CC Resolution No. 2940 RESOLUTION NO.2940
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,
ADOPTING THE CITY OF BAYTOWN'S REVISED COMMUNITY
DEVELOPMENT BLOCK GRANT HOMEBUYER ASSISTANCE PROGRAM
GUIDELINES; PROVIDING FOR A REPEALING CLAUSE; AND PROVIDING FOR
THE EFFECTIVE DATE THEREOF.
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BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS:
Section 1: That the City Council of the City of Baytown, Texas, hereby adopts the City of
Baytown's revised Community Development Block Grant Homebuyer Assistance Program Guidelines,
which are attached hereto as Exhibit"A"and incorporated herein for all intents and purposes.
Section 2: All resolutions or parts of resolutions inconsistent with the terms of this
resolution are hereby repealed, provided, however, that such repeal shall be only to the extent of such
inconsistency and in all other respects this resolution shall be cumulative of other resolutions regulating
and governing the subject matter covered by this resolution.
Section 3: This resolution shall take effect immediately from and after its passage by the
City Council of the City of Baytown.
INTRODUCED, READ and PASSED, by the affirmative vote of the City Council of the City of
Baytown, this the 25`'day of July, 2024.
BRANDON CAPETILL , Mayor
A EST:
CC
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Aih ELA AC SON city,Clerk -�Z
O OCt'
APPROVED S T FORNC �._^
SCOTT LE OND.,City Attorney
1
CDBG Homebuyer Assistance Guidelines.doc
04/08/2024
EXHIBIT"A"
CITY OF BAYTOWN
HOMEBUYER ASSISTANCE PROGRAM(CDBG-FUNDS)
GUIDELINES
I. PURPOSE
The Homebuyer Assistance Program is sponsored by the City of Baytown and administered
through its Planning and Development Services Department. The goal of the program is to
increase homeownership opportunities for first-time homebuyers, promote safe, decent
affordable housing and strengthen communities.
II. PROGRAM DESCRIPTION
All Homebuyers are required to provide proof of eligibility and be able to obtain a Mortgage
loan. The Homebuyer should consult a Real Estate Agent to find an eligible home and pay all
applicable Earnest Money and deposits for Mortgage loan application processing. Upon
Mortgage loan approval, the Community Development Division will render Down Payment
and/or Closing Cost assistance in the form of a five(5) year forgivable loan. Homebuyers will
receive aid on a first come, first serve basis.
III. ELIGIBILITY REQUIREMENTS
All potential Homebuyers must provide the appropriate documents to verify the following:
1. Homebuyer has obtained Mortgage financing;
2. Homebuyer is 18 years of age or older;
3. All members of Applicant Household are legal residents of the United States;
4. Homebuyer does not owe a debt to the City (taxes, liens, etc.);
5. Homebuyer has completed a Homebuyers' Counseling Workshop acceptable to the
City and meeting the requirements specified in Article IX hereinbelow;
6. Homebuyer must qualify for a Mortgage loan from a participating Approved Mortgage
Lender;
7. No person in the Household has previously received assistance through the
Homebuyer Assistance or Housing Rehabilitation Programs of the City of Baytown;
8. Neither the applicant nor any person in the Applicant Household has owned a home
within the past three (3) years;
9. Applicant Household's Annual Gross Income must not exceed the Maximum Income
limits,which will be recalculated each year based on HUD's guidelines and the median
income of residents of the Houston Primary Metropolitan Statistical Area; and
10. Homebuyer must contribute at closing at least 21 o of the sales price towards the
purchase of the home.
For purposes of determining whether the eligibility requirement enumerated in item 7 of this
article has been satisfied, a person will be deemed to have owned a home within the last three
(3) years if during such time, the person had an ownership interest in a manufactured home,
mobile home, and/or site built home and held more than merely a leasehold interest in the
property on which the same was situated.
Any Homebuyer who falsifies information will be disqualified from the program, will be
reported to the Baytown Police, and may be subject to criminal action.
HomebuA er Assistance Program Guidelines,Page 1
IV. DEFINITIONS
Annual Gross Income: wages listed on an employment verification form and Mortgage loan
application form in addition to the following applicable income sources including, but not
limited to, annual W-2 tax form, all unreported wages, salaries, tips, commissions, overtime,
self-employment wages, farm self-employment wages, part-time income, unemployment
benefits, stock/bond interest and dividends, net rental income, estate or trust funds, Social
Security awards, disability benefits, retirement pensions, Supplemental Security Income
(SSI),Temporary Assistance for Needy Families(TANF), survivor pensions,veteran benefits,
child support, and alimony.
Applicant Household: the Household that is applying for the Assistance Loan and a home
Mortgage loan from a Lender.
Approved Mortgage Lender: Mortgage brokers and lenders who are on the City of Baytown's
Approved Lenders List.
Assistance Loan: the amount that the City of Baytown grants to the Homebuyer that
supplements Down Payment and or Closing Costs incurred during the Mortgage loan
financing process.
City: the City of Baytown, Texas, its officers, agents, representatives and employees.
City of Baytown's Lien: the legal claim against a property in the amount of the Homebuyers'
Assistance Loan that must be paid to the City of Baytown in the pro-rated amount if the
Homebuyer is no longer in compliance with the terms of the Owner Lien Agreement. This
lien is subordinate to the Lender's Mortgage lien.
"Debt" means any delinquent sum of money levied, imposed or assessed by the City against
any applicant or property of the applicant, including, but not limited to, those for ad valorem
taxes on real or personal property located within the boundaries of the City.
Deteriorated Paint: any interior or exterior paint or other coating that is peeling, chipping,
chalking or cracking;or any paint or coating located on an interior or exterior surface or fixture
that is otherwise damaged or separated from the substrate.
Down Pavment and/or ClosingCosts:osts: only those expenses that are necessary and incurred by
buyers in transferring property ownership. The total Down Payment and or Closing Cost
assistance will not exceed 51.o of the sales price of the home. If the full amount of assistance
is not used, the remaining balance can be used for a Mortgage interest rate buydown. In the
event that the remaining balance is not adequate to buydown the Mortgage rate, funds can be
used for a Mortgage principal buydown. No cash will be disbursed to the buyer at closing.
The City of Baytown may limit the amount the City pays towards closing costs pursuant to
the customary fee schedule attached as Exhibit"A." Additional fees and/or fees above those
listed on Exhibit "A" must be reviewed and approved by Staff prior to closing. Justification
may be required in writing. The buyer or seller shall be responsible for paying Down Payment
and/or Closing Cost fees that are not paid through the City's funds.
Earnest Money: the deposit made to the Title Company by the potential Homebuyer to show
Homebuyer Assistance Program Guidelines,Page 2
his\her serious intention of purchasing the property. This money is applied to the closing
costs.
Homebuyer: the person applying for the City of Baytown's Homebuyer Assistance Program
and the same person applying for a home Mortgage loan from the Lender.
Household: all persons who occupy a housing unit. The occupants may consist of a single
person; a group of persons related by birth, marriage, adoption or law; or, a group of unrelated
persons who share living arrangements.
Lender: a bank, savings institution or Mortgage company that offers home loans and signs a
Homebuyer Assistance Program Lender Participation Agreement with the City of Baytown.
Maximum Income: the maximum gross income allowed for program eligibility. The scale is
calculated according to Housing and Urban Development's (HUD) guidelines using the
Houston Primary Metropolitan Statistical Area's median income.
Mortgage: a legal document that pledges a property to the Lender as security for payment of
a conventional, Federal Housing Administration (FHA), Veteran's Administration (VA), or
other home loan product processed by a Lender.
Real Estate Agent: an agent licensed to show and sell homes in the State of Texas.
Staff. any member of the City's Planning and Development Services Department charged
with administrating the Homebuyer Assistance Program.
Title Company: a corporation or other business entity, which is authorized and licensed to
transact the business of insuring titles to interests in real property in this state and completes
closing documents in the City of Baytown. If the property is a foreclosure, the City will work
with the buyer's chosen closing agent.
V. HOMEBUYER'S RESPONSIBILITIES
1. Obtain an application and the Homebuyer Assistance Program Guidelines from the
Planning and Development Services Department.
2. Submit to Staff the preliminary qualifying documents (see current Process Guide),
including a copy of the completed Mortgage application.
3. Sign the information release forms allowing Staff access to loan files when returning
the completed application.
4. Secure a Mortgage from an Approved Mortgage Lender. If the applicants' selected
lender is not currently an Approved Mortgage Lender, the lender must follow the
proper steps in order to be placed on the list.
5. Provide at least 2%of the sales price towards the purchase of the home.
6. Consider contacting a Real Estate Agent to find an eligible home.
7. Tender Earnest Money Agreement and corresponding Earnest Money, if any, to a
Title Company.
8. Tender the funds for Mortgage loan application fees charged by Lender, if
applicable.
Homebuyer_Assistance Program Guidelines,Page 3
9. Attend a City-approved Homebuyers' Counseling Workshop and provide the City of
Baytown with a certificate of attendance.
10. Furnish Staff with a copy of the property inspection, termite inspection, survey,
appraisal and any other property evaluation report required by the Lender.
11. Inform Staff of changes in information previously provided on the application any
time during the loan process.
12. Update all information previously submitted to the City if the information is over
three (3) months old.
13. Sign an Owner-Lien Agreement with the City of Baytown stipulating the
requirements of the five (5) year forgivable loan.
14. Remain a resident in the chosen home for at least five (5) years.
15. Adhere to all requirements outlined in the Homebuyer Assistance Program
Guidelines, Deed of Trust and Owner-Lien Agreement.
VI. HOMEBUYERS ASSISTANCE LOAN
1. The Homebuyer's eligibility status and the amount of Assistance Loan is expressly
contingent on fulfilling all requirements of the application process and Mortgage loan
approval.
2. Loans will be used for payment of Down Payment and:or Closing Costs. If the full
amount of assistance is not used, the remaining balance can be used for a Mortgage
interest rate buydown. In the event that the remaining balance is not adequate to
buydown the Mortgage rate, funds can be used for a Mortgage principal buydown. No
cash will be disbursed to the buyer at closing.
3. The amount of assistance is granted in the form of a five (5) year forgivable loan at
the time of closing.
4. The amount of loan granted depends upon the total amount necessary to complete the
loan process and application deposit collected by the Lender and the Earnest Money
deposit collected by the Title Company.
5. The maximum Assistance Loan amount will not exceed 5% of the sales price for each
home.
6. The Assistance Loan will be made by the City to the Homebuyer payable to the Title
Company at the time of closing.
VII. SECURITY
1. The Homebuyers Assistance Loan will be secured by a five(5) year lien on the
property subordinate to the Mortgage lien.
2. Forgiveness of the Assistance Loan will be pro-rated for five(5)years. Twenty percent
(200 o) of the total Assistance Loan will be forgiven at the end of each year of
ownership and completely forgiven at the end of the fifth year.
3. The conditions of the Assistance Loan are separate from the Mortgage requirements
of the Lender.
4. During the five(5) year loan period, upon sale, transfer of title, or cessation of owner-
occupied status, as defined in the Owner-Lien Agreement, the unforgiven balance of
the Assistance Loan shall be immediately due and payable to the City of Baytown.
5. In no case will the Assistance Loan be assumable by the next purchaser.
Homebuyer Assistance Program Guidelines,Page 4
6. In the event the Homebuyer refinances the original Mortgage loan, the pro-
rated share of the Assistance Loan must be repaid before the City of Baytown's
Lien is released.
VIII. ELIGIBLE PROPERTIES
Eligible properties must meet all of the following criteria:
1. Detached, or attached, single-family dwelling unit, excluding manufactured homes,
mobile homes and industrialized housing:
2. Priced $200,000 or below;
3. Located within the incorporated limits of the City;
4. The property owner or seller cannot be closely related to the homebuyer, as defined in
Chapter 573 of the Texas Government Code, nor can the property be owned by a
member of the applicant household; and
5. Per HUD's Lead Safe Housing Rule (24 CFR Part 35), if Federal funds are used to
assist in the acquisition of housing built before 1978, steps must be taken to address
lead hazards and the home must be free of any Deteriorated Paint.The City of Baytown
will conduct a visual assessment of pre-1978 dwelling units to determine the condition
of the paint. If based upon the visual assessment, the City determines the existence of
Deteriorated Paint,the home will be ineligible for the Homebuyer Assistance Program.
The City's decision shall be final.
IX. HOMEBUYERS' COUNSELING WORKSHOP
1. A workshop must be completed no more than one (1) year before obtaining the
Homebuyers Assistance Loan and the Mortgage loan from the lending institution.
2. Workshop topics at minimum must include how to buy a home, how to apply for a
loan, ownership benefits and responsibilities, fair housing, home maintenance,
Household budgeting and the loan closing process.
3. Homebuyer is required to submit a Certificate of Completion upon successfully
completing the entire Homebuyers' Counseling Workshop.
X. AUTHORIZATION TO MAKE CHANGES TO THE PROGRAM
The City Manager or his/her designee has the authority to approve an increase in fees listed
on the Customary Fee Schedule attached hereto; provided that (i) the amount of any increase
does not exceed twenty-five (250 o) of such fee herein approved and (ii) the total Down
Payment"Closing Costs do not exceed 50 o of the sales price.
R:Karen Files Community Development Homebuyer's Assistance Program Guidelines for Homebuyers-2019.doc
Homebuver Assistance Program Guidelines,Page 5
HOMEBUYER ASSISTANCE PROGRAM
CUSTOMARY FEE SCHEDULE
The City may pay the actual amounts up to the listed customary fees for the following categories:
Fee Category Maximum
Payable Fees
Loan Origination Fee 1%
Loan Discount/Point 1%
Appraisal Fee $500
Credit Report $65
Underwriting Fee $500
Document Fee $250
Wire Transfer Fee $75
Processing Fee $350
Funding Fee $250
Flood Certificate $75
Survey $475
Courier/Messenger Fee $50
Structural Inspection $350
Pest &Termite Inspection $100
1-Year Home Warranty $500
The City may also pay up to one year for flood, hazard and Mortgage insurance(deposit&premium);
actual tax and interest proration; Mortgagee's title policy; title charges as delineated on the HUD-1;
recording fees, and tax certificates.
Categories not included in the Down Payment and or Closing Costs will be Earnest Money deposit,
real estate broker agent commissions, and fees of an attorney retained by the Homebuyer.
Exhibit"A,"Page Solo