CC Resolution No. 1391 2639
RESOLUTION NO. 1391
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS,ADOPTING
GUIDELINES FOR THE 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, which was last amended on February 12, 1998, promotes the stabilization of
neighborhoods by increasing the percentage of owner-occupied homes within the City; and
WHEREAS,the City of Baytown desires to revise the Program in order to enable the City to use HOME funds
provided by the State of Texas and to make necessary changes related to such change; and
WHEREAS, such change is desired since the CDBG budget for this Program has been reduced to accommodate
only ten households; and
WHEREAS, it is expected that by funding the Program through HOME funds, the City will be able to afford
assistance to 23 households; and
WHEREAS,the fundamental difference between the two funding sources is as follows:
➢ through CDBG,the City was able to provide closing cost assistance via a five-year forgivable loan and
➢ through HOME, while the City will be able to provide the same assistance, the homebuyer will be
obligated to repay without interest the closing costs provided through the program upon satisfaction of the
first mortgage lien.
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 adopts the Homebuyers'Assistance
Program Guidelines,which 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. However,those Program applicants,who have submitted to the City of Baytown an executed Lender's
Agreement on or before June 10, 1999, will be under the Program guidelines in existence prior to the passage of this
resolution-- all others will receive assistance through the Program herein adopted with HOME funds.
INTRODUCED,READ and PASSED,by the affirmative vote of the City Council of the City of Baytown this the
10"day of June, 1999.
PET��FARO,Mayor
ATTEST:
C�I.E:C�istJ�t�
EILEEN P. HALL, City Clerk
APPROVED AS TO FORM:
kdTfACIO RAMIREZ, SR., i ttorney
c:klh172\citycouncil\r solidiom\HomebuyenAssislanceAmendmenl061099.guidelines
EXHIBIT 00A"
CITY OF BAYTOWN
HOMEBUYERS' ASSISTANCE PROGRAM
GUIDELINES
I. PURPOSE
The Homebuyers' Assistance Program is sponsored by the City of Baytown and administered
through its Planning and Community Development Department. The goal of the program is to
stabilize neighborhoods by assisting households to purchase affordable housing within the city
limits.
U. 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 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 through the Home Investment Partnership Program, which provides for a no-interest
loan payable upon the satisfaction of the first mortgage lien. Homebuyers will receive aid on a
first come, first serve basis.
III. ELIGHiILITY 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
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. neither the applicant nor any person in the applicant's household has owned a home
within the past three (3) years; and
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.
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, or site-built home and held more than merely a leasehold interest in the property
on which the same is situated.
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 provides 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.
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 real
estate broker/agent commissions.
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.
HOME Lien: the legal claim against a property in the amount of the Homebuyers' Assistance
Loan that must be paid to the State of Texas if the homebuyer is no longer in compliance with
the terms of the note or the deed of trust. This lien is subordinate to the lender's mortgage lien.
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 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.
Morteage: 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.
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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.
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 regarding the program.
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 down payment, which
may include 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 down payment.
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11. When the lender notifies Staff of loan approval, the homebuyer must sign a Deed of Trust
and a Down Payment Assistance Note, naming the State of Texas as the beneficiary and
lender and stipulating the requirements of the zero-interest loan.
12. The loan will be delivered 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. Consider contacting 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. Adhere to all requirements outlined in the guidelines, the Deed of Trust and the Down
Payment Assistance Program Note.
VH. HOMEBUYERS' ASSISTANCE LOAN
1. Loans will be used for payment of closing costs.
2. At the time of closing, the down payment assistance provided is a zero-interest loan
payable upon the satisfaction of the first mortgage lien.
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.
VIIL SECURITY
l. The Homebuyers' Assistance Loan will be secured by a lien on the property subordinate
to the mortgage lien.
2. The Assistance Loan shall become due and owing to the State of Texas upon the
satisfaction of the first mortgage lien.
3. The conditions of the Assistance Loan are separate from the mortgage requirements
of the lender.
4. If at any time, the first mortgage lien is satisfied by any means, the entire Assistance Loan
shall become immediately due and payable to the State of Texas.
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 HOME lien, the Assistance Loan must be repaid before the lien is
removed.
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IX. ELIGIBLE PROPERTIES
Eligible properties must meet all of the following criteria:
I. 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
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
I. 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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