DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: FACILITATE PROCESS OF PROVIDING HOMEOWNERSHIP ASSISTANCE FUNDS

12-C
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: FACILITATE PROCESS OF PROVIDING HOMEOWNERSHIP ASSISTANCE FUNDS
Problem Identification:
The process required to issue homeowner assistance checks within HCD’s Homeownership Institute is unnecessarily cumbersome. The City’s Department of Finance requires that four or five people sign off on each check request, and that the title company involved retrieve the check in person. The entire process (from the time the homeowner’s request is submitted until the check is deposited in the bank) takes 10 to15 days on average.

Recommended Action:
Replace the current check-based system with a system based on wire transfers.

Classification:
Cost Savings, Service Improvement

Function/Operational Area:
HCD Homeownership Institute, Department of Finance

Estimated Annual Impact:
The process would take one to two days if the money were wired, rather than the current 10 to 15 days, which would free up staff resources (a minimum of $32,500 per year) and would greatly improve customer satisfaction.

Estimated Implementation Costs:
Each wire transfer would cost approximately $15. With 1,400 check requests per year, the Homeownership Institute would be spending $21,000 on wire transfers each year, resulting in a net cost savings of at least $11,500 in staff time.

Barriers to Implementation:
Possible bureaucratic resistance from the Department of Finance.

Projected Implementation:
One month

Next Steps:
Study the wire transfer system currently used in HCD’s Settlement Expense Loan Program. Initiate senior-level discussions with the Department of Finance.

Analysis:
Costs:

At $15 per check request, wiring all checks through the banking system would cost a total of $21,000 per year (at 1,400 check requests per year). Additional costs, though minimal, would be incurred by the Institute in training staff and educating title companies and contractors about the new system.

Benefits:

The Homeownership Institute currently devotes the equivalent of 1 FTE (secretary) to the processing of check requests. At $25,000 annual salary with 30 percent benefits, the total salary applied to the process within the Homeownership Institute is $32,500 per year. Additional staff time is devoted to responding to multiple phone calls from customers, title companies and contractors who call on a continuous basis to ask about the status of their checks. These phone calls would be minimized, if not eliminated, if all customers knew the process would take 24 to 48 hours.

Additional salary costs could be saved within the Department of Finance, as the number of people required to review each check requests is reduced; the Department currently requires four or five people to review each request.

Net benefits:

$32,500 less $21,000 = $11,500 per year in staff resources (secretarial support) would be saved, at a minimum. The staff time saved would be directed towards the Homeownership Institute’s new comprehensive customer service initiative.

Customer satisfaction would improve dramatically with a wire-based system, as check processing time would decrease by 8 to 14 days.