CC Res. No. 2196 - AdoptHomeBuyersAssistanceProgramGuidelines RESOLUTION NO. 2196
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 1: That the City Council of the City of Baytown, Texas, hereby adopts the
City of Baytown'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 terms 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resolution are hereby repealed, provided, however, that such repeal shall be only to the extent of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 vot f the City Council of the
City of Baytown, this the 141h day of June, 2012.
EPHEN H. DONCARLOS, Mayor
A
Sy
ICI Y. Clerk
CP
AP TO FORM:
IGPTACIO RAMIREZ, SR., Cit ttorney
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EXHIBIT "A" Revised May 21,2012
CITY OF BAYTOWN
HOMEBUYERS' ASSISTANCE PROGRAM(CDBG-FUNDS)
GUIDELINES
I. PURPOSE
The Homebuyers' 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 all
applicable earnest money and deposits for mortgage loan application processing. Upon
mortgage loan approval, the Community Development Division will render down payment
and/or 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 a Homebuyers' Counseling Workshop acceptable to the
City and meeting the requirements specified in Article IX hereinbelow;
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.
Any homebuyer who falsifies information will be disqualified from the program, will be
reported to the Baytown Police and may be subject to criminal action.
Homebuyers'Assistance Program Guidelines.Page 1
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, but not
limited to, annual W-2 tax form, 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/or 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.
Down payment and/or Closing Costs: only those expenses that are necessary and incurred by
buyers in transferring property ownership. The City of Baytown may limit the amount the
City pays towards closing costs pursuant to the customary fee schedule attached as Exhibit
"A." The total down payment and closing cost assistance 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 shall be responsible for paying down payment and/or closing cost fees that are not
paid through CDBG funds.
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 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.
Homebuyers'Assistance Program Guidelines,Page 2
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 City's 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. HOMEBUYER'S RESPONSIBILITIES
1. Obtain an application and the guidelines from the Planning and Development
Services office.
2. Submit to Staff the preliminary qualifying documents (see current Process Guide),
including a copy of the completed mortgage loan application.
3. Sign the information release forms allowing Staff access to loan files when returning
the completed application.
4. 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
if the homebuyer wants to participate in the City's Homebuyers'Assistance Program.
5. Secure a mortgage loan from a lender.
6. Consider contacting a real estate agent to find an eligible home.
7. Tender Earnest Money Agreement and corresponding earnest money, if any, to a
Title Company.
8. Tender the funds for mortgage loan application fees charged by Lender, if
applicable.
9. Attend a City-approved Homebuyers' Counseling Workshop and provide the City of
Baytown with a Certificate of attendance.
10. Furnish Staff with a copy of the property inspection, termite inspection, survey,
appraisal and any other property evaluation report required by the lender.
11. Inform Staff of changes in information previously provided on the application any
time during the loan process.
12. Update all information previously submitted to the City if the information is over
three(3)months old.
13. Sign an Owner-Lien Agreement with the City of Baytown stipulating the
requirements of the five (5)year forgivable loan.
14. Remain a resident in the chosen home for at least five (5) years.
Homebuyers'Assistance Program Guidelines,Page 3
15. Adhere to all requirements outlined in the guidelines, Deed of Trust and Owner-Lien
Agreement.
VI. HOMEBUYERS' ASSISTANCE LOAN
1. The homebuyer's eligibility status and the amount of assistance loan is expressly
contingent on fulfilling all requirements of the application process and mortgage loan
approval.
2. Loans will be used for payment of down payment and/or closing costs.
3. The down payment and/or closing cost assistance is granted as a five (5) year
forgivable loan at the time of closing.
4. The amount of loan granted depends upon the total amount necessary to complete the
loan process and 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$4,500 for each home.
6. The Assistance Loan will be made by the City to the homebuyer payable to the Title
Company at the time of closing.
VII. 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 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.
VIII. ELIGIBLE PROPERTIES
Eligible properties must meet all of the following criteria:
1. detached single family housing structures, excluding manufactured homes, mobile
homes and industrialized housing;
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.
IX. HOMEBUYERS' COUNSELING WORKSHOP
1. 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.
Homebuyers'Assistance Program Guidelines,Page 4
2. Workshop topics at minimum must include how to buy a home, how to apply for a
loan, ownership benefits and responsibilities, home maintenance, household
budgeting and the loan closing process.
3. Homebuyer is required to submit a Certificate of Completion upon successfully
completing the entire Homebuyers' Counseling Workshop.
X. AUTHORIZATION TO MAKE CHANGES TO THE PROGRAM
The City Manager or his/her designee has the authority to approve the following:
1. 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 Down Payment/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.
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Homebuyers'Assistance Program Guidelines,Page 5
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 Maximum
Pa able 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 $450
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-1;
recording fees, and tax certificates.
Categories not included in the down payment and/or closing costs will be earnest money deposit,
real estate broker/agent commissions, and fees of an attorney retained by the Homebuyer.
Exhibit"A."Page Solo