Loading...
01/14/2014 NEIGHBORHOOD & AFFORDABLE HOUSING ADVISORY BOARD MEETING MINUTES CITY OF CLEARWATER January 14, 2014 Present: Linda Kemp Vice Chair Lisa Hughes Board Member Vicki Adelson Board Member Vacant Seat Board Member Vacant Seat Board Member Absent: Peggy M. Cutkomp Chair Michael Potts Board Member Also Present: Geri Campos Lopez Economic Development& Housing Director Michael Holmes Housing Manager Terry Malcolm-Smith Housing Coordinator Patricia O. Sullivan Board Reporter The Vice Chair called the meeting to order at 9:00 a.m. at City Hall. 3 —Approval of Minutes — December 10, 2013 Member Hughes moved to approve the minutes of the regular Neighborhood and Affordable Housing Advisory Board meeting of December 10, 2013, as recorded and submitted in written summation to each board member. The motion was duly seconded and carried unanimously. 4—Citizens to be Heard re Items Not the Agenda: None. 5— Presentation — RCS (Religious Community Services, Inc.) RCS President/CEO Caitlin Higgins-Joy thanked the board for its support for the new RCS outreach center, which will be completed by November. She discussed services to be offered there and reviewed RCS' programs, including the Haven, Grace House, and the largest food bank in Pinellas County. . 6 — Update —SHIP (State Housing Initiatives Partnership) Program Housing Coordinator Terry Malcolm-Smith reviewed the history of SHIP and provided an update on decreasing funding levels. SHIP funds are important for the City to use as a match for federal funds. She requested individual board members to contact the Legislative Delegation in support of the SHIP program and requested board support of a letter to the delegation re the importance of continuing SHIP; the program has not been fully funded for 3 years. Consensus was to send a letter to the Legislative Delegation and Appropriations Committee recognizing the importance of SHIP funds and requesting that the Legislature stop raiding the trust fund set aside for affordable housing. 7 — Update - Housing Policies and Procedures Neighborhood & Affordable Housing 2014-01-14 1 7.1. Homeownership — New Construction Policy See: 2014 -01 -4 Homeownership Policy New Construction Housing Manager Michael Holmes reviewed the updated home construction policy. Staff is updating outdated operating procedures to operate more efficiency. Updates to this document were triggered by NSP (Neighborhood Stabilization Program) funding requirements. He requested the Board review the document and provide input at the February meeting. Economic Development & Housing Director Geri Campos Lopez discussed the Country Club Townhome project, which should be completed by April, and reviewed the development's affordable housing component. A visit to the project will be scheduled for the Spring bus tour. 8 — Election of Officers Member Hughes moved to appoint Linda Kemp as Chair. The motion was duly seconded and carried unanimously. Consensus was to continue appointment of a Vice -Chair to February 11, 2014. 9 — Old /New Business 9.1. UNO Federation Update Mr. Holmes said HUD (Housing & Urban Development) Department has not responded to the City's letter re UNO Federation's hiring of a felon. No 2013/14 Consolidated Plan funds have been disbursed to UNO. Ms. Lopez said a follow -up letter will be sent next week. 9.2. Update - CAPER (Consolidated Annual Performance and Evaluation Report) Mr. Holmes reported the City Council approved the CAPER and staff submitted it to HUD. Staff anticipates HUD's response this month. 10 — Next Meeting — February 14, 2014 Planned topics for discussion for the coming months include the bus tour and a review of the Consolidated Plan process, including applications and ranking sheets. 11 - Adjourn Attest: The meeting adjourned at 9:41 a.m. oard Repo C air, Neighborhood & Affordabl Housing Advisory Board Neighborhood & Affordable Housing 2014 -01 -14 2 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 a ry OF C11,,,,,, I "rI I HOUSUNG 11:::1011 II 1.1 OVERVIEW OF REQUIREMENTS National Assisted properties must be occupied by Low-, Moderate-, and/or Objective Middle-Income (LMMI) Households. Eligible • Must be United States Citizens or person with eligible immigration status Homebuyers as documented in CFR 24 Chapter 5. • Income at or less than 120% AMI for NSP and 80% for CDBG and HOME, according to 24 CFR Part 5. Income eligibility shall be determined based upon anticipated annual gross household income • For properties that are to count towards meeting the 25% Set-Aside for NSP, household income must be at or less than 50% AMI • Able to receive mortgage based on traditional lending practices • Have completed at least eight (8) hours of homebuyer education through HUD-approved housing counseling agency. • Must purchase a City of Clearwater HOME or NSP-assisted house • Contribute a minimum of two percent (2%) of the purchase price of the home. Cash back to a borrower at closing is not permitted. For NSP- subsidized houses, the borrower must pay at least 50% of the bank required Down Payment Assistance • Must be willing to make this home their primary residence. • Cannot have been assisted with City funds during the past five years. Exceptions may be made by the Department Director under hardship circumstances. Program Goal Provide availability and accessibility to decent affordable housing to the residents of the City of Clearwater by increasing new, affordable for-sale units. Eligible • Eligible projects include City-developed properties, either within funded Properties projects, or single units on scattered sites. For NSP-funded homeownership, units must be within City identified Neighborhood Stabilization Program (NSP) target areas as identified in the City of Clearwater's NSP Consolidated Plan Amendment. • Property must be located within the City limits of Clearwater. • Properties may be unattached single family homes, townhomes, or condominium units. • Houses must meet the Florida Building Code and additional requirements identified through the NSP for NSP3-assisted homes. Maximum The house being purchased must not exceed a purchase price of$150,000. Purchase Price This maximum price will be reviewed on a yearly basis and changed if needed to meet City Council objectives and market demands. Maximum • Funds are available on a first-come, first-served, first-eligible basis. Homebuyer • Up to $45,000 for new construction located in the City's Targeted Subsidy Revitalization Areas. • For NSP homes, the homebuyer is responsible for at least 50% of the 1 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 lender/bank required down payment assistance. • The methodology for determining a reasonable level of assistance is detailed in Section 1.6 Setting the Homebuyer Subsidy. • Any amount exceeding the above limits will require approval of the Department Director. Maximum The maximum Development Subsidy will be determined on a project by Development project basis depending on the needs of the project and the sources of Subsidy funding used. Maximum Total Any amount exceeding the limits above will require approval of the City Funded Department Director. Homebuyer Subsidy Required • Repayment term of no more than 30 years with no balloon payment Primary requirements Home Mortgage . Interest rate expressed as Annual Percentage Rate (APR) may not Terms exceed 2 4% above the Market Rate (A rate that is no more than 25 basis points greater than the most-recent Freddie Mac Weekly Primary Mortgage Market Survey (PMMS) Rate for 30 year fixed-rate conforming mortgage). • No adjustable rate mortgages • No interest-only mortgages • No prepayment penalties • Combined lender fees, including loan discount & origination fees may not exceed 2% of loan amount. • Combined Loan to Value Ratio (CLTV) shall not exceed 105% • Front end ratio cannot be lower than 20%. Back end ratio (debt to income) shall not exceed 42% of their gross monthly income. Exceptions may be allowed in those cases where additional documentation supports ratios above the maximum limits. • First mortgage lender must allow the City to record Mortgage, Promissory Note and Land Use Restriction Agreement for the federally funded subsidy Affordability Period and Homebuyer Subsidy Agreement utilizing either the recapture or resale method, depending on the funding source, as described in 1.2. Title/Vesting • Individual/Joint • Fee Simple City Homebuyer : The City's assistance shall be provided in the form of a loan with a thirty Subsidy Terms year (30) term, which will be deferred for a 30-year period at zero (0%) interest with no payments due and forgiven at the end of the term. • During the term of the mortgage, the City will not subordinate its second mortgage except for circumstances outlined in the City's Loan Subordination Policy. The Borrower will be required to sign an acknowledgement of the City's Loan Subordination Policy. (See subordination policy) • If the homebuyer rents, refinances, sells, or transfers the ownership of the property prior to the expiration of the affordability period or term of the loan, the loan is immediately due and payable. • Loans will be secured by a mortgage, note, and land use restriction 2 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 agreement. 1.2 AFFORDABILITY REQUIREMENTS, AFFORDABILITY PERIODS AND RECAPTURE The City must ensure continued affordability for City-assisted housing by the use of enforceable recorded mortgage liens, promissory notes, and land use restriction agreements. Change of ownership or residents during the affordability period will subject the property to recapture of City homebuyer subsidy, which will become Program Income to be used for HOME or NSP-eligible uses. The affordability period for all homebuyer projects will be 30 years. The homebuyer subsidy will be provided in the form of a second mortgage, with 0% interest, no payments due, and forgiven at the end of the 30-year term. If the homebuyer sells or transfers ownership, or fails to maintain the property as its primary place of residence over the full affordability period, then the full amount of homebuyer assistance will become due and payable, as described in 1.6. The City enforces this requirement by an enforceable recorded land use restriction agreement (Exhibit X.X) against the property. If the homebuyer(s) sells, transfers, or ceases to occupy the property as his or her principal residence before the expiration of the affordability period, they will be required to repay to the City the balance due, as described in Section 1.6. The City will monitor the borrowers and housing units on an annual basis to ensure compliance with program regulations. The monitoring will include, but not be limited to, the following: • Owner—occupancy (Certification) • Property Tax Inquiry • Hazard Insurance Inquiry • Official Records Inquiry • Unit Inspection Inquiry The City will forward an annual self-certification of residency to the homebuyer via return receipt requested mail. The buyer shall provide the City with a copy of at least one utility bill to document owner-occupancy. In the event that an owner does not continue to occupy the unit as their primary residence, or is otherwise in non-compliance, the City will follow its default policy and consult with its attorney to identify the applicable next steps. Upon death of a homeowner, the amount of the Note shall be payable, either upon the conveyance of title (legal or equitable) to all or any portion of the Property used to secure the Note, unless title to the Property vests in an eligible person pursuant to City rules and regulations, the funding source from which the loan was made, and said person assumes this mortgage. Otherwise, the City will work with the heirs to establish monthly payments at the default rate until resolution of the estate. In case of a foreclosure, the City will follow its Foreclosure Policy. 1.3 MARKETING HOMES 3 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 Marketing the newly constructed homes is the responsibility of the Developer. The City will assist the Developer and will utilize existing resources to promote the sale of properties developed under their various housing programs. These items include preparing press releases for newspaper and broadcast media; promoting projects on social media sites such as Twitter and Facebook; posting on the official City of Clearwater website; and creating flyers or posters for general distribution and other activities as defined in the City's Analysis of Impediments to Fair Housing Choice (AI) for target groups that would not have access to general media. 1.4 QUALIFYING BUYERS An eligible homebuyer must be a United States Citizens or person with eligible immigration status as documented in CFR 24 Chapter 5. An eligible homebuyer must have a household annual gross income at or below the middle-income limits as defined by HUD for NSP of one hundred twenty percent (120%) of the median income for the area, and at or below the moderate-income limits as defined by HUD for HOME and CDBG of eighty percent (80%) of the median income for the area, as determined by 24 CFR Part 5, adjusted for family size. When houses are designated as being under the low-income set-aside for NSP, they must be sold exclusively to households at or below 50% of the AMI. City staff will compare the information provided to the appropriate HUD income limits as described below, to determine if the household is eligible for the City's NSP funding. Income limits are updated annually by the Department of Housing and Urban Development and distributed by Florida Housing Finance Corporation. The income limits are available on the City of Clearwater's website at www.myclearwater.com/housing. HUD's "Technical Guide for Determining Income and Allowances for the HOME Program" published in January 2005 can be found at the following link: http://www.hud.gov/offices/cpd/affordablehousing/library/modelquides/1780.cfm. In addition, HUD has published the "Guide to Completing NSP Income Certifications" which can be found in the tool kit section on www.HUDNSPhelp.info . Projects must follow the Part 5 methodology, which is similar to the Section 8 program. Clearwater staff will use the Technical Guide and these forms for calculating and verifying incomes (Exhibit X.X). Supporting documentation, such as W-2s, tax forms, and bank statements must be collected, reviewed, and kept in local records to demonstrate that the household's income was within the prescribed limit. Income and assets will be re- verified if new information is presented about an applicant's increased income or additional income sources. Income and assets will also be re-verified if the deadline for the assistance listed on the award letter has expired. In addition to being income eligible, households must meet the following requirements in order to be eligible to purchase an NSP house: • Complete and submit an Application for Assistance, including the submission of all required documentation, as described below, and a meeting with Clearwater staff. 4 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 • Attend eight (8) hours of approved homebuyer education, as evidenced by submission of a certificate of completion from a HUD and City of Clearwater approved housing counseling agency. • Become pre-approved by a financial institution for a loan meeting the program requirements, and for at least the amount of a mortgage required for the household to purchase a City-assisted home, as provided to the household based upon their analysis of the Application for assistance and the household's income. The prospective homebuyer should provide the City or its representative with a pre-approval letter from the bank, outlining the terms and amount of the loan and a good-faith estimate. This mortgage must be approved by Clearwater Staff. Application for Assistance—While forms may be filled out in advance by applicants, the application will be completed in a face-to-face meeting with a qualified representative of the City. Applicants will be required to bring evidence of employment, income and assets to the intake and application interview in order to make an initial determination of income eligibility. The Federal Fair Housing Act (the Act) was enacted in 1968, and amended in 1974 and 1988 to add protected classes, provide additional remedies, and strengthen enforcement. The Act, as amended, makes it unlawful for a person to discriminate on the basis of race, color, sex, religion, national origin, handicap, or familial status. Generally, the Act prohibits discrimination based on one of the previously mentioned protected classes in all residential housing, residential sales, advertising, and residential lending and insurance. Prohibited activities under the Act, as well as examples, are listed below. • It is illegal to do the following based on a person's membership in a protected class: • Misrepresent that a house or apartment is unavailable by: • Providing false or misleading information about a housing opportunity, • Discouraging a protected class member from applying for a rental unit or making an offer of sale, or • Discouraging or refusing to allow a protected class member to inspect available units; • Refuse to rent or sell or to negotiate for the rental or sale of a house or apartment or otherwise make unavailable by: • Failing to effectively communicate or process an offer for the sale or rental of a home, • Utilizing all non-minority persons to represent a tenant association in reviewing applications from protected class members, or • Advising prospective renters or buyers that they would not meld with the existing residents; • Discriminate in the terms, conditions, or facilities for the rental or sale of housing by: • Using different provisions in leases or contracts for sale, • Imposing slower or inferior quality maintenance and repair services, • Requiring a security deposit (or higher security deposit) of protected class members, but not for non-class members, 5 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 • Assigning persons to a specific floor or section of a building, development, or neighborhood, or • Evicting minorities, but not whites, for late payments or poor credit; • Make, print, publish, or post (direct or implied) statements or advertisements that indicate that housing is not available to members of a protected class; • Persuade or attempt to persuade people, for profit, to rent or sell their housing due to minority groups moving into the neighborhood by: • Real estate agents mailing notices to homeowners in changing area with a listing of the homes recently sold along with a picture of a Black real estate agent as the successful seller, or • Mailed or telephonic notices that the "neighborhood is changing" and now is a good time to sell, or noting the effect of the changing demographics on property values; • Deny or make different loan terms for residential loans due to membership in a protected class by: • Using different procedures or criteria to evaluate credit worthiness, • Purchasing or pooling loans so that loans in minority areas are excluded, • Implementing a policy that has the effect of excluding a minority area, or • Applying different procedures (negative impact) for foreclosures on protected class members; • Deny persons the use of real estate services; • Intimidate, coerce or interfere; or • Retaliation against a person for filing a fair housing complaint. Disclosures at Time of Application - Unless an applicant is disqualified during the intake interview, he or she will be given by City staff or its representative hard copies of the following documents: • An explanation of the Homebuyer Program in general terms and its benefits to buyers and the community. • The application approval criteria. • The requirement for attending pre-purchase counseling. • Applicant's household size and estimate of monthly income, with a statement that the income amount must be verified prior to the applicant being approved for assistance. • An estimate from the City of the amount and terms of Homeowner Financial Assistance for which applicant may qualify. • A general description of a buyer's obligations for repayment of subsidies. During the intake interview or subsequent face-to-face meeting, a representative of the City will review these disclosures with the applicant and be available to answer questions about them. No application can be approved unless disclosures have been made as required. 1.5 SETTING THE SALES PRICE 6 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 The developer will set the sales of price of the home with the following guidance. The homeownership program requires that properties acquired and constructed with City funding be sold to eligible homebuyers with an asking price for homes that is the lesser of the after-construction market value, or total development costs. The City will obtain an after-construction appraisal of market value. This appraisal may be completed at any time prior to the home being priced and offered for sale. This appraised value will be the asking price for the home unless it is higher than the estimated total development cost of the home, in which case the price will be the same amount as the total development cost. Total development cost includes all acquisition, construction and soft costs including the developer fee and any costs of providing down payment and closing cost assistance — regardless of the source of funds. Prior to closing any sale of a property, after actual total development cost is calculated as described above, and the first mortgage lender's appraisal has been received by the City, the sale price must be reduced to the lesser of the following three amounts if less than the contract price: 1) the actual development costs, or 2) the amount of the first mortgage lender's appraisal or 3) In unique circumstances at the discretion of the Department Director, the sales price of the home may be set lower than either total development cost or appraised value if needed to make the project feasible and meet funding guidelines. 1.6 SETTING THE HOMEBUYER SUBSIDY The maximum homebuyer subsidy for new construction in the City's Target Revitalization Areas is up to $45,000. This amount is reviewed and set on a yearly basis depending on direction from the City Council and the City's Consolidated Action Plan. While no set calculation is given, determining a reasonable level of assistance should be the difference between the sales price of the home and the amount of the first mortgage the homebuyer can afford. The Department Director can approve additional subsidy with justification to the file if the need arises. The Homebuyer Subsidy equals the assistance provided on behalf of the homebuyer. This may be provided in the form of the following: all or part of the closing costs (up to plus a contribution towards the down payment and/or an affordability subsidy to reduce the principal amount of the first mortgage and lower the monthly payments of the homebuyer to make the house affordable. For NSP assistance, the Subsidy may only be used to pay up to 50% of the down payment required by a lender. For example, if a lender requires a minimum 3% down payment, then the buyer must provide 1.5% from their own cash. Once applicants (prospective homebuyers) have received counseling from a HUD- certified and City-approved agency, and obtained the necessary certificate and are prequalified by a financial institution and have been certified as income-eligible, the City will determine the amount of subsidy. In most instances of development of homes for sale, the homebuyer subsidy does not require additional advances of funds at the settlement of the sale, since the amount of previous investments in a home typically are equal to or exceed the amount of Homeowner Subsidy. In other words, in most cases, Homeowner Subsidy is a paper transaction at the settlement, which does not require additional cash. 7 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 Recapture Requirements - The portion of this subsidy provided with City funds is subject to recapture if the homebuyer sells or otherwise disposes of the home during the Affordability Period. This applies to projects funded only with City funds. • Any portion of a recaptured homebuyer subsidy that was initially provided by City funds would be program income to the City. The portion of the recaptured subsidy that was initially provided with each source of federal funds, such as NSP, HOME or CDBG, would be classified as program income to such program(s), the amount of which would be determined on a pro rata basis, proportionate to such funds contributed in relation to the total contribution. When homebuyers sell their house during the affordability period, then the homebuyer subsidy will be recaptured, subject to available net proceeds. The following calculation is made to determine how much of the homebuyer subsidy is recaptured: + Sales price for the house - Mortgage principal repaid to lender - Seller's closing costs - Seller's real estate sales commission =Seller's net proceeds from sale - Cost of any capital improvements to the property paid by the homeowner - Down payment paid out of pocket when the house was initially purchased -Amount made in previous payments to the City in repayment of the City subsidy =Amount subject to recapture If the homebuyer subsidy to be repaid is greater than the amount subject to recapture, then the seller only needs to repay the amount that is available. If the homebuyer subsidy is provided using funds from another federal program in addition to the City funds used for subsidy, and such other funds are designated as positioned either ahead or behind the City funds used for subsidy, then the allocation of the funds recaptured between the City funds used for subsidy and the other program(s) must reflect the relative position of each such program funds. Resale Requirements In limited circumstances and depending on funding sources (such as County participation in the project), the resale provision may apply instead of the recapture provision. The HOME resale requirements are established in the HOME rule at§92.254(a)(5)(i). Under HOME resale provisions, the PJ is required to ensure that, when a HOME- assisted homebuyer sells his or her property, either voluntarily or involuntarily, during the affordability period, • The property is sold to another low-income homebuyer who will use the property as his or her principal residence; • The original homebuyer receives a fair return on investment, (i.e., the homebuyer's downpayment plus capital improvements made to the house); and 8 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 • The property is sold at a price that is "affordable to a reasonable range of low-income buyers." If a PJ only provides HOME assistance to develop the unit and HOME funds are not used to lower the purchase price from fair market value to an affordable price, resale provisions must be used. 1.7 EXECUTING THE SALE Pre-Approval for First Mortgage Loan - Once the applicant has obtained pre-approval for a first mortgage loan, they will return to the City. The first mortgage must be no more than a 30 year fixed-rate mortgage from a reputable lending institution, and the annual percentage rate and closing costs must be reasonable. The banks are typically requiring at least a 620 on the credit score in order to provide financing. The final HUD-1 Settlement Statement must be sent to the City prior to closing. The lending institution must create and service an escrow account for the receipt of property tax and insurance payments from the buyer. The homebuyer shall obtain a standard homeowners insurance policy in the amount of the full replacement costs of the home, and include windstorm, along with general liability coverage as required by the lender. All houses located within a designated flood zone must also obtain and maintain a flood insurance policy. All required insurance policies must be maintained for the term of the loan. The City of Clearwater must be listed as loss payee during the term of the loan. Notification of Approval or Denial - Upon completion of the tasks described above, the City will inform buyers in writing of their eligibility or ineligibility for homebuyer assistance, conditional upon completion of homebuyer education and training, signing a purchase agreement for an eligible home, obtaining first mortgage financing, and notification of the required minimum down payment amount. The written notification (Exhibit X.X Conditional letter of Approval) will include the amount of financial assistance that buyers qualify for and preliminary disclosures of the terms of that financial assistance. Confidentiality of Client Data - The City will observe all Privacy Act requirements and keep client data in locked file cabinets or password-protected electronic files. Waiting List -As necessary, the City will establish and maintain a waiting list of all prospective homebuyers who are approved for assistance. The City will follow these procedures. • Priority for selecting a completed home will be determined by the date that a client's application for assistance was approved following the completion of homebuyer education and pre-approval by a financial institution (that is, the client with the earlier date of approval shall have priority for selection). • As a home or group of homes becomes available for sale, the home(s) will be offered first to the client with the highest priority, and if not selected, then to the client with the second highest priority, etc. • Homes will be offered to a client only if the prices are affordable to the client as determined by the program underwriting analysis embedded in the application for assistance. 9 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 • Each client will have three opportunities to reject a home or groups of homes offered and maintain his or her priority. After a third rejection, a client's priority will fall to the bottom of the waiting list. Executing Sale Agreements with Buyers - Simultaneous with executing a purchase agreement, the City will issue a commitment letter (Exhibit 1.D) for the exact amounts of Homeowner Financial Assistance that the Buyer will be provided if the sale is completed. The commitment letter is intended, in part, to aid Buyer in obtaining a first mortgage loan. If an applicant has not met all of the requirements for purchase, no commitment letter should be issued. The commitment letter will be conditional upon no substantial changes occurring in the NSP Buyer's employment or financial status at the time of closing. Prior to executing a purchase agreement, the City will provide the Buyer with a second and final disclosure statement, (Exhibit 1.E). The final disclosure statement will reiterate the requirement for Buyer to attend pre-purchase counseling, and indicate the possession of a certificate of completion by the City. The statement will also describe the availability and terms of homebuyer subsidy, and obligations for repayment of subsidies on homes sold. A representative of the City will meet with the applicant to review these disclosures with them and be available to answer questions about the disclosures. Originating the Subsidy Recapture Lien Documents -The amount of Homeowner Financial Assistance provided to a Buyer as provided in this Policy will be secured by a promissory note and mortgage with the City of Clearwater named as lien holder at 0% interest. Instructions for filling out the lien documents can be found in Exhibit 1.J. All payments of principal will be deferred until buyer sells the home, transfers it, or violates the terms of the lien. At least seven working days prior to each closing of a home sale, the City will prepare a promissory note, mortgage deed (or deed of trust), (Exhibit 1.G and 1.H) and accompanying disclosure statement, utilizing a template reviewed by the City's attorney. The amount of the lien will be the amount of Homeowner Financial Assistance provided for in the Buyer's Commitment Letter, as originally provided or amended. The dated and signed Commitment Letter will be included in the file. The closing —The closing of the City's mortgage must occur simultaneously with the closing of the first mortgage. Closing agent must return copies of the executed first mortgage documents to the City. Except for documents to be recorded, all executed loan documents should be forwarded to the City immediately after closing. 1.8 HOMEBUYER COUNSELING National If the prospective homebuyer acquires a home, the housing counseling Objective costs are eligible under the applicable eligible use as project delivery costs. The counseling process will lead some prospective purchasers to conclude that they are not ready to buy a home. Eligibility to Before a prospective buyer is referred to counseling, the buyer must attend complete the Application for Assistance. (Exhibit 1.13). The information counseling obtained in the application will be used, along with verifications by City staff to determine a buyer's eligibility to purchase a home and to 10 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 receive Homeowner Financial Assistance. While forms may be filled out in advance by applicants, the application will be completed in a face-to- face meeting with a qualified representative of the City. Applicants will be required to bring evidence of employment, residence, income and assets to the intake and application interview in order to make an initial determination of eligibility. A household must also meet the program income eligibility requirements. The household must earn at or below 120% of the area median income (AMI) for the location for NSP3 Assistance. The household must earn at or below 80% of the AMI for HOME assistance. Program To provide the counseling necessary to prepare prospective Goal homebuyers for the home purchase and homeownership, a minimum of 8 hours of housing counseling must be completed and a certification form provided to the City by each household. Organization All counseling services will be provided by a HUD-approved Housing to provide Counseling Agency procured by the City of Clearwater, following the counseling procurement requirements at 24 CFR 85.36. Currently, these services services are offered by the following agencies: • Tampa Bay CDC • Community Services Foundation A process map for how Homebuyer Counseling is handled can be found in Exhibit 11. 1.9 DOCUMENTATION A checklist with a list of the content of a homeownership property file can be found in Exhibit 1.D. Did we ever get this? 1.10 PROCESSING PAYMENTS AND MANAGING PROGRAM INCOME Expenditures are reviewed by the Housing Manager or Housing Coordinator and submitted to the Controller for processing. The Controller prepares an Authorization for Disbursement, coding the expenditure to the appropriate fund and project number. The Director of Economic Development and Housing approves all expenditures which are then processed by the City of Clearwater Finance Department. The Controller enters the expenditures into the DRGR or IDIS system and the draws are approved by the Housing Manager. Funds received as program income are deposited into the appropriate fund with a notation indicating the project number. A spreadsheet is maintained detailing the expenditures and program income associated with each project. The total program income received is monitored monthly to ensure that the funds are being used in new projects. 1.11 ANNUAL MONITORING The City will monitor the borrowers and housing units on an annual basis to ensure 11 EXHIBIT: Homeownership Policy— New Construction 2014-01-14 compliance with program regulations. The monitoring will include, but not be limited to, the following: • Owner—occupancy (Certification) • Property Tax Inquiry • Hazard Insurance Inquiry • Official Records Inquiry • Unit Inspection Inquiry The City will forward an annual self-certification of residency to the homebuyer via return receipt requested mail. The buyer shall provide the City with a copy of at least one utility bill to document owner occupancy. In the event that an owner does not continue to occupy the unit as their primary residence, or is otherwise in non-compliance, the City will consult with its attorney to identify the applicable next steps. 1.12 ROLES AND RESPONSIBILITIES The Department Director will assign roles and responsibilities for the implementation of this program. In general, the Housing Coordinator is responsible for the underwriting and processing of the Application for Assistance, file reviews, and coordinating with non- profits acting on behalf of the City and lenders with the processing of the loan for homebuyer assistance. The Housing Manager will provide oversight and technical assistance. The Controller will process payments and maintain financial records. The Department Director approves payments and oversees overall program with the authority to approve exceptions as defined in this Policy. EXHIBITS: 1.A Income Certification Forms 1.13 Application for Assistance 1.0 Disclosures at Time of Application 1.D Commitment Letter 1.E Final Disclosures Prior to Purchase Agreement 1.F Purchase Contract 1.G Promissory Note 1.H Mortgage 1.1 Land Use Restrictive Agreement 1.J NSP Liens, Deeds and Declarations Procedures 1.K Realtor Referral Agreement 11 Housing Counseling Process Map 1.M Clearwater NSP Homeownership Project Feasibility Analysis Instructions 1.N Clearwater NSP Homeownership Project Feasibility Analysis Template 12