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CC Resolution No. 2575Y�)*0116)ZIM40*1b1 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, ADOPTING THE CITY OF BAYTOWN'S HOMEBUYERS' ASSISTANCE PROGRAM GUIDELINES; PROVIDING FOR A REPEALING CLAUSE; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ****************************************************************************** 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 Homebuyers' 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 Section 2: All resolutions or parts of resolutions inconsistent with the terms of this resolution are hereby repealed, provided, however, that such repeal shall be only to the extent of such inconsistency and in all other respects this resolution shall be cumulative of other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 28th day of March, 2019. BRANDON CAPETILLO, Nhyor ATTEST: Aukt�- LETICIA BRYSCH, City Clerk APPROVED AS TO FORM: NACIO RAMIREZ, S , City Attorney R:1Karen\FileslCity COunciRResolutions\2019Narch 28\AdoptHomeBuyersAssistanceProgramGuidelines.doc 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 is able to obtain 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 has completed a Homebuyers' Counseling Workshop acceptable to the City and meeting the requirements specified in Article IX hereinbelow; 5. Homebuyer must qualify for a Mortgage loan from a participating Approved Mortgage Lender; 6. No person in the Household has previously received assistance through the Homebuyer Assistance or Housing Rehabilitation Programs of the City of Baytown; 7. Neither the applicant nor any person in the Applicant Household has owned a home within the past three (3) years; 8. 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 9. Homebuyer must contribute at closing at least 2% 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. Homebuyer 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), Aid to Families with Dependent Children (AFDC), 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. 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 Payment and/or Closing Costs: 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 5% 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 his\her serious intention of purchasing the property. This money is applied to the closing costs. Homebuyer Assistance Program Guidelines. Page 2 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 (20%) 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 $180,000 or below; 3. located within the incorporated limits of the City; 4. the property owner and/or seller cannot be related to the Homebuyer within the third degree by consanguinity and/or second degree by affinity (marriage, blood or law) 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 (25%) of such fee herein approved and (ii) the total Down Payment/Closing Costs do not exceed 5% of the sales price. R: Karen Files -Community Development Homebuyers Assistance Progmm.Guidelines for Homebuyers - 2019.doc Homebuyer 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