Neighborhood Stabilization Program Pasco County Community Development Division Lender and Realtor Training

1. Pasco County: Want to be Homeowners? Game ON! Neighborhood Stabilization Program Pasco County Community Development Division Lender and Realtor Training February 11, 2009

2. Neighborhood Stabilization Program (NSP) • NSP is a special program that allocates funds to local governments to purchase, rehabilitate, and demolish foreclosed and abandoned properties • Pasco County received almost $19.5 million, the 17th largest allocation of funds in the country, 5th largest in Florida • Most Pasco funds aregoing towards 2 programs: Homebuyer Assistance Program Pasco Opportunity Program

3. General Rules of Program • Any type of property eligible – single family home, condominium, town home and mobile homes Maximum Sales Price $240,000 • Can use funds to purchase foreclosed homes or abandoned homes. • Foreclosed homes – Home must be owned by party that won at foreclosure sale • Abandoned homes – • Foreclosure or Tax Deed Sale Initiated • AND no mortgage or tax payments made for at least 90 days • AND the property has been vacant for at least 90 days

4. Other Rules of Program • Sales Price must be less than 85% of the appraised value • Lender’s rate cannot exceed 1% of the average FHA rate as stated on the HUD website • Maximum Lender Fees and Points cannot exceed 4% • Borrowers do not have to be first time homebuyers, but it must be their homestead

6. Homebuyer Assistance Program • Moderate/Middle Income Households can receive up to $20,000 in Homebuyer Assistance (80-120% Median Income) • Maximum Yearly Income • 1 Person $47,520 • 2 Persons $54,240 • 3 Persons $61,080 • 4 Persons $67,800 • 5 Persons $73,200 • 6 Persons $78,600

7. Certain Essential Service Workers Can Receive $10,000 More in Homebuyer Assistance • Government Employees – Local, State, and Federal • School Board Employees • Other Educational Employees, including Private Education and Higher Education • Law Enforcement Personnel • Active and Retired Military • Health Care Workers

8. Other Funding Available • Families that are going through the Family Self Sufficiency Program through the Pasco County Housing Authority may have those amounts doubled • Pasco County and the Pasco County United Way have teamed together to fund the “Prosperity Campaign.” This program helps families obtained the Earned Income Tax Credit (EITC) from the Internal Revenue Service. Those funds will be matched by the County

9. Homebuyer Assistance Program • Low Income Households can receive up to half of the amount of the sales price • Maximum Yearly Income • 1 Person $19,800 • 2 Persons $22,600 • 3 Persons $25,450 • 4 Persons $28,250 • 5 Persons $30,500 • 6 Persons $32,750

10. Rehabilitation Standards and Other Federal Requirements • Houses assisted must meet County Rehabilitation Standards (to be discussed) • Houses Built before 1979 must meet Lead Based Paint Standards • Houses more than 50 years old that are being renovated must meet historic requirements and be reviewed by the Department of State • There are other environmental rules that must be met

11. Process and Timeline • Homebuyer attends County-sponsored homebuyer education class • After homebuyer signs contract for home and is approved by lender • Lender sends Reservation Form to County • Within 5 days, home is inspected by County staff • If necessary, lead based paint assessment is completed

12. If No Repairs Are Necessary… • County approves application package • County contracted appraiser completes appraisal • Homebuyer meets with homebuyer counselor • Lender signs anti-predatory statement • Mortgage package e-mailed to title company • Homebuyer assistance check wired to title company • Closing occurs

13. If Repairs Are Necessary… • County approves application package • County contracted appraiser completes appraisal for pre- and post-rehabilitated property • Homebuyer meets with homebuyer counselor • Mortgage package e-mailed to title company • Homebuyer assistance check wired to title company • Closing occurs • Repairs completed after closing, under County management • Maximum County Loan cannot exceed 50% of sales price

14. Application Package • County Checklist Form • Bank Application (1003) • Verification of Income and Assets of everyone living in property (3rd party verification) • Credit Report • Real Estate Contract • Good Faith Estimate • Proof of Minimum Investment ($500 for Moderate Income, $1,250 for Moderate/Middle Income)

15. What is Income? • Wages, Salaries, Overtime, Fees, Commissions, Bonuses • Net income from the operation of a business or profession • Interest, dividends, and other net income of any kind from real or personal property • All gross periodic payments received from Social Security, SSI, welfare, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts. • Payments in lieu of earnings, such as unemployment, worker's compensation and severance pay • Periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling. • All regular pay, special pay, and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is head of the Family, spouse, or other person whose dependents are residing in the unit

16. What is Not Income? • Income from employment of children (including foster children) under the age of 18 years • Payments received for the care of foster children • 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 • Educational Scholarships

17. What Is An Asset? • Savings accounts and the average 6-month balance of checking accounts • Stocks, bonds, savings certificates, money market funds, and other investment accounts. • Equity in real property or other capital investments • The value of land, in excess of land allowable for housing production • Cash value of trusts that are available to the household • IRA, Keogh, and similar retirement savings accounts • Contributions to company retirement/pension funds that can be withdrawn without retiring or terminating employment • Assets that, although owned by more than one person, allow unrestricted access by the applicant • Lump-sum receipts, such as inheritances, capital gains, lottery winnings, insurance settlements, and other claims • Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc. • Assets disposed of for less than fair market value during two years preceding

18. What Is Not An Asset? • Necessary personal property • Interest in Indian trust lands. • Assets that are a part of an active business or farming operation. (Note: Rental properties are considered personal assets unless real estate is the applicant's main occupation.) • Assets not accessible to the family and that provide no income for the family • Vehicles specially equipped for the handicapped • Equity in owner-occupied cooperative and manufactured homes in which the family lives • Assets held in applicants' name but which are actually owned by someone else. • Cash value of life insurance policies

19. Rehabilitation Standards • Beyond County Code and FHA Standards • All Homes will be inspected for these codes • Inspections will be done by County Housing Staff – all are general contractors or building inspectors • Access needs to be given to staff • Inspections will be done within 5 days • Electricity will have to be turned on • Seller will provide well and septic results, if applicable • Seller may correct violations only if estimated repairs are less than $1,000, or appliances

20. Examples of Rehab Standards • All appliances must have at least 5 years of life remaining • A/C must be at least 11 SEER, 1 ton for every 500 square feet of air conditioned space • Carbon monoxide and smoke detectors arerequired • Arc-fault for each bedroom • Hard-wired ceiling fans • Electric panel must be 125 amp minimum

21. Wind-Borne Debris Region • Doors, windows, garage doors must meet wind standards

22. Rehabilitation After Purchase • Loan will close with funds held in escrow by County at closing for repairs • Construction will be managed by County staff • Homebuyer may select contractor by competitive bidding or not (bid price must be acceptable) • Bid process will begin immediately upon approval • County will pay for homebuyers to live in another location during repairs • Lender loan plus County loan cannot be more than 100% LTV

23. Rehabilitation Activities • Deficiencies noted on Inspection Reports must be corrected • Lead based paint issues must be addressed • House can be made accessible for physically disabled family members • Additions can be constructed if house istoo small for family

24. Pasco County Assistance • Loan interest rate is 0% • Payments will be required if front-end ratio is 28% or less and the back end ratio is less than 38% • If homebuyercannot afford payments, loan payments deferred for 5 years, with terms of 10-30 years, depending on assistance • Lenders must sign new Letter of Understanding, including anti-predatory statement. If a mortgage broker is used, the broker must get the Lender to sign

25. Recapture Affordability Provisions • Pasco County will recapture at time of re-sale or payoff the amount of equity that is not mortgaged by the lender loan and the County loan combined, and what the homebuyer puts into the purchase, at time of purchase. Appreciation is defined as the gain a homebuyer receives from the sale of the home, less any reasonable title and real estate costs. The cost of home improvements completed with building permits also shall be deducted from this amount. This equity-capping may not be more than the cash available at closing.

26. Two Examples Appraised Value: $100,000 County and Lender Loan: $ 60,000 Homebuyer Funds $ 1,000 Equity Balance: $ 39,000 Sales Price of Home: $120,000 -County and Lender Loan: $ 60,000 +Homebuyer Funds $ 1,000 = Initial Equity Balance: $ 39,000 Cash to Homebuyer $ 22,000 Equity Capping Penalty $ 39,000 Appraised Value: $100,000 County and Lender Loan: $ 60,000 Homebuyer Funds $ 1,000 Equity Balance: $ 39,000 Sales Price of Home: $120,000 -County and Lender Loan: $ 60,000 +Homebuyer Funds $ 1,000 -Initial Equity Balance $ 39,000 +Construction after Assistance $ 15,000 Cash to Homebuyer $ 37,000 Equity Capping Penalty $ 24,000

27. Pasco Opportunity Program (POP) • POP agencies buy foreclosed and abandoned homes, repair them, and make them available for sale to low/ moderate and middle income families • Properties will meet all Rehabilitation Standards • All other rules are the same • As much as possible, will try to target houses in most need • Realtors and Lenders– contact POP agencies if you have homes that you want to sell