1998-320AN 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
EXPENDrrUKES IN EXCESS OF $15,000 FOR PROJECTS MEETING PROGRAM
GUIDELINES AND CRITERIA, AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the C~ty Councd of the C~ty of Denton recogmzes the need to assist low and
moderate ~ncome families m securing safe, samtary, and decent housing, and
WHEREAS, the Cny of Denton pamc~pates m a Homebuyer Assistance Program
admm~stered by the C~ty of Denton Commumty 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 I. That the C~ty Council approves the Homebuyer Assistance Program
Gmdehnes and Program Ehgxblhty Criteria which is attached hereto and made a part of this
ordmance for all purposes as Exhibit "A" and authorizes the City of Denton Commumty
Development Office to admmxster th~s program
SECTION II That the Cxty Councd authorizes the expendxture of funds ~n excess of
$15,000 by the Commumty Development Office for projects meeting program gmdehnes and
criteria, subject to compliance with competmve b~ddmg laws where applicable
SECTION III That thxs ordinance shall become effective immediately upon its passage
and approval
PASSED APPROVED th sthe day of 998
JAC~fl~LLER, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
HERBERT L PROUTY, CITY ATTORNEY
F \SHA*~'D~DEPT~L/3L\Our Doouments\Ordlnanc~s~98~Iomobu~r Asslstanc~ ~o~ram Ordinance doc
EXHIBIT "A"
City of Denton ~ Commumty Development D v slon
1998/99 Homebuyer Assistance Program Gmdehnes
INTRODUCTION
Families from all walks of hfe quahfy for a mortgage loan to finance the purchase of exmtmg houses However,
these same families are often unable to save the money needed for the down payment, closing costs and prepmd
taxes and ~ns~rance The C~ty of Denton's Homebuyer Assistance Program (HAP) provides part of th~s
necessary financing as a secured forgivable second mortgage loan at 0% ~nterest for 5, 10 or 15 years The City
of Denton will forgive the note on a monthly barns
The Homebuyer Asmstance Program m adm~mstered by the City of Denton's Community Development Division
and ~s funded through federal grants from the U S Department of Housing and Urban Development The
program accomphshes two objeet~ves--promdmg home ownership opportunities for low and moderate ~ncome
families and builds stronger nmghborhoods
Pohcy clarifications or general questions should be addressed to the C~ty's Commumty Development D~vm~on
at the following address or telephone number
City of Denton ~ Commumty Development D~wmon
100 West Oak, State 208, Denton, Texas 76201
Phone Number (940) 349-7726 ~ Fax Number (940) 383-2445
WHO QUALIFIES FOR ASSISTANCE?
Participants must meet all of the following criteria to participate in the Homebuyers Assistance Program
1 L~ve m the c~ty of Denton for one year
2 Household mcome cannot exceed HAP ~ncome hmlt
No. of Peonle Max. Income L~m~t No of Pem)le Max Income Limit
1 $30,450 2 $34,800
3 $39,150 4 $43,500
5 $47,000 6 $50,500
7 $53,950 8 $57,450
3 Participants must be first-time homebuyers The following will be considered first-time homebuyers
a Participants who have not owned a home in the past three years,
b Part~mpants who are displaced single parents,
c Part~mpants who own or owned a substandard mobile home Commumty Development Inspector
will determine the condition of the mobile home
Page I of 7
4 Participants must occupy the home as thetr primary residence during the term of program assistance
The HAP second hen contains a due m full and payable/acceleration clause ~n the event of sale
5 Partunpants must meet the ehg~bfl~ty reqmrements of the mortgage program offered by a Participating
Lender The interest rate on the mortgage loan cannot exceed the prevmhng market rate See page 6 for
a hst of current Partm~patmg Lenders
6 Partm~pants may not hold hqmd assets m excess of $5,000 L~qmd assets are assets that can be readdy
converted to cash and include such assets as cash, checking and sawngs accounts, certfficates of deposit,
money market accounts, stocks, bonds and profit shanng accounts 0f funds can be w~thdrawn without a
penalty) Note Any sum over $3,500 to the maximum of $5,000 must be pledged by the participants for
closing costs, prepa~ds and down payment
7 Part~mpants must attend a HUD or Fanme Mae approved homebuyer education program Consumer Credit
Counsehng of North Central Texas, [nc currently offers a "Successful Home Ownership" workshop The
workshop ~s HUD-approved and meets Fanme Mae gmdehnes for home buyer education CCCS education
workshops are offered every s~x to e~ght weeks Call the Commumty Development D~v~mon at (940) 349-
7726 to register for the next available workshop
WHAT TYPE OF HOUSE QUALIFIES?
1 The house to be purchased must be a residential property, located w~thm the Denton c~ty hm~ts
Residential properties mclude the following ex~stmg and newly constructed single-family residence,
condommmm or townhouse Mobile homes and manufactured homes are not ehg~ble properttes The
maximum sales price of the house to be purchased shall not exceed $77,500
Pl~a$~ ]~0~O; The City of Denton will not assist ~n the purchase of a house that is beino rented
#nle$~ ~he buyer and renter are the same
2 The property to be purchased must be safe, decent and samtary Assmtance wtll not be provided to famhtate
the purchase of a substandard property An tndependent mspectmn of all major systems and ~tems that may
affect the health and safety of the occupants must be conducted on the property by a State L~censed Home
Inspection Company Commumty Development Staff wall rewcw thc inspection report and will determine
~fany repa~ra wall be reqmred HAP funds w~ll not be released until all the ~tems of concern have been
adequately addressed
3 It ~s recommended that the house contain adequate number of bedrooms
Maximum No of Maximum No of
Famdv Members Bedrooms Family Members Be4rooms
1 O/Efficiency 8 4 Bedroom
2 1 Bedrooms 10 5 Bedrooms
4 2 Bedrooms +10 6 Bedrooms
6 3 Bedrooms
4 Any structure built before 1978, where a child of s~x (6) years of age or younger will reside, must be free
from lead based paint All sales contracts for property constructed prior to 1978 must be subject to Lead-
Based Paint Health Hazards Addendum
Page 2 of 7
WHAT COSTS WILL HAP COVER?
1 CIosin~ Costs & Prepaids. HAP will only assist with Borrower's closing costs If the maximum
allowance is not used for a particular item, funds cannot be used to finance other ehg~ble items over the
amounts specified In such cases where certain Items cannot be covered through HAP, the buyer will be
responsible for those closing costs All of the following closing costs are ehglble for financmg, to some
degree, through HAP
application fee cretht report fee lender's inspection fee
loan origination fee settlement or closing fee document preparation fee
tltle insurance courier fees recording fees
title search apprmsal fee survey fee
attorney's fees other s~mllar items
Llm~tat~uns on Closing Costs & Prepalds
30 Days Interest - A full 30 days interest is provided
14 Months Hazard Insurance
Three (3) Months Property Taxes - a full three (3) months taxes are provided If the actual taxes for
a three (3) month period are less than the amount provided, the excess funds may not be escrowed for
additional taxes It is the responsibility of the purchaser to pay for any taxes above the three (3)
months prowded under the program
Inspection fees $100 for an Independent Home Inspections, $50 for lenders remspectton after repairs
have been completed, $75 for a Pest Inspection, $350 for a lead-based paint assessment and
inspection
2 Down Payment. Up to 50% of the MINIMUM down payment required by the Participating Lender based
on 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
3 ~ Additional funds may be available to help homebuyers whose ~ncome does not exceed
65% of the area median income (See page 3 for the 3 levels of assistance) and meet gap criteria These
funds are d~stnbuted 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 partmlpant to qualify for a mortgage loan Gap financing can be used for the
following sltuattons
A Asslst m the d~fference 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 home buyer w~th mortgage pnnc~pal buydown in order to make the mortgage payments
affordable
Page 3 of 7
LEVELS OF ASSISTANCE & OCCUPANCY REQUIREMENTS
The following are the three levels of assistance through the Homebuyer Assistance Program and additional
reqmrements for each level of assistance
Family MODERATE INCOME LOW INCOME VERY LOW INCOME
Size 80% - 66% AMI 65% - 51% AMI 50% & Below AMI
I $30,450 - $24,751 $24,750 - $19,051 $19,050 - or Below
2 $34,800-$28,301 $28,300 - $21,751 $21,750 - or Below
3 $39,150 - $31,851 $31,850 - $24,501 $24,500 or Below
4 $43,500 - $35,351 $35,350 - $27,201 $27,200 - or Below
5 $47,000 - $38,201 $38,200 - $29,401 $29,400 - or Below
6 $50,500 - $43,901 $41,000 - $31,551 $31,550 - or Below
7 $53,950 - $43,901 $43,900 - $33,751 $33,750 - or Below
8 $57,450 - $46,651 $46,650 - $35,901 $35,900 - or Below
Maximum Assistance $5,000 $10,000 $19,900
Occupancy 5 years 10 years 15 years
Reqmrements
Ehg~ble Costs Down Payment & Down Payment, Closing Down Payment, Closing
Closing Costs Costs & Gap F~nanc~ng Costs & Gap Flnancmg
EARNEST MONEY CONTRACT
1 The contract must show an ~nterest rate not to exceed the prevmhng rate
2 All contracts must be subject to a Property Cond~tmn Addendum (PCA) The Earnest Money Contract must
call for an ~ndependent ~nspectmn of all major systems and ~tems that may affect the health and safety of
the occupants The ~ndependent ~nspectmn must be completed by a State Lmensed Home Inspectmn
Company Commumty Development Staff w~ll rewew the inspection report and will determine ~f any
repmrs will be reqmred HAP funds will not be released until all the ~tems of concern have been adequately
addressed
Page 4 of 7
3 Under Special Provisions it must be annotated that the contract ~s subject to the Buyer quahfylng for HAP
assistance
4 Addendum to Sales Contract / Lead-Based Paint Hazards Not~fication ~s required for property constructed
prior to 1978 According to the addendum, a buyer has the option to conduct a risk assessment or
~nspect~oh for the presence of lead-based paint hazards If the buyer ~s to pay for the assessment, th~s fee
can be reimbursed under HAP should the loan be approved by the lendmg agency
5 Contracts must be properly endorsed by Seller(s) and Purchaser(s) Any changes to the contract must bc
dated and initialed by both part~es
6 Broker's name and address are required along w~th sclhng agent's name and telephone number
7 In some instances, the appraised value of the home will not support thc loan A change ~n contract price
may affect the HAP benefit level The mortgage company must submit a letter md~cating thc new sales
price along w~th an adjusted Good Faith Estimate (GFE)
PROCESS TO RECEIVE ASSISTANCE
If you meet all of the eligibility cntcrm, the process for homcownersh~p then includes the followmg steps
1 Attend a HUD or Fannie Mae an0roved homebuver education workshon. Consumer Credit
CounseHn~ of North Central Texas is currently offerin~ "Successful Homeownershin" workshon
Thc workshop Includes four components Pre-Homeownersh~p, Homebuy~ng process, Maintaining Home
as a Homeowner and Budgeting Skdls Please call the Cl~y's Commumty Development Division to register
for the next available workshop The workshops are offered every s~x to eight weeks and are free of charge
2 Select and contact a HAP Particlnatin~ Lender from the annroved list of your choice That Lender
will establish the actual size of the mortgage you can afford and determine your prellm~nary ehglblhty for
the program Feel free to contact the C~ty's Commumty Development Division if you have any questions
on the program
3 Find Your "dream home" and enter Into a nurehase aereement. A local realtor can assist you m finding
your home, based on the lender's loan pre-quahficat~on Once you have selected your "dream home", the
realtor can also assist you in entenng into a purchase agreement Please note that ~t is not necessary to
utthze the services of a realtor to receive assistance
4 HAP l~gder will submit your HAP a~n_olleation Once you have obtained prehmtnary loan approval and
entered into a purchase agreement, your lender will submit your appheation to the City's Community
Development D~wsmn for down payment and closing costs asststance You will NOT have to submit an
appheatwn d~recfly to the C~ty The HAP lender will process all the paperwork necessary for you to apply
for the HAP program
Page 5 of 7
When the buverVs aunllcation is received, the Community Develooment Office will begin
nrocessinu the request for assistance An ouflme of our functions follows
A Informatxon is reviewed to ensure completeness and accuracy and an chglblhty check xs performed
B Review xndependent home msp¢ctmn and request any needed rcpmrs
C Conduct an envxronmcntal review on property to determine xf near an airport or m a Special Flood
Hazard Area
D Determine the amount of assxstance from the Settlement Statement and request funds from our
Accounting Depa,h.ent Assxstance xs subject to completzon of all repairs as reqmrcd by Community
Development
E Notify lender and title company of assistance They will receive a Schedule of Assistance outhnmg
the actual amount of assistance that will be provxded to the buyer
F Prepare Homebuyers Assistance Program Deed of Trust and Promissory Note for loan closing
G Submit legal contracts and checks for HAP assistance to title company for closxng
WHAT WILL YOU BE REQUIRED TO SIGN AT CLOSING?
On the day of closing thc buyer(s) will be required to sign two legal documents for the Homebuyers Assistance
Program ~ A Dced of Trust and Promissory Note The follow,ng 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 on a monthly basis for a period of S, l0
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 assmtance 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
1 Buyer(s) agrees to reside ~n the house for the term of the forgivable loan 5, l0 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 m a timely
Page 6 of 7
HOMEBUYER ASSISTANCE PROGRAM PARTICIPATING LENDERS
* Active Participating Lenders
Par tiCipating Lenders/Address I Contact Person Mortgage Loans ] Translators
] Telephone Number
Allied Mortgage Capital Corp Helen W Ikerd FHA/VA/ N/A
1')22 W Oak, Denton TX 75201 (940) 898-1694 Conventional
American National Bank Spencer Murphy FHA/VA/ N/A
1565 W Mare St, State 468, Lewlsvllle TX 75067 (972) 221-7966 Conventional
'Countrywide Home Loans Hugh Kelly FHA/VA/ Various
2662 N Josey Lane #208, Carrollton TX 75007 (972) 245-2544 FNMA/FHLMC
Craln & Co. Mortgage Plus Donna Helms Conventional/ Spamsh
614 Edmonds, State 105, Lewlsvllle TX 75067-3555 (800) 221-2509 VA
iFirst State Bank of Texas* Pat Cou~ney Conventmnal/ N/A
100 S Locust, Denton TX 76201 (940) 381-7250 FHA/203K
l~rst Federal Savings Bank of North Texas Tom Phillips FHA/VA/ Spamsh
321 W Oak Street, Denton TX 76201 (940) 382-9676 ext 204 Conventmnal
The GM Group, Inc Shem Earnest FHA/VA/ Spanish
2323 N Central Expwy, Suite 110, Dallas TX 75080 (972) 918-0100 Conventional
Merit Mortgage Inc * Dana Reynolds FHA/VA/ N/A
325 S Stemmons, Levasvtlle TX 75067 (972) 539-6733 Conventional
Norwest Mortgage, Inc Donna Kelley FHA/VA/ Various
2430 1-35 E, State 150, Denton TX 76205 (940) 381-0044 Convantional W/appt
Precise Mortgage Services, Inc * Carol E Hmton FHA/VA/ N/A
1173 Bent Oak Dr Ste 100, Denton TX 76205 (940) 898-8066 Conventional
Provident Bank Grant Jacobson FHA/VA N/A
2220 ~an Jacmto Blvd ~ Denton TX 76205 (940) 387-5820 Conventional
Reliance Mortgage Co Rachard LaBabera Conventional/ N/A
120 'E McKmney, Denton TX 76201 (940) 381-1987 VA
BOMAC Home Mortgage, Inc. Company* Brian Wilson FHA/VA/ Spamsh
2430 S I35E Ste 238, Denton TX 76205 (940) 484-1110 Conventional
Superior Lending Mortgage Chnt Medford FHA/VA Various
8499 Gr0envllle Ave #209B, Dallas TX 75231 (214) 342-9585
Summit Mortgage* Rene6 Fatmhlld Conventional N/A
519 S Carroll Blvd, #A, Denton TX 76201 (940) 381-2523
Sun West Mortgage Co Jeff Bendtg FHA/VA/ N/A
2828 Forest Lane #1125 Dallas TX 75234 (972) 241-7477 Conventional
Texas Bank* Jessie Renaaker FHA/VA/203K/ N/A
729 Fort Worth Drtve, Denton TX 76201 (940) 383-4600 Conventional
World Savings & Loan Association Freddy Rmz Conventional Spamsh
18333 Preston Rd, Sto 188, Dallas TX 75252 (972) 380-1577
THIS LIST WILL BE UPDATED AS NEEDED - AUGUST 11, 1998
Page 7 of 7