CC Resolution No. 12992499
RESOLUTION NO. 1299
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,
REPEALING RESOLUTION NO. 1208 PASSED ON FEBRUARY 24, 1994;
APPROVING THE COMMUNITY DEVELOPMENT HOMEBUYERS' ASSISTANCE
PROGRAM GUIDELINES; AND PROVIDING FOR THE EFFECTIVE DATE
THEREOF.
WHEREAS, the Homebuyers' Assistance Program is designed to assist families in procuring
affordable housing by providing funds to assist with closing costs and portions of their down- payments;
and
WHEREAS, the Homebuyers' Assistance Program will assist in the stabilization of
neighborhoods; and
WHEREAS, the Homebuyers' Assistance Program will assist in furthering the recommendations
of the City of Baytown's Comprehensive Plan and Enterprise Zone Revitalization Plan; NOW
THEREFORE
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 repeals Resolution
No. 1208 passed on February 24, 1994.
Section 2: That the City Council of the City of Baytown, Texas, hereby approves the
Community Development Homebuyers' Assistance Program Guidelines, which is attached hereto as
Exhibit "A" and incorporated herein for all intents and purposes.
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 23rd day of January, 1997.
dAe &�"
PETE C. ALFAR , Mayor
ATTEST:
EILEEN P. HALL, City Clerk
' ' : • 0 1T. =iXKil:1Ti
/1
-IGNACIO RAMIREZ, S ,amity Attorney
c klh27\city council\resolutiom\HomebuymAssistance .guidelines
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CITY OF BAYTOWN
HOMEBUYERS' ASSISTANCE PROGRAM
GUIDELINES
I. PURPOSE
The Homebuyers' Assistance Program is sponsored by the Planning and Community
Development Department of the City of Baytown. The goal of the program is to stabilize
neighborhoods by assisting households to purchase affordable housing within the city limits.
II. PROGRAM DESCRIPTION
All homebuyers are required to provide proof of eligibility and be able to obtain a mortgage
loan. The homebuyer must consult a real estate agent to find an eligible home and pay the
required deposits for mortgage loan application processing and earnest money agreement.
Upon mortgage loan approval, the Community Development Division will render d o w n
payment and closing cost assistance as a 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. homebuyer has been a resident of the City of Baytown for at least three (3) years;
4. homebuyer has completed the Homebuyers' Counseling Workshop sponsored by the
City;
5. homebuyer's employment and credit stability is consistent with lender's qualifications;
6. no person in the household has previously received assistance through the
Homebuyers' Assistance or Housing Rehabilitation Programs of the City of Baytown;
7. no person in the applicant household has owned a home within the past three (3)
years; and
8. applicant. household's annual gross income must not exceed the below- stated
maximum income limits, which will be recalculated each year based on HUD's
guidelines and the median income of residents of the City of Baytown.
1997 Maximum Income Limits
NO. IN HOUSEHOLD
ANNUAL GROSS INCOME
1
$21,720
2
$23,420
3
$24, 120
4
$25, 820
5
$27, 180
6
$28,540
7
$29,900
8
$31,260
9
$32,620
10
$33,980
IV. DEFINITIONS
Annual Gross Income: wages listed on annual W -2 tax form in addition to the following applicable
income sources including, but not limited to, 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.
Assistance Loan: the amount that the City of Baytown grants to the homebuyer that supplements
down payment and closing costs incurred during the mortgage loan financing process.
CiW. 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.
Closing Costs: expenses incurred by buyers in transferring of property ownership that are
above the price of the property and are not included in the financing.
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: the person applying for City of Baytown's Homebuyers' 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 lending institution with a local office that is in accordance with the City of Baytown s
Homebuyers' Assistance Program and signs a Participating Lender Agreement with the City
of Baytown. Lending institutions must be a member of the Federal Deposit Insurance
Corporation (FDIC).
Manufactured Home: a mobile home on a permanent foundation that has minimum dimensions of
22 body feet in width, a pitched roof, and siding and roofing materials that are customarily
used on site -built homes with in 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
City of Baytown median income.
Mobile Home: a structure, movable in one or more sections, which is built upon a permanent chassis
and is designed to be used as a dwelling unit with or without a permanent foundation.
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 products processed by a Federal Deposit Insurance Corporation member.
Real Estate Agent: an agent licensed to show and sell homes in the State of Texas.
Staff: any member of the Planning and Community Development office charged with
administrating the Homebuyers' Assistance Program.
V. APPLICATION PROCESS
1. Interested homebuyers will obtain an application and the guidelines from the Planning
and Community Development office. Staff will explain the program requirements
and answer any questions.
2. Staff will schedule the homebuyer for the Homebuyers' Counseling Workshop. This
workshop is free of charge and open to anyone interested.
3. The homebuyer is required to submit to Staff the residency verification forms and
sign the information release forms allowing Staff access to loan files when returning
the completed application.
4. Staff will review the application and notify homebuyer of eligibility status,
which is contingent on fulfilling all requirements of the application process and
mortgage loan approval.
5. Homebuyers who meet the initial requirements should contact a potential lender
to begin a pre - approval loan process. The homebuyer must inform Staff of his/her
chosen lending institution and Staff will ask the lending institution to sign a Lender
Participation Agreement. If the lending institution does not wish to participate, the
homebuyer must seek financing from another institution.
6. After receiving notification from the lender of the maximum mortgage loan amount
available, the homebuyer should meet with a real estate agent to look for an eligible
home.
7. The homebuyer will update all information previously submitted to the City if the
information is over three (3) months old. The homebuyer must also have completed
the City - sponsored Homebuyers' Counseling Workshop to proceed with the program.
8. The homebuyer will take the Homebuyers' Counseling Workshop certificate to the
lender, pay for the application deposit and begin the loan process. Loan procedures
depend on the lending institution. The lender, using its own guidelines, will
determine the homebuyer's creditworthiness with regard to loan approval.
9. The lender will advise Staff of the incurred closing costs. Staff will process the
Assistance Loan, which will be the amount of closing costs less the earnest money
deposit and mortgage loan application fee previously paid by the homebuyer. The
Assistance Loan will not exceed $4500. The homebuyer is responsible for any fees
over and above $4500 needed to close the mortgage loan.
10. The homebuyer must secure an eligible home with an Earnest Money Agreement and
an earnest money payment to the Title Company of no more than $500 before
completing the loan process. This deposit will be used as part of the closing costs.
11. When the lender notifies Staff of loan approval, the homebuyer must sign an Owner-
Lien Agreement with the City of Baytown stipulating the requirements of the five (5)
year forgivable loan.
12. The forgivable loan will be made by the City to the homebuyer at the time of closing.
13. Any homebuyer who falsifies information will be disqualified from the program.
VI. HOMEBUYER'S RESPONSIBILITIES
1. Secure a mortgage loan from a lender.
2. Contact a local real estate agent to find an eligible home.
3. Render the earnest money and Earnest Money Agreement to a local Title Company.
4. Render the funds for mortgage loan application fees charged by lender.
5. Furnish Staff with a copy of the mortgage loan application and the receipt of
application fee.
5. Attend the Homebuyers' Counseling Workshop sponsored by the City.
6. Sign the information release form to allow access to lender's loan file.
7. Furnish Staff with a copy of the property inspection, termite inspection, survey,
appraisal and any other property evaluation report required by the lender.
8. Inform Staff of changes in information previously provided on the application any
time during the loan process.
9. Complete a yearly update provided by the City and return to Staff.
10. Remain a resident in the chosen home for at least five (5) years.
11. Adhere to all requirements outlined in the guidelines and Owner -Lien Agreement.
VII. HOMEBUYERS' ASSISTANCE LOAN
1. Loans will be used to supplement the homebuyers' funds for down payment and
closing costs.
2. Only actual closing costs and five percent (5 %) of the home price as down payment
expenses are eligible.
3. The assistance is granted as a forgivable loan at the time of closing.
4. The amount of loan granted depends upon the total amount necessary to complete the
loan process less the 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 $4500 for each home.
VIII. SECURITY
1. The Homebuyers' Assistance Loan will be secured by a five (5) year lien on the
property subordinate to the mortgage lien.
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.
5. In no case will the Assistance Loan be assumable by the next purchaser.
6. In the event the homebuyer refinances the original mortgage loan and the new lender
does not accept the City's lien, the pro -rated share of the Assistance Loan must be
repaid before the lien is removed.
IX. ELIGIBLE PROPERTIES
Eligible properties must meet all of the following criteria:
1. detached single family housing structures, excluding manufactured and mobile
homes,
2. priced $45,000 or below,
3. located within the Community Development Block Grant target area or an
Enterprise Zone, or a property outside the target area or Enterprise Zone that the
homebuyer is currently renting.
5. The property owner and/or seller cannot be related to the homebuyer in 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 homebuyers' household.
X. HOMEBUYERS' COUNSELING WORKSHOP
1. Workshops will be sponsored by the City of Baytown.
2. A workshop must be completed no more than four (4) months before obtaining the
Homebuyers' Assistance Loan and the mortgage loan from the lending institution.
3. Workshop topics will include, but are not limited to, how to buy a home, how to
apply for a loan, ownership benefits and responsibilities, home maintenance,
household budgeting and the loan closing process.
4. Homebuyers will be given a workbook and a Certificate of Completion upon
successfully completing an entire Homebuyers' Counseling Workshop.
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