Applicant Instructions and Lender Guidelines

Transcription

1 Community Development First Time Homebuyer Purchase Assistance Program Applicant Instructions and Lender Guidelines Planning and Growth Management Community Development Division 533 South Dixie Highway, Suite 101 Deerfield Beach, FL (954)

2 PROGRAM SUMMARY The City of Deerfield Beach First Time Homebuyer Program is designed to provide financial assistance to very-low, low and moderate-income applicants/households to acquire their first home that will be used as their principal place of residence. Financial assistance will be provided in the form of a second mortgage, which is due upon sale, refinance, transfer, or conveyance of the property. If the loan conditions are met at the end of the deferment period, a Satisfaction of Mortgage is provided to the homebuyer. Implementation of the program is city wide, excluding areas that have not been incorporated into the city limits of Deerfield Beach. PURPOSE The purpose of the First Time Homebuyer Program is to make homeownership affordable for prospective very-low, low and moderate potential homebuyers. Funds may be used towards down payment and/or closing costs - 1 -

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4 The application process for a prospective first time homebuyer commences with the submission of a City of Deerfield Beach First Time Homebuyer Application completed entirely, signed and dated by the applicant and co-applicant (where applicable). Applicant must be approved to participate in the City of Deerfield Beach First Time Homebuyer Program prior to executing a contract for sale and purchase Application Availability: Applications for the First Time Homebuyer Program will be accepted on a continual basis. Applications may be picked up at City of Deerfield Beach, Community Development Division, 533 S. Dixie Highway, Suite 101, Deerfield Beach, FL Applications are processed on a first-come, first-qualified basis Application Submittal: Applications are to be submitted to the City of Deerfield Beach, Community Development Division, 533 S. Dixie Highway, Suite 101, Deerfield Beach, FL prior to entering into a Contract for Sale or Purchase. To expedite the processing of your application please make sure all applicable documentation is included with your application at the time of submission Maximum Income: Households with an annual income at 120% or below the median income for Broward County (Florida Housing Finance Corporation Income Limits Adjusted to Household Size attached). The City of Deerfield Beach determines the household income and not just that of the applicant. Income for all household member 18 years and older and not enrolled in school as a fulltime student is included in calculating gross annual household income

5 Liquid Assets: Borrowers with liquid assets in excess of $50,000 after closing are not eligible for purchase assistance. IRAs, pensions, 401k and other retirement accounts will not be included in asset calculation. Buyer s Contribution: Buyer is required to contribute a minimum of 2% of the sales price or $2,000 (whichever is less) toward their purchase as down payment. Maximum Subsidy: up to $50,000 for households whose gross annual income does not exceed 50% of Broward County s Median income; up to $25,000 for a household whose gross annual income is greater than 50% and does not exceed 80% of Broward County s Median income and up to $20,000* for households whose gross annual income exceeds 80% and is less than 120% of Broward County s Median income. Income subject to change without notice. *applicant does not qualify for Community Development Block Grant funds Homebuyer Workshop: Attendance is mandatory as evidenced by the workshop certificate. Workshop certificates have no expiration dates. This is a requirement for participation in the program and will empower the first time homebuyer by giving the information needed to make informed decisions. DEERFIELD BEACH HOUSING AUTHORITY P: F: URBAN LEAGUE OF BROWARD COUNTY P: F: E: [email protected] 533 South Dixie Highway, Suite 201 Deerfield Beach, FL NW 36 Avenue Fort Lauderdale, Florida NEW VISIONS COMMUNITY DEVELOPMENT CORP.(NVCDC) P: F: E: [email protected] 950 NW 11th Avenue Ft. Lauderdale, Florida BROWARD COUNTY HOUSING AUTHORITY P: F: E: [email protected] GLOBAL FAITH INC. P: F: E: [email protected] 3810 Inverrary Boulevard Suite 405 Main Office Lauderhill, Florida SW 10th Street Pompano Beach, Florida NID-HCA FRANCOIS P: F: E: [email protected] 6780 Sunset Strip Sunrise, Florida Qualified Properties: Single-family residences, condominiums, manufactured homes, town home and villas. Multi-unit, recreational, mobile, seasonal or other types of vacation or non-permanent homes are not eligible under the program. Qualified Buyers: A first-time homebuyer is someone who has not owned and occupied their principal residence in the three year period preceding closing, evidenced by previous 3 years tax returns. All applicants will be considered irrespective of age, race, color, religion, national origin, sex, marital - 4 -

6 status, military status or physical handicap. However, concession will be given if you are divorced (must provide copy of Divorce Decree and Quit Claim Deed), relocations (150 miles or more) from another area for employment purposes (must show documented proof) or displaced due to a natural disaster (documented proof). Credit Issues: Delinquency of all credit should not exceed more than five (5) times within the past 12 month period. No delinquencies to exceed sixty (60) days which shall count as 2 occurrences. No delinquencies shall occur within the past six (6) months; outstanding charge-offs, judgments or liens must be paid or provide proof of payment; repossessions allowed as long as deficiency is satisfied; bankruptcies will be evaluated by each lender. Citizenship: Non-citizen applicants may qualify under the following circumstances: (1) Borrowers with lawful permanent resident alien status must provide evidence of lawful permanent residency issued by the Bureau of Citizenship and Immigration Services (BCIS) within the Department of Homeland Security (formerly the Immigration and Naturalization Service) (2) Borrowers who are non-permanent resident aliens must satisfy the following requirements: the property will be the borrower's principal residence, the borrower has a valid SSN, the borrower is eligible to work in the U.S. as evidenced by an Employment Authorization Document (EAD) issued by BCIS. A social security card is not sufficient evidence of work status for nonpermanent resident aliens (3) Other non-citizen borrowers must satisfy requirements imposed by Fannie Mae, Freddie Mac, VA, USDA, or FHA. Persons qualifying for political asylum are eligible in this program Purchase Price: Existing and new construction sale price limit is $331,579 Closing Cost: Can be a gift, seller concession or borrowed unsecured with lender approved limitations. Eligible Areas: Properties considered for purchase must be located within the city limits of Deerfield Beach. Inspections Fees: No AS-IS contracts allowed. Cost of home inspection to be incurred by homebuyer. Home considered for purchase must be fully inspected by a licensed home inspector or inspection engineer. Repairs must be made prior to closing and reinspected and approved by the original home inspector. NO REPAIR ESCROWS allowed

7 Verification of Income and Assets: State and/or Federal Regulations require verification of all income and assets. Each household member over the age of 18 that is not a full-time student will be required to sign an Authorization to Release Information form. Release and verification forms will be mailed directly to the source

8 INSTRUCTIONS FOR LENDERS UNDERWRITING GUIDELINES - 7 -

9 INSTRUCTIONS FOR LENDERS UNDERWRITING GUIDELINES Please carefully review the First Time Homebuyers Program Guidelines to ensure the borrower s file will be underwritten according to these guidelines. This program is designed to provide an affordable housing mortgage loan to all who meet the program guidelines. The loan must be fully documented (income and assets). Purchase assistance is available on a first-come, first qualify-basis. Lender Participation: Institutional first mortgage lender is defined as any bank or trust company, mortgage banker, savings bank, credit union, national banking association, savings and loan association, building and loan association or other financial institution or governmental agency authorized to conduct business in this State and which customarily provides service or otherwise aids in the financing of mortgages on real property located in this State. Prior to commit of SHIP and or CDBG funds, lenders must meet the following criteria: Interest Rate: Only fixed rate mortgages are available through this program. Interest rate shall not exceed.5 percentage points above the rate Broward County Office of Housing Finance Agency s posted rate. Rate Lock-In: Existing property: 60-day lock from date of real estate sales contract to purchase. The original rate may be extended or the most current lender s program rate may be applied at lender discretion New/Under Construction: 60 days prior to estimated Certificate of Occupancy Construction-to-Perm: 60 days from date of mortgage approved by lender Mortgage Terms: up to 40 year fixed rate mortgage with no prepayment penalty City s Lien Position: 2 nd or 3 rd position only Assumability: The purchase assistance is not assumable. If home is sold or refinanced, the annual pro-rated portion of purchase assistance must be reimbursed to the City of Deerfield Beach Origination or Discount Fees: Not to exceed 1% of the first mortgage loan Loan-to-Value(LTV): Not to exceed 97% with no PMI Private Mortgage Insurance: No Mortgage Insurance (PMI) is allowed to be charged on any loans originated through the First Time Homebuyers Program Income/Debt Ratios: The front-end ratio can not exceed 30%. Total housing expense plus other monthly debt obligations not to exceed 45% - 8 -

10 Seller s Concessions: Up to 6% of sales price with lender s approval Co-Borrower: Use all income/all debts to arrive at ratios for qualification purposes only. Co-borrower information cannot offset poor credit. Primary Borrower source of income must represent at least 50% of qualifying income. Co-Borrower, if not household member, is not to be listed on the Warranty Deed Lender Application Fees: Due at time of application, non-refundable, must be credited towards cost at closing. Fee determined by lender not to exceed $480 (for appraisal and credit report) Items Payable in Connection with Loan: $1,500 maximum other fees (not including application fees) Credit Issues: Delinquency of all credit should not exceed more than five (5) times within the past 12 month period. No delinquencies to exceed sixty (60) days which shall count as 2 occurrences. No delinquencies shall occur within the past six (6) months; outstanding charge-offs, judgments or liens must be paid or provide proof of payment; repossessions allowed as long as deficiency is satisfied; bankruptcies will be evaluated by each lender. Escrows: Required for taxes and insurance Mortgage Application Submission to the City of Deerfield Beach: Borrowers interested in receiving down payment assistance from the City of Deerfield Beach, please submit the following from the City of Deerfield Beach preferred lenders: Mortgage Commitment signed by lender and borrower Good Faith Estimate Mortgage Credit Analysis Worksheet Purchase Money Mortgage (HUD PUR) or Uniform Underwriting and Transmittal Summary (1008) Credit Report Copy of executed Contract for Sale and Purchase Copy of Property Appraisal Report Home Inspection Report NO REPAIR ESCROWS 2 weeks before closing: provide name, contact person, address, telephone number of closing agent and proposed closing date 2 days before closing: provide HUD Settlement Statement and a copy of homeowner insurance policy(s) naming the City of Deerfield Beach as 2 nd mortgagee Closings must take place in the City of Deerfield Beach, Community Development Division Office, 533 S. Dixie Highway, Suite 101, Deerfield Beach, FL

11 City of Deerfield Beach FIRST TIME HOMEBUYERS PROGRAM * APPROVED REGISTERED LENDERS Bank of America 888 West Cypress Creek Road, 2 ND Floor Fort Lauderdale, FL Loretta Parker Jay Meyer Phone: Fax: [email protected] BankAtlantic 2100 W. Cypress Creek Road Fort Lauderdale, FL Edith Bynes Phone: Fax: [email protected] * Maria Infante (954) Gibraltar Private Bank & Trust Juan E. Rojas 220 Alhambra Circle, 5 th Floor Coral Gables, FL Phone: Fax: [email protected] B. B. & T. Banking 300 S. Pine Island Road Plantation, FL Donna Drake Phone: Fax: [email protected] City National Bank of Florida 25 West Flagler Street Miami, FL Eugene N. Simmons Phone: Cell: Fax: [email protected] * Alvaro Orozco Phone: Cell: Fax: [email protected] Northern Trust 1100 East Las Olas Boulevard Fort Lauderdale, FL Paula A. Tier Phone: Fax: [email protected]

12 City of Deerfield Beach FIRST TIME HOMEBUYERS PROGRAM * APPROVED REGISTERED LENDERS continued B. B. & T. Bank (formerly Colonial Bank) 1580 Sawgrass Corporate Parkway Sunrise, FL * Marilyn Lopez Phone: Fax: [email protected] Mortgage Solutions Inc. of South Florida NE 6 th Avenue North Miami Beach, FL Ann John Latimer Phone: Fax: [email protected] AmTrust Bank 3600 West Hillsboro Blvd. Deerfield Beach, FL Josephine Smith Phone: Fax: [email protected] *Spanish speaking

13 PREDATORY LENDING Prohibited Practices Consumer Information To combat predatory lending, the Florida Fair Lending Act, effective October 2, 2002, prohibits predatory tactics on high cost home loans, including: * Charging prepayment penalties for longer than three years * Increased interest on loans going into default * Balloon payments on loans that mature in less than 10 years * Extending credit regardless of a borrower's ability to pay * Making direct payments to home improvement contractors * Calling a loan due even though the borrower has complied with the terms of the loan * Refinancing a loan during the first 18 months, unless there is a benefit to the borrower * Offering to originate a loan at the borrower's home without a prearranged appointment * Charging late fees that exceed five percent of the payment The new law also requires lenders to disclose certain facts about the loan at least three days prior to closing the deal, including: * A mortgage will be placed on the borrower's home, and they could lose the home in the event of foreclosure. * Interest rates and terms can vary, depending on the lender or broker. * Borrowers should consider consulting a HUD approved credit counseling agency or a financial advisor regarding financing of their home. * Debt consolidation can be a useful tool if the borrower does not take on additional short-term debts. * Loan applicants do not have to accept the loan, even though they have filled out an application. * Changes in loan terms will require another three-day disclosure period

14 Predatory Lending Practices Several predatory lending practices such practices described below. Potential borrowers are pressured into including false information on loan applications or are asked to leave signature lines or other lines blank. The lender or broker alters information entered by the borrower on the loan application. Excessive fees are financed into the loan. Banks generally charge 1-2% of the loan amount in fees to originate the loan. Predatory lenders often finance fees around 8% into a loan. Borrowers pay interest rates which are higher than their credit warrants. Loans are made based on equity without regard to borrower s ability to pay. A loan has prepayment penalties. These penalties negatively affect a borrower s ability to pay off a loan early and can impact the ability to refinance. Loans are made for considerably more than the property is worth. Refinancing is generally not possible if a borrower owes more than the property is worth. A single premium credit insurance policy is financed in the loan amount. Rather than making regular payments for an insurance policy, a borrower is compelled to make one up-front payment and this payment is financed into the loan. Balloon payments make sense for some borrowers but can be extremely harmful to others. Balloon payment mortgages require borrowers to pay off the entire loan balance in one large (balloon) payment after some number of regular payments. Borrowers must often refinance to make the balloon payment. Borrowers are sold loans with negative amortization, wherein the regular payment does not cover the principal and interest on the loan. Despite making regular payments, the loan balance increases. Loan flipping occurs when lenders encourage or pressure borrowers into frequent refinancing. Benefits are often not sufficient to cover the fees charged for each refinance. Lenders place pre-dispute mandatory binding arbitration clauses in loan contracts. These clauses limit the borrower s access to injunctive relief for abuses and borrowers can be required to pay arbitration costs and travel long distances. Tips to Avoid Predatory Lending Deals that sound too good to be true usually are. Ignore high-pressure sales tactics and lenders or brokers who try to rush you. Always shop around, do not take the first loan you are offered. Look at the total cost of the loan, not just the monthly payment. Consider items like points, fees, insurance, and prepayment penalties. Never sign a blank document or a document somebody promises to fill in later. Before closing your loan, get a copy of your final loan terms and conditions. Go over them with somebody you trust and do not sign if anything looks substantially different at closing

15 Program Source/Reference: Housing Finance Authority of Broward County Applicant Instructions Housing Finance Authority of Broward County Instructions for Lenders Florida Housing Finance Corporation Single Family Mortgage Revenue Bond Program 2006 Series 4-5 FNMA Underwriting Guidelines Part 1 & 2 City of Deerfield Beach First Time Homebuyer Program Palm Beach County SHIP Purchase Assistance Program 2 nd Mortgage Subsidy Program Saint Lucie County Lending Consortium Requirements for Membership