CC Resolution No. 2079 - AdoptHomeBuyersAssistanceProgGuidelines RESOLUTION NO.2079
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 l:That the City Council of the City of Baytown,Texas,hereby adopts the
City of Bayto«n'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 terns 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resolution are hereby repealed,provided,however,that such repeal shall be only to the extent of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 8"'day of.luly.2010.
I`ON ST I IEN H.DONCARLOS,yor
ATTE_:�
L1T1 IAGARZ.Gity
APPROVED AS TO FORM:
)NACIO RA;MIREZ.SR.'ity Attorney
10Karenl1:i1es\City Council\Resolutionsl2010Uuh 81AduptliomeBuyersAssistanceilrogramGuidelines.doc
Exhibit"A"
Revised May 14,2010
CITY OF BAYTOWN
HONIEI3UYERS'ASSISTANCE PROGRAM(CDBG-FUNDS)
GUIDELINES
I.PURPOSE
'File Flomebuyers'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 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 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 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 18 years of age or older;
3.all members of applicant's household are legal residents of the United States;
4.homebuyer has completed the Homebuyers'Counseling Workshop sponsored by the
City or another HUD-authorized agency;
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.and/or site built home and held more than merely a leasehold interest in
the property on which the same was situated.
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,annual
W-2 tax but not limited to,all unreported wages.salaries,tips.commissions,overtime,self-
employment wages,farm self-employment wages.part-time income,unemployment
Homebuyers'Assistance Program Guidelines,Page I
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 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.
Earnest Monev:the deposit made to the title company by the potential homebuyer to show
hislher serious intention of purchasing the property.This money is applied to the closing
costs.
Homebuyer:the person applying for the 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 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.
Homebuyers'Assistance Program Guidelines,Page 2
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 Development Services 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
I.Interested homebuyers will obtain an application and the guidelines from the
Planning and Development Services office.Staff will explain the program
requirements and answer any questions regarding the program.
2.Staff will refer the homebuyer to a HUD-approved Homebuyers'Counseling
Workshop.The City-sponsored workshop is free of charge and open to anyone
interested.
3.The homebuyer is required to submit to Staff the preliminary qualifying documents
(see current Process Guide)and sign the information release farms 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 hornebuyer 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 honiebuyer'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.fees paid outside of closing and category fees not payable by the Program.
The Assistance Loan will not exceed$4500.The homebuyer is responsible for any
fees over and above$4500 needed to close the mortgage loan.
Homebuvers'Assistance Prop-ram Guidelines,Page 3
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.
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.
V1.HOIIEBUYER'S RESPONSIBILITIES
l.Secure a mortgage loan from a lender.
2.Consider contacting a real estate agent to find an eligible home.
3.Tender Earnest Money Agreement and corresponding earnest money,if any,to a
Title Company.
4.Tender the funds for mortgage loan application fees charged by Lender,if
applicable.
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.Remain a resident in the chosen home for at least five(5)years.
11.Adhere to all requirements outlined in the guidelines,Deed of Trust and Owner-Lien
Agreement.
VI 1.IIOMEBUYERS'ASSISTANCE LOAN
1.Loans will be used for payment of closing costs.
2.The 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 down-payment 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$4,500 for each home.
VIII.SECC;RITY
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.
Homebuyers'Assistance Program Guidelines,Page 4
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.
6.In the event the homebuyer refinances the original mortgage loan,the pro-rated share
of the Assistance Loan must be repaid before the lien is released.
M ELIGIBLE PROPERTIES
Eligible properties must meet all of the following criteria:
I.y 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.HOIIEBUYERS'COUNSELING WORKSHOP
I.Workshops will be sponsored by the City of Baytown.
2.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.
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.
XI.AUTHORIZATION TO TNIAKE CHANGES TO THE PROGRAM
The City Manager or his/her designee has the authority to approve the following:
I.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 Closing costs do not exceed$4,500;and/or
2.an increase in the maximum sales price;provided that the amount of any increase
does not exceed ten(10%)of the maximum price herein approved.
Homebuyers'Assistance Program Guidelines,Page 5
Exhibit"A"
HOME BUYERS'ASSISTANCE PROGR IN1
CUSTOMARY FEE SCHEDULE
The City may pay the actual amounts up to the listed customary fees for the following categories:
Fee Category Maximum
Pavable 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
Processin-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 one year for hazard and mortgage insurance(deposit&premium);
actual tax and interest proration;mortgagee's title policy:title charges as delineated on the HUD-l;
recording fees,and tax certificates.
Categories not included in closing costs will be earnest money deposit,down payment.real estate
broker/agent commissions,and fees of an attorney retained by the Homebuyer.
RUKarcn\Filcs\Community Development\Homebuyees Assistance Program\Guidelines for Homebuyers Rev 5 14 10.doc
Exhibit"A."Page Solo