CITY OF PORTERVILLE. PROGRAM GUIDELINES FIRST TIME LOW INCOME HOME BUYER PROGRAM CDBG, HOME, and CalHome

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1 CITY OF PORTERVILLE PROGRAM GUIDELINES FIRST TIME LOW INCOME HOME BUYER PROGRAM CDBG, HOME, and CalHome INTRODUCTION The City of Porterville s First Time Low Income Home Buyer Program (FTHB) will provide selected qualified applicants with second trust deed loans to use toward reducing the first mortgage liability on the home and/or assist in the down payment (that portion that is eligible for gifting or local government assistance) and/or eligible closing costs. This loan will assist the lower income applicant in purchasing an affordable home in the City of Porterville. The total amount of City assistance through this program may not exceed $40,000 per household. The secured loan will be deferred for thirty (30) years at a rate of 1% simple interest with the total balance due at the end of that 30 year term, sale of property, transfer of title, or the borrower no longer occupies the home. In order to be eligible, the borrower s income must fall between 30% and 80% of the median income of the Visalia-Porterville- Tulare MSA, adjusted for family size, as defined annually by the U. S. Department of Housing and Urban Development. In order to qualify for a loan through the FTHB Program, the applicant must not be able to purchase a home with current assets, but must otherwise qualify for a home loan through a lending institution. PROGRAM OUTREACH AND MARKETING All outreach efforts will be done in accordance with state and federal fair lending regulations to assure nondiscriminatory treatment, outreach and access to the Program. No person shall, on the grounds of age, ancestry, color, creed, physical or mental disability or handicap, marital or familial status, medical condition, national origin, race, religion, gender, sexual orientation, or other arbitrary cause be excluded, denied benefits or subjected to discrimination under the Program. The City will ensure that all persons, including those qualified individuals with handicaps have access to the Program. A. The Fair Housing Lender and Accessibility logos will be placed on all outreach materials. The City will continue its marketing of the program to the public through press releases, fliers at public counters in high traffic areas, at fair booths and at special events. All of the materials are available in both English and Spanish, which is the language that is the primary language of a significant portion of the area residents. The marketing materials will also be distributed to mobile home parks, and additionally, the City will continue their cooperative relationship with the Housing Authority of the County of Tulare in coordinating targeted outreach to the tenants in public housing. 1

2 B. The City will work closely with local real estate agents and primary lenders to explain the Program requirements for eligible housing units and homebuyers, and to review Program processes. Local real estate agents and primary lenders will also be encouraged to have their customers participate in the Program. C. Section 504 of the Rehabilitation Act of 1973 prohibits the exclusion of an otherwise qualified individual, solely by reason of disability, from participation under any program receiving Federal funds. The City will take appropriate steps to ensure effective communication with disabled housing applicants, residents and members of the public. PROPERTY ELIGIBILITY REQUIREMENTS A. Housing unit types eligible for the homebuyer program are new or previously owned: singlefamily detached or attached houses, condominiums, or homes in mobile home parks, in a common-interest development or on a single-family lot and placed on a permanent foundation system. Manufactured homes unless on a permanent foundation system, are not allowed. B. Loans will only be made on residential zoned properties located within the city limits of Porterville. Existing homes to be financed under this program must be constructed after 1978, unless the pre-1978 dwelling can pass a visual assessment that reveals no visible signs of deteriorated paint surfaces (no cracking, peeling, and scaling, chipping or loose paint). Such assessment must be certified by the appraiser on the appropriate HUD form and by City staff (Building Inspector and/or Development Assistant) on the official inspection form. The homebuyer will also be trained in the visual inspection process and will be required to inspect and sign the inspection report determining the results of the visual assessment. Anyone certifying a visual assessment must have taken the on-line visual assessment course provided by HUD and received the course completion certificate. Visual assessment training will be provided to the borrower as part of the required homebuyer education course. The buyer must be given a copy of and asked to read the EPA pamphlet, Protect Your Family From Lead in Your Home and also must be provided a disclosure statement from the seller ( Seller s Lead-based Paint Disclosure notice (Attachment 1) including all known information about the lead-based paint hazards; and records or report pertains to the presence of lead base paint.) City staff will complete the FTHB checklist from the HOME management manual and place in applicant file. C. Purchase Price Limits for this program are based on the HOME Program Maximum Purchase Price/After Rehabilitation Value Limits (203b Limit) (Attachment 2) published annually and subject to change with updates by HCD. If primary financing sources have lower maximum price limits, then those prices will be the established maximum. D. Tenant occupied properties 1 will not be eligible for FTHB assistance unless the occupying tenant is the prospective buyer of the property or properties have been vacated at least 90 days prior to any executed purchase agreements with current owner and prospective buyer. Seller will not be entitled to any relocation payment assistance. Seller must be provided a Disclosure to Seller with Voluntary Arm s Length Purchase Offer (Attachment 4). Such document is to be signed by seller and returned to the City prior to funding. E. All housing units must meet State health and safety code and local code requirements and ordinances before close of escrow. 2

3 F. All housing units must be documented as to flood zone status and housing units located within a 100 year flood zone will be required to provide an elevation certificate and proof of flood insurance in order to close escrow with the City named as loss payee. G. City shall seek approval from the Department of Housing Community Development for any concentration of FTHB beneficiaries in the same subdivision (due to NEPA and marketing requirements). H. Housing unit size shall be sufficient to meet the needs of the homebuyer household, without overcrowding. Housing must be modest, so it may not exceed three bedrooms and two bathrooms unless there are documented extenuating circumstances (e.g. it would create an overcrowding situation, there is not a reasonable inventory of homes of this size, etc.) and the Loan Committee approves the exception request. I. Prior to close of escrow, an appraisal shall be prepared by an independent, State-licensed appraiser, who has the knowledge and experience necessary to appraise residential property. The appraisal must use the sales of comparable properties approach to determine value and must have been prepared within the past six (6) months. J. After a home is purchased using the First Time Homebuyer Program, such home shall not be eligible for the City s housing rehabilitation program (HRLP) beginning one year from the filing of project completion through the relevant period of affordability up to 15 years and must meet all other requirements of the HRLP program. 1 Property vacant for 3 months, before the offer to purchase is submitted, is considered vacant property and, therefore, eligible. HOUSEHOLD ELIGIBILITY REQUIREMENTS A. Households shall have sufficient income and credit worthiness to qualify for primary financing from one of the Participating lenders. B. Households shall be required to have sufficient liquid assets to be able to provide a minimum investment toward the down payment and/or closing costs. A down payment of 3.0% is required. However, depending on the requirements of the primary lender, 2% may come from other eligible sources (i.e. gift, seller contribution, etc.). In all cases a minimum cash investment of 1% of the 3.0% will be required from the homebuyer. C. An eligible homebuyer means an individual or individuals or an individual and his or her spouse who meets the income eligibility requirements and is/are not currently on title to real property. Documentation of homebuyer status will be required for all homebuyers. Applications will be accepted from households who meet the first-time homebuyer definition as established by the Title 25 California Code of regulations. First-Time homebuyer means a borrower(s) who neither have, nor has had, a present ownership interest in a principal residence at any time during the three year period prior to the date on which the program loan will close and who has not previously received a loan from a Department of Housing and Community Development (HCD) funded program. All borrowers that will take title to the property must meet this requirement. First Time Home Buyer by definition means: an individual or individuals or an individual and his or her spouse who have not owned a home during the three-year period before the purchase of a 3

4 home with City assistance, except that the following individual or individuals may not be excluded from consideration as a first time homebuyer under this definition: (1) A displaced homemaker who, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse. A displaced homemaker is an adult who has not, within the preceding two years, worked on a full-time basis as a member of the labor force for a consecutive twelve-month period and who has been unemployed or underemployed, experienced difficulty in obtaining or upgrading employment and worked primarily without remuneration to care for his or her home and family; (2) A single parent who, while married owned a home with his or her spouse or resided in a home owned by a spouse. A single parent is an individual who is unmarried or legally separated from a spouse and has one or more minor children for whom the individual has custody or joint custody or is pregnant; or (3) an individual or individuals who owns or owned, as a principal residence during the three-year period before the purchase of a home with City assistance, a dwelling unit whose structure is: (a) (b) not permanently affixed to a permanent foundation in accordance with local or state regulations; or Not in compliance with state, local, or model building codes and cannot be brought into compliance with such codes for less than the cost of constructing a permanent structure. D. Co-borrowers/co-owners other than owner occupants will not be permitted. This rule is included to prohibit investors from utilizing qualified persons to purchase a property for their own investment purpose and their financial gain. E. In accordance with Federal Regulations, no member of the governing body and no official, employee or agent of the local government, nor any other person who exercises policy or decision-making responsibilities (including members of the loan committee and officers, employees, and agents of the loan committee, the administrative agent, contractors and similar agencies) in connection with the planning and implementation of the Program shall directly or indirectly be eligible for this Program. Exceptions to the policy can be made only after public disclosure and formal approval by the governing body of the locality and HUD or HCD. F. Conflict of Interest requirements: When the City s program contains Federal funds, the applicable Conflict of Interest requirements of 24 CFR Section shall be followed for CDBG assistance, and Section of the HOME Final Rule shall be followed for HOME assistance. G. All applicants to go on title must have completed a City-sponsored home buyer education course, including verification of receipt of an EPA approved Lead Base Paint notification pamphlet such as the The Lead-Safe Certified Guide to Remodeling Right and complete a lead base paint visual assessment course provided by HCD or HUD prior to selecting property and submitting an application for loan assistance to the City. 4

5 INCOME QUALIFICATION CRITERIA Annual Household adjusted gross income shall not exceed 80% or be below 30% of the Visalia- Porterville-Tulare MSA, adjusted for family size. Household means one or more persons who will occupy a housing unit. Unborn children will not count in family size determination. For CDBG and HOME Program loans, the income limits are based on the current available Income Limits annually determined by U.S. Housing and Urban Development Department. (Attachment 5). In the case of the CalHome Program, the income limits are the State Income Limits published by the Department of Housing and Community Development in the California Code of Regulations (Attachment 5). The Annual Income definition as found at 24CFR Part 5 is the annual gross income of all adult household members that is projected to be received during the coming 12-month period, and will be used to determine program eligibility. For those types of income counted, gross amounts (before any deductions have been taken) are used and the types of income that are not considered would be income of minors or live-in aides. The verification of household income is done through third-party verification and/or by review of documents (submittal of tax returns, W-2 s, pay stubs, verification of employment, bank statements). Certain other household members living apart from the household also require special consideration. The household s projected income must be used, rather than past earnings, when calculating income. 1) For HCD Programs the City of Porterville will abide by the Income Calculation & Determination Guide for Federal Programs. 2) For CDBG funded Programs, the Technical Guide for Determining Income and Allowances will be used in income determination. The income inclusions and exclusions can also be found on the internet by searching for HCD income inclusions and exclusions. (Attachment 6) B. For lender s qualification, gross income will be calculated using underwriting guidelines recommended by the lenders approved for the program. However, for the City s program qualification, gross income will be calculated using HUD 24CFR Part 5 as discussed above or the California Code of Regulations, Title 25, Section The applicant will be required to provide all documentation and information required by the lender. C. The prospective borrower s credit report shall indicate an ability to repay all debts, including: (1) Credit score must be a minimum of 600 unless compensating factors are provided and/or justifiable evidence is provided that reduces risk. A twelve (12) month history of on-time payments for revolving accounts or alternative forms of credit (i.e. rent history, cell phone, gas or electricity account) is also required. (2) No outstanding unpaid judgments or involuntary liens at the time the City s loan is recorded; (3) No bankruptcies, which have not been dismissed prior to the recordation of the second mortgage loan. (4) No credit accounts past due at the time the prospective borrower s second mortgage loan is recorded. 5

6 MAXIMUM PURCHASE PRICE Purchase Price Limits for this program are based on the HOME Program Maximum Purchase Price/After Rehabilitation Value Limits (203b Limit) (Attachment 2) published annually and subject to change with updates by HCD. If primary financing sources have lower maximum purchase price limits, then those prices will be the established maximum. Note: for HOME and CalHome-funded Programs the home purchase price of owner-occupied and homebuyer properties must be limited as follows: For CalHome-funded Programs, the purchase price can not exceed 100% of the area median purchase as established by comparable sales or information provided by the California Real Estate Association; for HOME-funded Programs the value (with or without rehabilitation) can not exceed 95 percent of the area median purchase price as established by HCD and HUD. PRIMARY LOAN LIMITS AND TERMS; UNDERWRITING REQUIREMENTS A. The borrower shall obtain a fully amortized first lien position mortgage loan, with a term not less than 30 years, from a participating mortgage lender at the maximum amount consistent with an affordable housing cost. B. The first mortgage loan fixed interest rate shall not have an interest rate more than the current market rate for the type of property being financed. C. Temporary or permanent interest rate reductions (buy downs) and adjustable interest rate first mortgages are prohibited. D. No financing, junior or senior to the Program loan, may have a balloon payment due before the maturity date of the Program loan. E. Under the CalHome Program, all subordinating financing shall defer all principal and interest payments for the term of the CalHome Program loan. F. First mortgage lenders shall be required to collect and manage impound accounts for payments of taxes, assessments and hazard insurance for the term of the first mortgage. This is to ensure that they remain current. G. The maximum loan-to-value ratio on the first mortgage shall not exceed lender s policy. Depending on the requirements of funding source, the monthly insurance premiums are determined at an applicable percentage rate of the total mortgage loan divided by 12 months. H. Cash transactions and oral agreements outside of escrow are prohibited. I. Excess Escrow Funds shall be paid to City of Porterville s re-use account and credited as a principal reduction to the Borrower s loan. No excess funds shall be remitted to any party other than the City without the express written consent of the City of Porterville. In any event, the required 1% down payment from the homebuyer must be met. 6

7 ESCROW PROCEDURES The escrow/title company shall review the escrow instruction provided by the Program lender and shall issue a California Land Title Association (CLTA) and the American Land Title Association (ALTA) after closing. The CLTA policy is issued to the homebuyer and protects them against failure of title based on public records and against such unrecorded risks as forgery of a deed. The ALTA is issued to each lender providing additional coverage for the physical aspects of the property as well as the homebuyer s title failure. These aspects include anything which can be determined by only physical inspection, such as correct survey lines; encroachments; mechanics liens; mining claims and water rights. The Program lender instructs the escrow/title company in the escrow instructions as to what may show on the policy; the amount of insurance on the policy (all liens should be covered) and the loss payee (each lender should be listed as a loss payee and receive an original ALTA). SUBORDINATE FINANCING With today s high costs, in order for a low-income household to obtain a home, several funding sources might be required. Subordinate loans may be used to cover mortgage subsidy costs that exceed the Program maximum loan amount. All subordinate liens must have the payments deferred and the term must be for at least as long as the term of the Program loan. THE PROGRAM LOAN A. Maximum Amount of Program Assistance- The maximum secured second trust deed loan under this program shall be the lesser of $40,000 or the amount necessary to qualify a household for financing the house, regardless of the bedroom size. The amount of Program assistance to a homebuyer toward purchase of a home shall not exceed the maximum HOME subsidy limit for City s County per bedroom as designated by Section 221(d)(3) (Attachment 3). This loan is to be secured. The Lender must qualify the applicant for the greatest amount possible for the first trust deed mortgage loan. The difference between the primary mortgage loan and the total purchase price will be the City of Porterville subsidy (not to exceed $40,000). For example, if an applicant is qualified by the primary lender for a maximum first mortgage of $130,000, the purchase price of the home cannot exceed $170, using the City s assistance subsidy limit of $40,000. The City will be completing a Feasibility Analysis spreadsheet to assist in determining the level of assistance. QUALIFYING RATIOS: Front-End (housing): debt-to-income ratio shall be between 25% and 30% and is the percentage of a borrower s gross monthly income (before deductions) that would cover the cost of the loan principal and interest payment, property taxes, property insurance, mortgage insurance, and Home-Owner-Association (HOA) dues, if any. Back-End (total): debt-to-income ratio shall be between 28% and 35% and is the percentage of a borrower s gross monthly income that would cover the cost of housing as described in the paragraph above, plus any other monthly debt payments like car or personal loans and credit card debt, as well as child support and alimony payments. If the ratios are above the qualifying standards, there must be compensating factors given and approved by the Community Development Financial Assistance Review Committee. 7

8 Some of the more common compensating factors include: 1) The prospective borrower has successfully demonstrated over a minimum 12 month period the ability to pay housing costs equal to or greater than the proposed monthly housing costs for the property to be purchased. This means successfully handling housing costs plus any other household debt; or 2) The prospective borrower has demonstrated a conservative attitude toward the use of credit and an ability to accumulate savings; or 3) The prospective borrower has substantial non-taxable income; or 4) Previous credit history shows that the prospective borrower has the ability to devote a greater portion of income to housing expenses; or 5) There will be no more than a five (5) percent increase above the prospective borrower s current housing expense. RATE AND TERMS FOR PROGRAM LOAN A. The secured second trust deed loan will be deferred for thirty years at the rate of 1% simple interest for the term of the loan. The loan will become due and payable if the borrower(s) sells his/her home or if there is any change to the name(s) on title except for allowed transfers as detailed in Section C. Voluntary payments may be made during the term of the loan, but must be for a minimum of $50 and paid only once monthly. The principal plus deferred interest will be due and payable in one lump sum at the time of change of title, at the end of the 30-year loan repayment period, or when the loan is accelerated as detailed in Section C and D. The borrower may pay the loan at any time without a penalty. B. Combined Loan-To-Value Ratio: The loan-to-value ratio for a Program loan, when combined with all other indebtedness to be secured by the property, shall not exceed 100% of the sales price plus a maximum of up to 5 percent of the sales price to cover actual closing costs. C. As part of keeping the loan from going into default, borrower must maintain property insurance coverage naming the City as loss payee in second position. When a property is located in the 100-year flood plain, the borrower will be required to carry the necessary flood insurance. A certificate of insurance for flood and for standard property insurance with an endorsement naming the City as additional insured will be required at close of escrow. The City will verify the insurance on an annual basis. D. Since the borrower s loan is in second position behind an existing first mortgage, it is the City s policy to prepare and record a Request for Notice of Default for each senior lien in front of the City loan. This document requires any senior lien holder listed in the notice to notify the City of initiation of a foreclosure action. E. The City requires that borrower annually prove occupancy during the term of the loan. The City will annually verify that the homeowner has remained the owner-occupant by using City utility billing, insurance information, or self-certification forms mailed directly to the homeowners. 8

9 DUE UPON SALE OR TRANSFER REQUIRED NOTICING RESTRICTIONS ON ANY CHANGES OF TITLE OR OCCUPANCY A. The secured loan shall become due and payable at the time of the property s transfer or sale, or when the acceleration clause in the loan documents is triggered, except: 1) If the owner of the property dies, and the heir (see note below) to the property meets income requirements, the First-Time Homebuyer definition, and intends to occupy the home as a principal residence, the heir may be permitted, upon approval of the City, to assume the loan at the rate and terms the heir qualifies for under the current participation guidelines. If the property owner dies and the heir does not meet eligibility requirements, the loan is due and payable. NOTE: Heir is one who acquires property upon the death of another, based on the rules of descent and distribution, namely, being the child, descendant or other closest relative of the dear departed. It also has come to mean anyone who takes (receives something) by the terms of the will. An heir cannot be determined until the moment of death of the person leaving the property, since a supposed beneficiary (heir apparent) might die first. A presumptive heir is someone who would receive benefits unless a child was later born to the current owner of the property the presumptive heir hopes to get someday. A legally adopted child gains the chance to be an heir upon adoption as if he/she were the natural child of the adoptive parent or parents, and is called an adoptive heir. A collateral heir is a relative who is not a direct descendant, but a brother, sister, uncle, aunt, causing, nephew, niece, or a parent. It is noteworthy that a spouse is not an heir unless specifically mentioned in the will. He/She may, however, receive an inheritance through marital property or inadvertently or accidentally omitted from the will, and can claim he/she would (should) have received as an heir. 2) Required Period of Affordability (Attachment 7) First Time Homebuyer units assisted with HOME funds (does not apply to loans under CalHome Program) are required to remain affordable for a designated minimum length of time. The affordability period is dictated by the amount of HOME funds committed to each HOME-assisted unit. The Homeownership Affordability Periods are: Amount of HOME Assistance Minimum Period of Affordability in Years Less than $15,000 5 years $15,000 to $40, years More than $40, years B. The following transfers of interest shall not require the repayment of the loan: (A) (B) Transfer to a surviving joint tenant by devise, descent, or operation of law on the death of a joint tenant; A transfer, in which the transferee is a person who occupies or will occupy the property, which is: (i) (ii) (iii) a transfer where the spouse becomes an owner of the property; a transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement by which the spouse becomes an owner of the property; or a transfer into an inter-vivos trust in which the borrower is and remains the beneficiary and occupant of the property; 9

10 C. The acceleration clause will be in effect when the property is no longer the principal place of residency, or upon discovery of willful misrepresentation or fraud in connection with the program. Rental of the property is prohibited and will cause the loan to be accelerated. D. Refinancing of the property will accelerate the loan except that re-subordination is allowed if requirements and conditions are met as found in (Attachment 7). E. The loan is not assumable, but if an income eligible household buys the property, a new City loan may be granted to the applicant. F. In the case of CDBG and HOME loans, deed restrictions to insure long-term affordability will follow the funding source s guidelines. Additional restrictions may be placed on homes located within the Porterville Redevelopment Project Area. For further information regarding restrictions in the Redevelopment Area, contact the City s Community Development Department. In any loan transaction where the CalHome Program loan is the only subsidy, the borrower cannot be restricted from selling the home at its fair market value at any time. G In all cases where there is a change in title or occupancy or use, the borrower must notify the City in writing of any change. City and borrower will work together to ensure the property is kept in compliance with the original Program terms and conditions such that it remain available as an affordable home for low-income families. These types of changes are typical when borrowers do estate planning (adding a relative to title) or if a borrower dies and property is transferred to heirs. Changes in title or occupancy must be in keeping with the objective of benefit to low-income households (below 80% of AMI). H. The owner shall be assured a fair return on investment including the owner s investment and any capital improvement. If the Net proceeds are insufficient for the City to recapture the balance of Program Loan owed, the City shall share the Net proceeds with the owner in proportion to each party s investment in the property. The Net proceeds are the sales price less repayment of the primary loan, and closing costs. CITY LOAN PROCESSING PROCEDURES A. Applicants will be selected on a first come, first serve basis upon meeting the following criteria: 1. Applicants must be pre-qualified by the lending institutions participating in the program. A complete Borrower application package including the City s Approval Request Summary form (Attachment 8) for First Time Low Income Homebuyer Program assistance will be submitted to the City by the Lender. (The City executes a Participation Agreement with area lenders who are determined to be approved HUD lenders and have funds available for first mortgage financing). 2. City staff reviews the application packet submitted by lender and the Borrower s Application (Attachment 9) submitted by buyer and if the application meets all eligibility criteria, a loan package is then submitted to the Community Development Financial Assistance Review Committee for preliminary approval of loan assistance. If an applicant does not meet all eligibility criteria at the time of staff review, he/she will be notified in writing and will be eligible to re-apply for 6 months from the date of the notice. 10

11 3. Upon preliminary approval of the Committee, the applicant will have a maximum of sixty (60) days to find a qualified property and enter into escrow. Applicants then must complete acquisition of the property within sixty (60) days from the opening of escrow. The property selected will be submitted to the Community Development Financial Assistance Review Committee for final approval. If an applicant is not approved for assistance at the time of review by the committee, he/she will be notified in writing and will be eligible to re-apply for 6 months from the date of the notice. 4. In either case, if it appears the potential homebuyer cannot participate in the Program, the reservation of funds expires and the next person on the waiting list is given an opportunity to participate in the Program. 5. In cases where the original loan application included property selection, the Community Development Financial Assistance Review Committee has the option to give final approval at the time if all other conditions have been met. 6. The Community Development Financial Assistance Review Committee will serve as an appeals board for staff rejected loans, and review other policy and procedures as necessary. B. All properties purchased under the FTHB must comply with all local code standards. When an application is submitted with selected property, the property will be inspected by both a City Building Inspector and Community Development Department staff member, as part of the loan process, prior to submittal of the application to the Community Development Finance Assistance Review Committee for approval. A list of code related repair items will be given to the homebuyers, primary lender, and their Realtor. The Community Development Finance Assistance Review Committee must approve the property selection contingent upon the required repairs. An applicant that is approved for assistance prior to the selection of property will later need to have the proposed property inspected and submitted to the Committee for approval. Upon completion of all work required by the Building Inspector, a final inspection will be conducted prior to the close of escrow. The City of Porterville Building Inspector and/or Community Development Department staff will sign off on all required construction work assuring that each housing unit receiving program assistance is in compliance with local codes and health and safety requirements at the time of purchase and prior to occupancy. Note: For a prepaid fee of $199, an interested party, realtor, or seller, may schedule with the Building Inspector a pre-inspection of a house being considered for the FTHB program. (Revised 5/2011) 11

12 Attachment 1 Sellers Lead-Based Paint Disclosure Disclosure of Information on Lead-Base Paint and/or Lead-Based Paint Hazards Lead Warning Statement Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place your children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduces intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential real property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the seller s possession and notify the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase. Seller s Disclosure (a) Presence of lead-based paint and/or lead-based paint hazards (check (i) or (ii) below): (i) known lead-based paint and/or lead based paint hazards are present in the housing (explain) (ii) seller has no knowledge o lead-base paint and/or lead-based paint hazards in the housing. (b) Records and report available to the seller (check (i) or (ii) below): (i) Seller has provided the purchaser with all available records and reports pertaining to lead-based paint and/or lead-based paint hazards in the housing (list documents below): (ii) Seller has no report or records pertaining to lead-based paint and/or lead-based paint hazards in the housing. Purchaser s Acknowledgement (initial) (c) Purchaser has received copies of all information listed above. (d) Purchaser has received the pamphlet Protect Your Family from Lead in Your Home (e) Purchaser has (check (i) or (ii) below): (i) received a 10-day opportunity (or mutually agreed upon period) to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards; or (ii) waived the opportunity to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards. Agent s Acknowledgement (initial) (f) Agent has informed the seller of the seller s obligations under 42 U.S.C. 4852d and is aware of his/her responsibility to ensure compliance. Certification of Accuracy The following parties have reviewed the information above and certify, to the best of their knowledge, that the information they have provided is true and accurate. SELLER SELLER DATE PURCHASER PURCHASER DATE AGENT AGENT DATE 12

13 Attachment 2 State of California HOME Program Single-Family Maximum Purchase Price/After-Rehabilitation Value Limits Effective April 15, 2010 For the 203(b) limits for buildings containing more than one unit, please contact your HOME Representative. One-Unit 203 (b) Limit Alpine County 362,790 Amador County 337,250 Butte County 304,000 Calaveras County 362,790 Colusa County 302,100 Del Norte County 236,550 El Dorado County 362,790 Fresno County 289,750 Glenn County 218,000 Humboldt County 299,250 Imperial County 234,650 Inyo County 362,790 Kern County 280,250 Kings County 237,360 Lake County 304,950 Lassen County 216,600 Los Angeles County 362,790 Madera County 323,000 Mariposa County 312,895 Mendocino County 362,790 Merced County 58,383 Modoc County 200,160 Mono County 389,025 Monterey County 362,790 Napa County 362,790 Nevada County 362,790 Orange County 451,250 Placer County 362,790 Plumas County 311,600 Riverside County 362,790 Sacramento County 362,790 San Benito County 362,790 San Bernardino County 362,790 San Diego County 362,790 San Joaquin County 362,790 San Luis Obispo County 370,500 Santa Barbara County 362,790 Santa Clara County 481,650 Santa Cruz County 432,250 Shasta County 321,955 Sierra County 251,750 Siskiyou County 223,250 Solano County 362,790 Sonoma County 362,790 Stanislaus County 362,790 Sutter County 322,757 Tehama County 237,500 Trinity County 200,160 Tulare County 247,000 Tuolumne County 332,500 Ventura County 369,550 Yolo County 362,790 Yuba County 322,757 NOTE: The above value limits can and do change periodically. If there is a discrepancy between any limit in this table and a limit obtained from the HUD FHA Mortgage Limits web page ( please utilize the FHA limit and inform your HOME Representative of the change. Additionally: if the State Recipient has been granted a purchase price increase by HUD it is not reflected in the above table. 13

14 ATTACHMENT 3 STATE OF CALIFORNIA HOME PROGRAM SUBSIDY LIMITS PER UNIT SECTION 221(d) (3) (All limits are effective 10/1/10 except those highlighted, which are effective 1/1/10) COUNTY NAME O-BDR 1-BDR 2-BDR 3-BDR 4-BDR Riverside $125,928 $144,355 $175,536 $227,086 $249,271 Sacramento $141,669 $162,399 $197,478 $255,471 $280,430 San Benito $126,977 $145,558 $176,998 $228,977 $251,348 San Bernardino $125,928 $144,355 $175,536 $227,086 $249,271 San Diego $125,928 $144,355 $175,536 $227,086 $249,271 San Joaquin $137,996 $158,189 $192,358 $248,847 $273,159 San Luis Obispo $125,928 $144,355 $175,536 $227,086 $249,271 Santa Barbara $125,928 $144,355 $175,536 $227,086 $249,271 Santa Cruz $125,928 $144,355 $175,536 $227,085 $249,271 Shasta $141,669 $162,399 $197,478 $255,471 $280,430 Sierra $132,224 $151,572 $184,312 $238,439 $261,734 Siskiyou $141,669 $162,399 $197,478 $255,471 $280,430 Solano $129,076 $147,964 $179,924 $232,762 $255,502 Sonoma $126,977 $145,558 $176,998 $228,977 $251,348 Stanislaus $112,810 $129,318 $157,251 $203,430 $223,305 Sutter $129,600 $148,565 $180,655 $233,708 $256,541 Tehama $141,669 $162,399 $197,478 $255,471 $280,430 Trinity $141,669 $162,399 $197,478 $255,471 $280,430 Tulare $114,909 $131,724 $160,176 $207,215 $227,459 Tuolumne $129,600 $148,565 $180,655 $233,708 $256,541 Ventura $125,928 $144,355 $175,536 $227,086 $249,271 Yolo $130,650 $149,768 $182,118 $235,601 $258,618 Yuba $129,600 $148,565 $180,655 $233,708 $256,

15 ATTACHMENT 4 DISCLOSURES TO SELLER WITH VOLUNTARY, ARMS LENGTH PURCHASE OFFER Dear SELLER: This is to inform you that (Agency/Person) would like to purchase the property located at (Street Address or Other Property Identification), if a satisfactory agreement can be reached. We are prepared to pay $ for clear title to the property under the conditions described in the attached proposed contract of sale. Because Federal funds may be used in the purchase, however, we are required to disclose to you the following information: 1) The sale is voluntary. If you do not wish to sell, the (Agency/Person) will not acquire your property. The (Agency/Person) does not have the power to acquire your property by condemnation (i.e., eminent domain) [will not use the power of eminent domain to acquire the property.] 2) We estimate the fair market value of the property to be $, to be finally determined by an appraisal. 3.) Since the purchase would be a voluntary, arms length transaction, you would not be eligible for relocation payments or other relocation assistance under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA), or any other law or regulation. Also, as indicated in the contract of sale, this offer is made on the condition that no tenant will be permitted to occupy the property before the sale is completed. Again, please understand that if you do not wish to sell your property, we will take no further action to acquire it. If you are willing to sell the property under the conditions described in the attached contract of sale, please sign the contract and return it to us. If you were not provided with a statement of the above provisions prior to the purchase offer, you may withdraw from the agreement after this information is provided. If you have any questions about this matter, please contact Lupe Diaz His/Her telephone number is Buyer: Date: Buyer: ACKNOWLEDGMENT I (We) acknowledge receipt of this declaration prior to; or after presentation of the purchase offer. If received after presentation of the purchase offer, I (We) choose not to withdraw, from the agreement. _ Seller Date Seller 15

16 Disclosures to Seller with Voluntary, Arm Length Purchase Offer Acknowledgement As the Seller I/we understand that the City of Porterville Building Inspector and Staff will inspect the property for health and safety deficiencies. I/we also understand that public funds may be involved in this transaction and, as such, if the property was built before 1978, a lead-based paint disclosure must be signed by both the buyer and the seller, and that a Visual Assessment will be conducted to determine the presence of deteriorated paint. As the seller, I/we understand that under the City of Porterville program, the property must be currently owner-occupied, vacant for 90 days** at time of submission of purchase offer, new (never occupied), or renter is purchasing the unit. I/we hereby certify that the property is: Vacant at least 90 days**; Owner-occupied; New; Being purchased by occupant I/we hereby certify that I have read and understand the Declaration and a copy of said Notice was given to me prior to the offer to purchase. If this Notice is received after presentation of the purchase offer, I/we choose to withdraw or not to withdraw, from the Purchase Agreement. _ Seller Date _ Seller Date acknowledgement OR Seller acknowledgement may be attached as a separate page. Enclosure * NOTE: If property is not one of the following: (1) currently owner-occupied, (2) vacant for 90 days** at time of submission of purchase offer, (3) new (never occupied), or (4) renter is purchasing the unit, then relocation expenses must be paid, and this letter must be modified accordingly. See Relocation chapter of this manual. **Property can be vacant for less than 90 days with HOME management approval. See Real Property Acquisition chapter of this manual for more details. Attach evidence of HOME management approval if property has been vacant for less than 90 days. 16

17 ATTACHMENT 5 State CDBG s and HOME s INCOME LIMITS: Effective May 30, 2011 Tulare County - Visalia-Tulare-Porterville Family Size: % Median % 50% 80% 12,250 13,750 15,450 17,150 18,550 19,900 21,300 22,650 20,050 22,900 25,750 28,600 30,900 33,200 35,500 37,800 32,050 36,600 41,200 45,750 49,450 53,100 56,750 60,400 For all income categories, the income limits for households larger than eight persons are determined as follows: For each person in excess of eight, add eight percent of the four-person 50% limit to the 50% limit for eight persons and round the answer to the nearest $50. For example, the nine-person 50% limit for Alameda County equals $62,000 ($44,650 *.08 = $3,572 added to $58,950 = $62,522 rounded to $62,500) *Percentages may not be mathematically related to each other. categories because programs actual names for limits differ. Percents are used as names for the 17

18 ATTACHMENT 6 Part 5 Inclusions This table presents the Part 5 income inclusions as stated in the HUD Technical Guide for Determining Income and Allowances for HOME Program (Third Edition; January 2005). General Category (Last Modified: January 2005) 1. Income from wages, salaries, tips, etc. 2. Business Income 3. Interest & Dividend Income 4. Retirement & Insurance Income 5. Unemployment & Disability Income 6. Welfare Assistance 7. Alimony, Child Support, & Gift Income 8. Armed Forces Income The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services. The net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight-line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family. Interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as authorized in number 2 (above). Any withdrawal of cash or assets from an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by the family. Where the family has net family assets in excess of $5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rate, as determined by HUD. The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a periodic payment (except for certain exclusions, listed in Income Exclusions, number 14). Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (except for certain exclusions, listed in Income Exclusions, number 3). Welfare Assistance. Welfare assistance payments made under the Temporary Assistance for Needy Families (TANF) program are included in annual income: Qualify as assistance under the TANF program definition at 45 CFR ; and Are otherwise excluded from the calculation of annual income per 24 CFR 5.609(c). If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of: the amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities; plus: the maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities. If the family welfare assistance is reduced from the standard of need by applying a percentage, the amount calculated under 24 CFR shall be the amount resulting from one application of the percentage. Periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing in the dwelling. All regular pay, special day, and allowances of a member of the Armed Forces (except as provided in number 8 of Income Exclusions). 18

19 Part 5 Exclusions This table presents the Part 5 income exclusions as stated in the HUD Technical Guide for Determining Income and Allowances for HOME Program (Third Edition; January 2005). General Category (Last Modified: January 2005) 1. Income of Children 2. Foster Care Payments 3. Inheritance and Insurance Income 4. Medical Expense Reimbursements 5. Income of Live-in Aides 6. Income from a Disabled Member 7. Student Financial Aid Income from employment of children (including foster children) under the age of 18 years. Payments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the tenant family, who are unable to live alone). Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains, and settlement for personal or property losses (except for certain exclusions, listed in Income Inclusions, number 5). Amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family member. Income of a live-in aide (as defined in 24 CFR5.403). Certain increase in income of a disabled member of qualified families residing in HOME-assisted housing or receiving HOME tenant-based rental assistance (24 CFR (a)). The full amount of student financial assistance paid directly to the student or to the educational institution. 8. "Hostile Fire" Pay The special pay to a family member serving in the Armed Forces who is exposed to hostile fire. 9. Self-Sufficiency Program Income a. Amounts received under training programs funded by HUD. b. Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set side for use under a Plan to Attain Self-Sufficiency (PASS). c. Amounts received by a participant in other publicly assisted programs that are specifically for, or in reimbursement of, out-of-pocket expenses incurred (special equipment, clothing, transportation, childcare, etc.) and which are made solely to allow participation in a specific program. d. Amounts received under a resident service stipend. A resident service stipend is a modest amount (not to exceed $200 per month) received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development. Such services may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, resident initiatives coordination, and serving s a member of the PHA s governing board. No resident may receive more than one such stipend during the same period of time. e. Incremental earnings and benefits resulting to any family member from participation in qualifying state or local employment training programs (including training not affiliated with a local government) and training of a family member as resident management staff. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives, and are excluded only for the period during which the family member participates in the employment-training program. 10. Gifts Temporary, nonrecurring, or sporadic income (including gifts). 11. Reparation Payments 12. Income from Full-time Students 13. Adoption Assistance Payments 14. Social Security & SSI Income 15. Property Tax Refunds Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era. Earnings in excess of $480 for each full-time student 18 years old or older (excluding the head of household or spouse). Adoption assistance payments in excess of $480 per adopted child. Deferred periodic amounts from supplemental security income and social security benefits that are received in a lump sum amount or in prospective monthly amounts. Amounts received by the family in the form of refunds or rebates under state or local law for property taxes paid on the dwelling unit. 16. Home Care Amounts paid by a state agency to a family with a member who has a developmental disability 19