CC Resolution No. 1743 68
RESOLUTION NO. 1743
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS, ESTABLISHING THE HURRICANE KATRINA RELIEF
HOMEBUYERS ASSISTANCE PROGRAM; 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 hereby establishes the
establishing Hurricane Katrina Relief Homebuyers Assistance Program. The program 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, and shall automatically expire 18 months thereafter.
INTRODUCED, READ and PASSED, by the affirmative vote of the City Council of the City of
Baytown this the 151h day of September, 2005.
CALVIN MUNDINGER, Mayor
A S
ELVIN KN merim City lerk
APPROVED AS TO FORM:
ACID RAMIREZ, City Attorney
R1KarenTiles\City Council\Resolutions\2005\September 15\KatrinaHomebuyers'AssistanceProgram.doc
Proposed September 15,2005
EXHIBIT"A"
CITY OF BAYTOWN
HOMEBUYERS' ASSISTANCE PROGRAM (HURRICANE KATRINA RELIEF)
GUIDELINES
1. PURPOSE
The Hurricane Katrina Relief 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 assist the victims of Hurricane Katrina in re-establishing a
suitable living environment 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 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
downpayment and closing cost assistance as 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 IS years of age or older;
3. homebuyer has completed the Homebuyers' Counseling Workshop sponsored by the
City;
4. homebuyer's employment and credit stability is consistent with lender's
qualifications;
5. no person in the household has previously received assistance through the
Homebuyers' Assistance or Housing Rehabilitation Programs of the City of
Baytown;
6. homebuyer must provide appropriate documentation to verify they were displaced
from the states of Louisiana, Alabama or Mississippi; and
7. 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.
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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 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. The City of Baytown may limit the amount the City pays towards closing costs
pursuant to the customary fee schedule attached as Exhibit A. Closing costs will not exceed
$4,500. Additional fees and/or fees above those listed on Exhibit A must be reviewed and
approved by City of Baytown staff prior to closing. Justification may be required in writing.
The buyer or seller may be responsible for paying closing cost fees that are not paid through
CDBG funds.
Downpayment: the percentage of the total purchase price required by the buyer's mortgage
lender payable at the time of closing.
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 bank, savings institution or mortgage company that offers home loans, completes
the application process within the City of Baytown, and signs a Homebuyers' 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.
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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, 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.
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 out-of-state 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 downpayment and closing costs. Staff
will process the Assistance Loan, which will be the amount of downpayment and
closing costs less the earnest money deposit, fees paid outside of closing and
category fees not payable by the Program. All closing cost will be considered first;
the remaining funds will be applied to the homebuyers' downpayment. The total
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 before completing the loan process.
This deposit will be used as part of the closing costs.
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11. After 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 payable to the Title
Company 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 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 completed 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 on a form 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, Deed of Trust and Owner-Lien
Agreement.
VIL HOMEBUYERS' ASSISTANCE LOAN
1. Loans will be used for payment of downpayment and closing costs.
2. The downpayment and closing cost assistance is granted as a five (5) year 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 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 Katrina Relief 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.
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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 released.
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 $105,000 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. HOMEBUYERY 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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Exhibit A
HOMEBUYERS' ASSISTANCE PROGRAM
CUSTOMARY FEE SCHEDULE
The City may pay the actual amounts up to the listed customary fees for the following categories:
Fee Category Payable Fees
Loan Origination Fee 1%
Loan Discount/Point 1%
Appraisal Fee $325
Credit Report $65
Underwriting Fee $425
Document Fee $200
Wire Transfer Fee $75
Processing Fee $350
Funding Fee $100
Flood Certificate $25
Survey $350
Courier/Messenger Fee $50
Structural Inspection $200
Pest & Termite Inspection $100
The City may also pay up to 1 year for hazard and mortgage insurance (deposit & premium); actual
tax and interest proration; mortgagee's title policy; title charges; recording fee, and tax certificate.
Categories not included in closing costs will be earnest money deposit, and real estate broker/agent
commissions. Attorney fees are not payable if buyer retains his/her own attorney and the attorney is
not in connection with the loan closing as such review of abstract or preparation if closing
documents.
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