HOMEBUYER GUIDELINES FOR EDA/DEVELOPER REMODELED HOMES

Transcription

1 Brooklyn Park Economic Development Authority (EDA) TIF Foreclosure Recovery Program HOMEBUYER GUIDELINES FOR EDA/DEVELOPER REMODELED HOMES Updated: September 2011

2 TABLE OF CONTENTS I. Background... 1 II. Purpose of the Guidelines... 1 III. Marketing and Outreach... 1 IV. Homebuyer Eligibility... 1 V. Eligible Properties... 2 VI. Ineligible Properties... 2 VII. Lenders... 2 VIII. Underwriting... 2 IX. Application Processing... 3 X. Summary of a Homebuyer Process... 3 XI. Reasons for Denial or Postponement of Loan Applications... 3 XII. Appeal Procedures... 4 XIII. Modification and Termination of Program... 4 Attachments: 1. Quick Look Buyer Guidelines 2. Homebuyer Instructions Letter 3. Household Information Form 4. Buyer Certification 5. Brooklyn Park Community Information Letter

3 I. Background The TIF Foreclosure Recovery Program is administered by the Brooklyn Park Economic Development Authority (EDA) with the purpose of recovering foreclosed homes in the city of Brooklyn Park. The Brooklyn Park EDA and its development partner, Robert Engstrom Capital Management, LLC, shall not deny any family or individual the equal opportunity to apply for or benefit from the program on the basis of race, color, gender, religion, creed, national origin, age, familial or marital status, handicap or disability, sexual or affectional orientation or reliance on public assistance. II. Purpose of the Guidelines The purpose of these guidelines is to establish requirements for carrying out the resale of homes under the TIF Foreclosure Recovery Program. The Brooklyn Park Economic Development Authority (EDA) reserves the right to amend and adapt these guidelines, as needed, to comply with related requirements and timelines. III. Marketing and Outreach The EDA or its development partner will market the properties in the following ways: 1) List properties on the Multiple Listing Service (MLS) 2) Develop an informational sheet/brochure for how the sale of the property will happen; 3) Provide formation to the Realtors Association and Lenders; 4) Provide eligible homeownership counseling agencies with information to make announcements at workshops, put information in their newsletters and have the counselors make referrals; 5) Post information on the City website. Properties are sold on a first come first serve basis to qualified buyers. IV. Homebuyer Eligibility 1. Homebuyers must be U.S. Citizens or be a legal U.S. Residents (have legal immigration status). 2. The Homebuyer does not have to be a first time buyer, but the Homebuyer cannot have an ownership interest in any other residential property in the Twin Cities Metropolitan Area and must occupy the property within 60 days of closing. The property must be the primary residence of the Homebuyer and the Homebuyer must agree to a 30-year restriction that prohibits rental of the property. 3. The Homebuyer must contribute the greater of ½ the lender-required down payment or $1,000 of his/her/their own funds toward the purchase of the property. 4. The Homebuyer must complete a Home Stretch course. A list of agencies that provide the course is available on the web at or by calling The Home Stretch classes and curriculum are maintained by the statewide, nonprofit Home Ownership Center (HOC) and are recognized as a standard for homeownership education in Minnesota. The curriculum includes classes and one-to-one meetings with a homeownership counselor to review personal credit and income. 1 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

4 A copy of the participation certificate should be submitted to the EDA and must be provided prior to final approval. In the case of a Joint Tenancy purchase, both Homebuyers should attend and satisfactorily complete a Home Stretch course. The main Homebuyer should complete a Home Stretch course within the one year prior of purchase. 5. The Homebuyer must meet the requirements of a participating lending institution and qualify for an eligible first mortgage. 6. There is no maximum household income limit to be eligible for this program. 7. The Homebuyer must meet the requirements as specified elsewhere in these guidelines. V. Eligible Properties 1. The property must be one that the City or their development partner purchased and rehabilitated using TIF funding. 2. The Homebuyer must purchase the property with ownership in fee simple title, a 99-year leasehold interest (CLT), ownership in a state recognized cooperative or mutual housing unit. 3. The property must be occupied by the Homebuyer as their principle place of residence and will carry a 30-year restriction that prohibits rental of the property. VI. Ineligible Properties VII. Lenders Properties specifically ineligible are properties that did not receive funding from the EDA s TIF Foreclosure Recovery Program. The Homebuyers have their choice of any lender that is willing to work with and within the program guidelines. VIII. Underwriting 1. The TIF Foreclosure Recovery Program is depending upon the first mortgage lenders to apply prudent Homebuyer and property underwriting standards to support the objective of successful homeownership. Ideally, a homebuyer s front end ratio/monthly housing ratio payments of principal, interest, taxes and insurance (PITI) will not exceed 30 percent of the household s gross income. Homebuyer applicants with PITI amounts over the 30 percent ratio will need to be reviewed and approved by the Brooklyn Park EDA. In a situation where a homebuyer s housing ratio is in question, the EDA, at its discretion will require a complete review of the homebuyer s income using standards established by Minnesota Housing as described in the Community Revitalization Fund (CRV) Procedural Manual located at 2. The Buyer must obtain an A or prime first mortgage product. It must be a fixed rate FHA, VA, or Conventional, or Fannie Mae or Freddie Mac insured loan. The Brooklyn Park EDA will not approve 2 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

5 the resale of a property to a Buyer with an interest only loan, adjustable rate loan, balloon loan, or any loan that is considered sub-prime or predatory. 3. The Brooklyn Park EDA will not approve the resale of a property to a Buyer with loans that are cosigned with another party that will not live in the property. IX. Application Processing 1. The Brooklyn Park EDA or its development partner will provide a Homebuyer Instructions letter. It is the responsibility of each applicant to assure that Brooklyn Park EDA or its development partner receives his/her/the information requested in the Instruction letter. 2. At the time of application, applicants must submit: a. Completed Household Information Form b. Signed Buyer Certification Form c. Three (3) months of consecutive earning statements (all household members over 18) d. A copy of the most recent tax return (all household members over 18) e. Lender s Good Faith Estimate (GFE) (obtain from lender) f. Form 1003 Loan Application (obtain from lender) g. Form 1008 Uniform Underwriting and Transmittal Summary (obtain from lender) h. HomeStetch First Time Homebuyer Certification (may be submitted before closing) X. Summary of a Homebuyer Process 1. Buyer submits an offer or signs a purchase agreement, conditioned on Homebuyer eligibility approval by the EDA. Copy submitted to the EDA after execution. 2. Buyer obtains Good Faith Estimate from lender. Must be 30-year fixed-rate loan, or other sustainable mortgage product as determined by the EDA. Buyer must contribute the greater of ½ the lender-required down payment or $1,000 to the purchase. 3. EDA sends a Homebuyer Instruction Letter to the potential buyer. 4. Applicant submits information listed on the Homebuyer Instruction letter. 5. EDA reviews documents and determines eligibility (provide at least 5 days for EDA review). EDA requests additional information, if necessary. EDA sends approval (or denial) letter to the applicant within 5 days of receipt of information. 6. Buyer completes HomeStretch course and submits certificate to the EDA. 7. Buyer attends a pre-closing meeting with an EDA representative. XI. Reasons for Denial or Postponement of Loan Applications The Brooklyn Park EDA will do the final review and verify all applications for eligibility. No further applications will be accepted by the EDA where an applicant has been previously found to have falsified their application or misused loan funds. No reapplications will be accepted for one year following applicant's cancellation of loan or other actions that delay the processing beyond a reasonable period of time. Consideration will be given to applicants who request an extension for a medical or family emergency, or applicants that are currently under written order to correct for health and safety items. 3 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

6 XII. Appeal Procedures Appeals regarding denial of Homebuyer eligibility may be made in writing to the Director of Community Development, th Avenue North, Brooklyn Park, MN A written response will be provided within thirty (30) days. XIII. Modification and Termination of Program The Brooklyn Park EDA may modify or terminate the TIF Foreclosure Recovery Program as it deems appropriate, as required by Minnesota Housing, or for the continued implementation of same, including, but not limited to: (1) policy revisions necessary due to a change in design of the financing mechanism; (2) policy revisions necessary due to changes in the rules and regulations of the Minnesota Housing and/or the Brooklyn Park EDA; and (3) to facilitate prompt and proper expenditure of TIF funds. 4 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

7 TIF Foreclosure Recovery Program (Robert Engstrom Capital Management, LLC) QUICK LOOK Homebuyer Guidelines Eligible Primary/First Mortgage Loan Products Maximum Buyer Income Maximum Housing Ratio Minimum Buyer Investment Homebuyer Occupancy Requirement Homebuyer Education Requirement First Time Homebuyer Requirement Prime, Fixed Rate (HUD, VA, Conventional) None 30% (PITI / gross household income) Greater of ½ of the lender-required down payment or $1,000. Buyers must owner-occupy the assisted property as their principal place of residence. The Declaration of Restrictive Covenants prohibits rental of the property for a period of 30 years. Buyers must attend Home Stretch classes offered by a HUD approved counseling agency and a pre-closing meeting with EDA staff. None; however, cannot have an ownership interest in another residential property in the Twin Cities Metro Area. Questions: Contact Alisha Strowbridge at or alisha.strowbridge@brooklynpark.org 5 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

8 Homebuyer Instructions TIF Foreclosure Recovery Program Dear Prospective Buyer, Thank you for your interest in purchasing a home through the TIF Foreclosure Recovery Program. Robert Engstrom Capital Management, LLC, the seller of the property, is partnering with the Brooklyn Park Economic Development Authority (EDA) to purchase, rehabilitate, and resell the property to a qualified buyer. In order to determine your household s eligibility, please provide the following documentation: 1. Completed Household Information Form (attached) 2. Signed Buyer Certification Form (attached) 3. Three (3) months of consecutive earning statements (all household members over 18) 4. A copy of the most recent tax return (all household members over 18) 5. Lender s Good Faith Estimate (GFE) (obtain from lender) 6. Form 1003 Loan Application (obtain from lender) 7. Form 1008 Uniform Underwriting and Transmittal Summary (obtain from lender) 8. HomeStetch First Time Homebuyer Certification (may be submitted before closing) 9. Buyer attends a pre closing meeting with an EDA representative (must attend before closing) Please note: In a situation where a homebuyer s housing ratio (PITI/gross income) is in question, the EDA, at its discretion will require at a complete review of the homebuyer s income using standards established by Minnesota Housing as described in the Community Revitalization Fund (CRV) Procedural Manual located at: Please submit documentation to: C/O Alisha Strowbridge Economic Development Division th Ave N Brooklyn Park, MN If you have any additional questions please feel free to contact me at alisha.strowbridge@brooklynpark.org or by calling Sincerely, Alisha Strowbridge Project Facilitator 6 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

9 Household Information Form TIF Foreclosure Recovery Program Property Address Buyer Information: Buyer: Last Name, First Name, MI Gender: Male Female, DOB of Buyer (mm/dd/yyyy) Marital Status: Married Separated Not Married (Includes Single, Divorced, Widowed) Buyer Social Security Number: Ethnicity (select only one): Hispanic or Latino Not Hispanic or Latino Race (select one or more): American Indian or Alaska Native Asian Black or African American Native Hawaiian or Other Pacific Islander White Co-Buyer Information: Co-Buyer: Last Name, First Name, MI Gender: Male Female, DOB of Buyer (mm/dd/yyyy) Marital Status: Married Separated Not Married (Includes Single, Divorced, Widowed) Buyer Social Security Number: Ethnicity (select only one): Hispanic or Latino Not Hispanic or Latino Race (select one or more): American Indian or Alaska Native Asian Black or African American Native Hawaiian or Other Pacific Islander White Household Information: Gross Annual Income (Include income for all household members over 18): Please List Name and Age of all other Household Members: Name: Name: Name: Name: Age: Age: Age: Age: 7 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

10 Household Member A B C D E Name Base Pay (salary) Self-Employment Variable Flex Benefit Cash Housing/Car Allowance Child/Spousal Support Educational Grants Transfer Payments Interest/Dividend Investment Property Roommate Rent Other Subtotal Household Information Form (Page 2)* Total of All Income Types/Household Members 18+ (Add subtotals of A through E and any additional residents) $ *Include: All Adult Household Members (18+), Unearned Income from Minors I/We understand the information in this questionnaire will be used to determine eligibility. I/We understand that any false information may make me/us ineligible for housing/assistance. Full source verification forms will be required to complete this certification. I/We certify that all of the information given in this application is true, complete and accurate. I/We understand that false or incomplete information can result in a fine, imprisonment, and loss of housing and/or housing assistance. I/We authorize agency/management to make any and all inquires to verify this information, directly or through information exchange now or later which may be released to appropriate and Federal, state and local agencies. ALL HOUSEHOLD MEMBERS AGE 18 OR OLDER MUST SIGN BELOW: Signature Date Signature Date Signature Date Signature Date Signature Date

11 Buyer Certification TIF Foreclosure Recovery Program (the Buyer ) hereby certifies to Robert Engstrom Capital Management, LLC (the Seller ) and the Brooklyn Park Economic Development Authority (the Authority ) for the property located at Brooklyn Park, MN, Hennepin County (the Property ) the following: 1) Buyer agrees to occupy the Property as its primary residence. 2) Buyer does not have to be a first time buyer. The Borrower must not have an ownership interest in another property in the Twin Cities Metropolitan Area. 3) Buyer understands and has had an opportunity to review the Declaration of Restrictive Covenants, such Declaration having already been filed with Hennepin County, and will abide by the restriction contained therein. 4) Buyer acknowledges receipt of the Combined Tennessean Warning and Privacy Notice Act. 5) Buyer has to contribute the greater of half of the required down payment or $1,000 of his/her/their own funds towards the purchase of the property and must have financed the acquisition of the Property with a sustainable, fixed-rate mortgage. 6) Buyer has completed or will complete a Minnesota Homeownership Center HomeStretch class and has provided or will provide proof thereof to the Seller. 7) Buyer has completed or will complete the Community Information Meeting with City staff. Dated this day of, 201_ Signed: Buyer Printed Name Buyer Printed Name 9 TIF Foreclosure Recovery Program: Homebuyer Guidelines 2011

12 DEPARTMENT OF COMMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT DIVISION th Avenue N., Brooklyn Park, MN Phone Fax TDD Robert Schreier Director of Community Development Welcome to Brooklyn Park! On behalf of the City of Brooklyn Park, we are excited to have you as a member of our thriving community, inspiring pride, where opportunities exist for all. Prior to closing on your new home, we will be meeting to provide you with several resources. We will be discussing: Community Information, city and public services, events, churches and schools, and restaurants around town The background and goals of the housing program in which you are participating Proper maintenance of your home including keeping up landscaping, following city codes, and finding a contractor when necessary The restrictive covenant which prevents conversion of your home to rental property Any questions that you may have about the program or process We strive to improve your transition as a new homeowner in Brooklyn Park and look forward to meeting you. This meeting is mandatory and must be compelted prior to closing on your home. Please call Abigail Shafer at to schedule. Sincerely, Robert Schreier Executive Director Brooklyn Park Economic Development Authority