2001-315S \Our Documents\Ordinances\01XHomebuyer Assistance Program Ordinance doc
OP INANCE NO
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
WliEREAS, the City Council of the City of Denton recognizes the need to assist low and
moderate income famthes ~n sectmng safe, sanitary, and decent housmg, and
WHEREAS, the City of Denton parhc~pates ~n a Homebuyer Assistance Program
admmmtered 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 ORDA1NS
SECTION 1 That the City Councd approves the Homebuyer Assistance Program
Gmdehnes and Program Ehglbthty Cnterm which 1s attached hereto and made a part of this
ordinance for all purposes as Exhibit "A" and authorizes the C~ty of Denton Community
Development Office to administer this program
SECTION 2 That the C~ty Councd authorizes the expenditure of funds ~n excess of
$15,000 by the Community Development Office for projects meehng program gmdehnes and
criteria, subject to compliance w~th competitive bidding laws where applicable
SECTION 3 That th~s orchnance shall become effective zmmedlately upon its passage
and approval
PASSED PPROVED th s the day of /_oqZ 001
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
[/
APPI~OVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
City of Denton - Commumty Development D vts on
2001 Homebuyer Assistance Program Gmdehnes
INTRODUCTION
The Community Development Division of the City of Denton has administered the Homebuyer
Assistance Program since 1992 to help low and moderate income families to purchase decent and
affordable housing The program provides home ownership oppormnmes to first time homebuyers and
build strong neighborhoods The down payment and closing costs assistance is provided as a secured
forgivable second mortgage loan at 0% ~nterest for 5, 10 or 15 years The City of Denton forgives the
note at the end of the loan term
The Homebuyer Assistance Program is funded through federal grants from the U S Department of
Housing and Urban Development and Federal Home Loan Bank of Dallas
Policy clarifications or general questions should be addressed to the City's Community Development
D~vlslon at the following address or telephone number
City of Denton ~ Community Development Division
100 West Oak, State 208, Denton, Texas 76201
Phone Number 940 349-7726 ~ Fax Number 940 383-2444
WHO QUALIFIES FOR A$flSTANCE?
Participants must meet all of the following criteria to participate in the Homebuyers Assistance
Program
I Live in the city of Denton for one year
2 Annc~pated household income cannot exceed HAP income limit The anticipated annual ~ncome
and assets are calculated using HUD's most current Section 8 Income Guidelines established in
the Technical Guide for Determ~mng Income
No of people Max Income Limit No of People Max Income Limit
1 $36,050 2 $41,200
3 $46,350 4 $51,500
5 $55,650 6 $59,750
7 $63,900 8 $68,000
3 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 s~ngle parents,
c Own a substandard mobile home CD Inspector will determine the condmon of the home
Page I
4 Occupy the home as their primary residence dunng 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 Partlclpatmg 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 shanng accounts (if funds can be withdrawn without a penalty)
Note Any stun over $3,500 to the maximum of $5,000 must be pledged by the participants for
closing costs, prepalds and down payment
7 Attend a HUD or Fannie Mae approved homebuyer education program The following am 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?
1 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 ehglble properties The maximum sales price of the house to be
purchased shall not exceed $87,500
2 Rental properties are not ehgible 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
C~ty of Denton will not use it's power of eminent domain to acquire the property if negotiations
fall 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 Staffwlll 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 O/Efficiency 8 4 Bedrooms
2 1 Bedroom 10 5 Bedrooms
4 2 Bedrooms +10 6 Bedrooms
6 3 Bedrooms
P~e2
6 Any structure built before 1978 must be free of any deteriorated patnt The City of Denton wtll
conduct a vtsual assessment of pre 1978 houses to determtne the con&tton of the patnt If the
vtsual assessment shows deteriorated patnt, the patnt will need to be stabthzed and a clearance test
conducted by tmtned workers in accordance wtth Federal lead-based patnt reqmrements for safe
treatment
WHAT COSTS WILL HAP COVER?
1 Ciosln~ Costs & Prepa~ds: HAP will asstst with a percentage of the Borrower's clostng costs
based on household tncome See page 4 for the levels ofasststance
2 Down Payment. Up to 50% of the MIN1MUM down payment required by the Partmtpatmg
Lender based on the sales price For example FHA loans required a tnvestment of 2 25% of the
sales price - borrower's mtmmum down payment ts 1 125% of the sales prme In some tnstance, a
mortgage loan does not reqmre a down payment, however, under the Homebuyers Assistance
Program a minimum of $250 ts reqmred as down payment from the homebuyer
3 Gan Flnaneme: Addlttonal funds may be avatlable to help homebuyers whose tncome does not
exceed 65% of the area medmn tncome and meet gap criteria These funds are dtstrthuted and
approved by the C~ty GAP Fmanclng ~s not meant to be used as a cushton factor to make the loan
more appeahng to the purchaser or mortgage company It ts only available when the action ts
necessary for the parhctpant to qualify for a mortgage loan or the price range for a house ts not
avadable tn the market Gap financmg can be used for the following sttuat~ons
A Assist tn the difference between the sales price of the house and the maximum loan the buyer
can afford
B Assist parttctpants to buy down the interest rate tn order to make the mortgage payment
affordable
C Assist homebuyer wtth mortgage principal buydown tn order to make the mortgage payments
affordable
GAP ftmds are not guaranteed until a prehminary 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 apphcatlon to the Ctty of Denton for approval of all funds,
including gap funds Ctty of Denton recommends that you and your mortgage company recetve a
prehmtnary 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 reqmrements for each level of assistance
FAMILY SIZE vlODERATE 1NCOME LOW INCOME VERY LOW INCOME
80% - 66% AMI 65% - 51% AMI 50% & Below AMI
I $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
and Closing Costs Payment ~/2 of Down Payment ~/~ of Down Payment ~A of Down Payment
Assistance up to Closing, Costs
80% 85% 95%
$5,000 & Pre-Daids
An additional $5,000 An additional $14,900 or
Gap Funds (See page 3 for an Not Eligible for may be available for $9,900* may be available
explanation of gap funds) Gap Funds gap funds for gap funds
$14,900 or
Maximum Amount of HAP $5,000 $10,000 $19,900 ff 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 ff
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 add~tional $9,900 may be available for GAP funds
Page 4
OCCUPANCY REQUIREMENTS/TERM OF LOANS
The occupancy requarements and the term of the HAP loan as based on the amount of assistance that 1s
provaded for down payment, elosang costs and gap funds The following table and~eates the term of the
note and the number of years the household as requared to maantaln thear home as thear pnnelpal place
of residency to fully comply with the Homebuyer Assastance Program
a, mount of Assastanee Up to $5,000 Up to $10,000 Up to $19,900
3ccupancy Requirements
~ Term of Loans 5 years 10 years 15 years
PROCESS TO RECEIVE ASSISTANCE
The following is the process to receive assistance if you meet all of the ehglblhty criteria
I Attend a HUD or Fannie Mae annroved homebuver education workshoo The following ~s
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
2 Contact a HAP Partiemat~n~ Lender from the anuroved hst The lender wall determine if you
qualify for a mortgage loan and determine your preliminary ehglblhty for the program Your
mortgage company will submit the necessary paperwork to thc 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 Fccl free to contact the C~ty's
Community Development Division if you have any questions on the program
3 Find your "dream home" and enter into a ourchase agreement. A local realtor can assist you in
findang your home, based on the lender's loan pre-quahficatlon Once you have selected your
home, the realtor can also assist you m entenng anto a purchase agreement Please note that ~t ~s
not necessary to utlhze the services ora realtor to receive assistance
4 HAP lender will submit your HAP auuhcation Once you have obtaaned 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
5 When the buyer's apphcat~on is recelved~ the Community Development Office will begin
processing the request for assistance An outline of our functions follows
Page 5
A Information is reviewed for completeness and accuracy and an ehglblhty check is performed
B Review independent home inspection and request any needed repmrs Conduct a visual
assessment of pre-1978 houses to determine presence of deteriorated pmnt 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 RE(~UIRED 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 closmg 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 condmons
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
PLEASE NOTE The amount of the loan and interest of 5% from the beginning of the loan is due and
payable in ~11 upon the sale of the property, transfer of ownership, failure on the borrower to maintain
their home as a pnncipal residence dunnc, 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
Regardtng Non-Use of Eminent Domain, Seller's Inehg~bfl~ty for Relocation
Assistance, and Tenant's Relocation Assistance R~ghts
This ~s advance not, ce to the seller of real property, which may be purchased by a person rcce~wng assistance
under the C~ty of Denton's Homebuyer Assistance Program (HAP), a federally funded program, w~th down
payment and closing costs [Please note tha~ thts notice to seller does not constttute approval from the City of
Denton. The prospectore baFer at~d the Participating Lender ts reautred to submit an atn~hcatton to the
HomebuFer Assistance Program for aot~roval !
The seller (and/or owner and owner's agent) &any such property ~s not~fied of the following
The prospective homebuyer does not have the power of eminent domain, and will not purchase the
property ff negotmt~ons fall to result in an amicable agreement
2 The prospective purchase of the property ~s a transaction between the person applying for HAP
assistance and the seller of the real property, therefore, any such sale ~s not subject to governmental agency's
power of eminent domain, and a governmental agency will not be party m the transaction except as the possible
prowder of assistance to the prospective purchaser and adm~mstrator of the assistance program
3 The owner/seller of real property to a prospective homebuyer rece~wng HAP assistance under the e~ted
programs ~s not ehg~ble for relocation assistance under thc Urn form Relocation Assistance and Real
Property Aeqms~t~on Pohc~es Act
4 A tenant occupant of real property reqmred to move because the property ~s purchased by a home buyer
asststed under th~s program ~s ehglble for relocation assistance, including adwsory services, not,ecs of
actmns and r~ghts, moving expenses, and replacement housing assistance The C~ty of Denton will not
assist m the ourchase of a house that ~s being rented unless the buyer and renter are the same or the house
has been vacant for 60 days
5 The C~ty ~s required to prowde the seller an estimate of the market value of a property, which may be
subject to purchase by a homebuyer under th~s program prior to an offer or the m~tmt~on of negotmt~ons to
purchase the property The estimated market value of the property ~s $ , based on the
real estate market Th~s market value does not estabhsh the purchase price ~n a voluntary sale The
purchase price will be estabhshed through negotiations
Acknowledgement of Receipt of Notice to Seller
Received by Seller(s) 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
P~e7
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
3317 Brooke St, Denton Texas 76207 940 243 8637 12/00 1,2, 5 Spanish
Advantage Mortgage Network Inc. Brmn Wilson
2442 Lflhan Miller Pkwy, Ste 110, Denton TX 76205 940 484 LOAN (5626) 10/99 1,2, 5 Spamsh
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, lnc Sherry Atk~ns
2/01 l, 2 N/A
3000 S Stemons? Lake Dallas 75065 800 654 4089
Bank Source Mortgage Manny Uceda 12/98 1,2,5 Spanish
16479 Dallas Pkwy, Suite 100, Addison TX 75001 (972) 692-2565
BOMAC Home Mortgage, Inc Company V~ckl Cummings 7/96 I, 2, 5 Spanish
405 S Elm, Ste 30, Denton TX 76204 940 484 1110
Kelly Farley
KELAIR Mortgage Corp. Karen Wheeler 5/01 1,2,5 Spamsh
1101 $ 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, Lew~svllle TX 75067 940 390 0991
CTX Mortgage Company Dana Reynolds/
T~m Cranston 11/99 l, 2, 5 Spamsh
1660 S Stemmons Frwy #255, Lewlsvllle TX 75067 972 219 9795
Don Wood/
Denton Area Teachers Credit Union Robin Stnckland 2/01 l, 2 Spanish
225 W Mulberry, Denton TX 76201 940 380 5935
First State Bank of Texas Grant Jacobson
1/95 l, 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 Spamsh
2317 W Umverslt~, Dr, Suite B6, Denton TX 76201 940 891 3221
New Loan Mortgage, Inc. Loan Officer 12/01 I, 2 N/A
811 S Central Expwy, State 436, Richardson TX 75080 972 480 8222
Carol Hlnton /
Precise Mortgage Services, Inc. Donma Blair 3/96 I, 2, 5 N/A
1173 Bent Oak Dr Ste 100, Denton TX 76205 940 898 8066
Principal Residential Mortgage, Inc Christina Gladden 8/00 l, 2, 5 Spanish
250 S Stemmons Fwy #300, Lewlsvllle TX 76205 972 219 2620
Secure Mortgage Wendy Broyles 2/01 I, 2, 5 Spamsh
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
Stacy Curtis/
Texas Residential Mortgage Corp. Guadalupe Saucedo 2/00 l, 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