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
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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
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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.
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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:
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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.
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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.
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Village of Mount Prospect
Proposed Changes to First Time Homebuyers Program
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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.
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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:
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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.
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