SHELBY COUNTY DEPARTMENT OF HOUSING RESIDENTIAL DOWN PAYMENT ASSISTANCE PROGRAM

Transcription

1 SHELBY COUNTY DEPARTMENT OF HOUSING RESIDENTIAL DOWN PAYMENT ASSISTANCE PROGRAM ****************************************************************************** The Shelby County Department of Housing (SCDH) has funds available for Down Payment Assistance (DPA) for first time homebuyers within THDA s maximum income guidelines. The minimum income required to qualify for this program is 65% of median income as defined by HUD s moderate-low income guidelines. These income limits are noted on the chart on page 2. Regardless of the source of the permanent mortgage, the SCDH) will only approve the amount of the DPA request that is required to meet the housing needs of the buyer. The criteria for determining the amount of DPA needed to purchase a home is a front-end ratio that does not exceed 33% (monthly housing expenses/stable income) and a back end ratio that does not exceed 43% (monthly housing expenses plus debt/stable income). The amount requested cannot reduce the debt to income ratio below the maximum levels. Nor can any of the DPA be used to lower the debt ratios down to the maximum levels. The first mortgage can be a THDA, FHA,VA OR CONVENTIONAL 30 year fixed mortgage, ((ADJUSTABLE RATE MORTGAGES (ARM's) are not acceptable)), at a proposed rate approved by the SCDH prior to the commitment being made for assistance. DPA ADDRESS FOR SUBMISSIONS The permanent mortgage lender will submit an original DPA application form to: DPA, Shelby County Department of Housing, 1075 Mullins Station Rd., Suite W-131, Memphis, TN DPA SUBMISSION DOCUMENTS The permanent mortgage lender will also submit one copy of the following documents (properly executed and dated), which will be signified by checking each item off upon completion. Questions should be directed to (901) A FHA Loan Underwriting and Transmittal Summary (Form LT) signed and dated by the Underwriter. 2. A signed copy of Uniform Residential Loan Application (1003) and final copy that goes to Underwriting. 3. A copy of the Credit Report (for each applicable adult household member). 4. A copy of Verifications of Employment (VOE) and Income Verifications (check stubs, etc.) for all adult members in the household. 5. Two months bank statements with names, addresses, account numbers and balances on all checking, savings and investment accounts for all adult members responsible for the mortgage. 6. A copy of the Sales Contract. 7. A copy of the previous two (2) years tax returns or two (2) years W-2s. 8. An executed Good Faith Estimate and itemized worksheet with cost breakdown. 9. Verification of the required $ customer down payment (copy of cleared check, money order or cashier check). 10. Residential Down Payment Assistance Application. 11. Commitment to reserve funds request. 12. A completed copy of SCH's Home Ownership Profile. 13. An original acknowledgment of the DPA Program signed by the borrower and the lending institution's representative. 14. Purchased property built prior to 1978, original LEAD PAINT NOTIFICATION LETTER. 15. Certificate of completion of Homebuyers Counseling (no online certificates). 16. A signed W-9 completed by Buyer. 17. Declaration page of Hazard insurance (showing Shelby County as 2 nd lienholder). *** SCDH will review each DPA request for completeness and request additional information as needed.

2 DOWN PAYMENT ASSISTANCE PROGRAM DESCRIPTION I. Description of program activities: Down Payment Assistance (DPA) funds will be available to qualified purchasers to assist them with closing cost and down payment assistance. Potential homebuyers are required to provide a minimum of $ of their own funds toward earnest money, down payment, or closing costs. In addition to those minimum down payment requirements, the borrower will be required to pay additional down payment in any amount that exceeds 3 months of PITI/stable income from verified cash on hand or on deposit. The SCDH will review each DPA application submitted by the lender providing the permanent mortgage financing on behalf of the homebuyer. Each application will be reviewed on an individual basis to determine the financial status and need of every applicant. II. Eligible Homeowners Defined: The prospective purchaser must meet the following two key eligibility criteria in order to participate: A. Low to Moderate Income Home Buyer The prospective purchaser must be low-moderate income (as defined by THDA based upon family size) at the time the household initially occupies the property. GROSS ANNUAL INCOME: total monthly income, before taxes and other deductions, received monthly by each adult member of the household multiplied by twelve. This includes all wages, social security payments, unemployment benefits, interest and dividends payments, child support, rent, royalties and all other income derived from any sources. It dos not include educational benefits received from the Veteran's Administration. The following table lists the current minimum and maximum income limits by family size as established by THDA and is applicable to those liable for the Note(s) and living in the property. Minimum and Maximum Yearly Income Limits By Family Size Number in Household Minimum 26,100 26,100 26,100 26,100 26,100 26,100 26,100 26,100 Maximum 60,100 60,100 69,115 69,115 69,115 69,115 69,115 69,115 B. Purchase property is within Shelby County. C. Homebuyer must have completed Homebuyers Counseling. III. Eligible Properties: Eligible properties will include existing or newly constructed single family residences, town homes, zero lot line homes, and condominiums located in Shelby county as well as the city limits of Memphis having a sales price of $200,160 or less for newly constructed or existing homes. Multi-family housing developments will not be available for consideration with this program. The purchased property must be used as the principal residence and, A. A recorded Deed of Trust is required that will secure the DPA and closing cost funds regardless of the amount received, and B. A Promissory Note between the purchaser and the SCDH will also incorporate this requirement, and C. A Truth in Lending Disclosure is required, and D. Home buyer must keep the purchased property as the principal residence, and may not at any time lease the purchased property. Language to this effect will be incorporated into all loan documents including the recorded DPA Deed of Trust and the Promissory Note.

3 All existing properties must meet the standards established by FHA that are necessary to obtain FHA insurance. Newly constructed houses (less than one year old and/or has never been occupied) are required to meet applicable FHA standards for new houses. If a condominium is being purchased, the complex must be 50% owner occupied. Houses located in a flood plain must have flood insurance and meet FHA guidelines. IV. Resale Provisions: Resale provisions will be imposed on the use of DPA funds which will require a payoff of the unpaid balance upon the sale, transfer or leasing of the property. These provisions will be secured by the property and provided for in the recorded Deed of Trust and Promissory Note. There will be no prepayment penalty for the prepayment of any loan at any time prior to maturity. V. Ownership: The form of ownership will be in fee simple title only and will be subject to the following: A. Mortgages, Deeds of Trust or other debt instruments approved by SCDH. B. Any other encumbrances or restrictions that do not impair the marketability of the ownership interest, other than the restrictions on resale. VI. Permanent Financing: Eligible borrowers must have a permanent financing commitment. The financing is subject to review by SCDH. VII. Eligible Expenses: The amount of purchase assistance shall be no more than what is necessary to make the property affordable to the homebuyer. This shall consist of closing cost, the minimal down payment required by FHA Mortgage Insurance. The down payment and closing cost loan will have a maximum limit of $3,500 per household. The following closing cost expenses will be allowed for closing cost assistance: 1. Origination Fee (1%) 11. Credit Report 2. One repair inspection 12. Survey 3. One Lender inspection 13. Recording 4. Compliance and Final Inspection 14. Notary 5. Engineer's Certificate 15. Attorney's fee not to exceed $ Pest Inspection 16. Allowable Pre-pays 7. Closing/Settlement, Deed of Trust & Note Prep 17. Insurance 8. Amortization Schedule 18. Other as may be approved by SCDH 9. Title Examination 10. Title Insurance VIII. DPA Financing: Down Payment Borrowers minimum down payment is $500 Maximum Loan $3500 Interest Rate Interest rate will be 5% Fixed. Rated will be reviewed each July 1 to consider any adjustments for loans made in the new fiscal year. Maximum Term 10 years Collateral Second Mortgage Trust Deed, Promissory Note Debt Ratio's Front end 33% Back end 43% Due Dates All payments will be due on the first day of each month within at least 30 to 59 days of loan closing. Odd days interest calculations will not be required.

4 IX. DPA Terms and Conditions: All funds issued to qualified purchasers will be secured by a recorded DPA Deed of Trust and Promissory Note which will require a monthly amortized payment and that the total amount of any unpaid balance loaned to the buyer will be due and payable in full upon the sale or transfer of the residence, and upon any subsequent leasing of the property consistent with the Resale Provisions as outlined in item IV above. The first mortgage shall be a THDA, FHA, VA or CONV. 30 year mortgage with a term and/or rate approved by SCDH prior to the commitment being made for assistance. SCDH loan will be subordinate to the first mortgage only. Down payment assistance funds will be available on a first -come-first-serve basis. Firstcome-first-serve is defined as receipt of a COMPLETE application package. SCDH and the participating lending institutions do not guarantee DPA in the event funds are not available and/or the applicant does not meet the program requirements or the purchase property does not meet the guidelines of this program. The amount of the DPA is contingent upon approval of the estimated settlement figures, but in no situation will the DPA funds be received by the home buyer for anything other than Down payment and closing cost assistance. X. Process: A. A potential homebuyer must have contracted to purchase a home and obtained a loan commitment from a lender for permanent mortgage financing. B. Once the lending institution has approved the potential homebuyer for a mortgage contingent only upon the issuance of DPA, the lending institution will submit the required documents and follow the procedures as defined in this section. C. Upon favorable review by SCDH, a request for payment is submitted to Shelby County for processing. D. Upon receipt of the DPA check, SCDH will contact the lending institution to obtain directions of the method of delivery of the check, along with closing instructions. The permanent mortgage company will be responsible for the loan closing and insuring that a Deed of Trust is recorded for SCDH. E. After receipt of the closing documents and loan closing, the lending institution will forward one copy of each of the following documents to SCDH. 1. Copy of the first mortgage Note 2. Copy of the first mortgage Trust Deed 3. Original Recorded Deed of Trust securing the DPA funds. 4. Title Policy/commitment copy 5. Copy of Warranty Deed 6. Truth in Lending copy 7. Request for Mortgage Insurance (FHA, VA, etc.) 8. An executed copy of the HUD 1 Settlement Statement 9. The original executed Promissory Note securing the DPA funds. 10. A notarized waiver of marital rights, if applicable.

5 SHELBY COUNTY RESIDENTIAL DOWN PAYMENT ASSISTANCE APPLICATION ***************************************************************************** PLEASE PRINT CLEARLY OR TYPE Lending Institution Mailing Address/Zip Contact Person Phone Number Fax Number ***************************************************************************** Buyer(s) Name(s) Current Address/Zip Phone Number (home) (work) Purchase Property Address/Zip Total Down Payment Requested $ Amount Approved: $ (SCH only) Sales Price $ Realistic Closing Date: ****************************************************************************** Closing Attorney Address/Zip Phone Number Fax Number Required Attachment: A conditional commitment letter stating the above lending institution will originate a first mortgage specifying the loan amount with the loan only being contingent upon the issuance of Down Payment Assistance. The name(s) of the applicant(s) and the purchase property address must be identified in the letter.

6 SHELBY COUNTY HOME OWNERSHIP PROFILE ****************************************************************************** PLEASE PRINT CLEARLY OR TYPE Purchase Property is: New Existing Square Footage of heated area: Total number of bedrooms: Year that property was built: Census tract number of property: Was property built prior to 1978 Yes No If the house was built prior to 1978 and there is evidence of peeling, cracking, or blistering paint, and there are children under the age of seven, do any children in the household have elevated blood lead levels? Yes No Names of children with elevated blood lead levels: Method of documentation of elevated blood lead levels: ****************************************************************************** The following information pertains only to the person(s) primarily responsible for the mortgage: Household Size Including Applicant: CURRENT YEARLY HOUSEHOLD INCOME based on current monthly income including all working household members: $ Occupation: Current rent of applicant: $ /month Is applicant currently receiving federal assistance for housing expenses? If so, identify type and amount $ Race (circle): Black White Hispanic Pacific Islander Asian Alaskan Native American Indian Other Family Status: Married Couple Single parent with child Female Head of Household Single Male Single Female Other (specify)

7 SHELBY COUNTY GOVERNMENT ACKNOWLEDGMENT AND APPROVAL ***************************************************************************** Buyer(s) Name(s): Property Address: First Mortgage Rate: % Term: Amount: $ Circle Type: FHA VA THDA CONV. Are any other funds being used to assist the buyer with Down payment or closing cost assistance? Yes No If yes, identify the source: Amount:$ Description and Restrictions: I of do hereby certify that the above information is correct and that the property complies with Federal, State, and Local housing standards that are necessary to obtain Applicable Mortgage Insurance and must be evidenced by an appraisal report. Lender's Agent Date I hereby request assistance under the terms of the Shelby County Down Payment Assistance Program. I affirm, to the best of my knowledge the information requested and supplied by me is correct, and that I understand all the conditions of this payment. RECIPIENTS SIGNATURE RECIPIENTS SIGNATURE I certify to the best of my knowledge the above claimant qualifies for Down payment assistance in the amount of $. I further certify that I have no direct, indirect, present or contemplated personal interest in this transaction; nor will I derive any personal benefit from this payment. Down Payment Assistance Analyst DOWN PAYMENT ASSISTANCE APPROVAL Date Administrator or Authorized Designee(s)

8 COMMITMENT TO RESERVE FUNDS FOR SHELBY COUNTY GOVERNMENT, DEPARTMENT OF HOUSING DOWN PAYMENT ASSISTANCE PROGRAM To: Shelby County Government Department of Housing 1075 Mullins Station Rd. Memphis, TN FAX LENDER ADDRESS CONTACT PHONE FAX CUSTOMER S NAME (S) PROPERTY PURCHASED We are requesting you reserve funds up to $3500 for Down Payment Assistance for the above customer. We agree that this is a conditional commitment upon Shelby County Government, Department of Housing receiving a completed loan package within 60 days and the loan being approved in accordance with Shelby County Government, Department of Housing loan policy and procedures, a copy of which we have been supplied. Total Assistance Requested From Shelby County: $ Lenders Signature Date Shelby County Government, Department of Housing has reserved up to $ for Down Payment Assistance for the above customer. Approved by Date Shelby County Government Department of Housing 1075 Mullins Station Rd. Memphis, TN FAX

9 Mortgagee Clause Shelby County Government ISAOA/ATIMA 1075 Mullins Station Road Memphis, TN 38134