CITY OF VIRGINIA BEACH DEPARTMENT OF HOUSING & NEIGHBORHOOD PRESERVATION (DHNP) (757) 385-5750 HOME REPAIR PROGRAM HOME /CDBG/CDBG-R PROGRAM YEAR FUNDS 2011-2012 PURPOSE To provide eligible homeowner applicants who are occupants of the dwelling on the eligible property (eligible dwelling) located in Virginia Beach with financial and technical assistance to correct exterior code violation and to rehabilitate the interior and/or exterior of the eligible dwelling and may include energy efficiency improvements. See: Energy Efficiency Improvements (Page 8) acceptable in the Home Repair program. See: Definitions (Page 6) for terms referenced throughout the program description. Financial assistance will not be used for refinancing existing debt or satisfying judgments/liens. Assistance is not to perform routine maintenance, as determined by the Department of Housing and Neighborhood Preservation (DHNP) (i.e. HVAC filter replacement, stopped toilet, gutter cleaning, and trimming of trees). ELIGIBLE RECIPIENTS Assistance is available to homeowner applicants who are occupants of the eligible property located in the City of Virginia Beach. The total gross annual household income cannot exceed eighty percent (80%) of the area median income, adjusted for family size, as established by the U.S. Department of Housing & Urban Development (HUD), at the time of application [SEE HUD INCOME GUIDELINES]. HUD INCOME GUIDELINES Number in 1 2 3 4 5 6 7 8 Household 80% Median 39,150 44,750 50,350 55,900 60,400 64,850 69,350 73,800 Income Income guidelines effective as of June 1, 2011 All owners of record on the deed must be occupants of the eligible property, sign the program eligibility and residential loan application, and must have income verified. Household income and mortgage status will be re evaluated every six months until contract is signed. Household assets cannot exceed $75,000.00 (does not include the value of the eligible property), and the applicant(s) cannot own any other real estate.
Page 2 of 9 Households that have received prior assistance under any repair or reconstruction program administered by the DHNP, with the exception of the Emergency Home Repair Program, are not eligible to receive any assistance under this program. ELIGIBLE PROPERTIES Fee simple owner occupied single family dwellings. Townhomes and condominiums may be eligible only on a case by case basis as determined by the DHNP. INELIGIBLE PROPERTIES Manufactured homes (mobile homes as determined by state code and titled as personal property) are not eligible. Properties with a reverse mortgage are not eligible. City assessment cannot exceed $224,105.00. Properties located in a Clear Zone or Accident Potential Zone I or II, as designated on the most current Air Installations Compatible Use Zones (AICUZ) map, are not eligible for assistance. PROPERTIES IN A FLOOD ZONE For property where any portion of the property (not just the house) is in a flood zone, additional restrictions may apply, including proof of flood insurance. Owner will be required to maintain Flood Insurance on the property for the duration of any lien placed on the property by the DHNP. ELIGIBLE ACTIVITIES Rehabilitation to the eligible dwelling: To correct interior and exterior Code Violations as required. To provide energy efficiency improvements (Refer to Energy Efficiency Improvements (Page 8)). To provide general home repairs as determined by the DHNP Rehabilitation Standards. To provide improvements that will reduce the future costs of exterior maintenance. To remove unsafe or blighted conditions on the eligible property. To provide accessibility and usability improvements. To correct fireplace and/or chimney defects. Replacement of existing non energy star rated appliances is eligible to be replaced with energy star rated appliances (Replacement of refrigerators, washers, and dryers are not eligible under this program).
Page 3 of 9 TYPE OF ASSISTANCE A 25 year no interest deferred loan (zero Annual Percentage Rate (APR)) with no monthly payments. At the end of the 25 years the loan is immediately due and payable in full. A mortgage loan application will be taken by a licensed Mortgage Loan Originator (MLO). All terms and conditions of the loan will be explained by the MLO at the time of the loan application. A 5 year no interest forgivable loan (zero percent APR) with no monthly payments is available for energy efficiency improvements. The Energy Efficiency Forgivable Loan is contingent upon the minimum cost of construction as described in the Terms and Conditions below and as determined by the DHNP staff. The MLO will take the application for the forgivable loan and explain all terms and conditions. AMOUNT OF ASSISTANCE The maximum amount of the 25 year deferred loan (zero percent APR) and forgivable loan shall not exceed the lesser of $60,000.00 or the equity. A contingency will be part of the contract to cover change orders for repairs of any latent and/or unforeseen defects. The contingency is calculated as 15% of the final preconstruction cost. The maximum amount of the forgivable loan shall not exceed $10,000.00. If the estimated cost of construction as provided by the DHNP staff exceeds the equity as determined by the DHNP, the property will be considered infeasible. If the lowest responsive/responsible bid amount received for this project exceeds $60,000.00 the property will be considered infeasible. The Housing Development Programs Administrator may make an exception to the deferred loan and forgivable loan limit on a case by case basis. TERMS AND CONDITIONS Assistance through this program is provided based on the availability of funding and is provided one time only to any eligible individual or household. A minimum of $1,000.00 in the cost of construction to the main dwelling (excluding the cost of energy efficiency improvements) is required. Cost of construction is determined by the DHNP as itemized in the costed Work Write Up. This program provides assistance for the rehabilitation of the eligible property including energy efficiency improvements; however it does not allow for remodeling. Title Report is required and shall be provided by the DHNP at no cost to the applicant(s). If the property has any existing code violations, other than those which may be addressed by Eligible Activities herein, such as inoperable vehicle(s); grass or weeds in excess of 10"; junk, litter or debris, the property owner must eliminate these violations prior to assistance being provided. Failure to correct/remove these violations within 30 days of written notice may result in assistance being denied. Homeowner applicant(s) must agree to have both the interior and exterior of the dwelling inspected for compliance with the Lead Based Paint Requirements (Title X
Page 4 of 9 Regulations) if dwelling was built prior to January 1, 1978. The lead inspection will be secured by the DHNP at no cost to the homeowner applicant. A qualified licensed inspector will conduct a wood destroying insect/fungus/moisture inspection in order to determine if there is any active infestation and/or wood destroying insect, fungus, or moisture damage. The wood destroying insect/fungus/moisture inspection will be secured by the DHNP at no cost to the homeowner applicant(s). A home inspection is required to be completed by a qualified and state certified home inspection agency. The home inspection agency will be chosen by the homeowner applicant(s) and the request for the home inspection and report will be done by the DHNP staff. A report from that inspection is to be provided to the DHNP prior to an inspection being performed by the DHNP staff. The homes inspection will be secured by the DHNP at no cost to the homeowner applicant(s). Homeowner applicant(s) must provide access to all rooms/areas of the dwelling, which shall be inspected by the state certified home inspection agency and DHNP Construction Specialist. All rooms/areas to be inspected must be fully accessible. After rehabilitation, the dwelling must meet local housing codes and the Department of Housing & Neighborhood Preservation Rehabilitation Standards for the Home Repair Program. The After Rehabilitation Value of the property cannot exceed one hundred percent (100%) of the area median purchase price as established by the FHA 203(b) mortgage limits. Change Orders The Housing Development Programs Administrator or designee, in their sole discretion, may approve the provision of additional funds when hidden or latent damage is discovered, and may provide such additional funds in the manner they determine appropriate. Contingency 15% of the Cost of Rehabilitation will be incorporated in the deferred loan to cover change orders for repairs of latent and/or unforeseen defects. Contract Amount The forgivable loan plus the deferred loan plus the contingency equals the contract amount. Deed Title to the property (recorded Deed) must be held by the applicant(s) (life estates or heir property are not eligible). Deferred Loan A loan application will be taken by a MLO after the household and property have been determined to be eligible to participate in the Home Repair Program. A full explanation of all deferred loan and forgivable loan conditions and terms will be provided by the MLO. Financial assistance for the cost of rehabilitation is provided in the form of a 25 year no interest deferred loan to be secured by a Deed of Trust and Promissory Note. The interest rate and APR is zero percent. At the end of the 25 years the loan is immediately due and payable as stipulated in the Promissory Note and must be repaid in a lump sum, no installment payments will be required or accepted. Funds are immediately due and payable to the City of Virginia Beach if any of the following occur prior to the call date of the loan ( i.e. at the time of the owner(s) death, or upon the owner(s) vacating, selling or transferring the deeded property.) Property must remain the primary residence of the applicant(s).
Page 5 of 9 Equity The difference between the current assessed/appraised value of the property and the amount the owner still owes on the mortgage. Forgivable Loan A forgivable loan application will be taken by a MLO after the household and property have been determined to be eligible to participate in the Home Repair Program. A full explanation of all deferred loan and forgivable loan conditions and terms will be provided by the MLO. Financial assistance for the cost of energy efficiency improvements are provided in the form of a forgivable loan to be secured by a Deed of Trust and Promissory Note. The total amount of the forgivable loan is forgiven at a rate of 20% per year as determined by the contract anniversary date. Maximum Cost of Rehabilitation Shall not exceed 100% of the city assessment or 100% of a current appraisal. Homeowner applicant(s) has the option to provide a current appraisal of the property (not more than 6 months old) at their expense. Maximum Debt Ratio (Total Debt to Income Ratio) Applicants must demonstrate sufficient income to meet financial obligations and maintain the rehabilitated property. The maximum debt ratio established for this program shall be 50%. The total debt toincome ratio indicates how much of the applicant s gross income is spent on all of their debt obligations, including first mortgage, property taxes and insurance, car loans, child support and alimony, credit card bills, student loans, and any other long term debt. The program funding provided by the DHNP is not included in the calculation. To calculate the maximum monthly debt to income ratio, the applicant s annual salary is multiplied by 0.50, then divided by 12 (months). Promissory Note In the event of sale, lease or other transfer of the property, or the death of all of the grantors (homeowner applicant(s)), or the failure of all of the grantor(s) to keep the property as the grantor(s) primary residence, the note shall immediately become due and payable in full. Recording Fees The homeowner applicant(s) will be responsible for paying the fees associated with recording all Deeds of Trust. The homeowner applicant(s) will need to provide the DHNP a money order or certified check payable to the Clerk of Circuit Court at the time of Deed of Trust, Promissory Note and contract signing. Subordination of Lien The DHNP will consider subordinating only those liens for straight refinancing (No Cash Out or Debt Consolidations). Homeowner applicant(s) must sign the Subordination Policy Acknowledgement Form provided by the DHNP. Any lien will affect the homeowner applicant s ability to refinance the property and/or to borrow money using the property as collateral Title Report A title report will be required to ensure that the homeowner applicant(s) has fee simple title to the property (no life estates or heir property), and to determine if there are any recorded liens and/or judgments against the property. The payments on all existing loans (mortgages, equity loans, including all fees and charges, i.e. HOA, etc.) using the property as collateral cannot be in arrears at the time of the program eligibility application and loan approval.
Page 6 of 9 Real estate taxes must be current at the time of the program eligibility application and loan approval. DEFINITIONS The following are definitions used in the Department of Housing and Neighborhood Preservation (DHNP) Assistance Programs. If you have any questions please contact your Housing Specialist. 1. Accessibility - Suitable or adapted for people with physical challenges. 2. Assets Cash or non-cash items that can be converted to cash. 3. Assumption - A method of selling real estate where the buyer of the property agrees to become responsible for the repayment of an existing loan on the property. 4. Connection to Public Water - The cost of the installation (material and labor) of the service line from the tap/meter to the dwelling is also included. 5. Connection to Public (Sanitary) Sewer - The cost of the installation (material and labor) of the service line and clean out(s) to the dwelling is included. 6. Cost of Rehabilitation - The lowest responsive/responsible bid amount received based on the work write-up provided by the DHNP Construction Specialist and any approved change order(s) for this project determined at the completion of the pre-construction conference. 7. Costed Work Write-Up - The work write-up including the estimated cost for the work as determined by the DHNP Construction Specialist. 8. Current Code The Virginia Maintenance Code, Part III of the Virginia Uniform Statewide Building Code, 2009 and the International Residential Code For One and Two Family Dwellings, 2009. 9. Deed of Trust - A signed instrument recorded in public records that outlines the terms of an agreement evidencing a mortgage loan that is secured by a Promissory Note. 10. Estimated Cost of Construction - The construction costs as estimated by the DHNP Construction Specialist after preliminary inspection to determine feasibility but before a work write-up is generated. 11. Final Pre-Construction Cost The total amount to be entered into the construction contract. The Cost of Rehabilitation plus the Contingency (as determined by the program description), which shall be determined by the Housing Specialist. 12. Grossing Up Income income projection based on an assumption that there will be an increase in the applicant s income.
Page 7 of 9 13. Infeasible Not financially practical as determined by the DHNP to easily achieve rehabilitation within the program requirements (i.e. The cost of rehabilitation cannot exceed the program limit or the value of the structure). 14. Loan Approval - Upon receipt of the Final Pre-Construction Cost the MLO will perform the calculations to determine the total amount of assistance. The MLO will then issue an approval/denial letter. 15. Loan-To-Value - Mortgage amount divided by the assessed/appraised value of the property. 16. Manufactured Home - A pre-manufactured structure used as a dwelling with or without a permanent foundation connected to required utilities. 17. Maximum Debt Ratio - Annual mortgage payments including principal, interest, and taxes (P.I.T.I) plus other long term debts divided by the gross family income. 18. Promissory Note - A written, dated and signed instrument containing an promise by the borrower to pay a definite sum of money to a payee on demand or at a specified date. 19. Rehabilitation - To restore a structure to its former good state of condition or capacity. 20. Rehabilitation Standards - The DHNP Rehabilitation Standards meet or exceed HUD Housing Quality Standards (HQS) and the applicable code standards of the International Building Code (IBC), International Residential Code (IRC) and International Property Maintenance Code (IPMC) as amended by the Uniform Statewide Building Code (USBC). 21. Remodeling - To reconstruct or alter a structure from its original design or style. 22. Repair To restore an item to a good or sound condition after decay or damage. 23. Total Annual Gross Income The sum of all current income (earned and unearned) received by every adult (age 18 or older) household member before any deductions, projected over a 12 month period. Earned income of minors (age 17 and under) is not counted. However, unearned income (i.e. child support, SS, SSI, and TANF benefits paid on behalf of a minor) is counted. 24. Usability - Available for or convenient for use; fit for use. 25. Work Write-Up - Detailed description of work which may include materials and specifications, as generated by the DHNP Construction Specialists, required to meet the Rehabilitation Standards.
Page 8 of 9 ENERGY EFFICIENCY IMPROVEMENTS The following are lists of acceptable energy efficiency and conservation improvements which can be undertaken in the Department of Housing and Neighborhood Preservation (DHNP) Home Repair Program. If you have any questions, please contact your Housing Specialist. 1. Replacement of existing roofing with new approved Energy Star qualified roofing materials and/or system. 2. Replacement of exterior doors with new more energy efficient Energy Star qualified units. 3. Replacement of exterior windows, skylights and/or dynamic glazing products with new more energy efficient Energy Star qualified units. 4. Installation of new or upgrade of existing under floor insulation in crawlspace to a rating of R-19 or better. 5. Installation of new or upgrade of existing exterior wall Insulation to a rating of R-19 or better. 6. Installation of new or upgrade of existing attic or roof insulation to a rating of R-38 or better. 7. Installation of new or upgrade of roof and/or attic ventilation. 8. Caulking and sealing of exterior wall, floor and/or attic penetrations into conditioned spaces. 9. Replacement of Central Heating, Ventilation and Air Conditioning (HVAC) equipment with new more energy efficient, Energy Star rated equipment. 10. Sealing of and/or installation of new or upgrade of insulation on existing HVAC Ductwork. 11. Replacement of existing thermostat with new programmable thermostat. 12. Installing an approved insulating wrap around existing or new water heater tank. 13. Replacement of tank type water heater equipment with new efficient tank type, Energy Star rated water heater. 14. Replacement of tank type water heater equipment with new efficient tankless type, Energy Star rated water heater system. 15. Replacement of existing with new water conserving toilets, shower heads and faucets. 16. Replacement of flush assembly parts of existing toilets with new water conserving flush converter parts. 17. Replacement of existing incandescent lighting fixtures with new more energy efficient light or light/fan fixtures designed for use with compact fluorescent bulbs. 18. Installation of new ceiling fans or approved energy efficient light/fan fixtures, where none exist for circulation. CHECKLIST OF MATERIALS RECEIVED BY APPLICANT Please initial next to each item acknowledging that the information has been provided to you in written form and fully explained. 1. City of Virginia Beach Department of Housing and Neighborhood Preservation Home Repair Program Year 2011-2012 description 2. Conflict of Interest Form
Page 9 of 9 3. Authorization to Release Information Form 4. Subordination Policy Acknowledgment 5. Privacy Policy, Truth In Lending Disclosure, Fair Lending Notice, and Patriot Act Disclosure (SAFE ACT) Applicable as required: 6. Renovate Right Notice NOTE: Each applicant will be evaluated for credit worthiness based on the maximum debt ratio prior to any assistance being provided. All financial assistance programs are subject to final review and approval by the Housing Development Programs Administrator, in their discretion, based on the totality of the situation. Assistance will be denied if the Housing Development Programs Administrator determines that the transaction is infeasible or is not in the best interest of the City. The Housing Development Programs Administrator also reserves the right to increase the loan-to value ratio on a case-by-case basis or to waive any non statutory program requirement. By signing below, I hereby certify that I have read the above program description for assistance and fully understand and agree with the program requirements. Signature of Applicant Date Signature of Applicant Date Housing Specialist s Signature Date THE DHNP DOES BUSINESS IN ACCORDANCE WITH THE FEDERAL FAIR HOUSING LAW AND THE SECTION 504 PROGRAM ACCESSIBILITY REQUIREMENTS IT IS ILLEGAL TO DISCRIMINATE AGAINST ANY PERSON BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN Effective: July 1, 2011 (Revised 08/09/11)