Owner Financing Agreement in Virginia by qrl35290

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									                       CITY OF VIRGINIA BEACH
      DEPARTMENT OF HOUSING & NEIGHBORHOOD PRESERVATION (DHNP)
                            (757) 385-5750

                 DOWN PAYMENT/CLOSING COST ASSISTANCE PROGRAM
                          FOR FIRST- TIME HOME BUYERS
                             (HOME FUNDS 2009-2010)




PURPOSE
To assist current renters so that they may overcome barriers to becoming homeowners in the
City of Virginia Beach. To help insure the success of people assisted under this program when
they become homeowners. The purpose of the subsidy is not to enable the buyer to purchase a
more expensive home than they could normally income qualify to purchase. Minimum
assistance shall be $1,000 00 and in accordance with program guidelines. Assistance is
provided based on the availability of funding, and is provided one time only to any
qualified individual or household.

ELIGIBLE APPLICANTS
To be eligible to participate in this program, the applicant must be a resident of the City of
Virginia Beach whose household’s total gross annual income does not exceed eighty percent
(80%) of the area median income, adjusted for family size, as established by the U.S.
Department of Housing & Urban Development (HUD). SEE HUD INCOME GUIDELINES.
Assets cannot exceed $75,000.00. The Applicant(s) cannot own any other real estate.
Employees of the City of Virginia Beach Municipal government and Virginia Beach Public
School System employees are exempt from any residency requirement.

                                            HUD INCOME GUIDELINES
Number in
                                 1            2            3            4            5      6        7        8
Household
80% Median
                             38,000       43,450       48,850       54,300       58,650   63,000   67,350   71,700
Income
Income guidelines effective as of March 19, 2009

Applicant must be a first-time home buyer (as defined by any one of the following descriptions):
       • An individual or couple who have not owned a home (excluding a mobile home)
           during the 3 year period prior to applying for this program.


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Down Payment/Closing Cost Assistance
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         •    A single parent - an individual who is unmarried or legally separated from a spouse,
              and who has custody or joint custody of one or more minor children who live in the
              household for more that 50% of the time, or who is pregnant, and who does not
              currently own a home.

APPLICATION REQUIREMENTS
Applicant(s) must attend a Virginia Housing Development Authority (VHDA)certified first time
home buyers class. VHDA’s online course is not accepted, except for military persons on
deployment. The spouse who is not deployed must attend the class in person. Persons with a
disability may request a reasonable accommodation This must be done before making an offer
to purchase a home and certificate(s) of attendance will be required.

Applicant must be pre-approved (not pre-qualified) for a mortgage loan with the financial
institution of your choice prior to applying for this program and a pre-approval letter will be
required at time of application.

Please be aware that you are not eligible to apply for assistance under this program if
you make an offer to purchase a home (sign a purchase agreement/sales contract),
before applying for assistance.

ELIGIBLE PROPERTIES
Owner-occupied or vacant single-family homes, town homes or condominiums located in the
City of Virginia Beach with an appraised value that does not exceed $315,000 within the current
FHA Mortgage Limit.

The property will be subject to an inspection. The property must meet the Existing Property
Code Standard of the Uniform Statewide Building Code (USBC) in order to receive funds from
this program. It is the buyer’s responsibility to inform the seller of the property about this
program and that the property will be inspected and required to meet certain standards in order
for the buyer to receive financial assistance. The seller will be required to sign a Notice to
Buyer(s) and Seller(s), acknowledging that they know that HUD funding is assisting with the
home purchase.

Properties built prior to January 1, 1978, will be subject to Lead-based Paint Hazard Control
Requirements (Title X Regulations).

INELIGIBLE PROPERTIES
Any property that is currently rented, unless the renter is the applicant/home buyer.                         No
relocation or dislocation can result from the use of this program.

NOTE: Properties located in a Clear Zone or Accident Potential Zone I or II, as designated
on the most current Air Installations Compatible Use Zones (AICUZ) map, are not eligible
for assistance. Also, for property where any portion of the property (not just the house)
is in a flood zone, additional restrictions may apply, including proof of flood insurance.

Down Payment/Closing Cost Assistance
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Properties purchased by means of a non-qualifying assumption or owner financing.

FINANCING TERMS AND CONDITIONS
Co-borrowers who are not part of the applicant’s household are not permitted.

To determine the applicant’s eligibility for this program, the income of all borrowers on the
mortgage will have their income included in the household’s total gross annual income. DHNP
does not allow Grossing Up Income for the purpose of qualifying for a mortgage.

All borrowers on the mortgage must complete the Home Ownership Education Class and earn a
Certificate of Attendance.

Buyer(s) will be required to contribute a minimum of $500.00 or 1% of the purchase price,
whichever is greater.

AMOUNT OF ASSISTANCE
Funds for this assistance are provided only in compliance with HUD requirements. HOME
funds and are provided in the form of a no-interest deferred loan up to $30,000 for closing cost
and down payment assistance. The actual amount of assistance will be determined by DHNP
and is based on the amount of subsidy needed to ensure the buyer(s) housing debt ratio does
not exceed 33% or be below 28%. This ratio is based on the purchase price of a home that the
buyer is income qualified to purchase. The no-interest deferred loan will be secured by a Deed
of Trust. Funds are paid back to the City of Virginia Beach at the time of the owner(s) death, or
upon the owner(s) vacating, selling or transferring the deeded property (property must remain
the primary residence of the applicants). NOTE: DEFERRED LOAN FUNDS CANNOT
RESULT IN CASH BACK TO THE BORROWER(S) AT THE TIME OF CLOSING.

CREDIT - applicants must have good credit. A current credit report will be evaluated. All
judgments, liens and collections must be paid/satisfied. Bankruptcies must be discharged for 2
years. A written explanation of all negative information may be required. Having a foreclosure
on your credit report will result in your application being denied if the foreclosure is less than 3
years old.

INCOME-TO-DEBT RATIOS - housing debt ratio cannot exceed 33% of buyer(s) gross monthly
income. Deferred loan will need to be adjusted (reduced) in cases where the housing debt ratio
is less than 25% of buyer(s) gross monthly income. Total debt ratio cannot exceed 43% of
buyer(s) gross monthly income.

SUBORDINATION OF LIEN - The City of Virginia Beach Department of Housing and
Neighborhood Preservation will consider subordinating only those liens for straight refinancing
(No Cash Out or Debt Consolidations). This will affect your ability to refinance your property
and/or to borrow money using the property as collateral. Applicant must sign the
Subordination Policy provided by the DHNP.

Down Payment/Closing Cost Assistance
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OWNER RESPONSIBILITY FOR CONDITION OF PROPERTY ONCE PURCHASED
As an owner purchasing property with City assistance, you are fully responsible for the condition
of your house and yard. If, after proper notice, you are unable or unwilling to correct violations
of city code, we at our sole discretion may make the no-interest deferred loan due and payable.

                   CHECKLIST OF MATERIALS RECEIVED BY APPLICANT
Please initial next to each item acknowledging that the information has been provided to you in
written form and fully explained.

1.                 City of Virginia Beach Department of Housing and Neighborhood Preservation
                   Down Payment/Closing Cost Assistance Program - Program Description

2.                  Notice to Buyer(s) and Seller(s). This form must be signed by the buyer(s) and
                   seller(s) and attached to the purchase agreement. No purchase agreement will
                   be accepted without this executed form attached.

3.                 Lead-Based Paint Pamphlets
                   A.    Protect Your Family From Lead In Your Home
                   B.    Renovate Right: Important Lead Hazard Information for Families, Child
                         Care Providers and Schools.

4.                  Potential For Lead Base Paint Hazards Notice

5.                  Renovate Right Notice

6.                  Subordination Policy

                      ITEMS OF SPECIAL INTEREST TO THE APPLICANT
Please initial next to each statement acknowledging that you fully understand the information
being conveyed.

1.                 The first mortgage when combined with the second mortgage, as well as any
                   other mortgages, deferred loans, etc., may not result in cash back to the
                   borrower(s).

2.                 The property must pass an inspection by DHNP. The inspection is a minimal
                   standards inspection, and does not imply that major systems are working
                   properly or that they will continue to work in the future. It is recommended that
                   the buyer secure an inspection by a professional home inspection company.

3.           The applicant is responsible for providing their real estate agent with a copy of
            this program description. The applicant was also responsible for providing their
            mortgage lender with a copy of the program description at the time they pre-
            qualified for a mortgage loan. It is vital that both be aware of the program
            requirements in order to assist you to qualify for funding under this program.
Down Payment/Closing Cost Assistance
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By signing below, I hereby certify that I have read the above program description for assistance
in purchasing a home and fully understand and agree to comply with the program requirements.
I understand that my income verification is only good for six months; after that time, my income
must be verified again. Furthermore, I understand that if I have not signed a purchase
agreement within twelve months from the date of application, my application will be denied and I
will be required to start the application process from the beginning.




Signature of Applicant                                                         Date



Signature of Applicant                                                         Date


                               DHNP DOES BUSINESS IN ACCORDANCE WITH THE FEDERAL
                                      FAIR HOUSING LAW AND THE SECTION 504
                                      PROGRAM ACCESSIBILITY REQUIREMENTS




                                  IT IS ILLIGAL TO DISCRIMINATE AGAINST ANY PERSON
                                        BECAUSE OF RACE, COLOR, RELIGION, SEX,
                                    HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN

                                                    Effective: July 01, 2009

                                                                                         (Revised091709OW)




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