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HomeMy WebLinkAbout2000-344S \Our Docu iments\Ordinances\00\Homebuyer Assistance Program Ordinance doc 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 authorizes the City of Denton Community Development Office to administer this program SECTION 2 That the City Council authorizes 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 6is W day of , 2000 (:�J� Ar-c� EULINE BROCK, MAYOR ATTEST JENNIFER WALT] CI Y SECRETARY BY AP OVED S TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY d` City of Denton — Community Development Division iry o 2000 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 ownerslup 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 2 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 Determining Income No of People Max Income Limit 1 $ 34,050 3 $ 43,800 5 $ 52,500 7 $ 60,300 No of People Max Income Limit 2 $ 38,900 4 $ 48,650 6 $ 56,400 8 $ 64,200 Must be first -tune homebuyers The following will be considered first-time homebuyers Have not owned a home in the past three years, Displaced single parents, Own a substandard mobile home CD Inspector will determine the condition of the home Page 1 of 1 Occupy the home as their primary residence during the term of forgivable loan 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 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 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 — (940) 867-2227 WHAT TYPE OF HOUSE QUALIFIES? 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 $85,000 Rental properties are not eligible unless the buyer and renter are the same or house has been vacant for 60 days 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 fad 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 Seepage 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 Page 2 of 2 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/Bfficiency 8 4 Bedrooms 2 1 Bedroom 10 5 Bedrooms 4 2 Bedrooms +10 6 Bedrooms 6 3 Bedrooms 6 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? Closure 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 2 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 Gan Financing: 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 Page 3 of 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 MODERATE LOW VERY LOW FAMILY SIZE INCOME INCOME INCOME 80% - 66% AMI 65% - 51% AMI 50% & Below AMI 1 $34,050 - $27,691 $27,690 - $21,301 $21,300 or Below 2 $38,900 - $31,591 $31,590 - $24,301 $24,300 or Below 3 $43,800 - $35,556 $35, 555 - $27,350 $27,350 or Below 4 $48,650 - $39,521 $39,520 - $30,401 $30,400 or Below 5 $52,550 - $42,706 $42,705 - $32,851 $32,850 or Below 6 $56,400 - $45,826 $45,825 - $35,251 $35,250 or Below 7 $60,300 - $49,011 $49,010 - $37,701 $37,700 or Below 8 $64,200 - $52,196 $52,195 - $40,151 $40,150 or Below %: Down Payment %z Down Payment %z Down Payment HAP own Payment Assistant & 80% of closing & 85% of closing costs & 95% of closing costs costs up to $5,000 up to $5,000 up to $5,000 d Closing Costs Buyer' '/2 Down Payment & '/: Down Payment & Y. Down Payment & Contribution 20% of closing costs 15% of closing costs 5% of closing costs ap Funds (See page 3 for an Not Eligible for An additional $5,000 may be available for An additional $14,900* May be available for xplanation of gap funds) Gap Funds gap funds gap funds *Up to $14 900 may be available if funds from the Federal Home Loan Bank are avaiiaoie ine rrtr,n in uaaas provioes 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 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 ccupancy Requirements Term of Loans Page 4 of 4 WHEN SIGNING AN EARNEST MONEY CONTRACT Contracts are subject to a Notice to Seller of Real Property In accordance with the Uniform Relocation Act, the City of Denton must inform the seller that the City of Denton will not use it's power of emment domain to acquire the property if negotiations fad to result in an agreement between the HAP buyer and the seller The notice must be provided to the seller before entering into an Earnest Money Contract See page 9 for the "Seller's Notice " Contracts must be subject to a Property Condition Addendum (PCA) The contract must call for an independent inspection by a State Licensed Home Inspection Company CD Staff will review the mspegtion 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 Addendum to Sales Contract / Lead -Based Paint Hazards Notification is required for property constructed prior to 1978 According to the addendum, a buyer has the option to conduct a risk assessment or inspection for the presence of lead -based paint hazards The inspection is an eligible closing cost PROCESS TO RECEIVE ASSISTANCE The following is the process to receive assistance if you meet all of the eligibility criteria I Attend a HUD or Fannie Mae approved homebuver education workshop The following is agency's that currently provide homebuyer education classes * City of Denton thru CCCS of North Central Texas - (940) 349-7726 * CCCS of Dallas — (214) 638-2227 * CCCS of Fort Worth — (940) 867-2227 2 Contpct a HAP Participating Lender from the approved list The lender will determine if you qualify for a mortgage loan and deternne 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 4 HAP lender will subimt your HAP application 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 Page 5 of 5 When the buyer's application is received the Community Development Office will begin processing the reauest for assistance An outline of our functions follows 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 mdicate that the buyer(s) must comply with the following conditions 1 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 2 Buyer(s) agrees to maintain the property in safe and sanitary condition 3 Buyer (s) agrees to pay all mortgage payments, taxes and other assessment on the property in a timely manner Page 6 of 6 HOMEBUYER ASSISTANCE PROGRAM PARTICIPATING LENDERS Contact Person HAP Mortgage Participating Lenders/Address Telephone Number Lender Loans Translators Since See Below Advantapge Mortgage Network Inc Brian Wilson 10/8/99 I, 2, 5 Spanish 2442 Lillian Miller Pkwy, , Ste 110, Denton TX 76205 940 484 LOAN (5626) Allied Mortgage Capital Corp Helen W Ikerd 4/23/98 1, 2, 5 N/A 1722 W Oak, Denton TX 75201 940 898 1694 American Investment Mortgage Manny Uceda 11/23/98 1 , 2, 3 Spanish/ Italian/ 2216 Loon Lake Rd, Denton TX 76205 940 380 0002 French BOMAC Dome Mortgage, Inc Company Vicki Cummings 7/17/96 1, 2, 5 Spanish 405 S Elm, Ste 30, Denton TX 76204 940 484 1110 CBS Investment Company Bert Mahon 3/8/99 1, 2, 5 N/A 524 N Locust, Suite B, Denton TX 76201 940 898 7496 Countryside Lending Inc LeeRoy Schramm 3/23/99 2 N/A 2204 Quail Run, Corinth TX 76208 940 498 197 Dana Reynolds/ CTX Mortgage Company Tun Cranston 11/2/99 1, 2, 5 Spanish 1660 S Stemmons Frwy #255, Lewisville TX 75067 (972)219-9795 Grant Jacobson/ First State Bank of Texas Edward Stankunas 1/I8/95 1, 2, N/A 100 S Locust Denton TX 76201 940 381 7286 F&M Mortgage Co, Inc Renee Fairchild 10/1/99 1, 2, Spanish 416 W University Or #100, Denton TX 76201 940 387 7954 Jefferson Heritage Bank Richard LaBarbera 1/24/95 1, 2, 5 Spanish 321 W Oak Street, Denton TX 76201 940 382 9676 The Funding Source Brad Deighton 11/29/98 1,5 N/A 5068 W Plano Hwy #300, Plano TX 75093 972 991 4100 MaxAmenca Financial Services Richard Gilbert 11/19/99 1, 2, 5 Spanish 2317 W University Dr, Suite B6, Denton TX 76201 940 891 3221 Gilbert Martinez/ .A PomtBank, N .A Wendy Broyles 12/27/99 I, 2, 5 Spanish 524 $ I34E, Denton 76205 940 484 4546 Precise Mortgage Services, Inc Carol Horton 3/25/96 1, 2, 5 N/A 1173 Bent Oak Dr Ste 100, Denton TX 76205 940 898 8066 Texas Bank Jessie Rennaker 6/27/95 1, 2, 5 N/A 729 Fort Worth Drive, Denton TX 76201 940 383 4600 Texas Residential Mortgage Corp. Stacy Curtis 2/2/00 1, 2, 5 N/A 1400 Dallas Dr Ste C, Denton Texas 76205 (940) 566-5363 Wells Fargo Home Mortgage Town Kathy Rodriguez 7/14/00 1, 2, 5 Spanish 702 Harbour Dr, Lake Dallas Texas 75065 (940) 497-2964 Types of Mortgage Loans O FHA (203b) O Conventional Date Revised July 2000 O FHA (203k) ® VA Page 7 of 7 ZL 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 Thus 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 The seller (and/or owner and owner's agent) of any such property is notified of the following I 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 under the HAP program is a transaction between the person receiving the 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 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 tights, moving expenses, and replacement housing assistance Thc-Cpy 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 S , 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) Property Address Acknowledgement of Receipt of Notice to Seller Date Date , 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 PLEASE KEEP A COPY FOR YOUR RECORDS Page 8 of 8