Equal Housing Lender
Setting expectations for HomePrep
HomePrep is a Technology Solution That Connects Mortgage Loan Originators
With Clients on Their Path to Mortgage Readiness, To HUD Counselors That Help Them Achieve It!
Setting Expectations with the Mortgage Loan Originator (MLO)
MLO experience in dealing with client issues will vary drastically from MLO to MLO. Some MLOs know how to use tools of the mortgage industry and others have never used them. Some MLOs will be able to pinpoint the assistance a client will need and can summarize this in writing while other MLOs may just know the client can’t get a mortgage right now but could, if they got help getting issues resolved.
Whether an MLO does not have the time and needs a trained counselor to work with a client to get them mortgage ready or the MLO is unsure of how to assist the client, HomePrep can help.
The client pays upfront for the HUD counseling services. An Action Plan is done at the beginning of the process that lets the client and the MLO know how long or short the process can take.
Minimum Required Documents
- Signed Home Prep usage license.
- Signed Client Release of Information from MLO to HUD Counselor
- Signed Memorandum of Understanding (MOU)
Fee for HUD Counseling Service Paid Up-Front by Client
Though clients below a certain income level can get services for free from HUD counseling agencies, MLOs often work with clients where income levels may be higher, or above low to moderate income (LMI) levels where a sliding scale or “Fee for Service” cost is acceptable. The client pays upfront for the HUD counseling services.
An Action Plan is done at the beginning of the process that lets the client and the MLO know the timeframe the work can take.
The MLO Provides a Memorandum of Understanding (MOU) That Provides the Client A Credit Towards Closing Costs
Both the MLO and the client sign a Memorandum of Understanding (MOU) that is an agreement that the MLO will provide a credit towards closing costs that can be used by the client if the client returns to the referring MLO for their mortgage.
What is an MOU?
The Memorandum of Understanding (MOU) is an agreement between the mortgage loan originator (MLO) and the client that specifies an agreed upon dollar amount between $0 to $300 as a credit towards the client’s mortgage closing costs if that client returns to the MLO for their mortgage.
How is MOU Credit Used?
HUD allows clients to pay for pre-purchase counseling. HUD also requires that HUD counselors provide comparable programs from at least three different lenders for the client to choose from.
By signing an MOU with your client, you are providing the client with a credit towards their mortgage closing costs to help offset upfront costs the client pays for HUD counseling services incurred to get themselves mortgage ready.
The credit is only paid by the MLO if the client comes back to you for their mortgage once they are mortgage ready.
Minimum Client Requirements and Costs
- 550 minimum credit score
- Income
- Client ability to pay upfront HUD counseling services. Depending on the depth of client need, these services can vary in cost and duration to get mortgage-ready can be different from client to client. Estimated costs are $99 to $600.
Required Documents for MLO and Client to Sign
- MLO HomePrep Usage License (Indisoft provides)
- Client Release of Information from MLO to HUD Counselor
- Memorandum of Understanding (MOU)
Required of MLO for HomePrep portal
- xml 1003 application to upload or input client information in required fields in HomePrep portal.
- Credit report (if available)
- Select 1-6 client services and explanation of what MLO assesses as client needs to get them mortgage-ready.
MLO Cost For HomePrep
- A yearly fee of $250 and a $15/per client cost is required. (Discounted yearly fee of $225 thru 4/30/2024)
- MOU credit between $0 to $300 towards client closing costs.
Setting Expectations for the Client (Borrower)
HomePrep connects mortgage loan originators who have clients with common issues that are preventing homeownership to a counselor at Consumer Credit and Budget Counseling DBA National Foundation for Debt Management, a non-profit HUD counseling agency that can assist the client to become "mortgage ready".
NFDM's HUD counselors offer comprehensive support in various areas including credit improvement, budgeting, online Homebuyer Education, down payment assistance, student loan assistance, and any additional support you may need in your journey.
Client Summary of Services
| Service Category | Description |
|---|---|
| Budgeting | As a HUD-approved housing counseling agency, budget review is conducted to identify potential overspending and uncover savings opportunities. This ensures that proposed homes fit within clients' finances. |
| Student Loan Repayment Plan | Clients are referred to Student Debt Solutions (SDS) to find the most suitable repayment plan for their student loans. An additional fee of $49.50 applies thru 4/30/2024. Afterwards, $99 cost will apply. Client reviews student loan repayment plan first. Cost is only paid if client decides to proceed with putting plan in place. |
| Credit Enhancement & Building | Utilizing advanced tools like Credit Xpert Wayfinder and What-If Simulator, clients are guided to make informed decisions without erasing credit history. Short-term (0-6 months) and long-term (7 months-5 years) credit counseling is provided based on individual cases. |
| Downpayment Assistance | NFDM and HUD counseling agencies can find down payment assistance programs nationwide, addressing a major barrier to home ownership. Down Payment Connect, part of DownPaymentResource.com, is used. |
| Online & In-Person Homebuyer Education | NFDM offers an online course adhering to National Industry Standards for Homeownership Education. However,most HUD counseling agencies can offer both online and in-person classes that are approximately 6-8 hours long and ends with a one-on-one interview during regular business hours. |
| FreddieMac Homecoach | HomeCoach is Freddie Mac’s automated system made for HUD counselor use. This system enables counselors to use a soft pull credit and get findings similar to the MLO Loan Product Advisor (LPA) to assess loan eligibility and to highlight potential mortgage approval issues before revisiting a lender. |
| Cost | • LIMITED THROUGH APRIL 30, 2024 FOR HOMEPREP PILOT: HomePrep services (with the exception of Student Debt Services (SDS)) are at a total cost of $99 for the client. • Cost for SDS Student Loan Repayment Plan is $99 but is not paid until after the client sees their payment and wishes to proceed with the plan. • Low-income clients may qualify for some free or discounted services. |
What Client Can Anticipate and Do
- Soft pull credit will be pulled.
- Have ability to pay upfront cost for HomePrep HUD counseling services.
- Once referral made, complete Intake and Budget information sent by HUD counselor a minimum of 4 days prior to HUD counselor interview date.
- Set aside agreed upon schedule of monthly or bi-monthly calls with HUD counselor.
What Client Needs to Have Ready to Submit
- Last 2 years W-2’s, personal and/or business tax returns
- 2 months of paystubs and bank statements
- If retired: pension and/or social security awards letters.
- If divorced: divorce decree with alimony/child support agreements, property settlement, etc.
- If student loan: student loan financial Information including FSA ID, and login information ready for Studentaid.gov.
MLO's, we need your HomePrep-eligible clients!
- For a LIMITED time thru APRIL 30, 2024, new clients can be entered to use all HomePrep services with the exception of the Student Loan Repayment Plan ($49.50 thru April 30, 2024) for $99!
1. Credit Help: Short (0-6mos) or long term (7mos-5yrs)
2. Down Payment Assistance
3. Student Loan Repayment Plan
4. Budgeting
5. Home Buyer Education
6. Freddie Mac HomeCoach LPA feedback certificate for Conventional loans
o Coming Soon! HomeCoach Total Scorecard for FHA loans
When clients are Mortgage-Ready, the Mortgage Loan Originator is notified!
Low-income homebuyers may qualify for free or discounted services.
Client Credit Disclaimer
- Fixing your credit is free; you can do it on your own.
However, this service is for those that are serious about improving their financial skills, utilizing state-of- the-art tools and professional advice from certified counselors who have been in the business of helping prospective homeowners achieve homeownership for years.
HomePrep is part of The National Housing Advocacy Platform provided by IndiSoft https://www.indisoft.us/
The HomePrep HUD housing and credit counseling agency is the National Foundation for Debt Management, located at 13921 Icot Blvd., Ste. 706 in Clearwater, Florida 33760. The email address is
housing@nfdm.org and the website is
NFDM.org.
Pam Marron, NMLS# 246438
Innovative Mortgage Services, Inc. NMLS# 250769
