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Missouri Home Sale Contract by fzq16873


Missouri Home Sale Contract document sample

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									Section 8 Homeownership

                  Kathy Winter
              Iowa State Office
             U.S. Dept. of HUD
         Section 8 Homeownership
   Section 8 HO is an option to the PHA
       Implements through PHA Annual and administrative
   Use Voucher subsidy for monthly
    homeownership expenses
   First-time Homebuyer Program
   Resident pays 30% of AMI for housing costs
   Open Market Purchase
               Legislative History
   Sec. 555 of QHWRA of 1998
       Congress amends Sec. 8(y)
   Proposed Rule April 1999
   Final Rule Published Sept. 12, 2000
       Effective October 12, 2000
   Special Housing Type under Subpart M of
    24 CFR 982
   PHA choice
   Amendment to annual and administrative plan
   Final Rules
       October 18, 2002: Downpayment Assistance &
       October 28, 2002: Eligibilty Units Owned or
        Controlled by a PHA
   Eligibility of Units Owned or Controlled by
    a PHA; Final Rule – October 28, 2002
   Downpayment Assistance Grants and
    Streamlining Amendments; Final Rule –
    October 18, 2002
               PHA Capacity
            One of Three Options
   ONE: Establish Min. Down-payment

       Three (3) percent of sale price
       At least one percent of sale price comes from
        family’s personal resources.
                  PHA Capacity
   Two: PHA requires financing for purchase
    meets one of following:
       Provided, insured or guaranteed by State or
        Federal Gov.
       Complies with secondary market underwriting
       Complies with generally accepted private
        sector underwriting standards
                PHA Capacity
   Three: PHA demonstrates in Annual Plan
    it has capacity or will acquire capacity to
    successfully operate Homeownership
                 Family Eligibility
   Section 8 Eligible Family
       Current program participant
       Eligible for admission to Sec 8 HCV program
Family Eligibility
     First time Homebuyer
        Single Parent or displace homemakers
        No HO interest in 3 years

        Exception for Family that includes member with
         disability and homeownership is needed as a
         reasonable accommodation.
Family Eligibility
   Minimum   Income 982.627(c)
     Disabled Family:    Monthly SSI for
      individual living alone x 12.
     Other Families 2000 X National
      Minimum wage/hr ($10,300/yr)
       Welfare   assistance may not be included.
     Disabled andElderly Families –
     Welfare assistance may be included
PHA – Higher Minimum Income
   A PHA may set a higher minimum income for all
    family types.
   However Family may still qualify with HUD Min.
       Family that meets HUD minimum income and not
        PHA Minimum shall meet the requirement if:
            Pre-qualified or pre-approved for financing;
            Financing meets PHA established requirements; and
            Financing sufficient to purchase unit that meets HQS.
Family Eligibility

    Employment 982.627(d)
        Disabled and elderly exempt
     One adult member employed continually fulltime
      for year prior to HO assistance.
     One adult currently employed fulltime – not less
      than 30 hours
     PHA may not create more restrictive employment
                Family Eligibility
   Mortgage Defaults
       Not eligible if any family member has
        previously received Sec 8 HO assistance and
        defaulted on mortgage
   PHA may establish additional
    requirements for family eligibility
       FSS participants
Homeownership Voucher Option

   Family finds eligible property
   Subsidy to assist with monthly
    homeownership expenses
   PHA may make monthly payment to family
    or lender
Pre-Homeownership Counseling                  982.630

   Family must attend and satisfactorily
    complete program required by PHA
   Family does not pay for counseling
   PHA staff and/or other entity may conduct
       Consider HUD approved counseling agencies
Pre Homeownership Counseling              982.630

   PHA may adapt suggestions to meet local
    circumstances and needs of family.
   PHA may offer additional counseling after
    assistance begins.
   If not HUD approved counselor the PHA
    should ensure the program is consistent
    with HUD’s Housing Counseling program.
Pre-Homeownership Counseling

   Suggested Topics:
       Home maintenance
       Budgeting
       Credit counseling
       Negotiating the purchase price of a home
Pre Homeownership Counseling

   Topics, cont.
       Financing: Obtaining and pros and cons of
        different approaches
       Finding a home
       Locating a home in a area without a high
        concentration of low-income families
       Fair housing and state & Federal truth in
        lending laws
                 Finding a Home
   PHA may establish time limits
       Locating a unit and purchasing

   PHA may not steer family
             Eligible Unit      982.628

   One unit property or single unit in coop or
   New Construction
   Seller cannot be debarred, suspended or
    subject to a limited denial of participation
    by HUD
                Eligible Unit
   Unit in PHA Jurisdiction
   Must pass HQS
   Inspected by 3rd party Independent
            Home Inspections             982.631

   PHA conducts HQS inspection used for
    Voucher program
       Determines condition is decent, safe and
       No annual HQS inspection required
Home Inspections
   Independent Professional (3rd Party)
       Selected and hired by family
       Assess adequacy and life span of major
        systems, appliances and other structural
       Satisfaction of inspection by buyer typical
        contingency clause in contracts of sale.
       PHA may disapprove unit on basis of report
Home Inspections
   PHA may require additional inspections
    after purchase of unit.
Voucher Subsidy Available
   Payment standard in Sec. 8 program
    determines maximum subsidy
       No separate HO payment standard schedule
       Same subsidy standards
              Payment Standard
   Payment Standard greater of:
       Payment standard at commencement of HO
       Payment standard at most recent
        reexamination since commencement of HO

    Never goes below initial calculation
Homeownership Assistance Payment

   Family pays at least total tenant payment
    (TTP), may pay more
   Monthly HAP is calculated as the lesser of
       Payment standard minus family TTP
       Families monthly homeownership expenses
        minus family TTP
                 Contract of Sale
   Family must provide copy of contract of
    sale to PHA
   Contract of Sale must include:
       Prepurchase inspection (buyer satisfaction,
        buyer not obligated to pay repairs)
       Seller certification – seller not debarred,
        suspended or subject to limited denial of
       Terms and Conditions of sale
                  Financing 982.632
   PHA may establish their own financing
    requirements, including:
       Lender qualifications and terms of financing
       PHAs encouraged to review financing prior to
        approval of assistance to avoid Predatory
        Lending type situations
        PHA Financing Requirements

   May prohibit certain forms of financing
   Restrictions on other debt secured by
   Terms of financing
       Minimum downpayment
     PHA Financing Requirements
   Affordability of Purchase
       PHA may disapprove financing or refinancing
        if it determines debt is unaffordable or terms
        don’t meet PHA req.
   HUD is working on a Guide Book

    All PHA financing or affordability requirements
      must be described in PHA administrative
Financing a Purchase 982.632

   Financing a Unit
       PHA may establish their own financing
        requirements, including: lender qualifications
        and terms of financing.
       PHAs are encouraged to review financing to
        avoid Predatory Lending before assistance is
PHA Requirements for Admission

   PHA may limit HO Assistance to families
    or purposes defined by PHA
   Examples
     FSS participants
     Families in XYZ Non-profit Homeownership
    (Must include these requirements with the PHA
      Administrative Plan.)
PHA Requirements 982.629
    PHA may establish a maximum time for a family
    to locate a home and purchase a home
   PHA may require periodic reports on family’s
    progress in finding a home
   PHA decides if the family gets a rental voucher if
    a home is not found or put on the waiting list.
       Must include these requirements with the PHA
        Administrative Plan
PHA Requirements
    PHA determines if the HAP will go to the
    lender or the family. 982.635(d)
   PHA determines the number of Section 8
    Vouchers it will commit to the program.
Homeownership Expenses 982.635(c)
   The PHA determines amount to be included in
    the HO expenses/costs
       Principal and Interest on mortgage
       Mortgage Insurance Premium (MIP)
       Property Taxes
       Homeowner’s insurance
       PHA allowance for maintenance expenses
       PHA allowance for major repair and replacement
       PHA utility allowance
              PHA Allowances
   Allowances set for program as a whole,
    not based on actual cost or condition of
   PHA may contact counseling agencies
    and realtors for advice
Homeownership Assistance
Payment 982.635
   PHA will make a payment equal to the
    lower of:
       The payment standard (regular Sec. 8
        program) minus the total tenant payment; or
       The family’s monthly homeownership
        expenses minus total tenant payment.
                   Family Share
   Family Responsible for all HO expenses
    not covered by HAP
   If homeownership expenses exceed the
    payment standard, family pays the
    difference in addition to TTP.
   40% rule does not apply to HO families
       Law only limits amount paid by family for rent.
             Continued Assistance
   Family Obligations
       Comply with terms of mortgage.
       Use and occupancy
          Family’s only residence
          Report changes in composition

          No subletting or leasing
            Continued Assistance
   Comply with other family obligations under
    the voucher program
   Notice of move-out
   Notice of default
   Supply information concerning:
       Refinancing
       Sale or transfer of any interest in home
       Homeownership expenses
            Continued Assistance
   Prohibition on ownership interest on
    second residence
   Comply with additional PHA requirements
       Eg. Postpurchase counseling
Termination of Assistance 982.638
   Termination of Assistance
       PHA may terminate assistance in the case of
        mortgage default (foreclosure)
            PHA’s decision on whether family may receive
             rental assistance.
       PHA may terminate if family does not comply
        with family obligations
Family at Zero HAP            982.635(e)

   Homeownership assistance terminates
    after 180 days with zero assistance.
   HOWEVER, PHA has discretion to grant
    relief where termination would result in
    extreme hardship.
Time limitations              982.634

 Time limits do not apply to elderly or
  disabled families
 Maximum term:
       10yrs of HAP for a mortgage less than 20 yr
       15yrs of HAP for mortgage 20 yr and more
       Applies from initial purchase
Portable 982.636
   Portable
       Receiving PHA must have HO program
       Family and Unit must meet eligibility
                Move to New Unit
   Continuation of HO Assistance
       Initial Eligibility requirements apply, except:
          First time homeowner
          Pre-assistance counseling
Example – Sec. 8 Purchase
-   Family of four purchasing a 3 bedroom home.
-   Payment Standard for a 3 BR is $800/month
-   Housing expenses include:
    -   Principal, Interest, Taxes, Insurance (PITI)
    -   Mortgage Insurance Payment (MIP)
    -   Allowances Total $185
         -   $35 for maintenance allowance 3/BR
         -   $50 replacement allowance 3/BR
         -   $100 utility allowance 3/BR
Example Sec. 8 Purchase
   Family Adjusted Annual Income is
   30% of Adjusted Monthly Income $500
   Monthly Total Tenant Payment $500
   TTP = Total Family Share
Example – Sec. 8 Purchase

 Purchase Price                        $70,000

 FSS Escrow (DP)                         $5,000
 First Mortgage – FHA (30yrs @7%)        $65,000

 First Mortgage Payment PITI & MIP on $65k        $615
 Utility, maintenance and replacement allowances  $185
    Monthly Homeownership Expenses               $800
Example – Sec. 8 Purchase
   Gross Homeownership Costs
       PITI & MIP                   $615
       Allowances                   $185

    Total Family Share
    ($185 allowances+ $315 lender)   $500
    Homeownership Assistance Payment $300
Example –Sec. 8 Purchase
Purchase Price -                         $90,000
FSS Escrow (DP)                          $ 5,000
First Mortgage – FHA (30yrs @7%)         $85,000
First Mortgage Payment PITI & MIP on $85k $815
Utility, Maintenance & Replacement Allowance $185
   Monthly Homeownership Expenses          $1,000
Example Sec. 8 Purchase
Gross Homeownership Costs               $1,000
  -   PITI & MIP                   815
  -   Allowances                   185

Total Family Share               $700
($185 allowances +$515 lender)
Housing Assistance Payment              $300
Example Sec. 8 Purchase
   Is $700 per month Family Share too high
    for family with $20,000 adjusted annual
Web Site
   HUD Section 8 Homeownership:
Community Program….
   Lenders and Insured Loans
       Conventional
       Subsidized Loans
       State Housing Finance Authority
       USDA
       Fannie Mae
       FHA
Community Program…..
   Funding for additional subsidy
       Federal Home Loan Bank
       HOME – local government or State of Iowa
       CDBG – local government or State of Iowa
       5(h) proceeds (sale of Public Housing)
       Local Housing Trust Funds
Your Community’s Market
   What is available in your community for
       Are they in good condition?
       What price are they selling for?
       Are the affordable houses concentrated in
        low-income areas?
       Considering your payment standard - will it
        work without additional subsidy?
       Would you increase your payment standard?
Your Community’s Market
   Rental Housing Market
       What is utilization rate of Section 8 Vouchers?
       What is the need in your community for
        affordable housing?
       How long is the waiting list?

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