_______________________________________________________________________________
Sold
on Frederick II
Second Mortgages for First Time Homebuyers
Program
Requirements
The City of
Maximum loan amount is $15,000
Total
Household Income Limits
Income of all household members may not exceed
the moderate-income level as published annually by HUD for community planning
and development programs for the Washington DC Metropolitan Area as adjusted
for household size. The 2007 limits are:
1
|
Family Size |
Income Limit |
|
One- Person |
$52,900 |
|
Two- Person |
$60,900 |
|
Three- Person |
$68,000 |
|
Four- Person |
$75,600 |
|
Five-Person |
$81,600 |
|
Six-Person |
$87,700 |
|
Seven-Person |
$93,700 |
|
Eight-Person |
$99,800 |
Effective
The Census Long Form method of income
calculation must be used. The participating lender will verify the income of
borrowers and submit a certification of income verification with the Request
for Reservation of Funds.
Loan
terms
The Sold on Frederick II mortgage will be
subordinate to a first mortgage
Monthly payment will not be required.
The full amount borrowed will be due and
payable to the City of
The amount borrowed will be secured by a
repayment agreement / promissory note and deed of trust to be recorded in the
land records.
Eligibility requirements for
borrowers
Must
be 18 years or older.
Must
have a total household income that does not exceed limits above.
Must
be a first time homebuyer as defined by the Cranston-Gonzales National
Affordable Housing Act of 1990. The code specifies:
“
The term first-time homebuyer means an individual and his or her spouse who
have not owned a home during the 3-year period prior to purchase of a home with
assistance under subchapter II of this chapter except that – (A) any individual
who is a displaced homemaker may not be excluded from consideration as a
first-time homebuyer under this paragraph on the basis that the individual,
while a homemaker, owned a home with his or her spouse or resided in a home
owned by a spouse; (B) any individual who is a single parent may not be excluded from consideration as a
first-time homebuyer under this paragraph on the basis that the individual,
while married, owned a home with his or her spouse or resided in a home owned
by a spouse; and (C) an individual shall not be excluded from consideration as
a first-time homebuyer under this paragraph on the basis that the individual
owns or owned, as a principal residence during such 3-year period, a dwelling
unit whose structure is (i) not on a
permanent foundation in accordance with local or other applicable regulations,
or (ii) not in compliance with State, local, or model building codes, or other
applicable codes, and cannot be brought into compliance with such codes for
less than the cost of constructing a permanent structure.”
Must
qualify for a first mortgage, i.e. must meet the participating lender’s income,
credit and other underwriting criteria
Must
receive at least 6 hours of homeownership counseling prior to settlement.
Properties to be acquired
Must
be within the City of
Must
be a one unit dwelling (single family detached, townhouse or condominium)
Must
be either:
1.
Owner-occupied
with no tenants or boarders for 90 days prior to contact of sale
or
2
Newly constructed and never occupied
or
3
Have
been occupied by borrower (s) as tenant for at least 90 days
or
4
If
rental, must have been vacant at least 90 days prior to contract of sale.
Must
be in good and habitable condition. An appraisal of the property is required.
Lead- based
Paint Hazard requirements
Any
property constructed prior to
The
homebuyer must be provided with an educational pamphlet describing lead-based
paint hazards and with a description of the lead hazard reduction measures that
were undertaken.
A
qualified risk assessor must complete a visual assessment of the property. If
lead paint hazards including any deteriorated painted surfaces are found they
must be addressed via paint stabilization before settlement. Only qualified
workers using safe work practices, including occupant protection, can perform paint
stabilization. After completion of the work the home must pass a clearance test
before occupancy by the buyer.
Procedures for Reservation of
Funds & Closing
Buyers
must apply through a participating lender.
A
bank, credit union, or mortgage company doing business within
The
participating lenders will verify the borrowers income and determine
eligibility as to income and other program requirements and submit verification
with the Request for Reservation of Funds
.
Upon
receipt of a complete Request for Reservation of Funds and all
attachments the Director of Community Development will reserve funds for a
maximum of 90 days. Reservations will be made on a first come basis. One 30-day
extension may be granted in the sole discretion of the City.
At
least ten business days prior to closing the lender will submit to the
Department of Community Development a Request for Funds and Notice of
Settlement Agent. The Department will send the settlement agent a Sold on
Prior to
settlement the participating lender must submit the following to the Department
of Community Development.
General Notice Letter signed by both
the borrowers and sellers
Seller’s certification of property
eligibility
Evidence of Homeownership Counseling
for buyers
Hazard
Insurance binder naming the City of
Title
Insurance commitment to ensure the City’s deed of trust in a second lien
position behind only the first purchase money deed of trust or mortgage
A
copy of the appraisal of the property
Seller’s
certification of Lead Based Paint notice and clearance
(Applies
to property constructed before
Upon
receipt of all documents the Department of Community Development will release
the check for the Sold on
Following
settlement the participating lender or settlement agent will provide settlement
documents to the City. The lender will also submit demographic information on
each borrower on a form provided by the City.