disbursements daily to ensure compliance with all programs. Proper segregation of duties is 

maintained within the accounting department to ensure proper disbursement, collection and 

reconciliation of all program accounts. The accounting department will match all reconcilements 
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to both internal and external source documents to ensure completeness and accuracy of all 

reporting for the program.

AHFA will create the program guidelines to encompass the requirements in OMB A-133 to 

include the areas of control environment, risk assessment, control activities, information security, 

communication and overall program monitoring. An annual audit is performed after each fiscal 

year (September 30th) by AHFA’s independent audit firm. The audit encompasses AHFA’s 

basic financial statements and supplementary information. The audit is performed in accordance 

with auditing standards generally accepted in the United States for financial audits as contained 

in the Government Auditing Standards issued by the Comptroller General of the United States.

The audit will assess AHFA’s compliance with internal financial controls, certain provisions of 

applicable laws, regulations, contracts, program agreements, and other matters.

AHFA will compile on an annual basis a Cost Allocation Plan at the end of each fiscal year in 

accordance with OMB Circular A-87, which establishes the principles and standards for 

determining both direct and indirect costs for federal cost-based awards. AHFA will track all 

direct costs in a separate cost center on the general ledger very similar to the method used for our 

HOME program. Allocable time that can be tracked by department will be accumulated from the 

respective employees to ensure that proper allocation of salaries and benefits are tracked.

Additionally, if an employee is 100 percent dedicated to HHF all hours will be assumed to be 

allocated to the program unless otherwise documented. Finally, all costs shared by multiple 

departments or programs will be allocated based upon predetermined factors by AHFA. AHFA 

has cost centers (projects) that track all eligible operating expenses directly associated with a 

federal or state program. 

AHFA is currently fostering a relationship with a potential vendor to assist with the intake, 

documentation, and disbursement of funds for the program. Additionally, controls are being 

implemented to track the actual disbursement of funds back to the originating system as well as a 

monthly reconcilement of the cash balance held at the Bank of New York to the unexpended 

funds.

AHFA maintains all its accounting records at its office located at 7460 Halcyon Pointe Drive, 

Suite 200, Montgomery, AL 36117. It maintains all cash receipts, cash disbursements and 

general ledger activity on a local area network. AHFA maintains an information security 

program that complies with industry-standard best practices.

AHFA’s annual financial statements, annual reports, Moody’s Investors Service rating 

information and bond disclosure reports may be found on its website at www.AHFA.com.