NEZ PERCE TRIBAL HOUSING AUTHORITY

MORTGAGE FINANCING ASSISTANCE

 

FINAL POLICY

 

(NPTHA MFA Revised February 17, 2005)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adopted by the Board of Commissioners

January 22, 1999

February 20, 2003

Revised May 20, 2003

Revised November 17, 2004

Revised February 17, 2005


 

 

TABLE OF CONTENTS

 

I. General........................................................................................................................................ 3

II. Eligible Recipients.................................................................................................................... 3

III. Selection Criteria..................................................................................................................... 4

IV. Eligible Property Type............................................................................................................. 4

V. Property Value........................................................................................................................... 4

VI.Amount of NPTHA MFA......................................................................................................... 5

VII. Property Standards................................................................................................................. 5

VIII. Eligible Costs........................................................................................................................ 5

IX. Financing................................................................................................................................. 6

X. Minimum Period of Repayment, Recapture or Resale Provisions.......................................... 7

XI. Leveraging................................................................................................................................ 8

XII. Monitoring Requirements...................................................................................................... 8

XIII. Application Procedures........................................................................................................ 8

 

 

 

 

 

 


 

I. General

 

NPTHA - Mortgage Financing Assistance: Enables families who are low-income and meet other eligibility criteria to finance a home to be used as the principal place of residence through a first or second mortgage provided by NPTHA or a private lender. The family must meet all the lender's requirements associated with obtaining a mortgage (i.e., creditworthiness, total debt (including house payment) can not exceed 40% or other specified percentage of gross income, etc.). NPTHA is to provide financing assistance in accordance with its approved FY IHP. Depending on the availability of funds as identified in the approved IHP and the applicant=s affordability analysis, any of the following types of assistance may be available. The specific categories of assistance and the funds available will be identified in each submission of the IHP.

 

Down payment Assistance Closing Cost Assistance First Mortgage

Second Mortgage Appraisal Assistance Homebuyer Education

 

 

II. Eligible Recipients

 

NPTHA MFA funds can be used to assist homebuyers who meet all of the following minimum eligibility criteria described in the following table.

 

 

CATEGORY

 

ELIGIBILITY CRITERIA

 

Tribal Affiliation

 

Enrolled Nez Perce Tribe Member

 

Property Location

 

On the Nez Perce Reservation (according to the Treaty of 1855)

 

First Time Homebuyer

 

! had no ownership in a residence during the 3 year period prior to the date of application to the NPTHA for MFA

! owned a principal residence not permanently affixed to a permanent foundation, or owned property not in compliance with building codes, which cannot be brought up to code, for less than the cost of constructing a permanent structure.

 

Income ****

 

Must meet at a minimum: HUD National Low-income standards and not exceed 80% of median income. Moderate income applicants may be eligible without HUD approval when a percentage of ihp funds (not to exceed 10% of the total fiscal year ihp allocation) are designated for moderate income families specifically for the NPTHA MFA program. Consideration of moderate income families beyond the abovementioned 10% limitation and all other above income families can only be considered under an IHP specified model activity approved by HUD.

 

Unit Condition

 

Must be in standard condition or rehabilitated to standard condition with financing.

 

Counseling

 

Must agree to participate in housing counseling

 

Insurance

 

Must be willing to pay for home owner=s insurance

 

Residence

 

Must use home as permanent residence (at least 9 months per year)

 

Debt/Credit

 

Must have no outstanding obligations to the NPTHA and must meet HUD 184 creditworthiness criteria.

 

Ratios

 

Repayment terms must be within lender=s qualifying ratios

 


Financial assistance is for low-income families with incomes up to 80% of median income in accordance with the HUD national median income guidelines as amended annually by HUD:

 

 

Example for FY 2004 Funds

 

Size of Family*

 

Maximum Very Low Income

(50% of Median)

 

Low Income

(80% of Median Income)

 

Moderate Income

 

1

 

$19,050

 

$19,051 - $30,450

 

$32,201-$40,250

 

2

 

$21,750

 

$21,751 - $34,800

 

$36,801-$46,000

 

3

 

$24,500

 

$24,501 - $39,200

 

$41,401-$51,750

 

4

 

$27,200

 

$27,200 - $43,500

 

$46,001-$57,500

 

5

 

$29,400

 

$29,401 - $47,000

 

$49,701-$62,100

 

6

 

$31,550

 

$31,551 - $50,500

 

$53,351-$66,700

 

7

 

$33,750

 

$33,751 - $54,000

 

$57,051-$71,300

 

8 or more

 

$35,900

 

$35,901 - $57,450

 

$60,701-$75,900

*Number of persons in the family

 

 

III. Selection Criteria

 

Selection of applicants who meet all of the eligibility requirements identified above will be based on the date of application and date of mortgage readiness enrolled Nez Perce applicants with a Nez Perce family who wish to purchase their NPTHA MH or SH home or a new home in accordance with the applicable policy or lease agreement and HUD Section 184 underwriting guidelines:

 

 

IV. Eligible Property Type

 

Any single family property, to be occupied as the principal residence of the owner, including:

 

A one family property

A condominium unit

New (double-wide minimum) Manufactured/Modular home

 

 

V. Property Value

 

The appraised value and purchase price of the assisted property may not exceed the Rural Development 203(b) mortgage limit for the area for the type of property being assisted (single family,

condominium, etc.) as amended by the federal government (Exhibit A).

 

 

VI. Amount of NPTHA MFA

 

The MFA funds available to an applicant is contingent upon the applicant=s affordability analysis, the amount of NPTHA funds available as specified in the IHP, and the maximum limits set for each category of assistance.

 

 

VII. Property Standards

 

Each home purchased with MFA assistance must meet at a minimum the federal Section 8 Rental Assistance Program Housing Quality Standards (HQS) minimum requirements or, when FHA financing is involved, the Minimum Property Standards as verified by an inspection performed by a qualified person. Newly constructed housing must also meet the Model Energy Code published by the Council of American Building Officials and the Uniform Building Code.

 

 

VIII. Eligible Costs

 

NPTHA MFA funds may be used to provide assistance to qualified homebuyers in one or a combination of the following categories contingent upon the availability of funds and the limitations set forth in the approved IHP.

 

Downpayment Closing Cost Assistance Environmental Review

Acquisition - 2nd Mortgage Cultural Resource Survey

New Construction - 2nd Mortgage Appraisal Assistance

 

a. The maximum amount of downpayment and/or closing costs assistance will not exceed $5,000 for a low-income family and $3,500 for a moderate-income family or the cap set by the current fiscal year Indian Housing Plan.

 

b. Mortgage buy-down assistance will be available to low-income families for home purchases in Sundown Heights. All low-income families will be assisted with a maximum of $25,000 in the form of a forgiven second or third mortgage (aka conditional grant) and amortized over a 30-year period depending on affordability. Additional buy-down assistance required will be repaid according to terms based on affordability and secured through a second mortgage with repayment terms or a second/third forgiven mortgage depending on affordability. Moderate-income families will not receive the same benefit as low-income families, but will be assisted in accordance with the NAHASDA rules and regulations. Families whose income is over the moderate income limits are not eligible for assistance.

 

c. One-time costs for attorney assistance/review will be provided upon successful closing of the loan. Payment for costs will be made directly to the attorney upon receipt of an invoice after closing. NPTHA will pay up to $300.00.

 

d. One-time costs for appraisal assistance will be provided in the form of a reimbursement upon successful closing of the loan. NPTHA will pay up to $400.00.

 

e. One-time costs for inspection assistance will be provided in the form of a reimbursement upon successful closing of the loan. NPTHA will pay up to $250 for a licensed inspector.

 

f. Where the home search requires an additional appraisal, inspection, attorney review, etc., evidence of payment to the contractor for the additional services must be presented to the NPTHA prior to closing or to the disbursement of funds.

 

g. Existing tenants who purchase another home are not eligible for deferment or forgiveness of the assistance until all vacated charges are zeroed out with the NPTHA. They will initially sign a promissory note for the down payment and closing costs assistance plus interests amortized for a term not to exceed five years. Once the NPTHA determines there are no charges or there are minor charges to the tenant, the promissory note will be revised to reflect repayment of the charges and a deferment of the balance over a specified term. If the charges exceed the amount of assistance reflected in the promissory note, the NPTHA will amend the promissory note to reflect the additional costs.

IX. Financing

 

NPTHA MFA Program will be provided on the basis of terms which include without exception recapture provisions in the event:

 

a. Owner ceases to occupy the property as his principal residence, or

 

b. Owner sells the property to a subsequent homebuyer, or

 

c. NPTHA determines that any of the representations made by the owner as set forth in the application for the assistance were not true or correct when made.

Options for repayment of home purchase assistance using NPTHA MFA funds includes but is not limited to

 

!                   repayment on a monthly basis with a low interest rate, repayment after other prior loans are paid in full, repayment upon transfer of ownership of the home, or

 

!                   forgiveness of the principal amount of the loan or grant over a period of time.

The type of option for repayment will be based on the applicants affordability analysis, income, the type of assistance being requested. In all cases involving moderate income families, terms for repayment or a deferral terms will be in accordance with the March, 1998 NAHASDA Final Rule.

 

The NPTHA MFA Program also requires that the NPTHA funds either be recaptured from the initial homebuyer at the time of sale of the property, or restrictions must be imposed on who may qualify to be a subsequent purchaser of the property. Subsequent homebuyers must also be low income and the sale provisions must provide a fair return on investment to the owner and be affordable to the subsequent homebuyer. NPTHA reserves the right to make the final determination whether the provisions of proposed home purchase programs adequately meet the NAHASDA regulatory requirements.

 

In the event that funds are awarded as deferred loan, conditional grant, or a forgiven mortgage, the amount of the funds subject to recapture will be reduced by 1/30 for each year that the owner both owns the property and resides in the property as owner=s principal place of residence and makes any payments due on prior loans on the property. Owner shall not be required to repay more than the proceeds (after deducting closing costs as approved by NPTHA) from the sale of the property less the repayment of any prior loans secured by the property. If owner owns the property and the property has been owner's principal residence for at least thirty years, no funds need be repaid. If the property is sold to a subsequent owner whose income meets the restrictions of the original MFA, the MFA grant may be assumed by the subsequent owner provided NPTHA has given its prior written approval.

 

 

X. Minimum Period of Repayment, Recapture or Resale Provisions

 

The period for repayment or recapture of the MFA funds depends on the amount of funds invested in the home purchase:

 

 

Per

Unit MFA Investment

 

Minimum Recapture Period

 

Secured by:

 

Financing Terms

 

<$5,000

 

5 years

 

Subordinate mortgage and/or Assignment of trust/lease income, land, promissory note as determined by the Executive Director

 

Contingent upon Affordability, income

 

$5,001 - $10,000

 

 

 

10 years

 

Subordinate mortgage and/or Assignment of trust/lease income, land, promissory note

 

Contingent upon Affordability, income

 

$10,001 - $15,000

 

15 years

 

Subordinate mortgage and/or Assignment of trust/lease income, land, promissory note

 

Contingent upon Affordability, income

 

$15,001 - $20,000

 

20 years

 

Subordinate mortgage and/or Assignment of trust/lease income, land, promissory note

 

Contingent upon Affordability, income

 

$20,001 - $40,000+

 

30 years

 

Subordinate mortgage and/or Assignment of trust/lease income, land, promissory note

 

Contingent upon Affordability, income

 

 

XI. Leveraging

 

The evaluation rating process also favors those applications which successfully utilize leverage

with other funds. Any non‑match eligible source of funds which will pay for project development costs or provide permanent financing for the project is considered leverage. Some examples include:

 

Cash

Owner's Investment/Equity

Other Loans and Grants

CDBG or Other Federal Funds


Value of land or real property donated (or reduced) or provided at less than

Appraised value

Cost of infrastructure improvements

 

 

XII. Monitoring Requirements

 

Monitoring of mortgage financing programs is limited to verification that the homebuyer and

the property being purchased meet the MFA eligibility requirements and that the homebuyer

maintains the property as the owner's principal residence for the term of the MFA assistance.

Monitoring of the residency requirement and any repayment/recapture provisions shall take place

as part of the loan servicing process.

 

 

XIII. Application Procedures

 

Application procedures are to be developed and implemented by the NPTHA Executive Director. All application information is to be completed, processed, and verified utilizing forms developed by the Executive Director. Intake, processing, and verification procedures must be consistent with standard financing and underwriting practices. Additionally, applications for NPTHA MFA Programs must indicate the income levels and any other special characteristics of the targeted population.

 

Involvement in the NPTHA MFA Program will require the NPTHA to apply practices and documentation that require an understanding of underwriting procedures and quality control measures. Underwriting procedures will be developed and implemented by the NPTHA Executive Director.

 

 

IXV. Waiver Authority

 

The Executive Director has the authority to waive this policy as it relates to the definition of first time homebuyer.