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2000-344S \Our Docur~ents\Ordmances\OOq-Iomebuyer Assmtance Program Ordinance doc O INANCE NO dRZS- 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 C~ty of Denton recognizes the need to assist low and moderate ~ncome famlhes ~n secunng safe, sanitary, and decent housing, and WHEREAS, the City of Denton participates ~n a Homebuyer Assistance Program admlmstered 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 1 That the City Council approves the Homebuyer Assistance Program Gmdehnes and Program Ehg~blhty Criteria which ~s attached hereto and made a part of tlus ordinance for all purposes as ExNNt "A" and authorizes the C~ty of Denton Commtm~ty Development Office to adm~mster 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 gmdehnes and criteria, subject to compliance with competitive Ndd~ng laws where apphcable SECTION 3 That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the ~ dayof ~./67~ ,2000 EUL1NE BROCK, MAYOR ATTEST JENNIFER WALTERS, CI3~Y SECRETARY HERBERT L PROUTY, CITY ATTORNEY City of Denton - Community Development Division 2000 Homebuyer Assistance Program Guldehnes INTRODUCTION The Commumty Development Division of the City of Denton has adnumstered the Homebuyer Assistance Program since 1992 to help low and moderate income famlhes to purchase decent and affordable housing The program provides home ownersMp opportumties 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 Housmg and Urban Development and Federal Home Loan Bank of Dallas Policy clarifications or general questions should be addressed to the City's Commumty Development Dlws~on at the following address or telephone number City of Denton - Commumty Development Division 100 West Oak, Suite 208, Denton, Texas 76201 Phone Number 940 349-7726 - Fax Number 940 383-2444 WHO QUALIFIES FOR ASSISTANCE? Partm~pants must meet all of thc following criteria to pammpate tn the Homebuyers Assistance Program 1 Live m the city of Denton for one year 2 Anticipated household income cannot exceed HAP income limit The antlc~pated annual income and assets are calculated using HUD's most current Section 8 Income Guidelines established in the Tecluncal Guide for Determunng Income No &People Max Income Limit No of People Max Income Llnnt 1 $ 34,050 2 $ 38,900 3 $ 43,800 4 $ 48,650 5 $ 52,500 6 $ 56,400 7 $ 60,300 8 $ 64,200 3 Must be first-tune 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 deterrmne the condition of the home Page I of 1 4 Occupy the home as their primary residence dunng the term of forgivable loan 5 Qualify for a mortgage loan from a Partm~patmg Lender The ~nterest rate on the mortgage loan cannot exceed the prevmhng market rate See page 6 for a hst of current Partm~patmg Lenders 6 Lxqmd assets less than $5,000 L~qmd assets are assets that can be readdy converted to cash and include such assets as cash, checkang and sarongs accounts, certificates of deposit, money market accounts, stocks, bonds and profit sharing accounts (tf funds can be w~thdrawn w~thout a penalty) Note Any sum over $3,500 to the maximum o£$5,000 must be pledged by the participants for closing costs, prepmds and down payment 7 Attend a HUD or Fanme Mae approved homebuyer education program The following are the agencies that currently offer homebuyer education classes ~n the Metroplex a Cxty 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 QUAI,IFIE8? 1 Residential property, located wltlun the Denton mty hnuts, ~nclud~ng eyast~ng and newly constructed single-family restdence, condomamum or townhouse Mobile homes and manufactured homes are not ehslble properhes The maxamum sales price of the house to be purchased shall not exceed $85,000 2 Rental properttas are not ehgable unless the buyer and renter are the same or house has been vacant for 60 days 3 In accordance wtth the Umform Relocatxon Act, the Cxty of Denton must ~nform a seller that the C~ty of Denton wall not use ~t's power of enunent dommn to acqmre the property ~f negotiations fsal to result m an agreement between the HAP buyer and the seller The City of Denton will provide the seller w~th a written esttmate of the fiur market value of the property that the seller sxgns See page 7 for the "Seller's Notxce" 4 The property must be safe, decent and samtary Assistance will not be provided to facd~tate the purchase of a substandard property An independent mspectton must be completed by a State Dcensed Home Inspection Company CD Staff wall rewew the inspection report and determine ff any repturs wdl be reqmred HAP funds wdl not be released untd all the ~tems of concern have been adequately addressed Page 2 of 2 5 It ~s recommended that the house contmn adequate number of bedrooms Mardmum No of Maydmum No of Family Members Bedrooms Farmly Members Bedrooms 1 O/Efficiency 8 4 Bedrooms 2 1 Bedroom 10 5 Bedrooms 4 2 Bedrooms + 10 6 Bedrooms 6 3 Bedrooms 6 Any structure budt before 1978 must be free of any deteriorated pmnt The C~ty of Denton will conduct a v~sual assessment of pre 1978 houses to deterrmne the cond~tton of the pmnt If the wsual assessment shows deteriorated pmnt, the pmnt wdl need to be stabd~zed and a clearance test conducted by trained workers tn accordance with Federal lead-based pmnt reqmrements for safe treatment WHAT C08T8 WILl, HAP COVER? 1 Closing Costs & Preoalds: HAP will assist w~th a percentage of the Borrower's closing costs based on household mcome See page 4 for the levels of assistance 2 Down Payment: Up to 50% of the MINIMUM down payment reqmred by the Partlctpatmg Lender based on the sales price For example FHA loans reqmred a investment of 2 25% of the sales price - borrower's nummum down payment ~s 1 125% of the sales price In some mstance, a mortgage loan does not reqmre a down payment, however, under the Homebuyers Assistance Program a nummum of $250 is reqmred as down payment from the homebuyer 3 Gao Fmancinu: Additional funds may be avmlable to help homebuyers whose income does not exceed 65% of the area median income and meet gap criteria These funds are dxstnbuted and approved by the City GAP Financing ~s not meant to be used as a cushion factor to make the loan more appealing to the purchaser or mortgage company It ~s only avoalable when the action ~s necessary for the participant to quahfy for a mortgage loan or the price range for a house is not available in the market Gap financxng can be used for the followmg s~tuattons A Assist ~n the difference between the sales price of the house and the maramum loan the buyer can afford B Assist partm~pants to buy down the ~nterest rate tn order to make the mortgage payment affordable C Assist homebuyer w~th mortgage pnnc~pal buydown tn order to make the mortgage payments affordable Pa§e 3 of 3 LEVEI~ OF A~ISTANCE The followtng are the three levels of asststance through the Homebuyer Assistance Program and addlttonal reqmrements for each level of asststance 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 HAP ½ Down Payment ¼ Down Payment ¼ Down Payment Down Payment Asststance & 80% of closing & 85% of closing costs & 95% of closmg costs and costs up to $5,000 up to $5,000 up to $5,000 Closing Costs Buyer's ¼ Down Payment & ¼ Down Payment & ¼ Down Payment & Contribution 20% of closing costs 15% of closing costs 5% of closing costs An adahtaonal $5,000 An addmonal $14,900' Gap Funds (See page 3 for an Not Ehg~ble for explanatton of gap funds) Gap Funds may be avmlable for ~ avmlable for gap funds gap funds *up to $14 900 may be available ff fimds from the Federal Home Loan Bank are avmlable The FHLB of Dallas prowdes an eddttmnal $5,000 for households that are at or below 50% of the AMI The $5 000 grant ts forgiven over a five-year penod OCCUPANCY REqUIREMENTS/TERM OF LOANS The occupancy requirements and the term of the HAP loan ~s based on the amount of asststance that ts provided for down payment, closing costs and gap funds The followmg table tnd~cates the term of the note and the number of years the household ts reqmred to m/untmn thetr home as thetr pnnctpal place of restdency to fully comply wtth the Homebuyer Asststance Program Amount of Asststance Up to $5,000 Up to $10,000 Up to $19,900 Occupancy Reqmrements 5 years 10 years 15 years 2 Term of Loans Page 4 o! 4 WHEN SIGNING AN EARNF T MONEY CONTRACT 1 Contracts are subject to a Not~ee to Seller of Real Property In accordance with the Umform Reloeat,on Act, the City of Denton must mfonn the seller that the City of Denton will not use it's power of eminent domain to aeqmre the property if negoUatlons fall to result m an agreement between the HAP buyer and thc seller The notice must be provided to the seller before entenng rote an Earnest Money Contract See page 9 for the "Seller's Notice" 2 Contracts must be subject to a Property Condition Addendum (PCA) The contract must call for an independent mspeet~on by a State Licensed Home InspeeUon Company CD Staff wll review the mspeCtwn report and dctemunc ff any repairs will be required HAP funds will not be released untd all thc items of concern have been adequately addressed 3 Addcndum to Sales Contract / Lead-Based Paint Hazards Not~ficanon is required for property constructed prior to 1978 According to thc addendum, a buyer has thc opUon to conduct a risk assessment or mspecUon for thc presence of lead-based pmnt hazards The inspection is an chglble closing cost PROCESS TO RECEIVE ASSISTANCE The following is thc process to reeeivc assistance if you meet all of thc cllglbdlty criteria 1 Attend ~ HUD or FAnme Mae s_noroved homebuyer education workshoo The following is agency's that currently provide homobuycr 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 Co~t~ a HAP Partlclv~tm~ Lender from the aooroved list The lcndcr vail dctcrmme If you qualify for a mortgage loan and d~emunc your prelunmary eligibility for the program Your mortgagc company v~ll subn~t thc necessary papcnvork to thc CD office for considerat~on under the HAP program A prelunmary approval is good for 3 months and can be extended for an ad&t~onal two months w~th a signed earnest money contract Feel free to contact the City's CommunlW Dcvelopmant Dlwsion if you have any questions on the program 3 Find,your "dream home" and enter rote a ourchase aereement A local realtor can assist you m grading your home, based on the lender's loan pre-quahfleat~on Once you have scteeted your home, the realtor can also assist you m cntenng rote a purchase agreement Please note that it is not necessary to utthzc the scrwees of a realtor to receive assistance 4 HAP ien~ler wdl subnut your HAP annllcatlon Once you have obtained prclunmary loan approval and entered mto a purchasc agreement, your lcndcr wall subrmt your apphcatwn to the CD Office for down payment and closing costs assistance You vail NOT have to subnut an appheataon directly to the City Page 5 of 5 5 When, the buyer's anvhcataon is received, the Community Development Office will beton procqsslmi the reauest for assistance An outline of our run.ons follows A Information is revaewed for completeness and accuracy and an eligibility 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 paint Conduct an envaronmental rewew 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, t~tle company and buyer of assistance D Conduct a F mal Inspection of the property E Prepare and submit HAP Deed of Trust and Pronussory Note to tnle company for closing WHAT WII,L YOU BE REQUIRIIID TO SIGN AT CLOSING? Thc City of Denton's Homcbuycr Assistance Program (HAP) provides part of this necessary financm§ as a secured forgivable second mortgage loan at 0% interest for 5, l0 or 15 years The City of Denton vall forgive thc note at thc end of the loan term On thc day of closing thc buyer(s) will bc rcqmrcd to sign two legal dceuments for thc Homcbuycrs Assistance Program - A Deed of Trust and Promissory Note Thc following is an explanation of thc legal documents Promissory Note The promissory note states that the buyer promlscs to pay thc amount of HAP assistance based on thc payment schedule stated on the note The note is forgiven at the end of thc loan term 5, 10 or 15 years depandmg on thc amount of assistance See Page 4 for thc number of years Deed of Trust Thc deed of trust is a security instrument that allows the City of Denton to place a hen 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 tune, the City of Denton w~ll file a Release thc Lien with the Denton County Clerk's Office The contracts mchcate that thc buyer(s) must comply with thc following condmons I Buyer(s) agrees to reside m thc housc for the term of thc forgivable loan 5, 10 or 15 years from the date of exceut~un of thc promissory note 2 Buyer(s) agrees to mamtam the property m safe and samtary condition 3 Buyer (s) agrees to pay all mortgage payments, taxes and other assessment on the property m a tuncly manner PLEASE NOTE The amount of thc loan and interest of 5% from thc beginning of the loan is due and payable m full upon thc sale of thc ~ropcn'v. transfer of owncrslup, failure on the borrower to mamtmn their hame~ as a D/nno-mal residence durme the term of the loan 5, 10 or 15 years Page 6 of 6 HOMEBUYER ASSISTANCE PROGRAM PARTICIPATING LENDERS ' Contact Person HAP Mortgage PartiCipating Lenders/Address Telephone Number Lender Loans Translators Since (See Below) Advantage Mortgage Network Inc Brian Wilson 10/8/99 1, 2, 5 Spamsh 2442 Lllhan Miller Pkwy, Ste 110, Denton TX 76205 940 484 LOAN (5626) Alhed Mortgage Capital Corp Helen W lkerd 4/23/98 1, 2, 5 N/A 1722 W Oak, Denton TX 75201 940 898 1694 Spamsh/ American Investment Mortgage Manny Uceda 11/23/98 1, 2, 3 ltahan/ 2216 Loon Lake Rd, Denton TX 76205 940 380 0002 French BOMAC Home Mortgage, Inc Company Vicks Cummings 7/17/96 1, 2, 5 Spanish 405 S Elm, Ste 30, DentonTX 76204 940484 1110 CBS Investment Company Bert Mahon 3/8/99 1, 2, 5 N/A 524 N Locust, Sult~ B, Denton TX 76201 940 898 7496 Countryside Lending Inc LeeRoy Schramm 3/23/99 2 N/A 2204 Quml Run, Connth TX 76208 940 498 197 Dana Reynolds/ CTX Mortgage Company Tun Cranston 11/2/99 1, 2, 5 Spamsh 1660 S SWmmons Ft~vy #255, Lewasvllle TX 75067 (972) 219-9795 Grant Jacobson/ First State Bank of Texas Edward Stankunas 1/18/95 1, 2, N/A 100 S Locust, Denton TX 76201 940 381 7286 F&M Mortgage Co, lac Renee Fmrcbald 10/1/99 1, 2, Spanish 416W Umvers~y Dr #100, DentonTX 76201 940 387 7954 Jefferson Heritage Bank Rachard LaBarbera 1/24/95 1, 2, 5 Spanish 321 W Oak Street, Denton TX 76201 940 382 9676 The Funding Source Brad De~ghton 11/29/98 1, 5 N/A 5068 W Plano Hwy #300, Piano TX 75093 972 991 4100 MaxAmenca Fmancaal Serwces Pachard Cnlbert 11/19/99 1, 2, 5 Spanish 2317 W Umverslty Dr, Sult~ B6, Denton TX 76201 940 891 3221 G-albert Martmez/ PomtBank, N.A Wendy Broyles 12/27/99 t, 2, 5 Spamsh 524 S I34E, Denton TX 76205 940 484 4546 Precise Mortgage Semces, Inc Carol Hmton 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 Dave, Denton TX 76201 940 383 4600 Texas Resndentml Mortgage Corp. Stacy Curtas 2/2/00 1, 2, 5 N/A 1400 Dallas Dr Sro C, Denton Texas 76205 (940) 566-5363 Wells Fargo Home Mortgage Kathy Rodnguez 702 Harbour ~fown Dr, l.~ake Dallas Texas 75065 (940) 497-2964 7/14/00 1, 2, 5 Spamsh Types of Mo~gage Loans · FHA (203b) O Convenlaonal ~ FHA (203k) · VA Date Remsed July 2000 Page 7 of 7 City of Denton ~ Community Development Division Homebuyer Assistance Program NOTICE TO SELLER OF REAL PROPERTY Regarding Non-Use of Eminent Domain, Seller's Inehglbfl~ty for Relocation Assistance, and Tenant's Relocation Assistance Raghts Thts is advance nolace to the seller of real property, which may be purchased by a person reoelvmg assistance under the City of Denton's Homebuyer Asslstanoe Program (HAP), a federally funded program, w~th down payment and closing costs 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 enunent domain, and will not purchase the property ffnegottaUons fail to result m an almcable agreement 2 The prospective purchase of the property under the HAP program is a transaction between the person reoe~vlng the HAP a~sl~anoe and the seller of the real property, therefore, any such sale is not subject to governmental agency's power of enunent domam, and a governmental agency will not be party m the transactmn except as the provider of asslstunce to the prospeeUve purchaser and adnumstraWr of the asssstanee program 3 The owner/seller of real property to a prospective homebuyer recclvmg HAP assistance under the cited programs ~s not ehglble for rolocataen assistance under the Umform Relocatwn Assistance and Real' Property Aequ~slUon Poheles Act 4 A tenant oeenpant of real property reqmred to move because the property ~s purchased by a home buyer assisted under flus program is ehg~ble for relocaUon assistance, including advasory services, noUees of acUons and rights, moving expenses, and replacement housmg assistance The C~ty of Denton roll not ~q.~.~t m the ourehase of a house that ~s being rented unless the buyer and renter are the name or the house has been vacant for 60 days 5 The C~ty ~s rexlmred to provide the seller an estimate of the market value of a property, which may be subject to purchase by a homebuyer under ttus program prior to an offer or the tmtlatlon of negottattons to purchase the property The esUmated market value of the property ~s $ , based on the real estate market Tlus market value does not estabbsh the purohase price m a volunta~ sale The purchase pnee will be estabhshed through negotaatlons Acknowled_~ement of Receipt of Notice to Seller Received by Seller(s) Date Date Property Address , Denton Texas Mall Signed Notice to City of Denton, Commumty Development Dlvtslon 100 W Oak, State 208, Denton, Texas 76201 - OR - Fax 940 383 2445 PLEASE KEEP A COPY FOR YOUR RECORDS Page 8 of 8