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Notice No. 0010 | November 25, 2009

WISH and IDEA Programs Disbursement Policy: Consumer Debt Payoffs

Dear Community Lending Partner:

As you know, both Federal Housing Finance Agency (FHFA) regulations and the Bank’s Implementation Plan state that Affordable Housing Program (AHP) set-aside program subsidies can only be used for downpayment or closing cost assistance in connection with the participants’ purchase of their first home. In addition, according to FHFA regulations for AHP set-aside programs, a member may not provide cash back to the household receiving a WISH or IDEA subsidy in an amount over $250 at the time of closing on a mortgage loan. Any amount in excess of $250 must be applied as a credit to reduce the principal of the mortgage loan or as a credit toward the household’s future monthly mortgage payments.

If the settlement statement or other closing documents show consumer debt payoffs by the homebuyer in an amount greater than $250, the Bank will reduce the AHP set-aside program subsidy to the member by the additional amount of the payoff, unless the member provides sufficient documentation showing that:

  1. the payoff of delinquent debt or other consumer current debts are required by the lender of the first mortgage loan because the debts would affect the qualifying ratios of the household, and
  2. the cash to pay off those debts is brought by the homebuyer to the transaction and, in addition, the homebuyer contributes enough cash to the transaction to justify the requested AHP subsidy match.

If you have any questions, please call the Community Investment Department at 415-616-2542.



Marietta Nunez
VP, Community Lending
Community Investment Department