HomeMy WebLinkAboutRes 30-00 09/05/2000 c
RESOLUTION NO. 30-00
A RESOLUTION SUPPORTING THE CREATION
OF THE FIRST TIME HOMEBUYERS ASSISTANCE PROGRAM
WHEREAS the corporate authorities of the Village of Mount Prospect ("the Village") have determined
that it is in the best interests of the Village to initiate a First Time Homebuyers Assistance Program
("the Program"); and
WHEREAS, the Village has listed the creation of affordable housing, specifically home ownership
opportunities, as a top priority in its 2000 Consolidated Plan; and
WHEREAS, the Village has garnered the support of local lending institutions to administer and
financially support the Program;
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND BOARD OF TRUSTEES OF THE
VILLAGE OF MOUNT PROSPECT:
SECTION ONE: The Mayor and Board of Trustees do hereby authorize the creation of a First Time
Homebuyers Assistance Program as detailed in Exhibit "A."
SECTION TVVQ: This Resolution shall be in full force and effect from and after its passage and
approval in the manner provided by law.
AYES: Hoefert, Prikkel, Skowron, Wilks
NAYS: None
ABSENT: Farley, Lohrstorfer
PASSED and APPROVED this 5th day of September, 2000.
ATTEST:
Veln,(a W. Lowe ~ ~.~ ~
Village Clerk -:
H:~G EN~files~,WIN~R ES~I st-flme-homebuyers-preg ram.doc
Village
of
Mount Prospect
Ccrraram~ ~ Block Grant
Homebuyer's Assistance
Program Proposal
2000 Action Plan Amendment
Introduction
The dream of owning a home is a common one [or many people. Homeownership can be
especially difficult to achieve for low to moderate-income residents in the community. The
biggest constraints for a prospective buyer are the initial down payments and financing of the
purchase. The Village is requesting that the current 2000 Action Plan be amended to include the
following proposal.
Proposal
The Village of Mount Prospect is proposing tO administer a pilot Homebuyer's Assistance
Program in the community. A Homebuyer's AssiStance Program is designed to assist families in
the community purchase and own their own homes with necessary down payment and closing
costs provided by Village's Community Development Block Grant funds. This Homebuyer's
Assistance program would allow certain families who do not have the capability to purchase and
finance a new home, to do so. The Village is proposing to assist a maximum of two families as
pilots for this program.
Request
· $20,000 in funds be made available from current year (2000) Community Development
Block Grant funds for the Homebuyer's Assistance program. Current allocation will not
change.
· A maximum of $10,000 will be allocated for each homebuyer project.
· For each homebuyer project, a maximum of $7,500 will be made available for down paymem
assistance, $1,500 will be made available for closing cost assistance and $1,000 will be used
for project delivery and administrative costs.
· Bank One will provide monthly mortgage financing for the homebuyer.
Background
As a northwest suburb of Chicago, the Village of Mount Prospect's local housing efforts and
strategies are similar to its surrounding neighbors such as Des Plaines and Arlington Heights. The
three suburbs share similar demographic and housing characteristics such as:
· the lack of substantial developable land
· housing market characteristics: including, average sales and rental prices of existing housing
stock
· demographic data including population figures and racial breakdowns
· similar community development programs funded by the Community Development Block
Grant.
The Village of Arlington Heights has a Homebuyer's Assistance program that has proved to be
extremely successful in the last four years. Due to the success of Arlington Heights' program, the
similar housing trends which are occurring in both Arlington Heights and Mount Prospect and
due to the interest for the program in Mount Prospect, the Village recommends piloting a
Homebuyer's Assistance program using Community Development Block Grant funds. The pilot
program will serve as a basis for determining whether a Homebuyer's Assistance program can be
successful in the Village of Mount Prospect.
During June of 1999, the Village began compilation of its Five-year Consolidated Plan. As part
of this overall community development plan, the Village developed a Community De.velopment
Strategic Plan which established priorities and objectives to be met within the next five years. The
· · Village of Mount Prospect ,, Proposed Homebuyer's/~egi~tnnc¢ Program
"Affordable Housing" priority identified Homebuyer's Assistance as a community development
objective. The goal of this objective is to assist low to moderate-income residents with
purchasing a home. Please see Attachment I-excerpt from the Community Development
Strategic Plan.
In addition to the Community Development Strategic Plan, the Village conducted a Local
Housing Market Analysis as part of the Five-year Consolidated Plan. Through these studies, a
great demand for the Homebuyer's Assistance program was identified due to the need for
affordable housing in the Village. Without enough developable land, construetinn of a Iow-
income housing development is not a conceivable option; therefore an assistance program would
greatly benefit the Village in housing Iow to moderate residents in appropriately priced housing.
Please see Attachment 2-Local Housing Market Analysis.
Community support from various entities has been strong throughout the development of this
program. Letters of support were obtained for the program during IHDA's Homebuyar's
Assistance appliention program in the fall of 1999. These letters are included as Attachment 3 to
exhibit the support for the program.
Program Development
The Planning Division of the Community Development Department developed the Village of
Mount Prospect's Homebuyer's Assistance program by researching other Homebuyer programs
in neighboring suburbs. The Village of Arlington Heights has administered their Homebuyer's
Assistance program for the last four years with tremendous success. In addition, the Illinois
Housing Development Authority gl-IDA) provides grants to various communities for the
Homebuyer's Assistance program. II-IDA has been useful in the development of this program by
providing information on implementation procedures. In addition, the Village plans to participate
in IHDA's application process for FY 2001 Homebuyer's Assistance funds. The Village of
Mount Prospect would like to acknowledge the Village of Arlington Heights and the Illinois
Housing Development Authority (IHDA) for providing extensive assistance in the development
of this program.
Program Description
The Village of Mount Prospects' Homebuyer Assistance Program provides opportunities for low
and moderate-income households to own their first homes. Through this pilot program,
applicants obtain private first mortgages from Bank One-Mount Prospect 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 US Department of Housing and Urban
Development's Community Development Block Grant.
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.
First time homebeyers purchasing a home in Mount Prospect will be assisted with down payment
and closing cost assistance due to the significant barrier of these costs.
Property Eligibility
· Properties purchased must be within the corporate limits of the Village of Mount Prospect.
yillage of Mount Prospec~ Proposed Homebuyer's Assistance Program
· 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 Village inspection prior to purchase.
· Ownership shall be by fee simple title unly-the property to be purchased must have a clear
and free title.
· Refinance transactions do not qualify for this program.
The Village intends to target condominium-type dwellings for low-income persons. Prices for
single family detached homes are unaffordable to many low-income persons. However,
affordable detached single family homes that qualify for the program will also be considered.
Based on the present real estate market in Mount Prospect, condominiums are a more viable
target than any other property type.
Counseling
· Participants must successfully complete a homebuyer counseling and training course offered
by the lending institution prior to making an offer to purchase.
All homebuyers must attend and successfully complete a homebuyer-eounseling program prior to
purchasing a home through the homebuyer program. 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. The counseling sessions could 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.
Terms of Assistance
· Applicants must provide a minimum of $1,000 for down payment costs.
· Applicants are referred by the Village to the lending institution. Applicants must qualify for
first mortgage financing from Bank One-Mount Prospect.
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. The minimum loan for down payment assistance to a qualified applicant will be
$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 down payment assistance will be limited to $7,500 and the maximum amount for closing cost
assistance will be limited to $1,500 and a maximum of $I,000 will be used for 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 cfa second mortgage stipulating the recapture requirement.
Village of Mount Prosoect Proposed Homebuv¢ffs Assistance Program
The Village's homebuyer requirements will require the homebuyer to make a down payment
contribution of $1,000. The Village feels that the requirement for the homebuyer contribution
will provide greater assistance for alt program parties when purchasing a home.
Role of Village
· Administer and oversee the Homebuyer's Assistance program.
· Provide a maximum of $7,500 for down payment assistance.
· Provide up to $1,500 for closing cost assistance including the following fees: credit report,
appraisal, title charges, closing fees, recording fee, flood service fee, and tax service fee.
· Provide up to $1,000 for project delivery and administrative fees.
· Subordinate its lien position (in the form of a second mortgage) to the Banks first mortgage.
· Provide its loans at 0% interest. The Village will forgiv.e its loan in full after five years. The
loan will be forgiven at a rate of 1/60t~ of the original pnncipal balance at the end of each full
month of occupancy of the residence by the homebuyer.
· Maintain records for each home purchase for review by HUD as required by federal
regulation.
Role of Lending Institution (Bank One)
The lender will provide pre-purehase 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 lander will also waive certain program fees agreed to in a contract
agreement with the Village of Mount Prospect. The Village will pre-select applicants based on
their application and then send pre-applicatiun form to the lender to determine eligibility.
The lender will provide each participant with pre-purchase and post-purchase counseling, using
certified homebuyer training agencies. The lender will provide a homebuyer training class, at a
location to be announced. Tbe lender will provide a certificate of completion of homeowner
counseling to all participants.
The Bank further agrees to participate in the program in the manner summarized below:
· Make a total of at least $200,000 in first mortgage funds available to participants of the
program, which is the anticipated aggregate amount needed for the program.
· Provide mortgage loans that are 30 year fixed rate loans for up to 95% of the purchase price
of the home. Buyers will be required to provide down payments of at least $1000 of the
purchase prices from their own funds.
· Set no minimum loan amount for this program.
· Allow a front-end ratio (monthly housing costs as a proportion of gross monthly income) up
to 38%.
· Accept nontraditional credit histories.
· Charge no points on the loans.
Village of Mount Prospect Proposed Homebuyer's Assistance Program
· Waive the requirement that borrowers have a two-month reserve for principal, interest taxes
and insurance.
· 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.
· Provide each participant with pre-purchase and post-purchase counseling.
· 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 Bank.
Conclusion
The Village of Mount Prospect is proposing to administer a Homebuyer's Assistance program for
the first time in the community. The proposal is to allocate funds from the current year
Community Development Block Grant for a pilot program that would allow a maximum of two
participants. According to local housing studies, research and current regional housing trends,
demand for the program exists. A pilot will serve to determine whether the program is indeed
suited for the community and if the program will be beneficial in the Village's overall community
development goals.
A Homebuyer's Assistance program will assist low to moderate-income families purchase a home
in the community. Initial down payments, closing costs and mortgage financing are the common
barriers to affordable housing for Iow to moderate-income families who want to purchase a home.
The Homebuyer's Assistance program would provide these down payment and closing costs as a
deferred loan, meaning the loan will be entirely forgiven after the five-year loan term. Bank
One's parmership in the pilot program will provide financing and counseling to the homebuyer.
A Homebuyer's Assistance program in the community will help to alleviate barriers to affordable
housing in Mount Prospect. With few options available to alleviate barriers, this program would
at the least provide the option to purchase a home for low to moderate-income families. The
Homebuyer's Assistance program is a wonderful opportunity to provide for families who am
trying to make their dream of homeownership come true.
\\VItXV02~DEPT~COMDEV~GENkPLNG\CDB G~omebuyers assitance\program summary.doc
I~nk One, NA
~nk One Mortgage
31, 2000
Ms. Misty Das
Neight:)ofllood Planner
Village of Mt. Prospect
Community Development
Re: 2000 "Test Pilot Assi .~,ance Program Propos,31
Dear Ms. Des,
First of all, we would like to ff~a~k you for giving Bank One an opportunity to be part of a
very worthwhile initiative. We are in the busineSS of providing mo~;/ageS and expanding
homeownership opportunities in all the communities that we serve and your proposal for
the 2000 ASSistance Prograr~ would aid us in rostra'lng our efforts.
For the 2000 "Test Pilot Assistance Program, we propose the following:
· Waiver of current stande~ application fee to ~lualified borrower(s~ for tile year 2~0.
· Make a total of at least 300,000 in flint mortgage funds available to quarked
borrower(s).
· Zero point mortgage loads at standard 30-year fixed rate, up to 95% Loan-to-Value
with flexible quaFa'Ting r~...'os of 33138. Will accept over ratios wfth strong
compen~ng ~c~ors.
· Closing costs associated'with credit report, appraisal, title charges, closing fees,
recoming fees, flood seC'ce fee and tax service fee to be capped at $1,50O.
- Non-traditional credit histories will be acceptable.
· Will provide assistance ~ the Village in marketing the pro9~
· Bank will provide pre-purct~se counseling utilizing the FannieMae ' A Guide to
Homeownership' as well!as parthedng with an accredited counseling agenc~ in
providing home buying e.~.' UCo~On to p~gmm pe~cipan~.- .-
· Dedicat~l Loan Officer tb meet the participants needs.
We ate looking forward to a very rewarding partnership.
// / ._~/.?~n. y/ravas-Scott RObert [.. Holzer ~
[,...~. JVP/Qbmmunity Liaison Officer VPI Market Sales Manager
September 28, 1999
Village of Mount Prospect
100 S. Emerson Street
Mt. Prospect, Illinois 60056
Illinois Housing Development Authority:
As a Real Estate Broker in the Village of Mount Prospect, we are firmly behind such
programs as the proposed "Homebuyer's Assistance Program".
We truly believe and support all programs that help the less privileged to be able to afford
to purchase their own home.
We therefore would appreciate the IHDA's granting assistance to the Village of Mount
Prospect for this program funding.
~e~s RYo~ in advance, elson
RE/MAX Suburban
~C/j~I !~ suburban
330 e. northwest highway, suite 100
mt. prospect, illinois 60056
phone: (847] 577-9888
fax: (847) 577-5034
CAROLYN H. KRAUSE Eou¢^~o.
September 27, 1999
Ms. Misty Das, Neighborhood Planner
Village of Mount Prospect
Community Development Planner
100 South Emerson Street
Mount Prospect, IL 60056
Dear Ms. Das:
I was delighted to hear that the Village of Mount Prospect is applying for a grant
through the Illinois Housing Authority to administer the Homebuyers Assistance '
Program in Mount Prospeqt as part of its Affordable Housing Year 2000 '
Consolidated Plan.
This is a worthwhile program that will enable Iow income residents the
opportunity to purchase their own home.
It is my understanding that Mount Prospect is implementing this program based
on the experience of the Village of Arlington Heights. I am familiar with the
success of Arlington Heights' program because that community is also a part of
my legislative district.
Because the price of housing has accelerated at such a rapid rate, it is difficult for
many citizens to accumulate enough capital for the down payment and closing
costs involved in the purchase ora home. The Homebuyers Assistance program -
provides hard-working residents with the help they need to make the dream of
home ownership a reality.
I know fi:om the personal acknowledgments of Arlington Heights constituents who
have participated in the program, that the screening process is very rigorous so that
only those who are serious and show a real willingness to adhere to the guidelines
of the program will be eligible to participate.
aving established home ownership engenders pride and involvement in the
community; this makes the program successful for both the municipality providing
assistance and to the recipient who now becomes more involved and productive in
the community. It is a winning combination all the way around.
I give my wholehearted support to the Village of Mount Prospect to administer
this excellent Homebuyers Assistance Program.
Very Truly Yours,
Carolyn H. KrauSe
State Representative
September 29, 1999
To Whom It May Concern:
Tiffs letter is to acknowledge my support oft. he Village of Mount Prospect's grant appl/cation
being submitted to the Illinois HouSing Development Authority.
I believe this grant application has merit and the need for such a program in Mount Prospect
is well deserved.
I strongly support the Village of Mount Prospect in this endeavor.
Very truly yours,
~.~7 ~V,$I liig~lin$ Rood ~, R~publi¢c~n Spokesman:
,~c~l~mb~rg. Illin~ls gO l.~.~ , L~r & Comm~rc~
84?/882.0270 :, ~ Consumer ~t~Ct&n
PrOud R~latlon
~02.~ Stmtton B~dMing ~., In~umno
Springfield. Iflinois 62706 ~r~n Revitalization
217~82.0347 State of Illinois Employee Suggestion
Hous~ of Representatives Awa~ ~oa~d
Terr R. Parke
State Rep~entative · 53~ Oistrict
October ~. ~999
Mr. Michael Rose
Acting Director & Liaison
Illinois Housing Development Board
401 N. Michigan Avenue, Suite 900
Chicago, IL 60611
Dear Director Rose:
I am writing to recommend that the Village of Mount Prospect receive
favorable consideration for federal HOME funds in order to initiate its Homebuyer
Assistance Program.
This program will target seniors whc~'(i) b~re~fi~t-time buyers, and (ii) have
a Iow/moderate income~ The required down payment and costs associated with
purchasing a home is a significant barrier to affordable housing in Mount
Prospect. Local banks will help homebuyers with reducing costs and monthly
mortgage payments by offering a fixed rate interest. In addition, the program will
address homebuyers counseling and home maintenance education.
It is exciting to see such an innovate program planned for Mount ProseCt
and I am hoPeful that the necessary funding will be provided so the Village may
provide this opportunity to ou~ senior citizens wishing to become first-time
homeowners.
Thank you for your favorable consideration of this matter.
Sincerely,
Terry R. Parka
State Representative
TRP:sb
cc: Hon. Gerald L. Farley
Ms. Misty Das
ILLINOIS STATE SENATE
KATHLEEN K. PARKER
STATE SENATOR · 29TH DISTRICT
September 22, 1999
Michael Rose
Illinois Housing Development Authority
40! N. Michigan Avenue Suite 900
Chicago, Illinois 60611
Dear Mr. Rose:
I am writing to express my support for a grant for the Village of Mount Prospect to administer a
Homebuyers Assistance Program.
The goal of this program is to help low to moderate income residents purchase affordable
housing. The required down payment and costs associated with purchasing a home are a
significant barrier to affordable single-family housing in Mount Prospect. This program alm~ to
help alleviate those barriers.
The Village will work closely with local bank~ to offer programs with reduced monthly mortgage
costs and fixed rate interest. There will also be homebuyer counseling available and home
maintenance education.
Eligible homebuyers will have incomes equal to or less than 80% of the area median income,
will be first-time homebuyers or seniors. In addition, they must be able to qualify:for first
mortgage financing fa'om a source other than the HOIV[E program. HOME program money will
be used solely for down payment and closing cost assistance. The HOME loan will be a 0%
interest loan for up to 5 years.
I hope that you will give every consideration to this grant application as I believe it has many
merits. Homeownership brings stability to not only to our communities but also to our families.
Thank you in advance for your consideration.
Sincere.~y,
Kathleen I~. Parker
State Senator
29~n District
S~L~C~ CO~E ON e~.~CS September 27,
ASSISTANT OEMOCRATIC
FLOOR LEAOER
Ms. Mis~ D~
100 South Emerson S~eet
Mount Prosp~ ~ 60056
De~ Ms. D~:
I ~ ~ting to~y ~ suppog of~a ~t app~cafion ~ Villag~ ofMo~t ~o~t sub~ to
~a II~ois Houshg Dewlopm~t Au~od~ to ~st~r
~ Mo~t Pro~ect for ~ 2000. ~a Vi~ag~ ofMo~t ~o~ct h~ ~t~lished ~ pdo~W of
~or~bla ho~g ~ i~ 2000 co~t~ plm. ..
I b~liew ~at ~ Homebuy~r's ~sistmca ~o~ ~I1 accomplish yo~ go~s of~sis~g
low/moderata-income residents ~ ~fordabl~ ho~g.
required do~ pa~ent md costs ~at ~e ~sociatad ~ a single f~ily home ~ Mo~t
Prospect. ~esa costs o~en sa~a ~ a b~er to p~ch~g a single f~ly home.
. Hom~buyer's ~sistmce pro~ ~11 offer efi~bla cm~dates ~ oppo~W to P~c~e a
hom~ h Mo~t Pro,act.
~ you ~ow, ~ proem is ~er s~m~ by ~ Vi~ag~ ofMo~t ~t wh° ~ be
wor~g closaly ~ locfl b~ to pm~de ~ b~t ~sistmce possible for homabuy~
Mo~t Pro~t. Specific~ly, b~ ~11 h~lp homebUYe~ ~ r~uchg co~ ~d reduc~g
mon~ly mo~gag~ pa~ by offing a ~ed ~t~est ~te. ~e pro~ ~11 ad&ess
homebuyers co~a~g md home m~t~ce education.
Agar, I wo~d ~a to emph~k~ my's~po~ for yo~ appficafion t0
Dav~lopment Au~ofi~ ~d ~sh you ~ b~t of luck ~u~oUt ~ ~t approv~ pr~s,
V~W ~ly ~R~, ,
~ch~d J. D~bin
U~ted States Senator
RJD/sd