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HomeMy WebLinkAbout2001-315S \Our Documents\Ordinances\01\Homebuyer Assistance Program Ordinance doc ORDINANCE NO AV 01- J 1 b- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, APPROVING GUIDELINES FOR OPERATION OF THE CITY OF DENTON HOMEBUYER ASSISTANCE PROGRAM AND ELIGIBILITY CRITERIA, AUTHORIZING EXPENDITURES IN EXCESS OF $15,000 FOR PROJECTS MEETING PROGRAM GUIDELINES AND CRITERIA, AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City Council of the City of Denton recognizes the need to assist low and moderate income families in securing safe, sanitary, and decent housing, and WHEREAS, the City of Denton participates in a Homebuyer Assistance Program administered by the City of Denton Community Development Office and funded through a federal grant from the Department of Housing and Urban Development, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION 1 That the City Council approves the Homebuyer Assistance Program Guidelines and Program Eligibility Criteria which is attached hereto and made a part of this ordinance for all purposes as Exhibit "A" and authonzes the City of Denton Community Development Office to administer this program SECTION 2 That the City Council authonzes the expenditure of funds in excess of $15,000 by the Community Development Office for projects meeting program guidelines and criteria, subject to compliance with competitive bidding laws where applicable SECTION 3 That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the 'T — day of 001 EULINE BROCK, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY BY APP OVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY BY 164 f L)� c c-it City of Denton — Community Development Division 2001 Homebuyer Assistance Program Guidelines INTRODUCTION The Community Development Division of the City of Denton has administered the Homebuyer Assistance Program since 1992 to help low and moderate income families to purchase decent and affordable housing The program provides home ownership opportunities to first time homebuyers and build strong neighborhoods The down payment and closing costs assistance is provided as a secured forgivable second mortgage loan at 0% interest for 5, 10 or 15 years The City of Denton forgives the note at the end of the loan term The Homebuyer Assistance Program is funded through federal grants from the U S Department of Housing and Urban Development and Federal Home Loan Bank of Dallas Policy clarifications or general questions should be addressed to the City's Community Development Division at the following address or telephone number City of Denton — Community Development Division 100 West Oak, Suite 208, Denton, Texas 76201 Phone Number 940 349-7726 —Fax Number 940 383-2444 WHO QUALIFIES FOR ASSISTANCE? Participants must meet all of the following criteria to participate in the Homebuyers Assistance Program Live in the city of Denton for one year Anticipated household income cannot exceed HAP income limit The anticipated annual income and assets are calculated using HUD's most current Section 8 Income Guidelines established in the Technical Guide for Determmina Income No of People Max hicome Limit 1 $36,050 3 $46,350 5 $55,650 7 $63,900 No of People Max Income Limit 2 $41,200 4 $51,500 6 $59,750 8 $68,000 Must be first-time homebuyers The following will be considered first-time homebuyers a Have not owned a home in the past three years, b Displaced single parents, c Own a substandard mobile home CD Inspector will determine the condition of the home Page I 4 Occupy the home as their primary residence during the term of forgivable loan 5 Qualify for a mortgage loan from a Participating Lender The interest rate on the mortgage loan cannot exceed the prevailing market rate See page 6 for a list of current Participating Lenders 6 Liquid assets less than $5,000 Liquid assets are assets that can be readily converted to cash and include such assets as cash, checking and savings accounts, certificates of deposit, money market accounts, stocks, bonds and profit sharing accounts (if funds can be withdrawn without a penalty) Note Any sum over $3,500 to the maximum of $5,000 must be pledged by the participants for closing costs, prepaids and down payment 7 Attend a HUD or Fannie Mae approved homebuyer education program The following are the agencies that currently offer homebuyer education classes in the Metroplex a City of Denton thru CCCS of North Central Texas - (940) 349-7726 b CCCS of Dallas — (214) 638-2227 c CCCS of Fort Worth — (800) 867-2227 WHAT TYPE OF HOUSE QUALIFIES? I Residential property, located within the Denton city limits, including existing and newly constructed single-family residence, condominium or townhouse Mobile homes and manufactured homes are not eligible properties The maximum sales price of the house to be purchased shall not exceed $87,500 2 Rental properties are not eligible unless the buyer and renter are the same or house has been vacant for 60 days 3 In accordance with the Uniform Relocation Act, the City of Denton must inform a seller that the City of Denton will not use it's power of eminent domain to acquire the property if negotiations fail to result in an agreement between the HAP buyer and the seller The City of Denton will provide the seller with a written estimate of the fair market value of the property that the seller signs See page 7 for the "Seller's Notice " 4 The property must be safe, decent and sanitary Assistance will not be provided to facilitate the purchase of a substandard property An independent inspection must be completed by a State Licensed Home Inspection Company CD Staff will review the inspection report and determine if any repairs will be required HAP funds will not be released until all the items of concern have been adequately addressed 5 It is recommended that the house contain adequate number of bedrooms Maximum No of Maximum No of Family Members Bedrooms Family Members Bedrooms 1 0/Efficiency 8 4 Bedrooms 2 1 Bedroom 10 5 Bedrooms 4 2 Bedrooms +10 6 Bedrooms 6 3 Bedrooms Page 2 Any structure built before 1978 must be free of any deteriorated paint The City of Denton will conduct a visual assessment of pre 1978 houses to determine the condition of the paint If the visual assessment shows deteriorated paint, the paint will need to be stabilized and a clearance test conducted by trained workers in accordance with Federal lead -based paint requirements for safe treatment WHAT COSTS WILL HAP COVER? Closing Costs & Preoaids: HAP will assist with a percentage of the Borrower's closing costs based on household income See page 4 for the levels of assistance Down Payment. Up to 50% of the MINIMUM down payment required by the Participating Lender based on the sales price For example FHA loans required a investment of 2 25% of the sales price - borrower's minimum down payment is 1 125% of the sales price In some instance, a mortgage loan does not require a down payment, however, under the Homebuyers Assistance Program a minimum of $250 is required as down payment from the homebuyer Gau Ft anQ core: Additional funds may be available to help homebuyers whose income does not exceed 65% of the area median income and meet gap criteria These funds are distributed and approved by the City GAP Financing is not meant to be used as a cushion factor to make the loan more appealing to the purchaser or mortgage company It is only available when the action is necessary for the participant to qualify for a mortgage loan or the price range for a house is not available in the market Gap financing can be used for the following situations A Assist in the difference between the sales price of the house and the maximum loan the buyer can afford B Assist participants to buy down the interest rate in order to make the mortgage payment affordable C Assist homebuyer with mortgage principal buydown in order to make the mortgage payments affordable GAP funds are not guaranteed until a preliminary approval is provided by the City of Denton Please make sure to talk to your mortgage company about applying for gap funds The mortgage company will need to submit your application to the City of Denton for approval of all funds, including gap funds City of Denton recommends that you and your mortgage company receive a preliminary approval from the City of Denton making an offer on a home to purchase Page 3 LEVELS OF ASSISTANCE The following are the three levels of assistance through the Homebuyer Assistance Program and additional requirements for each level of assistance FAMILY SIZE MODERATE INCOME LOW INCOME VERY LOW INCOME 80% - 66% AMI 65% - 51% AMI 50% & Below AMI 1 $36,050 - $29,316 $29,315 - $22,551 $22,550 or Below 2 $41,200 - $33,476 $33,475 - $25,751 $25,750 or Below 3 $46,350 - $37,701 $37,700 - $29,001 $29,000 or Below 4 $51,500 - $41,861 $41,860 - $32,201 $32,200 or Below 5 $55,650 - $45,241 $45,240 - $34,801 $34,800 or Below 6 $59,750 - $48,556 $48,555 - $37,351 $37,350 or Below 7 $63,900 - $51,936 $51,935 - $39,951 $39,950 or Below 8 $68,000 - $55,251 $55,250 - $42,501 $42,500 or Below Down Payment Down /, of Down Payment h of Down Payment /z of Down Payment and Closing Costs Pa men Assistance up to Closing Costs 80% 85% 9 $5,000 & Pre- aid Gap Funds (See page 3 for an Not Eligible for An additional $5,000 An additional $14,900 or explanation of gap funds) Gap Funds may be available for $9,900 may be available gap funds for gap funds Maximum Amount of HAP $5,000 $10,000 $14,900 or $19,900 if FHLB are Assistance available *The amount of GAP funds depends on what type of funds are available for assistance Up to $14,900 may be available if funds from the Federal Home Loan Bank are available The FHLB of Dallas provides an additional $5,000 for households that are at or below 50% of the AMI The $5,000 grant is forgiven over a five-year period If FHLB funds are not available only additional $9,900 may be available for GAP funds Page 4 OCCUPANCY REQUIREMENTS/TERM OF LOANS The occupancy requirements and the term of the HAP loan is based on the amount of assistance that is provided for down payment, closing costs and gap funds The following table indicates the term of the note and the number of years the household is required to maintain their home as their principal place of residency to fully comply with the Homebuyer Assistance Program Amount of Assistance Up to $5,000 Up to $10,000 Up to $19,900 5 years 10 years 15 years Occupancy Requirements Term of Loans TO RECEIVE ASSISTANCE The following is the process to receive assistance if you meet all of the eligibility criteria 1 Attend a HUD or Fannie Mae approved homebuyer education workshop The following is agency's that currently provide homebuyer education classes a City of Denton thru CCCS of North Central Texas - (940) 349-7726 b CCCS of Dallas— (214) 638-2227 c CCCS of Fort Worth — (800) 867-2227 Contact a HAP Participating Lender from the approved list The lender will determine if you qualify for a mortgage loan and determine your preliminary eligibility for the program Your mortgage company will submit the necessary paperwork to the CD office for consideration under the HAP program A preliminary approval is good for 3 months and can be extended for an additional two months with a signed earnest money contract Feel free to contact the City's Community Development Division if you have any questions on the program 3 Find your "dream home" and enter into a purchase agreement. A local realtor can assist you in finding your home, based on the lender's loan pre -qualification Once you have selected your home, the realtor can also assist you in entering into a purchase agreement Please note that it is not necessary to utilize the services of a realtor to receive assistance 5 HAP leader will submit your HAP apphcation Once you have obtained preliminary loan approval and entered into a purchase agreement, your lender will submit your application to the CD Office for down payment and closing costs assistance You will NOT have to submit an application directly to the City An outline of our functions follows Page 5 A Information is reviewed for completeness and accuracy and an eligibility check is performed B Review independent home inspection and request any needed repairs Conduct a visual assessment of pre-1978 houses to determine presence of deteriorated paint Conduct an environmental review on property C Determine amount of HAP assistance from Settlement Statement and wire funds to Title Company Assistance is subject to completion of repairs Notify lender, title company and buyer of assistance D Conduct a Final Inspection of the property E Prepare and submit HAP Deed of Trust and Promissory Note to title company for closing WHAT WILL YOU BE REQUIRED TO SIGN AT CLOSING? The City of Denton's Homebuyer Assistance Program (HAP) provides part of this necessary financing as a secured forgivable second mortgage loan at 0% interest for 5, 10 or 15 years The City of Denton will forgive the note at the end of the loan term On the day of closing the buyer(s) will be required to sign two legal documents for the Homebuyers Assistance Program — A Deed of Trust and Promissory Note The following is an explanation of the legal documents Promissory Note The promissory note states that the buyer promises to pay the amount of HAP assistance based on the payment schedule stated on the note The note is forgiven at the end of the loan term 5, 10 or 15 years depending on the amount of assistance See Page 4 for the number of years Deed of Trust The deed of trust is a security instrument that allows the City of Denton to place a lien on the property for the term of the forgivable loan and only for the amount of HAP assistance At the end of the term of the loan the entire grant will be forgiven At that time, the City of Denton will file a Release the Lien with the Denton County Clerk's Office The contracts indicate that the buyer(s) must comply with the following conditions Buyer(s) agrees to reside in the house for the term of the forgivable loan 5, 10 or 15 years from the date of execution of the promissory note Buyer(s) agrees to maintain the property in safe and sanitary condition Buyer (s) agrees to pay all mortgage payments, taxes and other assessment on the property in a timely manner PLEASE NOTE The amount of the loan and interest of 5% from the beginning of the loan is due and payable in full upon the sale of the property transfer of ownership, failure on the borrower to maintain their home as a principal residence during the term of the loan 5 10 or 15 years Page 6 City of Denton — Community Development Division Homebuyer Assistance Program NOTICE TO SELLER OF REAL PROPERTY Regarding Non -Use of Eminent Domain, Seller's Ineligibility for Relocation Assistance, and Tenant's Relocation Assistance Rights This is advance notice to the seller of real property, which may be purchased by a person receiving assistance under the City of Denton's Homebuyer Assistance Program (HAP), a federally funded program, with down payment and closing costs (Please note that this notice to seller does not constitute approval from the Ctty o HomebuyerAssistance Proeram for approval 1 The seller (and/or owner and owner's agent) of any such property is notified of the following 1 The prospective homebuyer does not have the power of eminent domain, and will not purchase the property if negotiations fail to result in an amicable agreement 2 The prospective purchase of the property is a transaction between the person applying for HAP assistance and the seller of the real property, therefore, any such sale is not subject to governmental agency's power of eminent domain, and a governmental agency will not be party in the transaction except as the possible provider of assistance to the prospective purchaser and administrator of the assistance program 3 The owner/seller of real property to a prospective homebuyer receiving HAP assistance under the cited programs is not eligible for relocation assistance under the Uniform Relocation Assistance and Real Property Acquisition Policies Act 4 A tenant occupant of real property required to move because the property is purchased by a home buyer assisted under this program is eligible for relocation assistance, including advisory services, notices of actions and rights, moving expenses, and replacement housing assistance The City of Denton will not assist in the purchase of a house that is being rented unless the buyer and renter are the same or the house has been vacant for 60 days 5 The City is required to provide the seller an estimate of the market value of a property, which may be subject to purchase by a homebuyer under this program prior to an offer or the initiation of negotiations to purchase the property The estimated market value of the property is $ , based on the real estate market This market value does not establish the purchase price in a voluntary sale The purchase price will be established through negotiations Received by Seller(s) Acknowledgement of Receipt of Notice to Seller Date Date Property Address Denton Texas Mail Signed Notice to City of Denton, Community Development Division, 100 W Oak, Suite 208, Denton, Texas 76201 — OR — Fax 940 383 2445 Page 7 PLEASE KEEP A COPY FOR YOUR RECORDS Page 8 HOMEBUYER ASSISTANCE PROGRAM PARTICIPATING LENDERS Contact Person HAP Mortgage Participating Lenders/Address Telephone Number Lender Loans Translators Since See Below Advantage Investors Mortgage Ray Sanchez 12/00 1, 2, 5 Spanish 3317 Brooke St, Denton Texas 76207 940 243 8637 Advantage Mortgage Network Inc. Brian Wilson ] 0/99 1, 2, 5 Spanish Lillian Miller Pkwy, , Ste 110, Denton TX 76205 940 484 LOAN (5626) Allied Mortgage Capital Corp. Helen W ikerd 4/98 1, 2, 5 N/A 1722 W Oak, Denton TX 75201 940 898 1694 American United Mortgage Services, Inc Sherry Atkins 2/01 1,2 N/A 3000 S Stemons Lake Dallas 75065 800 654 4089 Bank Source Mortgage Manny Uceda 12/98 1,2,5 Spanish Dallas Pkwy, , Suite 100, Addison TX 75001 (972) 692-2565 BOMAC Home Mortgage, Inc Company Vicki Cummings 7/96 I, 2, 5 Spanish S Elm, Ste 30, Denton TX 76204 940 484 1110 KELAIR Mortgage Corp. Kelly Farley Karen Wheeler 5/01 1,2,5 Spanish 1101 S Broadway, Suite 100, Carrollton, TX 75006 (972)242-7459 Countrywide Home Loans Loan Officer 8/00 1, 2, 3, 5 N/A 724 W Main St, Lewisville TX 75067 940 390 0991 CTX Mortgage Company Dana Reynolds/ 1660 S Stemmons Frwy #255, Lewisville TX 75067 Tim Cranston 11/99 1, 2, 5 Spanish 972 219 9795 Denton Area Teachers Credit Union Don Wood/ Robin Strickland 2/0i 1,2 Spanish 225 W Mulberry, Denton TX 76201 940 380 5935 First State Bank of Texas Grant Jacobson 1/95 1, 2, N/A 100 S Locust, Denton TX 76201 940 381 7286 F&M Mortgage Co, Inc Renee Fairchild 10/99 1, 2, Spanish 416 W University Dr #100, Denton TX 76201 940 387 7954 Liberty Mortgage Richard Gilbert 11/99 1, 2, 5 Spanish 2317 W University Dr, Suite B6, Denton TX 76201 940 891 3221 New Loan Mortgage, Inc. Loan Officer 12/01 1,2 N/A 811 S Central Expwy, Suite 436, Richardson TX 75080 972 480 8222 Precise Mortgage Services, Inc. Carol Horton / DOnnia Blair 3/96 1, 2, 5 N/A 1173 Bent Oak Dr Ste 100, Denton TX 76205 940 898 8066 Principal Residential Mortgage, Inc Christina Gladden 8/00 1, 2, 5 Spanish 250 S Stemmons Fwy #300, Lewisville TX 76205 972 219 2620 Secure Mortgage Wendy Broyles 2/01 1,2, 5 Spanish 401 S Locust, Suite 205-A, Denton TX 76201 940 898 7477 Texas Bank Jessie Rennaker 6/95 1, 2, 5 N/A 729 Fort Worth Drive, Denton TX 76201 940 383 4600 Texas Residential Mortgage Corp. Stacy Curtis/ Guadalupe Saucedo 2/00 1, 2, 5 Spanish 1400 Dallas Dr Ste C, Denton Texas 76205 940 566 5363 Types of Mortgage Loans O FHA (203b) ® Conventional ® FHA (203k) ® VA Date Revised May 2001