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RESIDENTIAL MORTGAGE LOAN PROGRAMS

VIEWS: 11 PAGES: 43

  • pg 1
									       Residential Mortgage
          Loan Programs
              CDBG / HOME / BOND Funded




City & County of Durham
First-time Home Buyer Downpayment Assistance
Reference Guide
Revised August 2011


Department of Community Development
First-time Home Buyer Program
P.O. Box 25494
Durham, NC 27701
919-560-4570

Homeownership Hotline
919-560-4000
www.durhamnc.gov/departments/comdev/buy_a_home
Notice Under the Americans with Disabilities Act – A person with a disability may
receive an auxiliary aid or service to effectively participate in city government
activities by contacting the ADA Coordinator, voice 919-560-4197, fax 919-560-4196,
TTY 919-560-1200, or ADA@durhamnc.gov, as soon as possible but no later than 48
hours before the event or deadline date.




                                                                                Page | 2
                                     Marketing Plan
           Homebuyer Programs and Asset Building Activities


The Department of Community Development administers affordable housing programs on behalf
of the City of Durham. These programs include subordinate lending for many types of
residential properties including attached and detached single-family homes. Our homeownership
purchase assistance programs provide funding for second mortgage loans to households within
the city and county limits of Durham for the purchase of a new home.

The sources of funding are housing bond program income, CDBG, and HOME Investment
Partnerships. All loans have low interest rates and require immediate amortized repayment. The
City of Durham loans are underwritten to assure repayment of funds utilizing program guidelines
and underwriting criteria. The City staff and its Originating and Underwriting Agent closely
review all applications for compliance, eligibility, and loan approval. This review also ensures
the potential new homeowner can afford the purchase, and will be able to sustain the asset over
time.

These programs include subordinate lending for many types of residential properties including
attached and detached single-family homes, condominiums and townhomes. The department's
homeownership purchase assistance programs provide funding for second mortgage loans up to
$20,000 to households for the purchase of their first home.

The IDA Program is an incentive and wealth building program that encourages a pattern of
savings to enable households to reach the goal of homeownership by saving for a down payment
and the City matches those funds. The City offers grant matching funds up to a 5:1 match or a
maximum of $7,500.00 if the applicant satisfies the terms and conditions of their savings plan.

The Five-Year Plans and the Annual Action Plans indicate Homeownership as one of the
primary means by which lower income households can accumulate wealth. Additionally,
homeownership is a major component in creating neighborhood stability and vitality. Both plans
continue to support programs to make homeownership more affordable to low-to-moderate
income buyers.

Neighborhood Revitalization is one of the City of Durham’s two priorities that focus on efforts
to address specific housing and community development needs. Homeownership stabilizes
neighborhoods that are in need of revitalization.




                                                                                         Page | 3
           Homeownership and Asset Building Marketing Plan
Daily, the City assists approximately 25 households a day seeking homeownership via walk-ins
and telephone conversations. These households represent a city-wide marketing effort to ensure
that homeownership opportunities are offered. Three staff persons are dedicated to the daily
operations of the Homeownership Division.

Monthly, staff makes presentations at the New Employees Training regarding homeownership
opportunities. Homebuyer assistance programs are reviewed and discussed with the new
employees. Marketing our homebuyer program information continues with city staff
encouraging employee to disseminate homebuyer information to their neighbors, churches, co-
workers, businesses and organizations. Additionally, staff recruits non-profits and for-profit
organizations to assist with the City’s marketing efforts of the homeownership programs. On
occasion, homeownership presentations are made to financial institutions and businesses
throughout the Triangle area.

Annually, the City holds two informational workshops for local realtors and lenders to ensure
that they are kept abreast to all City programs, fair housing updates, other financial opportunities.
The City depends on the realtors and lenders on updates relative to the lending industry and
realtor laws.

National Homeownership month is an opportunity for the Department to partner with many
developers, non-profits and other agencies in the Durham community to plan homeownership
activities that inform and engage all citizens of Durham on homeownership opportunities.

As a member of the Durham Regional Association of Realtors, the Department assists with the
planning of the annual Homebuyer’s Fair where several thousand potential homebuyers obtain
home purchase information. The Durham Regional Association of Realtors and the Department
of Community Development were recognized nationally as a best practice collaboration.

All potential borrowers must attend a 7.5 hour homeownership education workshop. The classes
cover the home purchase process and the discussion and completion of the City’s application for
second mortgage financing. The following topics are discussed:

       Who's who in the home buying process
       First time home buyer assistance programs
       The role of a realtor
       Working with a lender and the Pre-qualification process
       Home inspections
       Closing/settlement
       Post homeownership responsibilities

Partnerships

The Department partners with non-profits, developers and other agencies to promote and
enhance the City’s homeownership programs and asset building efforts.


                                                                                             Page | 4
                    Application Process & Timelines


The City of Durham Department of Community Development is committed to effective and
timely processing of loan applications. The following table outlines the activity, timeline, and
contact source necessary for loan closings.



              Activity                        Time Lines                      Contact
      Pre-application Intake &              7 Business Days           Department of Community
 Transmittal of Pre-Application to                                          Development
              SunTrust                                                     919-560-4570
  (If all documentation is correct)
                                                                          SunTrust Agent
                                                                           919-381-3316
     Pre-Approval or Decline               10 Business Days           Department of Community
     Pre-Application Process                                                Development
                                                                           919-560-4570
   Homeownership Workshops                 Monthly Sessions              Counseling Agency
Homeownership Counseling One-             1 One-hour Session             Counseling Agency
       on-One Session
Minimum Housing Code Inspection             3 Business Days          Neighborhood Improvement
                                                                             Services
                                                                           919-560-1647
Review of First Mortgage Package           5 Business Days                SunTrust Agent
by Originating/Underwriting Agent        (Based on complete                919-381-3316
                                              package)
         Request for Funds                12 Business Days            Department of Community
                                        (Allows sufficient mail             Development
                                              delivery)                    919-560-4570




                                                                                            Page | 5
                    First-Time Home Buyer Program
20% Down-Payment Assistance Program

           1. City subsidy: 20% of sales price, not to exceed $20,000.00
           2. Sales price cannot exceed 95% of area median purchase price. Limits can be
              found at:
               http://www.hud.gov/offices/cpd/affordablehousing/library/homefires/index.cfm#2009
              or in the Department of Community Development
           3. Loan term: 30 years, non-deferred
           4. Qualifying Ratios: 20-35/43 (The borrower’s front-end ratio cannot be below
              20%)
           5. Total household income cannot exceed 80% of the median family income for the
              Durham MSA as published by HUD.

Program Requirements

Combined Maximum LTV:100% of the appraised value. The first, second and third mortgages
combined cannot exceed the appraised value of the property being purchased.

Interest Rate: 2%

Conditions of First Mortgage: Adjustable rate mortgages are not allowed. Cash back to the
buyer at loan closing may not exceed $500.00. No owner financing will be allowed.

Eligible Closing Costs: Closing costs can be financed if the property appraises for more than the
sales price. The difference between the appraised value and the sales price can be used to finance
closing costs, but only if necessary.

Participant’s Contribution Requirement: The applicant must contribute a minimum of $500
of their own money. The applicant may be required to contribute additional funds for closing
costs and other expenses.

Seller’s Contribution: The seller may contribute up to 6% of the sales price towards closing
costs if the loan-to-value (LTV) is 90% or less. If the LTV is more than 90%, the seller may
contribute up to 6% of the sales price, not to exceed the first mortgage lenders requirement.

Residency/Citizenship: City/County residency not required at the time of application. Applicant
must be a citizen or legal alien of the United States.
Legal Alien must provide:
   1. A copy of a green card and social security card;
   2. Evidence of application of citizenship
   3. Must have a valid Social Security number. Tax Identification Numbers are not
       acceptable.


                                                                                          Page | 6
First-Time Home Buyers Definition: All participants must be first-time home buyers: First-
time homebuyer means an individual or an individual and his/her spouse who have not owned a
home three years prior to the purchase of a home except that:
   1. Any individual who is a displaced homemaker may not be excluded from consideration
       as a first-time homebuyer under this paragraph on the basis that the individual, while a
       homemaker, owned a home with his or her spouse:
   2. Any individual who is a single parent may not be excluded from consideration as a first-
       time homebuyer under this paragraph on the basis that the individual, while married,
       owned a home with his or her spouse or resided in a home owned by the spouse: and
   3. An individual may not be excluded from consideration as a first-time homebuyer under
       this paragraph on the basis that the individual owns or owned, as a principal residence
       during the three-year period of a dwelling unit whose structure is:
                    a. Not permanently affixed to a permanent foundation in accordance with the
                        local or other applicable regulation: or
                    b. Not in compliance with the State, local, or model building codes, or other
                        applicable codes, and cannot be brought into compliance with such codes
                        for less than the cost of constructing a permanent structure.

Real Estate Ownership: Applicants are ineligible if they own any other property, including heir
property, listed as real estate such as a rental property, vacation property, land, timeshare, etc.

Eligible Property:
           1. Applicants cannot purchase manufactured housing (a mobile home or trailer);
           2. Applicants can purchase a duplex, triplex or quadraplex in a dwelling where part
              of the property will be owner occupied and rental;
           3. The property must be in the City or County of Durham;
           4. The City will not finance a construction loan. The property must be an existing
              home; and
           5. The City will not fund properties built prior to 1978 under the First-Time Home
              Buyer’s program unless lead hazards have been abated.

THE PROPERTY MUST BE IN COMPLIANCE WITH MINIMUM HOUSING CODE
STANDARDS PRIOR TO LOAN CLOSING



NOTE: The City of Durham Minimum Housing Code does not address possible lead hazards, or
other possible environmental hazards. Inspection by the City of Durham for Minimum Housing
Code Compliance does not indicate that the dwelling is “safe”. It only indicates that the dwelling
has been inspected for conditions, which would violate the Minimum Housing Code. The City
makes no claim that a dwelling is safe from environmental hazards as a result of passing the
Minimum Code requirements, and the City assumes no liability for any environmental hazard

                                                                                           Page | 7
damages, including those from lead-based paint or plumbing fixtures, as a result of conducting
such an inspection.

       All dwelling built prior to 1978 are presumed to contain some lead-based paint, and may
include other materials, which may contain lead. If your dwelling was built before 1978,
information can be obtained through the City of Durham Department of Community
Development and the North Carolina Department of Health and Human Services. Such
information will address lead-based paint hazards, health effects, methods of treatment, and
programs that are available for remediation.

Liquid Assets: Liquid Assets are limited to $20,000 (does not include pension, IRA, 401K’s or
life insurance with a cash value)




                                                                                         Page | 8
                Individual Development Accounts (IDA)
The Individual Development Accounts (IDA) Program is a savings program in which the City
provides matching grant funds toward the purchase of a home.

   1. Total household income cannot exceed 80% of the median family income for the Durham
       MSA as published by HUD.
   2. Sales price cannot exceed 95% of area median purchase price. Limits can be found at:
       http://www.hud.gov/offices/cpd/affordablehousing/library/homefires/index.cfm#2009 or
       in the Department of Community Development.
   3. Savings must be deposited with a FDIC insured savings institution.
   4. Participants can select a savings plan with a HUD approved counseling agency.
   5. Participant’s savings plus match can be used for downpayment assistance, closing costs,
       or first mortgage rate buy-down.
   6. Matching funds are in the form of a grant.
   7. Participant can also secure a City second mortgage provided underwriting criteria are
       met.
   8. Participants must sign a Grant Agreement. A copy of the Grant Agreement is attached to
       this document. (Attachment A)
   9. Participants must purchase a home within the Durham City Limits.
   10. The home being purchased must meet minimum housing code standards.

The Individual Development Account (IDA) teaches a pattern of savings to enable low wealth
households to reach the goal of homeownership by saving for a downpayment.

Participant’s total savings will be matched according to one of the savings plans.

Savings Plan 1 (six months duration): The participant’s savings of up to $1,500 will be
matched 3:1 up to a maximum grant amount of $4,500.

      The participant must deposit monthly
      Six months of savings is required
      No more than one missed deposit is allowed
      If a deposit is missed, additional savings are allowed

Savings Plan 2 (twelve months duration): The participant’s savings of up to $1,500 will be
matched 4:1 to a maximum grant amount of $6,000.

      The participant must deposit monthly
      Twelve months of savings is required
      No more than two missed deposits are allowed
      If a deposit is missed, additional savings are allowed



                                                                                          Page | 9
Savings Plan 3 (twenty-four months duration): the participant’s savings of up to $1,500 will
be matched 5:1 to a maximum grant amount of $7,500.

      The participant must deposit monthly
      Twenty-four months of savings is required
      No more than three missed deposits are allowed
      If a deposit is missed, additional savings are allowed

Use of Funds

IDA matching funds may be used for the following:

   1. Downpayment
   2. Closing costs
   3. Reduction of the first mortgage amount

Residency/Citizenship

City/County residency not required at the time of application. Applicant must be a citizen or
legal alien of the United States.

Legal alien must provide:

   1. A copy of a green card and social security card
   2. Evidence of application of citizenship
   3. Must have a valid social security number (Tax Identification Numbers are not acceptable)

First-time Home Buyer Definition

All participants must be first-time home buyers: First-time home buyer means an individual, or
an individual and his/her spouse, who have not owned a home in three years prior to the purchase
of a home except that:

   1. Any individual who is a displaced homemaker may not be excluded from consideration
      as a first-time home buyer under this paragraph on the basis that the individual, while a
      homemaker, owned a home with his/her spouse; and
   2. Any individual who is a single parent may not be excluded from consideration as s first-
      time home buyer under this paragraph on the basis that the individual, while married,
      owned a home with his/her spouse or resided in a home owned by the spouse; and
   3. An individual may not be excluded from consideration as a first-time home buyer under
      this paragraph on the basis that the individual owns or owned, as a principal residence
      during the three year period of a dwelling unit whose structure is;
          a. Not permanently affixed to a permanent foundation in accordance with local or
               other applicable regulation; or



                                                                                         Page | 10
           b. Not in compliance with State, local, or model building codes, or other applicable
              codes, and cannot be brought into compliance with such codes for less than the
              cost of constructing a permanent structure.

Eligible Property

   1. Applicants cannot purchase manufactured housing (a mobile home or trailer);
   2. Applicants can purchase a duplex, triplex or quadraplex, a dwelling where part of the
      property will be owner occupied and rental;
   3. The property must be in the Durham City limits;
   4. The City will not finance a construction loan. The property must be an existing home;
      and
   5. The City will not fund properties built prior to 1978 under the First-time Home Buyer
      Program unless lead hazards have been abated.

Liquid Assets

Liquid Assets are limited to $20,000 (does not include pension, IRA, 401K’s or life insurance
with cash value)

THE PROPERTY MUST BE IN COMPLIANCE WITH MINIMUM HOUSING CODE
STANDARDS PRIOR TO LOAN CLOSING.

NOTE: The City of Durham Minimum Housing Code does not address possible lead hazards, or
other possible environmental hazards. Inspection by the City of Durham for Minimum Housing
Code Compliance does not indicate that the dwelling is “safe”. It only indicates that the dwelling
has been inspected for conditions, which would violate the Minimum Housing Code. The City
makes no claim that a dwelling is safe from environmental hazards as a result of passing the
Minimum Code requirements, and the City assumes n liability for any environmental hazard
damages, including those from lead-based paint or plumbing fixtures, as a result of conducting
such an inspection.

All dwelling built prior to 1978 are presumed to contain some lead-based paint, and may include
other materials, which may contain lead. If your dwelling was built before 1987, information can
be obtained through the City of Durham Department of Community Development and the North
Carolina Department of Health and Human Services. Such information will address lead-based
paint hazards, health affects, methods of treatment and programs that are available for
remediation.




                                                                                         Page | 11
                                      ATTACHMENT A

       INDIVIDUAL DEVELOPMENT ACCOUNT MATCHING FUNDS GRANT
                            AGREEMENT

                                          (SAMPLE)

This Agreement is made this _____ day of ______________ 20____ between the City of
Durham (the “City”) and ____________________________________ (the “Purchaser”).

THE CITY AND THE PURCHASER AGREE AS FOLLOWS:

The City, through the City’s Individual Development Account Matching Fund Program
(hereinafter the IDA) approved by City Council, gives a grant to the Purchaser to be used for
down payment assistance, closing costs, and/or for the reduction of the first mortgage amount to
the purchase property located at __________________________________, Durham, North
Carolina. As of the making of this Agreement, the Purchaser has saved for _____________
months, qualifies for the ______% match, and has contributed $_____________ to a savings
account. The City’s maximum grant amount shall not exceed $___________, in accordance with
the IDA guidelines.

The Purchaser understands that all guidelines and requirements of the IDA program apply
to the use of the funds provided by the City and certifies that:

    1) The Purchaser will purchase a property located within the City limits of Durham that
       meets minimum housing code and understands that the property will be inspected by the
       City of Durham Department of Neighborhood Improvement Services, such inspection
       being for program compliance only. The inspection by the City is not intended to find all
       defects in the home, and the Purchaser should not rely upon this inspection. The
       Purchaser understands and agrees that an inspection by a private inspector for Purchasers
       own use is recommended, and is to be obtained by the Purchaser at the Purchaser’s
       expense.
    2) The Purchaser has $20,000 or less in liquid assets (excluding retirement or pension
       funds).
    3) The Purchaser meets all income requirements for the program, and has a maximum
       household income that is at or below 80% of the Median Area Income for the Durham
       area.
    4) The Purchaser has met all requirements and has been approved by a lender for a first
       mortgage loan, which when combined with available City funds, is sufficient to close on
       the purchase of the above listed property.
    5) The Purchaser will occupy the property stated above as their principal residence, and will
       continue to use the property as their principal residence for at least 24 months from the
       date of this Agreement.
    6) The Purchaser will maintain the residence, both inside and outside, in a good state of
       repair and preservation, and the Purchaser will not permit the use of any part of the
                                                                                        Page | 12
       residence for any unlawful purpose or permit any unsafe or unsanitary condition or
       nuisance to exist thereof.

If it is found that at any time that the Purchaser has supplied information that is false, inaccurate,
or misleading in any respect in order to obtain IDA matching grant funds from the City, or if the
Purchaser does not occupy this property as their primary residence for at least 24 months from
the date of this Agreement, the City reserves the right, in its sole discretion, to require the
Purchaser to repay the City the full amount of the IDA grant, and the Purchaser agrees to make
such repayment immediately upon written request by the City.



IN TESTIMONY WHEREOF, the parties hereto have caused this Agreement to be executed this
______ day of _________________________, 20____.




                                                                                             Page | 13
                 Section 8 Homeownership Program
20% Down-Payment Assistance

         1. City subsidy: 20% of sales price, not to exceed $20,000.00
         2. Sales price cannot exceed 95% of area median purchase price. Limits can be
            found at:
            http://www.hud.gov/offices/cpd/affordablehousing/library/homefires/index.cfm or
            in the Department of Community Development
         3. Loan Term: 30 years, non-deferred
         4. Qualifying Ratios: 20-35/43 (The borrower’s front-end ratio cannot be below
            20%)
         5. Total household income cannot exceed 80% of the median family income for the
            Durham MSA as published by HUD.
Program Requirements

Combined Maximum LTV:100% of the appraised value. The first, second and third mortgages
combined cannot exceed the appraised value of the property being purchased.

Interest Rate: 2%

Conditions of First Mortgage: Adjustable rate mortgages are not allowed. Cash back to the
buyer at loan closing may not exceed $500.00. No owner financing will be allowed.

Eligible Closing Costs: Closing costs can be financed if the property appraises for more than the
sales price. The difference between the appraised value and the sales price can be used to finance
closing costs, but only if necessary.

Participant’s Contribution Requirement: The applicant must contribute a minimum of $500
of their own money. The applicant may be required to contribute additional funds for closing
costs and other expenses.

Seller’s Contribution: The seller may contribute up to 6% of the sales price towards closing
costs if the loan-to-value (LTV) is 90% or less. If the LTV is more than 90%, the seller may
contribute up to 6% of the sales price, not to exceed the first mortgage lenders requirement.

Residency/Citizenship: City/County residency not required at the time of application. Applicant
must be a citizen or legal alien of the United States.
Legal Alien must provide:

       1. A copy of a green card and social security card;
       2. Evidence of application of citizenship;
       3. Must have a valid Social Security number. Tax Identification Numbers are not
          acceptable.

                                                                                         Page | 14
First-Time Home Buyers Definition: All participants must be first-time home buyers: First-
time homebuyer means an individual or an individual and his/her spouse who have not owned a
home three years prior to the purchase of a home except that:
          1. Any individual who is a displaced homemaker may not be excluded from
              consideration as a first-time homebuyer under this paragraph on the basis that the
              individual, while a homemaker, owned a home with his or her spouse:
          2. Any individual who is a single parent may not be excluded from consideration as
              a first-time homebuyer under this paragraph on the basis that the individual, while
              married, owned a home with his or her spouse or resided in a home owned by the
              spouse: and
          3. An individual may not be excluded from consideration as a first-time homebuyer
              under this paragraph on the basis that the individual owns or owned, as a principal
              residence during the three-year period of a dwelling unit whose structure is:
              a. Not permanently affixed to a permanent foundation in accordance with the
                   local or other applicable regulation: or
              b. Not in compliance with the State, local, or model building codes, or other
                   applicable codes, and cannot be brought into compliance with such codes for
                   less than the cost of constructing a permanent structure.

Real Estate Ownership: Applicants are ineligible if they own any other property, including heir
property, listed as real estate such as a rental property, vacation property, land, timeshare, etc.

Eligible Property:
              1. Applicants cannot purchase manufactured housing (a mobile home or trailer);
              2. Applicants can purchase a duplex, triplex or quadraplex in a dwelling where
                 part of the property will be owner occupied and rental:
              3. The property must be in the City or County of Durham;
              4. The City will not finance a construction loan. The property must be an
                 existing home; and
              5. The city will not fund properties built prior to 1978 under the First-Time
                 Home Buyer’s program unless lead hazards have been abated.

THE PROPERTY MUST BE IN COMPLIANCE WITH MINIMUM HOUSING CODE
STANDARDS PRIOR TO LOAN CLOSING

NOTE: The City of Durham Minimum Housing Code does not address possible lead hazards, or
other possible environmental hazards. Inspection by the City of Durham for Minimum Housing
Code Compliance does not indicate that the dwelling is “safe”. It only indicates that the dwelling
has been inspected for conditions, which would violate the Minimum Housing Code. The City
makes no claim that a dwelling is safe from environmental hazards as a result of passing the
Minimum Code requirements, and the City assumes no liability for any environmental hazard


                                                                                          Page | 15
damages, including those from lead-based paint or plumbing fixtures, as a result of conducting
such an inspection.

       All dwelling built prior to 1978 are presumed to contain some lead-based paint, and may
include other materials, which may contain lead. If your dwelling was built before 1978,
information can be obtained through the City of Durham Department of Community
Development and the North Carolina Department of Health and Human Services. Such
information will address lead-based paint hazards, health effects, methods of treatment, and
programs that are available for remediation.

Liquid Assets: Liquid Assets are limited to $20,000 (does not include pension, IRA, 401K’s or
life insurance with a cash value)




                                                                                       Page | 16
                                        INCOME
The income of all family members 18 years of age and older will be considered when
determining program eligibility. Only the income of the applicant(s) will be used to calculate
affordability. All household members who are 18 years of age and older and unemployed must
complete an Income Affidavit.

Household income will not be re-verified at the time of closing unless more than six months has
elapsed since income eligibility was determined.

INCOME TO BE INCLUDED FOR CITY SECOND MORTGAGE FINANCING
   1. Gross wages / salaries;
   2. Overtime;
   3. Commission;
   4. Tips;
   5. Bonuses (cash);
   6. Other compensation for personal services;
   7. Self-employment net income from non-farm business;
   8. Interest;
   9. Dividends;
   10. Net income of any kind from real estate or personal property;
   11. Gross periodic payments received from social security supplemental social security,
       annuities, and disability;
   12. Lump-sum payment for delayed start of a periodic payment (except social security);
   13. Worker’s compensation;
   14. Reliable and determinable alimony payments and child support payments;
   15. Regular contributions or gifts received from persons not residing in the dwelling;
   16. All regular pay, special pay and allowances for a member of the armed forces (whether or
       not living in the dwelling) who is head of the family, spouse or other person whose
       dependents are residing in the unit;
   17. Public assistance payment (AFDC, TANF, general assistance and emergency assistance);
   18. Veteran’s payments (disabled members of armed forces or survivors of deceased
       veterans);
   19. Survivor benefits (payments from survivors or widows pensions, estates, trusts, annuities,
       or any other type of survivors benefits);
   20. Pension or retirement;
   21. Stipend income: must have more than three years of eligibility remaining;
   22. Other income (all other payments received regularly, such as foster child payment and
       military allotments)



                                                                                        Page | 17
INCOME TO BE EXCLUDED
   1. Income from employment of children under 18 years of age, including foster children
       (full-time college students residing away from home will be considered a household
       member as long as they are dependents);
   2. Lump-sum payments from inheritance insurance payments (including health, accident
       and worker’s compensation) and settlements for personal or property losses;
   3. Reimbursements of medical expenses for any family member;
   4. Income of live-in aides who work for the household (not of household members who
       work as live-in aides);
   5. Educational scholarships, awards and income paid by the government to veterans for
       educational purposes;
   6. Educational assistance (Pell grants, scholarships or grants, financial assistance students
       receive from employers or others not residing in the student’s household);
   7. Temporary, nonrecurring or sporadic income (including gifts);
   8. Lump sum Supplemental Security Income and Social Security benefits;
   9. Any earned Income Tax Credit;
   10. Income specifically excluded from consideration by any other federal statute (example:
       food stamps, value of childcare provided under the Child Care and Development Block
       Grant Act of 1990);
   11. Capital gains from sale of property;
   12. Tax refunds or other refunds or rebates;
   13. Bank deposit/withdrawals;
   14. In-kind pay (free, food, rent, etc.);
   15. Farm business; and
   16. Any type of loan

INCOME TO BE USED FOR PROGRAM COMPLIANCE
CALCULATING COMPLIANCE INCOME
To calculate compliance income, use the greater of the current year-to-date income annualized,
or the gross income from all sources earned last year, if the borrower was employed with the
same employer for the full tax year. If the borrower has been on the job less than one year, use
the year-to-date income annualized.

When calculating compliance income, one-time, irregular, sporadic income will not be included.
Examples: VA payments, unemployment, severance, child support or alimony, charities and
contributions from persons not living in the household.

DOCUMENTATION OF INCOME FOR PRE-QUALIFYING
  1. Last two paycheck stubs that cover at least 30 days (no more than 60 days old may be
     used) if income can be clearly calculated;
  2. Most recent two years tax returns (for self employment);
  3. Statement from the Social Security Administration
                                                                                         Page | 18
   4. Bank statements; and
   5. Written statement from employer
   6. Verification of employment


FOR LOAN CLOSING
All income received by the household must be documented. All types of income documentation
include, but are not limited to, the following:
    1. Completed verification of employment form from the first mortgage lender. Note: This
        form should verify the applicant’s earnings for the past two years and current year-to-date
        (current base pay, other earnings such as bonus, commission and overtime earnings);
        hours scheduled to work per week: likelihood of the continuance of other earnings.
    2. All applicants must have W-2’s and federal tax returns for prior two years, plus the
        current month’s earnings statement or pay stub.
    3. Statement from the employer, provided such statement is on the company letterhead and
        contains the same information listed in the above.
    4. A verbal verification of employment is acceptable.
    5. A minimum of two months’ bank statements is required for verification of deposits.
    6. For self-employed applicants, acceptable documentation of income is:
            a. Copies of federal tax returns for past two years; and
            b. Year-to-date profit and loss statement.
    7. Other Earnings Calculation: To determine future amounts of bonus, commission and
        overtime earnings, calculate the average amount reported for the past two years plus year-
        to-date. To determine whether these earnings are guaranteed or likely to continue,
        employer must verify in writing.
                Example: the applicant earned overtime pay of $1,000 in 2008, $1,200 in 2009
                and $700 through June of 2010.
                $1,000 + $1,200 + $700 = $2,900
                $2,900 ÷ 30 = $96.67/month
                $96.67 x 12 = $1,163.64 anticipated earnings for 2010
    8. Employment: The applicant must have a 24 month uninterrupted history with a strong
        likelihood of continuation. This includes both full-time and part-time employment.
        Applicant must have two consecutive years of part-time employment to use for qualifying
        income. No gaps and no exceptions. An applicant whose full-time employment is less
        than two years, but was previously in a training program, college, university or military, a
        copy of the certification, degree or discharge papers will be accepted. Gaps of six months
        or less are acceptable, with documentation, for the following reasons only: laid off,
        illness of self, spouse or dependent (legal guardianship of parent or child), caretaking of
        spouse or dependent (legal guardianship of parent or child), or change of jobs for upward
        mobility only.



                                                                                          Page | 19
Temporary Income: For temporary income, the stability and the durability of the income
are considered. The stability would be if the income has been received at least two years,
and the durability would be documentation that the income will continue. The temporary
agency will be required to verify that the income will continue.
Seasonal part-time or second job income may be considered “uninterrupted” if the
applicant has worked the same job “ in season” for the last two years and expects to be
rehired.

Income Qualifications for Purchase
         1. Gross wages/salaries;
         2. Other compensation for personal services;
         3. Net income from business;
         4. Social Security and Disability: Gross the amount of Social Security and
              Disability by 25%;
         5. Child Support: If child support is to be calculated as part of the applicant’s
              income then these two requirements must be met: A copy from the
              registrar of court or cancelled checks must be provided as proof of
              payments received consecutively over the past three months; and the
              applicant must have more than three years of eligibility left to receive
              child support; Gross the amount of child support by 25%;
         6. Alimony: Must provide verification of 12 months payment history.
              Payments must continue for at least one additional year;
         7. To include the wages of a working son/daughter in the household income,
              these five requirements must be met:
                  a. The son/daughter must be 18 years of age or older;
                  b. The son/daughter must have held the job for more than two years;
                  c. The son’s/daughter’s credit must meet the program requirements;
                  d. The son/daughter will have to attend all counseling sessions; and
                  e. The son/daughter will be a co-borrower for the loan
         8. Net income of any kind from real estate or personal property;
         9. Over-time, commissions, tips, and/or bonuses must be confirmed by an
              employer to be continued and will be averaged for two years to be counted
              as income. Copies of signed tax returns for two years are acceptable; three
              years are preferred;
         10. Allowances (such as car, uniform, meals, or paternal) cannot be counted as
              income. If allowances are a major portion of the applicant’s income, tax
              returns will be used to determine income. All periodic income must be
              verified, three years of tax returns are needed to average income; and
         11. Pre-approved applicants who receive an income increase during the
              approval period will not be disqualified from the program if their income
              does not exceed 80% of the median family income. However, program
              eligibility may change.
                                                                                  Page | 20
                 Income
                  2011

         Median Family Income Chart
           City/County of durham

Family     30%      50%     60%       80%
 Size
  1      $14,250 $23,750 $28,500 $38,000

  2      $23,750 $27,150 $32,580 $43,400

  3      $18,350 $30,550 $36,660 $48,850

  4      $20,350 $33,900 $40,680 $54,250

  5      $22,000 $36,650 $43,980 $58,600

  6      $23,650 $39,350 $47,220 $62,950

  7      $25,250 $42,050 $50,460 $67,300

  8      $26,900 $44,750 $53,700 $71,650




                                       Page | 21
                                          CREDIT
Rent History:
A written verification of rent payments must be provided prior to loan closing. Rental history
must be verified for the past two years.
 No 30-day late payments in the last 12 months. If late beyond the due date it is considered a late
payment.

Judgments:
All judgments must be paid in full prior to loan approval. Judgments that have occurred within
the last twelve months will disqualify the applicant. No outstanding federal or state tax liens are
allowed.

Non-Medical Collections:
Non-medical collection opened within the last 12 months will be considered a late payment. All
non-medical collections must be paid in full prior to closing.

Medical Collections:
Medical collections exceeding $1500 must be paid in full prior to loan closing. Medical
collections totaling $2000 will disqualify an applicant.

Past Due Accounts:
Past due accounts reported in the last 12 months will disqualify the applicant.

Slow Credit:
No more than 2 late payments within last 12 months.

Credit References:
Three traditional references or three alternative references are required. Alternative credit
references: utilities, insurance, or other installment accounts with a 12 month payment history
will be considered. The City will accept references from agencies that are on letterhead, but not
signed by the agency if it is accompanied by a letter from the first mortgage lender.




                                                                                           Page | 22
Bankruptcy:
Chapter 13
Applicant must be discharged from bankruptcy for 2 years with 12 months of re-established
credit showing on the credit report.
Chapter 7
Three traditional references or three alternative references are required. Alternative credit
references: utilities, insurance, or other installment accounts with a 12 month payment history
will be considered.

Debt:
Student loans must be deferred for 3 years or longer to not be included in debt ratios. All
installment debt that has 10 months or less remaining will not be included in debt ratios.




                                                                                          Page | 23
  Housing Counseling & Education Requirements
1. Applicants are required to attend a 7.5 to 8 hour homeownership education workshop;
   and

2. All applicants are required to receive one-on-one housing counseling with an agency
   designated by the City of Durham, Department of Community Development.




                                                                                  Page | 24
     Submission of First Mortgage Loan Package
1. After the first mortgage loan has been approved and committed, the required
   documentation is then forwarded by the lending institution to the agent for the City. This
   transmittal must include the Transmittal of Approved Loan to the Originating and
   Underwriting agent.
2. Once the completed package is received, the Originating and Underwriting agent has 5
   business days to review the package and make a recommendation to the City of Durham,
   Department of Community Development. For an approved loan, this recommendation is
   in the form of a check request for loan closing. The City requires 12 business days to
   process a check request. Please keep these timing requirements in mind when arranging
   for loan closing.


   Questions concerning the status of a loan should be directed to the
                 Originating and Underwriting agent.




                                                                                     Page | 25
           First Mortgage Lender Transmittal Form

To:    Maria Flores, SunTrust Mortgage             From: __________________________
       Originating and Underwriting Agent
       512 S. Mangum Street, 2nd Floor                       _________________________
       Durham, North Carolina 27701
       Phone: 919-381-3316 Fax: 919-381-3486

RE:    City of Durham's Second Mortgage Program

       Borrower: _______________________________________________

       Property Address: __________________________________________

       Name of Project/Program: ____________________________________

       Amount Request: $__________________________________________

We have approved a first mortgage in the amount of $__________ at ____ % for ______
months, with a principal and interest payment of $_________ per month, and escrow of
$_______ per month for taxes, $_______ for insurance and $________ for other items. We
understand that all of the following items are needed for review for the City Second Mortgage.
We have placed a check mark beside the items enclosed.

       _____         Copy of the Original Application-Signed by borrower(s) and loan officer
       _____         Copy of the First Mortgage Lender's Final Loan Approval and all
                     conditions of the loan.
       _____         Copy of Good Faith Estimate
       _____         Copy of Verification(s) of Employment
       _____         Copy of Verification(s) of Deposit (Liquid asset not to exceed $20,000.)
       _____         Copy of Verification(s) of Rent
       _____         Copy of Appraisal (reviewed according to FHA or Conventional Fannie
                     Mae or Freddie Mac Guidelines). If the appraisal does not meet these
                     guidelines, additional information may be requested from the appraiser.
       _____         Copy of Credit Report
       _____         Documentation of all credit inquiries




                                                                                       Page | 26
First Mortgage Lender Transmittal Form - Continued
   _____       Explanation of any late payments

   _____       Closing costs and prepaid fee

   _____       Closing attorney information

   _____       Trustee and the beneficiary information

   _____       Copy of the Ratified Contract

   _____       Original Pre-Contract Agreement

   _____       Original Housing Code Addendum

   _____       Signed copies of most recent two (2) years IRS tax returns

   _____       Copies of most recent two (2) years IRS Transcripts

   _____       W-2’s (current year on all employment)

   _____       Pay Stubs (within 30 days of loan closing)

   _____       Original Borrower's Affidavit

   _____       Flood Certification

   _____       Copy of Housing Counseling Certificate

   _____       Copy of Homebuyer Education Workshop Certificate

   _____       Copy of Minimum Housing Code Certificate

   _____       Certificate of Occupancy



   First Mortgage Lender: ________________________________

   Submitted by: ________________________________________
                                  Name / Title




                                                                            Page | 27
                                         Appraisal

The City requires an appraisal with each loan application. Ordering the appraisal is the
responsibility of the first mortgage lender. The first mortgage lending institution must instruct
the appraiser to use FHA guidelines in cases where the first mortgage is FHA, or
FHLMC/FNMA guidelines in all other cases. The appraiser must also be instructed that the City
will use the appraisal during its mortgage approval process, and that the City or it’s agent may
call the appraiser with questions, or to request additional information. The City requires that the
appraiser is on the first mortgage lender(s) FHLMC/FNMA approved list for all loans other than
FHA/VA. The City mortgage has a maximum loan-to-value requirement of 100% of the
appraised value.




                                                                                          Page | 28
                Minimum Housing Code Inspection

All houses are required to meet minimum housing code at the time of closing, unless the
purchaser/participant has made a legal contract with the current owner/seller to have repairs
completed post closing. If no such legal contract has been made between the
purchaser/participant and owner/seller prior to closing, then closing will be delayed until such
repairs are made. The City will not provide second mortgage financing unless the house meets
minimum housing code requirements.



PROCEDURE:
    1)  The first mortgage lender must request housing code inspections forms from the
        City of Durham’s Department of Neighborhood Improvement Services at 560-
        1647.

       2)     The request form is to be completely filled out and forwarded to the Inspection
              Team of the City of Durham’s Department of Neighborhood Improvement
              Services. All requests are to be directed to the Housing Code Administrator, 560-
              1647.

       4)     Once the inspection has been completed, the original inspection reports
              will be sent back to SunTrust.

       5)     SunTrust will send a copy of the inspection report to the first mortgage lender and
              the City of Durham’s Department of Community Development.



   PLEASE REFER TO THE HOUSING CODE ADDENDUM TO SALES CONTRACT:

               “The Seller and Buyer each understand and acknowledge that one of the
       conditions for participation in the City of Durham First Time Home Buyer Program is
       that the property be in compliance with all requirements of the City of Durham Minimum
       Housing Code prior to closing. The Seller and Buyer further understand and
       acknowledge that the owner of a property subject to Minimum Housing Code
       requirements is responsible for any repairs to the property necessary to bring the property
       into compliance with the City of Durham Minimum Housing Code requirement,
       regardless of whether or not the Buyer closes on the property sale.”



       For questions please call the Housing Code Administrator at 560-1647.



                                                                                        Page | 29
             Housing Code Inspection Request Form
TO:    Housing Code Administrator
       Department of Neighborhood Improvement Services (NIS)
       101 City Hall Plaza
       Durham, NC 27701
       Phone: (919) 560-1647      or    FAX: (919) 560-1790


I have an executed sales contract to purchase a house in the City of Durham's First-Time Home
Buyer Program. The property under contract is:




Please arrange for an inspection of this property as per the program guidelines as soon as possible.
You may contact the following person for access to the property:


       Name:

       Agency or Relationship:

       Telephone:

The inspection report should be forwarded to the owner of the property, the contract purchaser and
Originating and Underwriting representative listed below:
       Contract Purchaser:




        Originating and Underwriting agent:
        Maria Flores
        SunTrust Mortgage
        512 S. Mangum Street, 2nd Floor
        Durham, North Carolina 27701
        Phone: 919-381-3316 / Fax: 919-381-3486


Thank you for your assistance.

____________________________
Signature of Contract Purchaser


                                                                                          Page | 30
                              Borrower’s Affidavit

The Borrower’s Affidavit establishes the participant’s eligibility for the Mortgage Loan Program
and to verify conformity with federal, state, and county requirements. In addition, the affidavit
details loan limitations and restrictions, which are part of the terms of the mortgage loan.

The Borrower’s Affidavit must be completed by the first mortgage lender, reviewed and signed
by the participant, and notarized before loan closing.

The Reaffirmation of Borrower’s Affidavit must be reviewed and signed by the participant, and
notarized at loan closing.

All participants must sign the Borrower’s Affidavit.




                                                                                        Page | 31
                                Borrower’s Affidavit
                                      (NON-RENTAL HOUSING)

                                               (SAMPLE)

This affidavit is an essential part of an application to the CITY OF DURHAM, NORTH CAROLINA (the
"City") for a mortgage loan (the "Mortgage Loan") for the purchase or rehabilitation of a single-family
residence and, if applicable, the land appurtenant thereto (the "Residence"). This affidavit is intended to
serve two purposes:

        1)      to establish that you are eligible for the Mortgage Loan under the City's Affordable
                Mortgage Loan Program and to verify conformity with federal, state and City
                requirements; and



        2)      to ascertain that you understand the nature and extent of the limitations and restrictions
                which are a part of the terms of the Mortgage Loan.

FALSE STATEMENTS IN THIS AFFIDAVIT MAY SUBJECT THE APPLICANT TO PENALTIES
FOR PERJURY UNDER THE LAWS OF THE STATE OF NORTH CAROLINA. FURTHER, ANY
FALSE STATEMENT WHICH AFFECTS THE ELIGIBILITY OF THE MORTGAGE LOAN MAY
RESULT IN CANCELLATION OF THE MORTGAGE LOAN COMMITMENT OR, IF THE
MORTGAGE LOAN IS FUNDED PRIOR TO THE DISCOVERY OF THE FALSE STATEMENT,
ACCELERATION OF THE DEED OF TRUST NOTE AND THE INSTITUTION OF APPROPRIATE
PROCEEDINGS, INCLUDING FORECLOSURE.

READ THIS AFFIDAVIT CAREFULLY TO BE SURE THE INFORMATION IS TRUE AND
COMPLETE BEFORE SIGNING THIS FORM.

If you are uncertain as to the meaning of any questions, please ask an authorized representative of the
Department of Community Development for an explanation. COMPLETE ALL QUESTIONS. If any
question is not applicable, answer "N/A".

This affidavit is made in connection with Mortgage Loans financed by the City pursuant to the
Origination Agreement, dated as of February 16, 2009 between the City and SunTrust Bank (the
"Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.

Each of the undersigned, under penalties of perjury, does hereby represent, warrant, affirm and say:




                                                                                                 Page | 32
                                       A. Eligibility of Borrower



1.      The following persons are the mortgagors under the mortgage loan and will: [check
        the appropriate box below]


‫ڤ‬       purchase the Residence, including, if applicable, the land appurtenant thereto, as a completed
        residential unit,

‫ڤ‬       purchase land and construct a completed residential unit thereon to constitute the Residence,

‫ڤ‬       purchase land and rehabilitate an existing residential unit thereon to constitute the Residence, or

‫ڤ‬       rehabilitate the Residence currently owned by one or more of such persons

Include each person who is expected to be liable to any extent on the Mortgage Loan (collectively the
"Borrowers"):

Names of Borrowers:

_____________________________             ____________________________

_____________________________             ____________________________

2.      The following persons will have an "Ownership Interest" in the Residence:

_____________________________             ____________________________

_____________________________             ____________________________

For the purpose of this paragraph, an "Ownership Interest" includes any of the following interests in the
Residence:

(a) a fee simple interest; (b) a joint tenancy, a tenancy in common or tenancy by the entirety; (c) the
interest of a tenant-shareholder in a cooperative; (d) a life estate; (e) a land contract pursuant to which
possession and the benefits and burdens of ownership are transferred although legal title is not transferred
until a later time; (f) an interest held in trust for such person (whether or not created by such person) that
would constitute an Ownership Interest if held directly by such person; and (g) an interest equivalent to
one of the interests heretofore mentioned in the structure but not in the underlying land, which land may
be leased with the written approval of the City. An Ownership Interest does not include a remainder
interest, a lease with or without an option to purchase or a mere expectancy to inherit. [Each person who
will have an Ownership Interest in the Residence must be a grantor under the Deed of Trust securing the
Mortgage Loan.]




                                                                                                   Page | 33
3.    The number of persons currently expected to live in the Residence is _____.

4.            a.       For the purpose of applying for the Mortgage Loan, each Borrower has disclosed
              all of his or her current gross monthly income for the calendar month prior to the date of
              application in the space below. For purposes of this paragraph, gross monthly income is
              the sum of monthly gross pay and any additional income from overtime, part-time
              employment, bonuses, commissions, dividends, interest, royalties, pensions, VA
              compensation, net rental income, and other income (e.g., alimony, child support, public
              assistance, sick pay, social security benefits, unemployment compensation, income
              received from trusts and income received from business activities or investments).



Borrower                       Source                   Gross Monthly Income

____________________ __________________ $___________________

____________________ __________________ ___________________

____________________ __________________ ___________________

____________________ __________________ ___________________

____________________ __________________ ___________________

____________________ __________________ ___________________

____________________ __________________ ___________________



Total Gross Monthly Income for the prior calendar month:               $___________________
      b.      Annualized gross income is total gross monthly income multiplied by 12 and is
              $______________.

5.    The combined Net Worth(Total Assets minus Total Liabilities) of all Borrowers (excluding
      down payment and closing costs paid by the Borrowers) is $_____________.

6.    To the best of each Borrower's knowledge, information and belief, mortgage loans are not
      available to the Borrowers in connection with financing the Residence, wholly or in part, from
      private lenders upon terms and conditions that are reasonably equivalent to those of the Mortgage
      Loan. Furthermore, to the best of each Borrower's knowledge, information and belief, but for this
      Mortgage Loan upon its special terms (which are not typical of standard commercial lending
      practices), including, without limitation, an interest rate that is at or below 3% the balance of
      private financing necessary to purchase and/or construct or rehabilitate the Residence would not
      otherwise be available to the Borrower.

                                      B. Principal Residence

1.    The Residence is or is to be located in the City at the following address:

                                                                                              Page | 34
     ________________________________

2.   The Residence is reasonably suitable for occupancy by only one family and no part thereof is
     leased land, unless the City in its sole discretion has approved in writing that the land underlying
     the structure may be leased.

3.   If the Residence is to be acquired as a completed residential unit, the appraised value of the
     Residence, excluding any interest in the underlying land that is not to be acquired by the
     Borrowers, as estimated by an appraiser approved by the City, is $___________. Each Borrower
     understands that the total amount of the Mortgage Loan and all other loans relating to the
     Residence shall not exceed such appraised value unless the City in its sole discretion waives in
     writing such requirement.

4.           a.       Each Borrower will occupy the Residence as a principal residence within sixty
             (60) days after the mortgage financing is provided or the related construction or
             rehabilitation is completed, whichever is later. Each Borrower will continue to use the
             Residence as a principal residence as long as the Mortgage Loan is in effect, unless
             permitted otherwise by the City in writing.

             b.     Each Borrower will occupy the Residence as a principal residence for the term of
             the Mortgage Loan.

             c.    No Borrower will use the Residence as a recreational, second, vacation or
             weekend home.

             d.      No Borrower will use the Residence as an investment property.

             e.    Unless permitted by the City in writing, the Residence will not be used by any
             Borrower in such Borrower's trade or business, including the following uses:

             (i)     as a place that is used for the purpose of meeting or dealing with patients, clients
             or customers in the course of trade or business or that is otherwise used for or in
             connection with any trade or business;

             (ii)    as a place where inventory is held for use in the trade or business of selling
             products at wholesale or retail;

             (iii) as a place that is used in the trade or business of providing day care for children, for
             individuals who have attained the age of 65 or for individuals who are physically or
             mentally incapable or caring for themselves; or

             (iv)    for rental to any person.

5.   The land appurtenant to the Residence does not provide, other than incidentally, a source of
     income to the Borrowers. No Borrower will subdivide or otherwise convey any portion of the
     land constituting a part of the Residence without obtaining the prior written approval of the City.



6.   None of the proceeds from the Mortgage Loan will be used by any Borrower to:

     a.      purchase any land in excess of the amount reasonably required to maintain the basic
                                                                                                Page | 35
               livability of the Residence;

       b.      purchase any personal property other than (I) fixtures that are considered an integral part
               of the Residence under the laws of the State of North Carolina, and (ii) with the prior
               written approval of the City, air conditioners, a refrigerator, a stove, a washer and dryer
               or other appliances; or

       c.      repay, directly or indirectly, any existing loan or financing any Borrower may have
               obtained or any cost any Borrower may have paid other than a construction period loan or
               bridge loan or similar temporary initial financing having a term of one year or less which
               was obtained or costs which were paid (I) in connection with the purchase or construction
               of the Residence for a purpose eligible for a Mortgage Loan under the City's Second
               Mortgage Loan Program and (ii) in anticipation of obtaining the Mortgage Loan or
               similar tax exemption assisted financing and using the proceeds thereof to repay such
               existing loan or financing or costs.

7.     Each Borrower will maintain the Residence, both inside and outside, in a good state of repair and
       preservation, except for ordinary wear or tear or obsolescence in spite of repair. No Borrower
       will use or permit the use of any part of the Residence for any unlawful purpose or permit any
       unsafe or unsanitary condition or nuisance to exist thereon.

C. Cost of Residence

1.     Each Borrower understands that the "Acquisition Cost" of the Residence financed in connection
       with the Mortgage Loan may not exceed limits published by the City. These limits may vary
       according to property location and other criteria established by the City. "Acquisition Cost"
       means the cost of acquiring the Residence as a completed residential unit. To the extent
       applicable, Acquisition Cost does not include:

       a.      "settlement costs" including titling and transfer costs, title insurance, survey fees and
               other similar costs and "financing costs" including credit reference fees, legal fees,
               appraisal expenses, "points" which are paid by the Borrowers or other costs of financing
               the Residence, except to the extent that they are usual and reasonable and are approved in
               writing by the City;

       b.      value of services performed by any Borrower or members of his or her family, which
               include only the Borrower's brothers and sisters whether by whole or half blood, spouse,
               parents, grandparents, sons, daughters, nieces, and nephews;

       c.      the cost of land that has been owned by any Borrower for at least two years before the
               date on which construction of the Residence begins.



2.     The following calculation of Acquisition Cost is true, complete and correct:

       a.      amount paid or expected to be paid, in cash or in kind, by the Borrowers or any other
               person to the Builder of the Residence or any other person for the land (excluding any
               interest in the land that is not to be acquired by the Borrowers) and completed residential
               unit thereon

                                                                                                Page | 36
             ..................................... $__________

                                                         - or -

     b.      amount paid or expected to be paid, in cash or in kind, by the Borrowers or any other
             person (I) to any person for the land upon which a completed residential unit to constitute
             the Residence is to be constructed and (ii) to any person for the cost of materials, labor
             and administrative and other services relating to the construction of a completed
             residential unit thereon..... $__________

                                                       + plus +

     c.      amount paid or expected to be paid by the Borrowers or any other person to any person
             for fixtures such as light fixtures, curtain rods and wall-to-wall carpeting.(If such amount
             is included in paragraph a or b above, then, do not include it here.) ..............................
             $__________

                                                       + plus +

     d.      amount paid or expected to be paid by the Borrowers or any other person to any person
             for air conditioners, a refrigerator, a stove, a washer and dryer or other appliances unless
             such amount is included in paragraph a, b or c above............................ $__________

                                                       + plus +

     e.      amount paid by the Borrowers or any other person for usual settlement and financing
             costs....... $__________

     Acquisition Cost (TOTAL of a-e above).......                 $__________

3.   The total amount to be paid by the Borrowers or by any other person to the Builder or any other
     person in connection with the purchase or construction of the Residence and any other property
     being acquired contemporaneously with the Residence, including all money to be paid and the
     full value of any goods or services to be provided by the Borrowers, except the value of services
     performed by any Borrower or members of his or her family (which include only the Borrower's
     brothers and sisters whether by whole or half blood, spouse, ancestors and lineal descendants),
     does not exceed the Acquisition Cost of $_____________ or, if such total amount does exceed
     such Acquisition Cost, the amount of such excess is $_____________ and was paid or is expected
     to be paid for ____________________________________________________________.



4.    Without prior consent of the City, there are no contracts or agreements, expressed or implied,
     between the Borrowers or any other person and the Builder or any other person to perform
     construction work in connection with the Residence or to transfer any costs thereto in addition to
     work and costs covered by and included in the Acquisition Cost and any amount in excess thereof
     described in the immediately preceding paragraph.

5.   To the extent applicable, each Borrower has inspected the Residence and has determined that:

     a.      to the best of such Borrower's knowledge, information and belief, the Residence meets or
             will meet the minimum applicable health, zoning and occupancy standards;
                                                                                            Page | 37
       b.      the Residence is or will be of sufficient size for all residents with the defined additions or
               improvements as stated in the sales or other related contract or contracts;

       c.      the Residence includes or will include all necessary property and fixtures necessary for
               occupancy, such as kitchen equipment, bathing facilities, heat and hot water; and

D. General

1.     Each Borrower has been advised and understands that, except in circumstances in which the City
       in its sole discretion consents in writing to an assumption of the Mortgage Loan, the Deed of
       Trust Note will become due and payable in full upon any transfer of title or any other beneficial
       interest of Borrower in the Residence, in whole or in part, and furthermore, any such
       unauthorized transfer shall constitute a default under the Mortgage Loan.

2.     Each Borrower has been advised and understands that if any statement or representation herein is
       breached or is found to be untrue or misleading, then such breach or misrepresentation or
       omission shall constitute a default under the Mortgage Loan, and entitle the holder thereof to
       exercise any and all of its rights and remedies hereunder, including, without limitation, the
       initiation of foreclosure proceedings.

3.     Each Borrower will assist any originator or servicer of the Mortgage Loan and the city in
       obtaining any information or documentation required to verify the statements made in this
       affidavit. Each borrower hereby consents to any inspection of the Residence required for such
       verification and agrees to supply any information or documentation required for such verification
       within such Borrower’s control as the city may request.

4.     Each Borrower has the ability and intent to repay the Mortgage Loan in accordance with the
       terms of the Deed of Trust Note.

5.     Each Borrower understands and acknowledges that with respect to the City's Second Mortgage
       Loan Program, under which the Mortgage Loan is being offered by the City to such Borrower, the
       City is acting in a limited capacity only as a second mortgage lender and is not otherwise
       responsible in any way with respect to the acquisition or construction of the Residence. Each
       Borrower further understands and acknowledges that the Borrowers are responsible for
       contracting with the Builder or any other person with respect to the acquisition or construction of
       the Residence, that the Borrowers are responsible for determining that the Residence has been
       constructed or will be constructed in accordance with the applicable zoning ordinances, housing
       or building codes or other applicable land use or development regulations or laws and that the
       Borrowers are responsible for their obligations to the Builder or any other person with respect to
       the acquisition or construction of the Residence.

6.     Each Borrower understands and acknowledges that the Residence which the Borrowers are
       acquiring or constructing or rehabilitating was not approved by the City either prior to the start of
       its acquisition or construction or rehabilitation, as applicable, or as of the date hereof. Each
       Borrower further understands and acknowledges that the City does not have present authority nor
       is obligated in any way whatsoever to provide financial relief for any present or future repairs to
       the Residence which may be required for any reason. All of the representations, statements and
       warranties contained herein are intended and shall survive the closing for the purchase of the
       Residence and, accordingly, shall continue in full force and effect after such closing and not
       merge upon delivery of the deed to Borrower(s) evidencing Borrowers' title to the Residence or
                                                                                                  Page | 38
       upon delivery of the Deed of Trust securing the Mortgage Loan. Pursuant to Section 14-209 of
       the General Statutes of North Carolina, each Borrower declares under penalty of perjury that the
       foregoing representations and warranties are true and correct.



AFFIANT:_______________(SEAL)           AFFIANT____________________ (SEAL)

                Borrower                                           Borrower

AFFIANT: _______________(SEAL)            AFFIANT                             (SEAL)

                Borrower                                         Borrower

__________________ COUNTY, NORTH CAROLINA

I , ______________________________, a Notary Public of the County of_______________,
State of North Carolina, do hereby certify that _____________________________________

__________________________________________________________________________
personally appeared before me this day and signed the foregoing Affidavit.

Date: ________________________                ______________________________________
                                              Official Signature of Notary

                                              My commission expires: __________________




                                                                                             Page | 39
                Reaffirmation of Borrower’s Affidavit
                                     (Non-Rental Housing) at Closing

                                                  (Sample)

Each Borrower on the proposed Mortgage Loan has now reviewed all of the representations, statements
and warranties contained in that Borrowers’ Affidavit (Non-Rental Housing), previously executed by
Borrower on ___________________, 200__, which by this reference is incorporated herein and made a
part hereof, and concurrently with a closing for purchase of the Residence held on this day and/or funding
of the Mortgage Loan, does hereby reaffirm all of the representations, statements and warranties
previously made in the aforesaid Affidavit.


    AFFIANT:_______________(SEAL) AFFIANT:_______________(SEAL)
                  Borrower                              Borrower


    AFFIANT:_______________(SEAL) AFFIANT:_______________(SEAL)
                   Borrower                             Borrower




__________________ COUNTY, North Carolina

I, ______________________________, a Notary Public of the County of_______________,
State of North Carolina, do hereby certify that _____________________________________

__________________________________________________________________________
personally appeared before me this day and signed the foregoing Affidavit.

Date: ________________________                   ______________________________________
                                                 Official Signature of Notary

                                                 My commission expires: __________________




                                                                                                Page | 40
                              Recapture Provisions

                                First Time Homebuyer Program
                                         HOME Funds

During the affordability period, in the event that the property is sold or title is transferred by
conveyance, will, operation of law or otherwise, voluntarily or involuntarily, when the first
mortgage is refinanced, or no longer the principal residence of the homebuyer, the City of
Durham shall recapture all or portion of the subsidy to the homebuyer to include interest.

The period of affordability for the First Time Homebuyer 2nd mortgages up to $20,000 is 10
years and the term of the loan is 30 years.

The use of HOME funds requires that a period of affordability be determined as it relates to the
resale of the property. The affordability period is based on the amount of HOME funds provided.



         HOME Funds Provided                                 Affordability Period
               <$15,000                                            5 years
           $15,000 - $40,000                                       10 years
               >$40,000                                            15 years




                                                                                         Page | 41
                         Subordination Agreements
Subordination agreements for the City of Durham’s residential mortgage loan programs will only
be executed by the City Manager for the purpose of lowering interest rates.

                             PROCESS AND PROCEDURES
In accordance with the Originating and Underwriting Agreement approved by City Council on January 3,
2006, SunTrust Mortgage will review all requests made by lenders for City of Durham Subordinations at
a fee of $75.00 per request.

On April 7, 2003, the Durham City Council authorized the City Manager to execute Subordination
Agreements for the City of Durham’s residential mortgage loan programs for the purpose of lowering
interest rates only.

The following process is hereby implemented by the City of Durham:

        All request for Subordinations by a lender or the borrower will be referred to SunTrust
        Mortgage, Inc.;
       Once SunTrust is in receipt of the request for subordination, all contact with the borrower and
       lender shall be made by the Originating and Underwriting agent;
       SunTrust Mortgage, Inc. will request and review pertinent information from the requesting lender
       and make recommendations to the City for approval or denial;
       The following forms are to be used by SunTrust and transferred to the City for file purposes once
       a recommendation is made and/or loan is closed;
             City of Durham Application for Subordination;
             City of Durham Homebuyer File Review for Subordinations;
             City of Durham Request For Subordination Checklist; and
             City of Durham Median Family Income Chart
         Refer to the checklist to analyze credit, LTV, interest rates, debt service, etc…
         The City of Durham will not subordinate for the following:
             Interest rate is higher than initial loan;
             Debt consolidation takes place;
             Excessive loan fees;
             Adjustable rates; and
             Cash back to the borrower
       Once a recommendation from SunTrust is submitted, if approved, the City will prepare a
       Subordination Commitment Letter for submission to the requesting lender and refer borrower for
       housing counseling if needed;
       If approved by the City, SunTrust will submit the Substitution of Trustee and Subordination
       Agreement documents to the requesting lender for execution at loan closing;
       The Substitution of Trustee and Subordination Agreement documents shall be returned to the City
       for execution by City Officials. Once executed, documents will be return to the requesting lender
       by the City;
       SunTrust will assure receipt of the executed HUD-1 Closing Statement after loan closing;
       The City shall assure receipt of recorded Substitution of Trustee and Subordination Agreement
       documents for file purposes; and
       SunTrust will assure all documents are returned to the City for file purposes.




                                                                                              Page | 42
                      LOAN SUBORDINATION CHECKLIST
Note: The Subordination Agreement is only allowed if the borrower is trying to lower interest
rate or monthly payments. The Subordination Agreement cannot be used for cash out or debt
consolidation.

Subordination Agreement for residential mortgage loans will only be executed by the City
Manager for the purpose of lowering the first mortgage rate or monthly payment.

The following must be included:

    A letter from Lender stating the current interest rate and the current PITI
     monthly payment and the proposed interest rate and PITI monthly payment along with
     the term for repayment for subordination.
    Subordination Application
    Pay stubs covering the most recent 30 days
    Copy of completed and signed Uniform Residential Loan Application (Form 1003) for
     the Refinance of the First Mortgage
    Provide HUD -1 after closing
    Good Faith Estimate for the Refinance of the First Mortgage (the figures on the Uniform
     Residential Loan Application and the Good Faith Estimate must match
    Account Status Information from AmeriNational Community Services, Inc. for the
     Second Mortgage to be subordinated. They can be reached at (800) 943-1988 or (562)
     927-6686.
    Copy of Triple Merge Credit Report from Company refinancing the First Mortgage
    Copy of Appraisal
    Copy of 2008 Property Tax Bill
    Copy of current Homeowners Insurance Policy




                                                                                       Page | 43

								
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