A. 

How May American Dream Funds Be Used?
For projects targeting homeownership for minority or special needs households, we will be asking, “How do the activities proposed directly produce more homeownership?” There is a clear expectation that more households will become homeowners because of the activities which will be undertaken; that this result is certain; and that it will happen in the near future. We are looking for fairly immediate results – producing more homeowners within a two-year period.

B. 

American Dream Funding Availability

1. There will be three competitive offerings in 2008:
   1. Seven hundred fifty thousand dollars ($750,000) will be available in the first offering (applications due on May 1);
   2. Seven hundred fifty thousand dollars ($750,000) will be available in the second offering (applications due on August 1); and
   3. One million dollars ($1,000,000) will be available in the third offering (applications due on October 1).
2. For projects targeting minority households, applications may request up to $10,000 per household and up to $100,000 for the total project.
3. For projects targeting households with special needs, applications may request up to $50,000 per household and up to $200,000 for the total project.

C. 

Member Limits

1. Any member may apply for and receive American Dream awards.
2. A member may receive up to $200,000 in any one offering.
3. A member may receive only one award per targeted household type per offering.
4. Members who have received American Dream awards in prior years and who have demonstrated substantial successful progress may submit an application to request additional funds to continue or expand the project.

D. 

Targeted Household Types

1. Minority Households
2. Persons with Special Needs
   
   Part of the focus of the American Dream Homeownership Challenge is to increase homeownership for persons with special needs. A “person with special needs” is defined as a person who will be the borrower or co-borrower on the first mortgage who will be an “owner of record” of the house and who is:
   1. PHYSICALLY DISABLED, meaning any person (under 55 years old): (1) with a physical impairment which results in substantial functional limitations and who is receiving disability benefits from federal or state government; or (2) who is deemed physically disabled by a qualified professional who attests that by reason of this impairment is unable to perform life roles in at least one of the major domains of living, working, learning, or socializing.
   2. MENTALLY DISABLED, meaning any person: (1) who is diagnosed with a psychiatric disorder and who is receiving disability benefits from federal or state government; or (2) who is deemed to have a comparable long-term mentally disabling condition by a qualified professional who attests that by reason of this impairment is unable to perform life roles in at least one of the major domains of living, working, learning, or socializing.
   3. DEVELOPMENTALLY DISABLED, meaning any person: (1) with a severe chronic developmental disability who has been diagnosed with mental retardation and who is receiving disability benefits from federal or state government; or (2) who is deemed developmentally disabled by a qualified professional who attests that by reason of this impairment is unable to perform life roles in at least one of the major domains of living, working, learning, or socializing.
   4. CO-OCCURRING DISABLED, meaning any person: (1) diagnosed as having both a psychiatric disorder as well as a substance abuse/dependency (co-occurring) and who is receiving disability benefits from federal or state government; or (2) who is deemed to have a comparable long-term co-occurring condition by a qualified professional who attests that by reason of this impairment is unable to perform life roles in at least one of the major domains of living, working, learning, or socializing.
   5. Please note that this definition is more restrictive than the definition used in the Affordable Housing Program (AHP). The FHLBank will also consider other definitions of disability or “special needs” but full and complete justification must be provided for any alternative definitions proposed. Accepting any such alternative definitions will be the sole discretion of the FHLBank

E. 

American Dream Funds for minority or special needs projects may be used for:

1. Activities directly related to helping households become homebuyers, such as:
   1. Principal write-down;
   2. Downpayment/closing cost assistance; or
   3. Offsetting other costs which reduce the purchase price of the home.
2. Activities indirectly related to helping households become homebuyers, such as:
   1. Translating materials;
   2. Homebuyer counseling;
   3. Outreach materials and activities;
   4. Staff costs related to new and specially targeted programs; or
   5. Equipment or supplies required for new and targeted programs.
3. For all of these indirect activities, the burden is on the applicant to demonstrate that the activities are very likely to produce more homeowners. It is also expected that a substantial portion of the funds will be used to reduce the mortgage amount for American Dream homebuyers. Also, if the Sponsor is receiving funds for indirect activities, the Sponsor may not charge any fees at closing.

F. 

American Dream Funds may not be used for other activities such as:

1. Any activity or materials related to RENTAL housing;
2. Constructing or equipping facilities, regardless of the use intended, including dormitories for volunteers or others;
3. Providing funds for loan pools or similar other sources currently in existence;
4. Normal operating expenses of the sponsor;
5. Supplanting or substituting for other funding sources that are no longer available;
6. Equipment or supplies used primarily for other programs of the sponsor or member; or
7. Equipment or supplies used primarily in the normal course of business.

G. 

Eligibility

1. If a member is applying with a sponsor, the sponsor must have demonstrated experience in developing, financing, or providing homeownership; and the sponsor must have performed successfully with any prior grant funds received under this or other FHLBank programs.
2. The member must originate and close long-term, fixed-rate, fully amortizing mortgages for the homebuyers in the program, at terms and rates consistent with the member’s comparable mortgage programs. Adjustable rate mortgages, variable rate mortgages, interest-only mortgages, or any other mortgages other than identified above are not eligible.
3. There are no household income restrictions for eligible households but the purchase price of homes cannot exceed $200,000.
4. American Dream funds may not be used with other subsidy programs of the FHLBank, including the AHP and Welcome Home.

H. 

Application Guidelines

1. Applications must be received by the due date.
   1. For consideration in the first offering, applications must be received by May 1, 2008 (awards will be made in June);
   2. For consideration in the second offering, applications must be received by August 1, 2008 (awards will be made in September); and
   3. For consideration in the third offering, applications must be received by October 1, 2008 (awards will be made in November).
2. Any member may apply.
3. Members may submit multiple applications in an offering.
4. Applications must include all of the following information.
   1. Amount of grant funds requested;
   2. Number of homebuyers to be created;
   3. The type of households targeted (minority or special needs – an application may target only one of the groups identified);
   4. Detailed description of the proposed use of funds and homeownership to be created (including a two-year budget for projects targeting minority or special needs homebuyers);
   5. An Affordability Worksheet, demonstrating that the households targeted will be able to afford the homeownership proposed;
   6. Description of the proposed role to be played by the member; and
   7. Description of the proposed relationship between the member(s) of the FHLBank of Cincinnati and the sponsor(s), if any.

I. 

Application Submission
A member may submit an application by mail, email, fax, courier, or other delivery. The application must include all of the information requested and must be received by the application deadline.

J. 

Evaluation of Applications

1. Each application requesting funds for minority or special needs households will be reviewed, scored, and ranked according to the following criteria:
   1. Proposed use of funds (up to 40 points).
      • Creating an increased number of homeowners;
      • Producing homeownership opportunities for minority or special needs households;
      • Innovation in the use of funds to achieve the goals.
   2. Proposed role and activities of the member (up to 25 points).
      • The member must originate and close long-term (at least 15 years), fixed-rate, fully amortizing mortgages for the homebuyers in the program, at terms and rates consistent with the member comparable mortgage programs (required);
      • Providing special mortgage products or underwriting;
      • Providing concessions (rates, terms, fees, etc.);
      • Providing increased outreach (including marketing targeted to minority or special needs households, as appropriate);
      • Providing financial or in-kind contributions towards purchase of homes.
   3. Partnership between member and sponsor, and services committed to homebuyers, if applicable (up to 35 points).
2. All eligible applications will be ranked from highest score to lowest score.

K. 

Disbursement of American Dream Funds
American Dream funds will be disbursed to the member upon execution of a direct subsidy agreement and a project agreement incorporating the commitments made in the application. The member will be expected to use the American Dream funds provided to fund assistance to homebuyers at closing, consistent with the commitments made in the application, and fund other activities identified in the application based on documentation of work performed. The member is expected to maintain control over the American Dream funds and to disburse funds to the sponsor or on behalf of homebuyers only upon submission of appropriate documentation by the sponsor.

L. 

Retention
The housing assisted with American Dream funds must be subject to a legally enforceable restriction in the warranty deed or restrictive covenant to the warranty deed requiring that the Federal Home Loan Bank of Cincinnati be given notice of any sale, refinancing, or use other than as a primary residence prior to the end of the retention period. Homebuyers will be required to pay back a pro rata amount of the American Dream grant if the home is sold, refinanced, or used other than as a primary residence during the three-year retention period. (The required retention language is available at www.fhlbcin.com.)

M. 

Reporting
The FHLBank expects that the American Dream grants will increase homeownership. It is the FHLBank’s desire that the reporting not be burdensome, but rather that it be sufficient to allow the FHLBank to determine how the grant has resulted in the creation of homeownership. As a condition of receiving a grant, the member must agree to make the following reports to the FHLBank:

1. Progress Report:
   1. Six months after receiving a grant, the member shall submit a report summarizing the initial progress: (1) in establishing the project; (2) formalizing any partnerships; (3) developing any special programs or materials; and (4) describing any particular problems or special circumstances which might hinder the project.
   2. Members must certify that they have closed home purchases with American Dream funds pursuant to the commitments made in the approved application. No other approvals from the Federal Home Loan Bank of Cincinnati are required prior to closing. (However, if there are any questions about eligibility of homebuyers or properties, the member may request clarification prior to closing.)
   3. As part of the Progress Report, the member must provide an American Dream Summary Report of Closing (available at www.fhlbcin.com) for each loan closed and must also certify to the Bank that they have received and will maintain in their files for inspection by the FHLBank the following documents for each loan closed:
      • The HUD-1 Settlement Statement, signed by both seller and buyer, showing the amount of American Dream funds provided for the benefit of the homebuyer;
      • A copy of the Warranty Deed, showing that the retention language (available at www.fhlbcin.com) has been included;
      • A signed and dated copy of the uniform residential loan application;
      • For minority households, evidence of minority status (either from the loan application or other sufficient evidence);
      • For special needs households, evidence of the special needs status consistent with the definitions included here (evidence of disability income or an attestation of the disability from a qualified professional).
2. Interim Report:
   1. Twelve months after receiving a grant, the member shall submit an Interim Report to the FHLBank covering three general areas: (1) how the funds have been used; (2) statistics on the number of new homebuyers, the number of first-time homebuyers, the number of minority homebuyers, the number of homebuyers with special needs, and any other relevant information about the homebuyers served. (For projects serving households displaced by disaster, the Interim Report will constitute the Final Report for the project.)
   2. Members must certify that they have closed home purchases with American Dream funds pursuant to the commitments made in the approved application.
   3. As part of the Interim Report, the member must provide an American Dream Summary Report of Closing (available at www.fhlbcin.com) for each loan closed and not previously reported and must also certify to the Bank that they have received and will maintain in their files for inspection the following documents for each loan closed but not previously reported:
      • The HUD-1 Settlement Statement, signed by both seller and buyer, showing the amount of American Dream funds provided for the benefit of the homebuyer;
      • A copy of the Warranty Deed, showing that the retention language (available at www.fhlbcin.com) has been included;
      • A signed and dated copy of the uniform residential loan application;
      • For minority households, evidence of minority status (either from the loan application or other sufficient evidence);
      • For special needs households, evidence of the special needs status consistent with the definitions included here (evidence of disability income or an attestation of the disability from a qualified professional).
3. Final Report:
   1. The member shall submit a Final Report, including similar information as provided in the Interim Report, 24 months after receiving a grant.
   2. Members must certify that they have closed home purchases with American Dream funds pursuant to the commitments made in the approved application.
   3. As part of the Final Report, the member must provide an American Dream Summary Report of Closing (available at www.fhlbcin.com) for each loan closed and not previously reported and must also certify to the Bank that they have received and will maintain in their files for inspection the following documents for each loan closed but not previously reported:
      • The HUD-1 Settlement Statement, signed by both seller and buyer, showing the amount of American Dream funds provided for the benefit of the homebuyer;
      • A copy of the Warranty Deed, showing that the retention language (available at www.fhlbcin.com) has been included;
      • A signed and dated copy of the uniform residential loan application;
      • For minority households, evidence of minority status (either from the loan application or other sufficient evidence);
      • For special needs households, evidence of the special needs status consistent with the definitions included here (evidence of disability income or an attestation of the disability from a qualified professional).
4. Additional Information:
   The FHLBank may request additional information about how funds were used and about the results achieved.

N. 

Information and Technical Assistance

For information or assistance, please contact Housing and Community Investment at (888) 345-2246.