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HomeMy WebLinkAboutRes 08-07 04/03/2007 Resolution No. 08-07 A RESOLUTION AMENDING RESOLUTION NO. 30-00 SUPPORTING THE CREATION OF THE FIRST TIME HOMEBUYERS ASSISTANCE PROGRAM WHEREAS, the corporate authorities of the Village of Mount Prospect determined that it was in the best interests of the Village to establish a First Time Homebuyers Assistance Program ("the Program"); and WHEREAS, with the passage of Resolution No. 30-00, a First Time Homebuyer's Assistance Program was established in the Village of Mount Prospect, as part of the 2005-2009 Consolidated Plan; and WHEREAS, since the establishment of the Program, the Corporate Authorities of the Village of Mount Prospect have determined that it is in the best interests of the Village and first time homebuyers to amend the program. NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND BOARD OF TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS: Section One: The Mayor and Board of Trustees do hereby authorize an amendment to the 2000 Homebuyer's Assistance Proposal to (1) eliminate the matching requirement for funds, (2) authorize the Village to perform background checks on applicants, (3) require pre- and post-purchase counseling, (4) limit the amount of acquisition assistance to 20%, and (5) establish a maximum purchase price for properties acquired through the program, a copy of the proposed 2007 First Time Homebuyers Assistance Program Guidelines is attached and made a part hereof as Exhibit "A". Section Two: The Resolution shall be in full force and effect from and after its passage and approval in the manner provided by law. AYES: Corcoran, Hoefert, Korn, Lohrstorfer, Skowron, Zad et NAYS: None ABSENT: None PASSED and APPROVED this 3rd day of April, 2007. ~Y4Pb t IJ/J; Irvana K. Wilks Mayor ~~~.zfL~ M. Lisa ngell 0 Village Clerk H:\CLKO\files \WI N\RES\amendres30-00 1 sttimehomebuyersprogramapril2007 .doc VILLAGE OF MOUNT PROSPECT First Time Homebuyers Assistance Program 2007 Guidelines Village of Mount Prospect Proposed Changes to First Time Homebuyers Program Purpose During the development of the 2005-2009 Consolidated Plan, the Village of Mount Prospect determined that the homeownership within the Village is difficult for low- and moderate- income households. The biggest constraints for a prospective buyer are the initial down payments and financing of the purchase. The First Time Homebuyers Program (FTB) is a tool to encourage low- and moderate-income residents purchase a home and build equity. Program Description The Village of Mount Prospect's First Time Homebuyer Assistance Program provides opportunities for low- and moderate-income households to purchase their first homes. Through this program, applicants obtain private first mortgages from banks/brokers and receive assistance from the Village with down payments and closing costs. The program was developed by the Village's Planning Division and is made possible by the Department of Housing and Urban Development's Community Development Block Grant and the Illinois Housing Development Authority's HOME funds. Funding · $42,000 in IHDA HOME funds is available over the next two years. · A maximum of $10,000 will be allocated for each homebuyer project for down payment, closing cost, and project delivery. Applicant Eligibility . Applicants must be first time homebuyers (not having owned a home in the past three years). Exceptions may be made for displaced homemakers. . Applicants' household incomes must not exceed specific year HUD income limits. · Applicants must occupy the property as their principal residence Property Eligibility . Properties purchased must be within the corporate limits of the Village of Mount Prospect. Eligible properties are limited to single-family residences. This includes detached homes, condominiums, townhouses, coach houses and duplexes (with split ownership). Properties must pass a home inspection at the home buyer' s expense. Properties must pass a Village inspection and lead inspection prior to purchase (both are covered by the Village). Ownership shall be by fee simple title only The property to be purchased must have a clear and free title. Refinance transactions do not qualify for this program. The maximum appraised value for properties is $275,200. The down payment from all sources, including the Village's assistance, must not exceed 20% of the purchase price. . . . . . . . . 1 Village of Mount Prospect Proposed Changes to First Time Homebuyers Program Counseling Pre-purchase counseling allows the prospective homebuyers to better understand the home buying process and alleviate many of the fears typically associated with loan closing or settlement. Participants must successfully complete a homebuyer counseling and training course offered by the Northwest Housing Partnership prior to making an offer to purchase. The counseling sessions include the following topics: . Selecting a home (a Realtor will be used in the home selection process). Understanding the buying and rehabilitation process, including loan closing. Financial costs of home ownership. Budgeting personal finances. Home maintenance and repairs. How to avoid predatory lending institutions and practices. . . . . . Post-purchase counseling is also required approximately 6 months after the closing. The post- purchase counseling will include: · How to avoid foreclosure · Preventative home maintenance tips A Certificate of Completion is required BEFORE an offer is made on a property. Terms of Assistance . Applicants must provide a minimum of $1,000 for down payment costs. . Applicants are referred by the Village to lending institutions with commitments to the FTB program. The amount of the down payment/ closing costs assistance loan will be based on the applicant's income and the home purchase price and is to be determined by the Village in consultation with the lender. Homebuyers must contribute a minimum down payment of $1,000 and the maximum loan will be the amount necessary to bridge the gap between the buyer's resources and the funds needed to secure the private mortgage. The maximum amount for assistance will be limited to $10,000 for down payment, closing cost and project delivery costs. The down payment/ closing cost assistance loan provided by the Village will be secured by a second mortgage recorded against the title to the property. The loan will be a 0% interest, deferred loan. The loan will be deferred for the affordability period of five years and will be forgiven at a rate of 1/60th per month over the five-year period. Recapture will be ensured by the execution and recording of a second mortgage stipulating the recapture requirement. Role of Village . Administer and oversee the First Time Homebuyer's Assistance program. . Provide a maximum of $10,000 in assistance: down payment, closing costs, and project delivery costs. 2 Village of Mount Prospect Proposed Changes to First Time Homebuyers Program . Subordinate its lien position (in the form of a second mortgage) to the lender's first mortgage. Village loans are provided with 0% interest. The loans are forgiven in full after five years. The loans are forgiven at a rate of 1/60th of the original principal balance at the end of each full month of occupancy of the residence by the homebuyer. The Village maintains records for each home purchase for review by HUD and IHDA as required by federal regulations. The Village must verify income from a third party source. Should the homebuyer be accepted in the program and not purchase a home for more than 6 months, the income must be re-verified. Perform a background check on all applicants. . . . . . Role of Lending Institution The lender will provide pre-purchase homebuyer counseling and assist the Village in marketing the program. The lender will provide a thirty-year fixed rate mortgage with no minimum mortgage amount. The lender will allow expanded underwriting ratios of 33/38 total monthly housing debt (including payment of mortgage, taxes, insurance, and condominium assessments) should not exceed 33% of gross monthly household income and total monthly household debt should not exceed 38%. The lender will also waive a portion of the closing costs as described in commitment letters. The Village will pre-select applicants based on their pre- application and then send application form to the lender to determine eligibility. Lenders in the program will provide the following: . Provide mortgage loans that are 30-year fixed rate loans. Buyers will be required to provide down payments of at least $1,000 of the purchase prices from their own funds. Set no minimum loan amount for this program. Allow underwriting rations of 33/38 total monthly housing debt Work with persons with nontraditional credit histories. Furnish the Village, at each closing, a final report including the amount of the first mortgage, an itemization of the amount of the bank's contribution to the purchase, and other loan application and documents requested by the Village. Assist the Village in marketing the program. To manage the collection of its own loans. In the event the loan recipient defaults on the mortgage, the Bank agrees that the Village will not be responsible for recovering the funds or for repaying that portion of the mortgage extended by the lender. . . . . . . . C:\Documents and Setlings\kdewis\LocaJ Settings\ Temporary Internet Files\OLK6B\Program Summary.doc 3