City of Dallas Mortgage Assistance Program Making Home Ownership A Dream Come True

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1 City of Dallas Mortgage Assistance Program Making Home Ownership A Dream Come True

2 MAP Funding Funded by: U.S. Department of Housing and Urban Development (HUD) Administered by: City of Dallas Housing/Community Services Department

3 Program Operations Mortgage Assistance Program Team David Silva, Program Coordinator Tammi Southall, Sr. Contract Compliance Administrator Melissa Hale, Loan Services Representative Pamela Beck, Administrative Assistant Office Management Cynthia Rogers-Ellickson, Interim Assistant Director Rick Robin, Development Manager

4 Success Story Program Year Families Served 153 African American % Anglo 7-4.6% Hispanic % Other Ethnic Background 3-1.9% Families Under 67% or Less of AMFI % Average Family Income $38,162 Average Sales Price $116,581 Average MAP Subsidy $15,779 Public Subsidy $2,414,188 Private Mortgage Financing Leveraged $16,017,176

5 Success Story Program Year Construction Type Existing Properties New Construction - General New Construction - CHDO New Construction Land Bank 75 Units 26 Units 44 Units 8 Units

6 Success Story Cumulative Loan Production From October 1, 1991 September 30, 2015 Total Loans Closed 7,945 Public Subsidy $82,865,366 Private Mortgage Financing Leveraged $573,041,488

7 What is MAP? The Mortgage Assistance Program (MAP) is structured with the purpose of providing home ownership opportunities for low to moderate income families, as well as incentivizing the purchase of new construction homes in order to enhance the City s property tax base. To do this, MAP provides assistance with down payment and closing costs to families who earn 80% or below of the Dallas AMFI.

8 Existing and New Homes Homebuyer Assistance Homebuyers may be eligible to obtain a soft second loan of up to $14,000 for the purchase of their Primary Residence. A maximum of $4,000 may be used for closing costs A maximum of $1,500 may be used to pay for Minimum Housing Standards (MHS) required repairs on existing properties only. The funds have a 5-year deed restriction forgiven 1/5th per year No payment, no interest Due on sale, lease, lease with option to purchase, transfer or other disposition (including contract for deed) of the property within the deed restriction period. These loans are secured by a lien on the property Conventional, FHA, or Portfolio Loans. Lenders must establish Escrow Accounts Not allowed: High Cost or Sub-Prime Loans, Adjustable Rate Mortgages (ARM), Interest only loans, Discount Points paid by Borrower, and Cash Back at Closing Sales price of the purchase property cannot exceed $183,000-Existing Homes / $228,000- New Homes. Properties occupied by a tenant other than seller/borrower must be vacated for a period of 60 days prior to execution of the sales contract.

9 Homebuyer Assistance for New Homes by: Community Housing Development (CHDO), Land Bank Lot, Neighborhood Investment Program or Approved Target Area Homebuyers may be eligible to obtain a soft second loan of up to $20,000 for the purchase of a property built by a Community Housing Development Organization (CHDO) as their Primary Residence. A maximum of $4,000 may be used for closing costs The funds have a 10-year deed restriction forgiven 1/10th per year No payment, no interest Due on sale, lease, lease with option to purchase, transfer or other disposition (including contract for deed) of the property within the deed restriction period. These loans are secured by a lien on the property Conventional, FHA, or Portfolio Loans. Lenders must establish Escrow Accounts Not allowed: High Cost or Sub-Prime Loans, Adjustable Rate Mortgages (ARM), Interest only loans, Discount Points paid by Borrower, and Cash Back at Closing Sales price of the purchase property cannot exceed $228,000

10 Eligible Borrower Requirements Borrower must be a U.S. citizen or a permanent resident with a valid Social Security Card Permanent residents must provide a copy of both sides of their unexpired immigration documents from INS Must provide the filed tax return for the last tax period Must have continuous, satisfactory employment history for the past six (6) months

11 Eligible Borrower Requirements Must successfully complete a homebuyer education course through MAP and HUD approved education provider Borrower may not have more than $4,000 plus two (2) months gross income after closing The Borrower s housing expense to income ratio may not exceed 35.00% and total debt (including housing expense) to income ratio may not exceed 45.00% Front-end ratios under 20% will be reviewed on a case by case basis to determine if there is a financial need for MAP funds. Co-Signers are not eligible.

12 Income Calculation - Household Income All sources of income for the household must be documented and will be used to determine the Annual Household Income. Income eligibility will be determined by using Definition 3: IRS Form 1040 Adjusted Gross Income Method. This will require the Tax Return for the last tax period and the MAP Verification of Employment (VOE) Form. The highest income verified will be used to determine MAP eligibility Self-employed homebuyers must provide the two (2) most recent tax returns and a current profit and loss statement [Must be Self-Employed for past two (2) years]

13 Income Calculation - Household Size Dependents: Individuals under 18 years of age, or is a person with a disability, or is a full-time student and reside in the household with the borrower. Supporting documentation for dependents must include legal documents such as: Birth Certificate Social Security Card Marriage Certificate Custodial Agreement Tax Return Dependents not counted: Foster Children Live-in aides and children of live-in aides Unborn children Children being pursued for legal custody or adoption

14 Property Requirements City Limits of Dallas ( The sales price must not exceed the appraised value of the property Types of properties: Single Family Condominium Town home 1-4 unit development Properties must be occupied by the owner or borrower If occupied by a tenant, must be vacated for a period of 60 days prior to execution of sales contract Properties must meet Minimum Housing Standards (MHS) including lead-based paint regulations

15 Property Requirements Borrower must sign notification: Watch Out for Lead-Based Paint Poisoning Borrower must receive copy of: Protect Your Family from Lead in Your Home Seller must sign Notice to Real Property Owner/Seller HUD Foreclosures built after January 1, 1978 are eligible HUD Homes must meet all MAP guidelines. All MHS required repairs must be completed prior to submission of MAP loan file. HUD Homes are not eligible for MHS repair funds. FHA 203k loans not eligible

16 MHS Repair Program MHS Repair Funds Homebuyers may use up to $1,500 from the total MAP Loan ($14,000) for MHS required repairs on existing properties Cannot be used for HUD Foreclosures MHS reviews must be completed by an authorized representative of the City of Dallas (at no cost to the homebuyer). The MHS review is to ensure the property meets standards for the program. It is not for the benefit of the homebuyer. Should be requested and performed during option period of purchase contract All MHS required repairs must be completed prior to closing Only Sellers and Contractors may be reimbursed for MHS repairs Sellers cannot be reimbursed for labor, only materials Reimbursement may only occur at closing

17 MHS Property Review Initial MHS Review Once purchase contract is executed, lender is allowed to register homebuyer to reserve funds Once funds are reserved, the MHS Review may be requested Once submitted, within 48 hours, a representative from the City of Dallas will contact the requesting party to confirm the date and time of the review. Final MHS Review Once required repairs completed, same MHS Review request process should be followed Final inspection is performed once all MHS required repairs are completed TREC Inspection Is HIGHLY recommended Not required for MAP

18 Lead-Based Paint Hazard Reduction Homes built before 1978 may have lead in the paint No deteriorated paint (chipping, peeling, cracking, flaking, chalking) Visual inspection of all painted surfaces (interior, exterior, garage, detached buildings, fences) Deteriorated paint should be addressed before the inspector arrives Provide lead booklet Protect Your Family from Lead in the Home to all borrowers

19 MHS Processing Procedures Seller must present documentation of repairs to City of Dallas Invoices for materials Construction contracts/invoices (must be fully itemized) Invoices must include the contractor s name, address, phone number and purchase property address. Invoices must reflect if PAID or NOT PAID All documentation reviewed by MHS inspector must be attached to final MHS inspection report Reimbursement will only occur if the closing of the MAP loan is finalized

20 Loan Processing Procedures All MAP loans will be registered online Loan Officers will receive a User ID and Password to access the loan registration page Once loan registered, lender will: Save registration confirmation (includes assigned MAP loan number) Submit loan package via to maploans@dallascityhall.com Within 30 days for existing properties Within 120 for all new construction properties If complete loan package not received within 30/120 day timeframe, MAP registration will expire and be deemed null and void INCOMPLETE LOAN PACKAGES WILL NOT BE ACCEPTED Estimated 10 business day turn-around

21 Closing and Funding Closing and Table Funding only at MAP participating title offices registered as a Vendor with the City of Dallas MAP lenders and City of Dallas set closing date, order documents and wire funds for closing City of Dallas authorizes funding only after the title office has provided the required documents Second-lien associated charges disclosed by Lender

22 Important Note Subsidies are subject to fund availability on a firstcome, first-served basis. Acceptance of an application for MAP in no way constitutes a commitment or obligation on the part of the City of Dallas. No commitment is made or implied until City of Dallas has approved funding for each application. Due to funding limitations, no applicant should assume any commitment even when an applicant must expend personal funds to meet application requirements.

23 Exhibits and Forms MAP Manual MAP Loan Submission Form MAP Loan Application Affidavit of No Conflict of Interest MAP Notice of 2 nd Lien Associated Charges Notice to Real Property Owner/Seller Explanation Form 1010 MAP Verification of Employment Notification: Watch Out for Lead-Based Paint Poisoning Booklet: Protect Your Family from Lead in Your Home