City of Miami Department of Community Development Neighborhood Stabilization Program 1 (NSP1)

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1 City of Miami Department of Community Development Neighborhood Stabilization Program 1 (NSP1) The Neighborhood Stabilization Program (NSP1) provides up to $70,000 in deferred payment second mortgage subsidy to homebuyers seeking to acquire a foreclosed home which might require rehabilitation. Depending on the amount of rehab, it also provides funds for the purchase and rehabilitation of foreclosed residential properties by a developer on behalf of a pre qualified buyer, so that rehab can be done on the home before the closing with the buyer. To be eligible, you must: Have a household income at or below 120% of the area median income, adjusted for family size. Must contribute at least $500 of personal funds towards down payment/ closing costs. Must not hold title to another residential property at time of closing. Have a credit score acceptable to a first mortgage lender. Have a Homebuyers Education Certificate issued by a U.S. HUD approved counseling agency. Want to live within the City of Miami s NSP designated geography known as Areas of Greatest Need (AGN). How Do I Get Started? 1. Pick up an application for the NSP1 Program at the Department of Community Development. You can also download the application at 2. Gather all documents listed in the NSP1 Program Homebuyer Checklist (attached below), under the header Provided by Homeowner. 3. Attend a U.S. HUD approved Homebuyer Counseling 8 hour workshop. See list of participating agencies at: 4. Contact any of the Participating Lenders to obtain a loan commitment and to be prequalified for a mortgage loan. To obtain the Participating Lender s list, please visit 5. With the help of a Realtor, search for a foreclosed vacant home in the City of Miami s designated AGN based on your pre approved loan amount and within the maximum sales price limit of $236, Have your lender provide you with a full mortgage commitment. 7. Fill out the NSP1 Application for Subsidy form, include all proper documentation, and submit them to your lender. Have your lender submit your loan package to the City. 8. The terms of the City s loan are attached to this document. The assistance will be provided on a first ready, first served basis. The City of Miami reserves the right to cancel any and all applications based on lack of funding availability. For further information on the NSP1 Foreclosure Purchase/Rehab Program, please call (305)

2 The NSP maps can be located at:

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4 Snapshot of the NSP1 Equity Sharing and Downpayment Assistance Programs Income Limits: Eligible Properties: Eligible Buyers: Maximum Sales Price: Discount Requirement: Loan Terms: Security: Current year s income limits may be downloaded from: Income limits change annually. Single Family Residences Townhomes Condominiums Property must be located in the City of Miami s Areas of Greatest Need (AGN). Property must be foreclosed and vacant. A 90 day vacancy certification from the lender holding title on the property is required. Property must meet Housing Quality Standards as per 24 CFR and obtain the City s environmental clearance. Households with income less than or equal to 120% of the area median income, adjusted for family size. Must contribute at least $500 of personal funds towards down payment/ closing costs. Buyer must not hold title to another residential property at time of closing. The Buyer s credit must be acceptable to a first mortgage lender. The maximum sales price is $236,000, including total acquisition and rehab costs. The property shall be purchased at a minimum 1% discount from the as is appraised value. An appraisal must be completed within sixty (60) days of the final purchase price offer. Total assistance will be the minimum amount necessary to meet credit underwriting. For the Equity Sharing program the amount cannot be less than 20% or greater than 50% of the purchase price, with a maximum cap of $70,000. For the Downpayment Assistance program, the amount will be the lesser of $70,000 or the amount necessary to meet the minimum credit underwriting standards. However, the minimum amount of assistance shall be $1,000. 0% interest rate Non amortizing deferred payment, 30 year loan Payment of principal will be forgiven at end of maturity period provided that the homeowner resided in the house as their primary residence for the 30 year affordability period. The loan will be secured by a second mortgage on the property. If necessary, the City will further subordinate to other subsidy sources. For the Equity Sharing Program the lien will be for $1,000, regardless of actual subsidy amount which could be up to $70,000. For the Downpayment Assistance Program the lien will be for the full City subsidy amount, up to $70,000.

5 First Mortgage Loan Restrictions: Period of Affordability: Other Restrictions: Resale Restrictions Equity Sharing Program: Resale Restrictions Downpayment Assistance Program: Term of the loan must be 30 years with a fixed interest rate, which cannot exceed more than 150 basis points over Freddie Mac s weekly average 30 year rate, as published in the Primary Mortgage Market Survey ( PMMS ); no prepayment penalties. Total percentage charged for Discount, Origination & Broker fees must not exceed 2 points. All other lending fees must be reasonable and cannot exceed $500 or 0.5% of the loan amount, whichever is greater. The required period of affordability compliance is thirty (30) years for the homebuyer. An affordable housing restrictive covenant will be placed on the property, restricting the future sales price of the property and the income limits of future buyers. Applicant must reside in the purchased unit at all times. The loan will be due at sale, transfer of property, or if the unit ceases to be the primary residence of the applicant. If the owner sells and/ or transfers the house prior to the end of the City's mortgage term, the following provisions will apply: 1. The sale of the property must be pre approved by the City, and the new buyers must meet the program s income limits in effect at the time AND the sales price must not exceed the maximum affordable sales price in effect at the time. 2. For any "early" sale or transfer, the City shall share in any gain realized, based on its pro rated share of participation in the original purchase. 3. The above shared gain proposal terminates in the event of a foreclosure, with the lender required to provide the City the right of first refusal to purchase the loan at a negotiated price. In the case of a foreclosure, the City will recapture any amount of net proceeds available from the sale of the property. If the owner sells and/ or transfer the house before the end of the City s 30 year mortgage term, the following provisions will apply: 1. The sale of the property must be pre approved by the City, and the new buyers must meet the program s income limits in effect at the time AND the sales price must not exceed the maximum affordable sales price in effect at the time. 2. For any early sale or transfer, the City shall share in any gain realized, based on its pro rated share of participation in the original purchase. Furthermore, if the sale occurs within the first 3 years, the City shall keep 100% of its pro rated share of the gain, from year 3 up to year 20, the City s share of its pro rated gain shall decrease by 5% every year, while in turn, the owner s share shall increase by 5% each year. At year 20 up to the City s loan maturity of year 30, the owner shall retain 100% of the City s gain. 3. The above share gain proposal terminates in the event of a foreclosure, with the lender required to provide the City the right of first refusal to purchase the loan at a negotiated price. In the event of a foreclosure, the City will recapture any amount of net proceeds available from the sale of the property.

6 Tax Benefits: The tax benefits under the Equity Sharing Program (see attached example), are represented by a reduction in the tax valuation basis of the property agreed to by the Property Appraiser s Office for the NSP Equity Sharing Program.

7 The Purchase Contract Riders The following describes language which must be added to the purchase contract to insure that the property being purchased would qualify for US HUD Neighborhood Stabilization Program 1(NSP1) funding. Riders in bold. ISSUE #1: Purchase Price Discount. The purchase price must be at least a 1% discount from an as is appraisal value, which must be performed within 60 days of the final offer. Discounts can be greater than the minimum 1%. Therefore, the Purchase price section of the contract should read: Purchase Price: The lesser of $(absolute dollar amount that you believe is a fair price) or a 1%* discount from an as is appraised value of the property. An appraisal shall be completed according to US HUD standards, and shall be dated within 60 days of the final offer. *As an FYI, the discount percentage can be greater than 1%. ISSUE #2: Environmental Review. No NSP1 monies can be committed or expended before a US HUD Release of Grant Conditions or a confirmation of exempt status has been issued for the property. This covers the environmental review which must be completed by the City before NSP funding can be used to acquire the property. Therefore, the contract should have an addendum which reads: This contract is contingent upon the purchaser obtaining City of Miami s Neighborhood Stabilization Program 1 financing and the purchaser obtaining a US HUD Release of Grant Conditions or the issuance of a confirmation of exempt status from the City of Miami and US HUD. ISSUE #3: Inspection Period. Only after the buyer s and City inspections, the cost of rehabilitation of the property can be estimated. In case that the rehab cost is higher than $10,000, the buyer should be able to break the contract and bring the developer as the new buyer who will renegotiate the purchase price with the seller. Therefore, the contract should have an addendum which reads: Buyer may, at Buyer s expense, by, ( Inspection Period ) (within 10 days from Effective Date if left blank) make any and all inspections of the Property. The inspection (s) will be by a person who specializes in and holds an occupational license (if required by law) to conduct home inspections or who holds a Florida license to repair and maintain the items inspected. Buyer may cancel this Contract by delivering written notice to Seller within days (within 5 days if left blank) from the end of the Inspection Period if the cost of treatment and repairs estimated by Buyer s inspector (s) is greater than $10,000 or if the Buyer s inspection (s) reveal open permits or that improvements have been made to the Property without required permits. For the cancellation to be effective, Buyer must include in the written notice a copy of the portions of the inspector s written report dealing with the items to be repaired, and treatment and repair estimates from the inspector of person (s) holding an appropriate Florida license to repair the items inspected or any written documentation of open permit (s) or permit (s) that have not been obtained if a permit is required.

8 ATTENTION BUYER: PLEASE READ CAREFULLY THE ATTACHED APPLICATION. ALL OF THE ITEMS IN THE CHECKLIST MUST BE COMPLETED BEFORE THE APPLICATION CAN BE RETURNED TO THE CITY OF MIAMI BY THE BANK.

9 NSP1 Program Homebuyer Checklist Please check every item submitted herein or provide an explanation and an anticipated date of submission. Failure to submit a complete file will result in delays or rejection of the file. Provided by Provided by Included Document Homebuyer Lender Reservation Letter Application for NSP1 Subsidy Uniform Residential Loan Application (URLA 1003) properly signed by the applicant(s). Uniform Underwriting and Transmittal Summary (form 1008) Good Faith Estimate and Truth in Lending forms (signed) Credit report Proof of income: i.e. VOE (required), paystubs (last 60 days), social security award letter, pension statement, etc Verification of applicant s funds available for minimum down payment contribution. Income Tax returns for the past two (2) years Affordability Study Bank statements for the last six (6) months. Rent verification (canceled rental payment checks or letter from landlord.) Sales contract Commitment letter from all other lenders. Copy of property appraisal. Certificate of Completion: Homebuyer Counseling Workshop. Copy of Social Security card for all adult (18 years and older) household members. Copy of State issued ID cards or Birth Certificates for all members of the household. Subordinate Commitment Letters to be received within 30 days of the City s Conditional Approval (if needed) All of the documents listed in the table above must be submitted to the City of Miami for your file to be reviewed.

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11 City of Miami Department of Community Development Neighborhood Stabilization Program NSP1 Application for Subsidy (Application - Page 1 of 2) I. PROPERTY INFORMATION Subject Property Address (street, city, state & ZIP) Apt. No. Applicant II. APPLICANT INFORMATION Co Applicant Applicant s Name (First Name, Middle Initial, Last Name) Co-Applicant s Name (First Name, Middle Initial, Last Name) Applicant s Address (street, city, state & ZIP) Co-Applicant s Address (street, city, state & ZIP) Home Phone (include area code) Work Phone (include area code) Home Phone (include area code) Work Phone (include area code) Applicant III. EMPLOYMENT INFORMATION Co Applicant Applicant s Employer Self Employed Co-Applicant s Employer Self Employed Employer Address (street, city, state & ZIP) Employer Address (street, city, state & ZIP) Monthly Income $ Dates (from - to) Monthly Income Dates (from - to) $ IV. OTHER INFORMATION Applicant Co Applicant Do you hold title on a real estate property at this time? (a mobile home, unless you own the land too, is titled as a personal property & not considered a home) YES NO YES NO Have you declared bankruptcy in the last 2 years? YES NO YES NO V. HOUSEHOLD INFORMATION Name Date of Birth SSN Relationship to Applicant Total Cash Value of Assets 1 $ 2 $ 3 $ 4 $ 5 $ 6 $ 7 $ Total $

12 (Application continuation - Page 2 of 2) Name VI. ANNUAL HOUSEHOLD INCOME Wages/ Salary ** Benefits/ Pensions Public Assistance Other Income Annual Income 1 $ $ $ $ $ 2 $ $ $ $ $ 3 $ $ $ $ $ 4 $ $ $ $ $ 5 $ $ $ $ $ 6 $ $ $ $ $ 7 $ $ $ $ $ Total $ $ $ $ $ ** include tips, commissions, & bonuses I hereby authorize the City of Miami to verify my past and present employment records, bank statements, stock holdings and any other asset balances that are needed to process this application. I further authorize the City to order a consumer credit report and verify other credit information, including past and present landlord references. It is understood that a copy of this form will also serve as my authorization. The information obtained here is only to be used to ascertain my eligibility to receive Neighborhood Stabilization Program subsidy. I further irrevocably grant to the City of Miami, its assigns and successors, my consent and full right to, use my name, photograph, likeness, image, voice, and biography in any and all media, publications, advertising, and publicity, in connection with my participation in the Neighborhood Stabilization Program Subsidy Program and any program related activity or project. I certify that (i) neither I, the applicant, nor the co-applicant, is employed by the City of Miami or by any agency/ developer which built the Subject Property in this application utilizing funds provided by the City of Miami, and that (ii) neither I, the applicant, nor the co-applicant, is related to any employee of the City of Miami or of the agency/ developer which built the Subject Property in this application utilizing funds provided by the City of Miami. Warning: Florida Statute 817 provides that willful false statements or misrepresentation concerning income and assets or liabilities relating to financial condition is a misdemeanor of the first degree and is punishable by fines and imprisonment provided under S or Name of Applicant (Print) Signature of Applicant Date Name of Witness (Print) Signature of Witness Date Name of Co-Applicant (Print) Signature of Co-Applicant Date Name of Witness (Print) Signature of Witness Date

13 NSP1 Participating Lenders Nery Torrent Robin Holley Ocean Bank Bank Atlantic 780 NW 42nd Ave, Suite W. Cypress Creek Road Miami, FL Ft. Lauderdale, FL (305) (office) (954) (office) (305) (fax) (954) (fax) Juan Rojas Martha Delgado Gibraltar Private Bank & Trust Total Bank 220 Alhambra Circle, 5th Floor 1100 NW 72 nd Avenue Coral Gables, FL Miami, FL (786) (office) (305) (office) (305) (fax) (305) Miriam Aspuru Gene Simmons Ann Latimer City National Bank Jennifer MacDonald 25 West Flagler Street Aniceto Carriedo Miami, FL Josie Hosein (305) (office) Aspuru Mortgage Corporation (305) (fax) 1535 SW 87 Avenue Miami, FL (305) (office) Rosandra Merchant (305) (fax) Wells Fargo Home Mortgage 1225 West 68th St Hialeah, FL (office) (fax) Bob Smith Tom Barbato Northern Trust Bank Republic Federal 700 Brickell Avenue Senior Vice President Miami, FL Residential Lending (305) (office) 1001 Brickell Bay Drive, Suite 1900 (305) (fax) Miami, FL (office)

14 NSP1 Participating Developers Prodesa Development, LLC Pointe Developers, Inc. Burgos Lanza and Associates, Inc Douglas Road, Suite SW 3 rd Avenue, suite 601 Miami, FL Miami, FL (305) (office) (305) (office) (305) (fax) (305) (fax) Jorge@pointedevelopers.com cgarcia@prodesa.us NSP1 Participating Homebuyer Counseling Agencies Acorn Housing Corporation Adamo Community Services 1439 W. Flagler Street, Suite C Orientations held at: Miami, FL NE 84 th St, Suite 150 (305) (office) Miami, FL (305) (fax) (305) (office) (305) (fax) Little Haiti Housing Association Miami Beach CDC 181 NE 82nd Street 945 Pennsylvania Avenue Miami, FL Miami Beach, FL (305) (office) (305) (office) (305) (fax) (305) (fax) Miami Dade Affordable Neighborhood Housing Services Housing Foundation, Inc. of South Florida 19 West Flagler Street, Suite NW 12th Avenue Miami, FL Miami, FL (305) (office) (305) (office) (305) (fax) (305) (fax) Opa Locka CDC Universal Truth CDC 490 Opa Locka Blvd., Suite NW 37 Avenue Opa Locka, FL Carol City, FL (305) , ext. 222 (office) (305) (office) (305) (fax) (305) (fax) Centro Campesino Farmworkers Center, Inc SW 186 Avenue Florida City, FL (305) (office) (305) (fax)