CC Resolution No. 1342 2566
RESOLUTION NO. 1342
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,
AMENDING RESOLUTION NO. 1299 CONCERNING THE COMMUNITY
DEVELOPMENT HOMEBUYERS' ASSISTANCE PROGRAM GUIDELINES; AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF.
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WHEREAS, on January 23, 1997, the City Council approved a Homebuyers' Assistance Program
(the "Program") for the City of Baytown, which program is designed to assist families in procuring
affordable housing by providing funds to assist with closing costs; and
WHEREAS,the Program promotes the stabilization of neighborhoods by increasing the percentage
of owner-occupied homes within the City; and
WHEREAS,to date,the Program has provided approximately $13,000 in Homebuyers' Assistance
Loans and four homes have been closed under the Program; and
WHEREAS, to increase the participation in the Program, the City Council desires to remove the
FDIC lender requirement, expand the eligible areas,and increase the sales price of the eligible property; and
WHEREAS, the Homebuyers' Assistance Program, as amended, furthers 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 amends the Community
Development Homebuyers'Assistance Program Guidelines, which were adopted on January 23, 1997. The
amended guidelines are attached hereto as Exhibit"A" and incorporated herein for all intents and purposes.
Section 2: 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 12th day of February, 1998. //f� e
PETE C. ALFAR , Mayor
ATTEST: p
EILEEN P. HALL, City Clerk
APPROVED AS TO FORM:
6WKACIO RAMIREZ, SRlLiy Attorney
c:klh77\citycouncil\resolutions\HomebuyersAssistanceAmendment021298.gu idelines
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 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:
I. 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
immediately preceding the application;
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
S. 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.
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.
EXHIBIT A
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Assistance Loan: the amount that the City of Baytown grants to the homebuyer that
supplements downpayment and 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.
Closing Costs: only those expenses that are necessary and incurred by buyers in transferring
property ownership that are above the price of the property and are not included in the
financing. Closing costs include, but are not limited to, loan origination fee, appraisal fee, credit
report, underwriting fee, escrow fee, courier/messenger fee, attorney's fee, mortgagee's title
policy,title charges, recording fee, assumption fee, survey, pest inspection, one discount point,
lender's inspection, structural inspection, flood certificate, hazard insurance (deposit &
premium), mortgage insurance (deposit & premium), tax proration, and termite inspection.
Categories not included in closing costs will be earnest money, lender application fee,
downpayment, and realtor commission.
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 maintaining a place of business to which the public is invited in
the City of Baytown that signs a Participating Lender 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 Planning and Community Development office charged with
administrating the Homebuyers' Assistance Program.
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Title Company: a corporation or other business entity, maintaining a place of business to which
the public is invited in the City of Baytown, which is authorized and licensed to transact the
business of insuring titles to interests in real property in this state.
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 at least$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.
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2. Contact a local real estate agent to find an eligible home.
3. Tender the earnest money and Earnest Money Agreement to a Title Company.
4. Tender 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.
6. Attend the Homebuyers' Counseling Workshop sponsored by the City.
7. Sign the information release form to allow access to lender's loan file.
8. Furnish Staff with a copy of the property inspection, termite inspection, survey, appraisal
and any other property evaluation report required by the lender.
9. Inform Staff of changes in information previously provided on the application any time
during the loan process.
10. Complete a yearly update provided by the City and return to Staff.
11. Remain a resident in the chosen home for at least five (5) years.
12. Adhere to all requirements outlined in the guidelines and Owner-Lien Agreement.
VII. HOMEBUYERS' ASSISTANCE LOAN
l. Loans will be used for payment of closing costs.
2. The assistance is granted as a forgivable loan at the time of closing.
3. The amount of loan granted depends upon the total amount necessary to complete the
loan process less the downpayment and application deposit collected by the lender and
the earnest money deposit collected by the Title Company.
4. 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.
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.
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 $60,000 or below;
3. located within the City limits of Baytown; and
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
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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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