BELOW MARKET RATE (BMR) BUYER & HOME SELECTION PROCESS City of Santa Clara: Central Park City of Santa Clara BMR Program Overview Neighborhood Housing Services Silicon Valley (NHSSV) in collaboration with the City of Santa is offering first time homebuyers an opportunity to purchase new construction Below Market Rate (BMR) homes in Santa Clara at Central Park by DR Horton. New construction single family and townhouse style homes will be offered for sale at lower than market rate prices for households earning less than 110% of the Area Median Income*. Households that purchase a BMR home will be required to sign affordable housing documents (also known as Resale Agreement or BMR Deed Restrictions, as well as a BMR Deed of Trust and Promissory Note) to ensure homes remain affordable and homeowner (s) occupied for the restricted 20 year term. BMR homeowners must resell their home during the first five years of the restricted term for the restricted sales price defined in the affordable housing documents. BMR homeowners can resell their home to whomever they choose at market rate after year six of the 20 year the restricted term and pay an equity share to the City**. Applicants must meet the following criteria and complete the steps listed below, in sequence, to purchase a BMR home in Santa Clara. Basic BMR Program Qualifications & Requirements 1. Be a First Time HomeBuyer as described by the City of Santa Clara program guidelines**; 2. Have a gross Household income of not more than 110% of the AMI, adjusted for household size - table below; 3. Qualify to purchase a BMP unit with a fixed-rate, thirty-year conventional loan, applying prudent debt-to-income ratios for principal, interest, taxes, insurance and HOA and total debt a. No short sales or bankruptcy within the last 4 years b. No foreclosures within the last 7 years 4. Attend a Homebuyer Opportunities Orientation (HOO) hosted by NHSSV; Attend an Application Workshop and obtain a Homebuyer Education Certificate (8 hour HUD class) from NHSSV Maximum Household Incomes* for the City of Santa Clara BMR program 1 2 3 4 5 6 110% AMI $81,840 $93,555 $105,215 $116,930 $126,280 $135,630 *These are the 2015 maximum household annual gross income limits for BMR program eligibility as determined by the State of California s Housing & Community Development Department. The amounts on this table are not the income needed to qualify for a first home mortgage loan. Please speak to a NHSSV Approved Loan Officer to see if you qualify for a first home mortgage loan. Santa Clara: Central Park 5/14/15 Page 1 of 6 Initials
Down payment assistance is not specifically available for new construction BMR homes in Santa Clara. Please talk to a loan officer for more information. FHA loans are not compatible with the City of Santa Clara s affordable housing documents. STEP 1: Attend a required Homebuyer Opportunities Orientation (HOO) & Application Workshop BEFORE you apply Attend an Orientation: Homebuyer Opportunities Orientations (HOOs) are hosted by NHSSV to assist interested applicants in the BMR home purchase process and to review the affordable housing documents. The orientation lasts approximately 1.5 hours. Attend an Application Workshop: Applicants are also required to attend a City of Santa Clara Application Workshop to apply for a BMR home in Santa Clara. The Application Workshop will review the BMR deed restrictions, application, BMR approval and buyer selection processes. Applications will be suspended if applicants have not attended both an Orientation and an Application Workshop. STEP 2: Submit your Santa Clara BMR Application to NHSSV All applicants must submit a City of Santa Clara BMR application by the documented deadline to NHSSV with single-sided copies of all the documents listed on the BMR application for each household member 18 years old and older. NHSSV will use the applications submitted by the deadline to build a list of BMR pre-qualified buyers for the Central Park project. Upon exhaustion of the list of BMR pre-qualified buyers after the initial application deadline for these 4 homes at Central park, homes will be available on a first come first served basis with adherence to buyer qualification and program guidelines. Please note: NHSSV can t hold or reserve properties for applicants that are in the middle of the application process, suspended, denied, or in the appeal process. Your application will be considered ineligible if you are unable to provide proof of gift funds needed for the purchase within the requested timeframe. Please review the BMR Application carefully for other BMR Program disclosures. STEP 3: NHSSV will review applications for priority criteria, preliminary program screening & mortgage eligibility All applicants must submit a complete City of Santa Clara BMR Priority Levels Ranking Form with their BMR application by the documented deadline to NHSSV with single-sided copies of all the documents listed on the form as evidence their priority level. If no proof is submitted, no priority will be issued. All proof must be submitted with the application; it will not be accepted separately. Priority Criteria The City Council has established the following Priority Criteria for the allocation of the BMR units: 1 st Priority Level: At least one household member*** who both lives within the City Limits of the City of Santa Clara and operates a business or is employed by a business or a public or quasi-public agency in Santa Clara 2 nd Priority Level: Household lives with the City Limits of the City of Santa Clara Santa Clara: Central Park 5/14/15 Page 2 of 6 Initials
3 rd Priority Level: At least one household member operates a business or is employed by a business or a public or quasipublic agency in Santa Clara 4 th Priority Level: Any other qualified applicant household without regard to residency or employment ***The qualifying household member must be the person or a dependent of a person whose name will appear on title and who will use the unit as their primary residence NHSSV will verify residency and employment for each applicant. NHSSV will apply the above-described Priority Criteria to rank BMR Program applicants. Those selected for the highest priority level will be screened first by NHSSV and selected either through a lottery selection, if necessary, or without a lottery if the number of candidates in the priority level is less than or equal to the number of units available. The list of pre-qualified (screened and selected to move to Step 4) buyers in a higher priority category must be exhausted before a BMP unit will be offered to someone who is in the next priority level. Preliminary Program Screening BMR applications will be screened by NHSSV for program and mortgage eligibility. The screening process will include review of household program qualifications and the ability to afford to purchase a BMR unit based on the examination of household size and income, assets, and available cash to purchase. Mortgage Eligibility Applicants who pass the program screening process will be asked obtain mortgage pre-approval for a first mortgage home loan with one of the City of Santa Clara s approved loan officers. Applicants will have 7 days (including weekends) to obtain a first mortgage home loan pre-approval. If applicants decide not to use a program approved loan officer, they must still be pre-approved by one and the 7 day mortgage pre-approval timeline requirement still applies. The City of Santa Clara s approved loan officers have approved the BMR affordable housing documents and any down payment assistance that may be available. Loan officers will determine if applicants qualify for a home mortgage and will issue a loan pre-approval letter for the maximum loan amount applicants can afford. If a designated applicant is unable to obtain financing at an affordable cost or is unable to meet the program requirement to purchase the BMR unit, the next highest ranked applicant will be offered the unit. In the event that the next applicant is unable to purchase the BMR unit, the second highest ranked applicant will be offered the unit. Step 4: BMR Program Approval Upon obtaining an appropriate first mortgage pre-approval letter from a City of Santa Clara approved lender, applications will be processed for BMR approval based on program requirements and mortgage affordability. Step 5: Home Selection Approved BMR applicants will be assigned homes based on priority criteria, affordability and closing dates. If an approved applicant chooses not to purchase the home assigned to them, they will be moved to the bottom of the list of pre-qualified applicants (regardless of priority criteria status) and may not have another opportunity to purchase at Central Park due to the high demand for BMR homes. Santa Clara: Central Park 5/14/15 Page 3 of 6 Initials
Step 6: Loan Approval Your loan officer will submit your compete loan application to their mortgage underwriter for final approval of your first home mortgage loan. The BMR Department will simultaneously update your BMR status. You will be required to supply both your loan officer and the BMR Department with updated paystubs, verifications of employment, and any new tax documents from all buyers in your household as necessary. Step 7: Affordable Housing Documents Review & Affidavit & Test Buyers will meet one-on-one or in a small group setting to review the City of Santa Clara s affordable housing documents and sign a BMR affidavit and take a BMR test acknowledging and documenting their understanding of the BMR program. Step 8: Purchase Contract After you decide to purchase a BMR home at Central Park, NHSSV staff will refer you to project s sales agents to complete your purchase contract and appropriate real estate documents. You will need to have a deposit check ready for $20,000 for the purchase contract appointment. Your total remaining deposit and closing costs will need to be available within 2 weeks prior to close of escrow. Initials STEP 9: 8-hour Homebuyer Education Certification (must be HUD approved) All qualified applicants are required to attend a live (not online) 8-hour homebuyer education class preferably prior to entering into a purchase contract. Dates and times for classes are available online at www.nhsnow.org. If you have already attended this class in the last 6 months, please alert NHSSV immediately. The 8-hour Homebuyer Education Certificate is good for 1 year. Applicants can submit their 8 hour certificate after BMR approval but before closing the transaction. STEP 10: Close of escrow Prior to final escrow closing, you will meet with NHSSV staff to formally accept the affordable housing documents that are required for your BMR home purchase. Upon final loan approval, all loan documents and previously signed affordable housing documents are sent to the Escrow Officer at the Title Company. Once the home is complete and has been released by the City of Santa Clara for occupancy, the title company s Escrow Officer will be informed. The escrow Officer will coordinate an appointment with you to sign your escrow documents, all mortgage Notes and Deeds of Trust, and deposit your funds for closing costs (please note that all funds prior to close of escrow must be in the form of a cashier s check and or wire). After signing your loan documents, the documents are returned to your lender for review and funding approval. Upon verification of funding and recording, ownership of the home is transferred from KB Home to the buyer(s). Lottery Policy When it is necessary for NHSSV to conduct a lottery to select a homebuyer, it is done so privately. In order to protect the privacy of homebuyers and the program s integrity, several NHSSV staff members and occasionally a representative from the City of Santa Clara is present at the drawing and signs a drawing affidavit to confirm homebuyer selection fairness and transparency. Santa Clara: Central Park 5/14/15 Page 4 of 6 Initials
NHSSV and/or The City of Santa Clara may change program or selection process at their sole discretion at any time without notice. Person submitting applications containing misrepresentations or falsifications will be subject to immediate disqualification from this and any future housing programs administered by NHSSV. Please initial all pages where indicated and at the bottom of each page and include them with your BMR application package. I/We certify and acknowledge that we have read, agree and understand all of the information. Applicant s Name (print) Co-Applicant s Name (print) Applicant s Signature Date Co-Applicant s Signature Date **City of Santa Clara BMR Resale Provisions A BMP unit is subject to a 20-year City loan, secured by a Promissory Note and Deed of Trust and an affordability resale and repurchase covenant restriction that is recorded on the title of the property. The principal amount of the City loan is the difference between the appraised unrestricted Initial Market Value (IMV) and the restricted Affordable Sales Price (ASP) when the BMP unit is initially sold. In the first five-years of ownership, resale of the BMR unit is restricted to another BMR-qualified, new buyer (a first-time buyer with an income not exceeding 110% of area median income) at a re-established restricted resale price. The ASP will be adjusted by any percentage change in the Area Median Income (AMI), which is established by the U.S. Department of Housing and Urban Development, from the date of the original BMR purchase. Within the first 5 years of ownership, if the home is sold to another qualified buyer at the reduced ASP, the City Loan is forgiven and another City Loan is established for the new owner. After the initial five-years of ownership, the BMR unit can be sold at the current, unrestricted fair-market price. When the home is sold at market value, the homeowner pays-off the City BMP promissory principal. After 20 years of ownership, the homeowner is required to pay back the principal of the City BMR promissory note, and is able to realize all of the market-driven appreciation in the home above its initial market value. Santa Clara: Central Park 5/14/15 Page 5 of 6 Initials
Central Park: Summer 2015 BMR Schedule Type SFR Townhome Condo-style Condo-style Development @ Central Park Siena Turin Roma Roma Lot 45 20 3 45 Address 3138 Via Siena Pl 2970 Via Torino Pl 2901 Via Roma Pl #3 2931 Kaiser Drive BMR Sales Price $599,000 $465,000 $465,000 $465,000 Estimated Initial Market Vale 1,359,880 1,106,041 $946,000 $946,000 BMR Prom Note $760,000 $641,041 $481,000 $481,000 Monthly HOA Fee $180 $380 $420 $420 Earnest Money Deposit Requirement $20,000 $20,000 $20,000 $20,000 Plan 4SC 3T 3R 3R Stories 2 3/3.5 3/3.5 3/3.5 Bedroom/Bath 4/2.5 3 3 3 Square Feet 1,957 1,600 1,727 1,727 Application Workshop 5/19/2015 5/18/2015 5/18/2015 5/18/2015 Application Deadline 5/22/2015 5/22/2015 5/22/2015 5/22/2015 Target Close of Escrow 7/17/2015 7/17/2015 7/30/2015 7/30/2015 Santa Clara: Central Park 5/14/15 Page 6 of 6 Initials