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ANOKA COUNTY

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					                                       Anoka County


             FORECLOSURE
    DOWN PAYMENT ASSISTANCE PROGRAM
                POLICY



            For the Provision of Down Payment Assistance with the use of:
HOME Investment Partnership Program funds




Administrators will continue to use the most recently approved policy until HUD approves a new policy, even if the
approval exceeds the effective date above. Any and all policy changes will be immediately sent from Anoka
County to participating administrators.
                                                                                                           02-24-10




                                                        1
                                                           INDEX


A.   Program Overview ........................................................................................................... 3
B.   Funding Source................................................................................................................ 3
C.   Determination of Applicant Eligibility ................................................................................ 3
D.   Down Payment Assistance Qualifications ........................................................................ 4
E.   Mortgage Requirements .................................................................................................. 5
F.   Down Payment Assistance Procedures ........................................................................... 5
G.   Sale of the Property Purchased with Program Funds ...................................................... 6
H.   Refinancing ...................................................................................................................... 6
I.   Continuing Affordability .................................................................................................... 6
J.   Re-Use of Program Funds ............................................................................................... 6
K.   Required Federal Regulations ......................................................................................... 6
L.   Client and County File Requirements and Retention ....................................................... 7
M.   Policy Modifications ......................................................................................................... 7




                                                                2
A.   Program Overview
     Anoka County is committed to assisting in the creation of affordable housing for low and moderate-
     income households. The Foreclosure Down Payment Assistance Program provides funds to assist
     homebuyers with costs associated with the purchase of a foreclosed home in Anoka County.

     Funds will be provided in an amount not to exceed $10,000. Funds will be secured against the property
     as a zero percent (0%) interest deferred loan for five (5) years. In the sixth (6) year repayment
     requirements of down payment assistance funds will be forgiven. If the unit is sold, refinanced or no
     longer the principle place of residence within the 5 year period, the full balance of the down payment
     assistance funds will be due and payable.

      All units must meet applicable health and safety codes within 120 days of purchase of the property. All
     code violations or identified lead-based paint must be corrected within 120 days of purchase of the
     property or the full balance of the down payment assistance funds will be due and payable. An Anoka
     County representative will complete an inspection prior to closing and a second inspection after the
     required 120 day period or sooner if repairs have been completed.


B.   Funding Source [HUD Regulations 24 CFR 92]
     The funds for Foreclosure Down Payment Assistance are being provided by the U.S. Department of
     Housing and Urban Development (HUD) through the HOME Investment Partnership Program. The
     Foreclosure Down Payment Assistance Program has been approved as an eligible use of funds and is
     operated within Anoka County.

     The Foreclosure Down Payment Assistance Program provides assistance with HOME Investment
     Partnership Program funding and must be used by applicants that meet the eligibility requirements.

C.   Determination of Applicant Eligibility
     The Foreclosure Down payment Assistance Program was established for the purpose of providing down-
     payment assistance to low or moderate income families for the purchase of foreclosed single-family
     housing.

     To be eligible to participate in the Down Payment Assistance Program, the following requirements must
     be met:

     Income: [HUD Regulations 24 CFR 92.2]
     The family’s income cannot exceed 80% of the median income for the area, the maximum income
     limitation as determined by HUD. The HOME regulations require that income of all family members be
     included in the determination of income.

     Acquisition Price: Purchase price shall be no more than 80% of the Section 203(b) maximum HOME
     Program purchase price limit as determined by HUD for the Minneapolis/St. Paul Metropolitan Statistical
     Area being used to assist with the purchase of owner-occupied residential property.

     Homebuyer Education and Counseling: To qualify for participation in the Foreclosure Down
     Payment Assistance Program, all homebuyers in the household must have successfully completed a
     HUD Certified home buyer education course. The Certificate of Completion of the HUD Certified home
     buyer education course must be included in the application package and placed in the client file.

     Mortgage Qualification: The borrower(s) must be able to qualify for a VA guaranteed, FHA insured,
     Fannie Mae/Freddie Mac, or approved conventional fixed rate conforming mortgage as determined by a
     participating private lender. See Section “E” for further mortgage requirements.

     Ernest Money: All applicants are required to provide a minimum of $2,000 Earnest Money contribution
     which must be noted on the HUD Settlement Statement at time of sale.

     Other: Borrowers may NOT receive any cash back at closing.


                                                     3
ANOKA COUNTY                                                   HOME Investment Partnership Program

              The homebuyer is expected to pay a minimum of 26% of their income for principal, interest,
              taxes and insurance (PITI) and/or ground lease payments and owner association fees. A
              homebuyer’s PITI cannot exceed 35% of annual gross income.

     Property Eligibility: The foreclosed property being purchased must be located in Anoka County and
     must be the principal place of residence of the borrower(s).

     Eligible properties are foreclosed single-family housing as defined as one to four family residences,
     cooperative units, condominiums, and townhouses. A multi-unit owner-occupied property is not an eligible
     property. Down payment assistance will not be provided for the purchase of a property that is primarily
     occupied by tenants.

     The specifics of the above qualifications will change over time and are regulated by state and federal law.
     The borrower(s) must abide by those requirements in place at the time he/she chooses to participate in
     the down payment assistance program.


D.   Down Payment Assistance Qualifications

     Income/Property: Borrowers must be eligible and the property must meet criteria defined in 24 CFR
     Part 92.250. Income will be determined by using Part 5/Section 8 as defined in 24 CFR Part 92.203.

     Housing Quality Standards: [HUD Regulations 24 CFR 982.401]
     The property must meet all applicable State and local housing quality standards and code requirements
     within 120 days of the purchase of the property. If there are no such standards or code requirements, the
     housing must meet the housing quality standards in 24 CFR 982.401.

     Minimum / Maximum Down Payment Assistance: [HUD Regulations 24 CFR 92.205]
     The Down Payment Assistance program administrator will fund an amount not less than $1,000 or more
     than $10,000 per household. When a borrower is using down payment assistance the borrower(s) will pay
     a minimum 26% of gross monthly income for principal, interest, taxes and insurance (PITI) and no more
     than 35% PITI. Down payment assistance will be reviewed for subsidy layering, ensuring that a
     household will not be over subsidized.

     Subsidy Layering: HUD Regulations 24 CFR 92.250(b)]
     Before committing funds to a project, the administrator must evaluate the project and determine that no
     more HOME funds will be invested in combination with other governmental assistance, than is necessary
     to provide affordable housing.

     Repayment Agreements:             Borrower(s) receiving HOME down payment assistance funds will be
     required to sign a repayment agreement that will be filed as a lien against the property. The terms of the
     repayment agreement will require the borrower(s) to pay back 100% of the HOME funds if they are sell,
     transfer, no longer occupy or refinance the property within five (5) years. Borrower(s) will also have to pay
     back 100% of the HOME funds if the property does not meet inspection requirements within 120 days of
     the home purchase. The five years will begin with the date the repayment agreement is signed, and ends
     at midnight 6 years from that said date. If the property is sold, transferred, or ceases to be used as a
     primary residence for an eligible activity and/or use a provided for in the HOME Investment Partnerships
     Program Act, Title II, 24 USC §12701, and 25 CFR Part 92 within the five (5) year period of affordability,
     the Owner shall repay to Grantor a sum equal to the full amount of the Grant, as set forth above subject
     to the availability based on net proceeds. Net proceeds are defined as the amount available from the
     sale less non-HOME debt recorded prior to the date of the Agreement and closing costs. If the amount of
     net proceeds is not sufficient to repay the entire Grant amount, then the amount to be repaid shall be as
     follows:

         Grant repayment amount = Grant amount ÷ (Grant amount + amount of any Owner’s capital
         investment) multiplied by the net sale proceeds.

                                                      4                   Foreclosure Down Payment Assistance
ANOKA COUNTY                                                  HOME Investment Partnership Program


     On the first day of the sixth year the HOME assistance will be considered a grant and no longer needs to
     be repaid to Anoka County.

     Down Payment Assistance used on a property that subsidized with indirect HOME
     funding: If down payment assistance is used for a homebuyer that is purchasing a property that was
     either acquired or constructed with HOME funds in the form of an indirect subsidy, the amount of the
     down payment assistance will be included in the affordability period of the resale provision. At no time
     will an administrator require enforcement of both a resale and a recapture provision.

E.   Mortgage Requirements
     First Mortgage Requirements:
      The first mortgage will be fixed term, fully amortizing, over a maximum term of thirty (30) years.
      No rollover, negotiated rate mortgages, or other mortgage loans, including Contract For Deed, with
         principal balloons will be permitted.
      The loan-to-value ratio may be up to 105 percent, including the Down Payment Assistance loan.
      The loan must meet industry accepted underwriting standards.
      The interest rate in the first mortgage may be no higher than the current market rate in Anoka County
         communities.
      Down payment assistance cannot be used on purchase mortgages that are set up as 80/20 with
         immediate second mortgage requirements.

     Additional Mortgage Requirements:
      Additional mortgages or assistance programs that have requirements including income, assets and
        purchase price may be used in collaboration with HOME down payment assistance as long as
        subsidy layering has been reviewed.. HOME regulations will apply to all those programs unless the
        program has a more restrictive guideline, then the administrator is to use whichever is most restrictive
        in the qualification requirements.
      Entry cost assistance programs that are available through the Minnesota Housing Finance Agency
        (MHFA) are acceptable as additional mortgages with HOME down payment assistance.

F.   Foreclosure Down Payment Assistance Procedures
     1.    Borrowers wishing to participate in the Foreclosure Down Payment Assistance Program must
           complete the Anoka County Foreclosure Down Payment Assistance Application and submit it to
           the participating administrator(s). The participating administrator(s) will work directly with
           homebuyers. Foreclosure Down Payment Assistance is available on a first come, first served basis
           to households who meet the income, homebuyer education and other criteria established in this
           Policy.

     2.    The program administrator will complete a worksheet to determine the amount of down payment
           assistance for which the borrower qualifies. The administrator will review the worksheet for
           accuracy and place worksheet in the participant’s file. The administrator will verify and document
           that the borrower is paying 26% - 35% of gross monthly income for PITI.

     3.    Prior to the closing date, the lender will send all necessary documentation required by the HOME
           Program to the program administrator. Upon receipt of the required documents, a check will be
           prepared for the amount identified on the worksheet..

     4.    The administrator shall provide the down payment assistance check at closing and will be
           responsible for having the borrower(s) sign the Anoka County Repayment Agreement, the HOME
           Program Homebuyer Agreement, and the Subordination Policy at that time.

     5.    The Anoka County Community Development office will record the Repayment Agreement with the
           Anoka County Recorder’s Office.

                                                      5                  Foreclosure Down Payment Assistance
ANOKA COUNTY                                                   HOME Investment Partnership Program


G.   Sale of the Property Purchased with HOME Program Funds: The property will have a
     repayment agreement payable during the first five years. At such time if the borrower(s) wishes to resell
     the home purchased with HOME Down Payment Assistance Program funds, it is required that the down
     payment assistance funds provided to the borrower(s) be repaid in full to Anoka County.

     HOME funds loaned for the purchase of the property will be subject to a recapture provision. The amount
     of HOME funds that is subject to recapture is only the amount of assistance that was provided to the
     homebuyer to buy the dwelling unit. [HUD Regulations 24 CFR 92.254 (a)(5)(ii)]

H.   Refinancing: Anoka County will not subordinate the Down Payment Assistance loan if refinancing.

I.   Continuing Affordability: HOME Program guidelines will ensure that all borrowers receiving down
     payment assistance through the HOME Down Payment Assistance Program meet the applicable
     program rules and regulations. The HOME Program requires that properties assisted with HOME
     Program funds remain affordable for a minimum of 5 years, which is in conjunction with the Repayment
     Agreement that is filed against said property. The use of HOME Program funds as described herein will
     require that borrowers using down payment assistance pay back that assistance upon refinance, sale,
     maturity or transfer of title during the period of affordability, all HOME Program funds utilized for down
     payment assistance and that the funds will be returned to Anoka County, thereby nullifying the continued
     affordability requirement.

J.   Re-Use of HOME Program Funds: Anoka County will reinvest returned HOME Program funds
     for the purpose of assisting other low and moderate-income families to obtain decent and affordable
     housing within Anoka County.

K.   Required Federal Regulations: The following Federal Regulations are set forth as requirements
     in the HOME Investment Partnership Program Final Rule:

        Fair Housing and Equal Opportunity [HUD Regulations 24 CFR 100]
        Affirmative Marketing [HUD Regulations 24 CFR 92.351] Marketing must comply with requirements of the
         Consolidated Plan. Any entity engaged in marketing Anoka County funded programs must not
         discriminate against households who may be included in protected classes. Furthermore, every effort
         must be made to engage in inclusionary marketing and to use the HUD fair housing logo whenever
         feasible. [HUD Regulations 24 CFR 92.351]
        Conflict of Interest [HUD Regulations 24 CFR 92.356]
        Flood Insurance if located within a FEMA designated 100 year flood plain [HUD Regulations 24 CFR 54]
        Lead Based Paint for Pre-1978 Homes. [HUD Regulations 24 CFR 92.355] Notice to purchaser, signed
         receipt in client file, visual assessment. Contact Anoka County if there are questions concerning lead
        Relocation: [HUD Regulations 24 CFR 92.353] An owner-occupant who sells a property to a first time
         homebuyer is not eligible for relocation assistance under the URA as long as the seller prior to sale is
         informed in writing. If the owner-occupied property contains rental units or if the single-family property
         is investor owned, relocation is more compelling. A tenant displaced from such a property as a result
         of the acquisition is covered by URA relocation requirements.
        HOME-assisted housing must meet all applicable State and local housing quality standards and code
         requirements. If there are no such standards or code requirements, the housing must meet the
         housing quality standards in 24 CFR 982.401.
        Disclosure of all rights
        Debarred, suspended or ineligible Contractors will not be used. [ HUD Regulations 24 CFR 24]
        All Administrators will be a Drug Free Workplace




                                                       6                   Foreclosure Down Payment Assistance
ANOKA COUNTY                                                 HOME Investment Partnership Program

L.   Client and County File Requirements and Retention:                   [HUD Regulations 24 CFR 92.508]
     The participating administrator(s) will keep in their client files, at minimum, the following required
     documents which shall be available for review or monitoring at any time: Anoka County Down Payment
     Assistance (DPA) Application; Notice of Rights Concerning The Information You Supply To Anoka County
     Community Development; DPA Program Affidavit; Conflict of Interest Provision; DPA Program Housing
     Quality Standards/Visitability Inspection Agreement; Voluntary Acquisition/General Information Notice;
     Income Verification (using Part 5 Income Determination); required inspection documentation; Lead
     documents; Appraised value of property; Sale price of property; Copy of repayment agreement; Copy of
     the Anoka County Subordination Policy; Copy of the HOME Program Homebuyer Agreement, Settlement
     Statement; IDIS Completion form; Copy of first mortgage documents and other assistance; and
     documentation of soft costs. These requirements are open to change at any time.

     Record Retention: Record retention is set forth in the HOME Final Rule 24 CFR 92.508 as for
     homeownership housing projects, records will be retained for five (5) years after the project completion
     date, except for documents imposing recapture/resale restrictions, which must be retained for five years
     after the affordability period terminates.


M.   Policy Modifications. Anoka County shall have the authority to make modifications to this policy as
     necessary for the continued implementation of the program, including, but not limited to: (1) policy
     revisions necessary due to a change in design of the Down Payment Assistance Program; and (2) policy
     changes necessary due to revisions in the rules and regulations of the HOME Investment Partnership
     Program; American Dream Downpayment Initiative (24 CFR 92) as administered by the U.S. Department
     of Housing and Urban Development.




                                                     7                  Foreclosure Down Payment Assistance

				
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