HOME Loan Portfolio Management and Monitoring

SB Friedman, as lead consultant, and Jane R. Bilger Community Strategies, Clarity Partners, and The Community Builders were engaged to assist the Cook County Bureau of Economic Development (the “Bureau”) with managing and monitoring its HOME loan portfolio. The Bureau maintains a portfolio of approximately 150 HOME-assisted multifamily projects with existing loan balances and active affordability covenants.

The SB Friedman team is assisting the Bureau with two primary tasks: 1) designing a risk assessment tool to monitor the financial performance and program compliance of individual HOME-assisted multifamily projects over time; and 2) developing more streamlined and standardized policies and procedures for Bureau staff to use in evaluating project performance. The scope of work includes: reviewing the Bureau’s existing HOME policy guidebooks and forms; analyzing sample project files that include underwriting criteria, loan and partnership agreements, rent rolls, audited financial statements, and loan payment records; and reviewing other affordable housing programs (e.g., Low Income Housing Tax Credits, Section 8, etc.) from the Department of Housing and Urban Development (HUD) that provide additional subsidy in County HOME-funded projects. 

After extensive consultations with Bureau staff, the team has assembled an Excel-based Risk Assessment Tool in accordance with HUD’s HOME program final rule (published July 2013). The Risk Assessment Tool incorporates data from existing Bureau databases and files and compares these data against thresholds based on HUD guidelines and industry benchmarks to assess programmatic compliance and financial risks. When these programmatic, physical and financial thresholds are not met for an individual project, the Risk Assessment Tool triggers alerts to inform users of potential problems. In February 2014, the consulting team held a training session with Bureau staff and HUD representatives to provide a hands-on review of the Risk Assessment Tool and an accompanying user manual. Bureau staff were also provided with an updated policy and procedures document that incorporates changes to the HOME program under the final rule. 

Results: The SB Friedman team presented a demonstration of the Risk Assessment Tool in October 2013 and January 2014. After refinements, we provided Bureau staff with a training session in February 2014. The Bureau is currently in the process of populating a related Access database to house pertinent project monitoring data. The Bureau accepted our revision of their policy and procedures document stemming from the HOME final rule in January 2014.