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HomeMy WebLinkAboutRES 95-018 RESOLUTION The Innovative Housing Development Corporation (IHDC), through its President, Gaylyn Cooper, by a majority of its Board of Directors do agree to enter into a contract with the City of Beaumont for 1994 HOME funds up to $300,000 to continue the Home Buyer's Assistance Program. The terms and conditions previously agreed upon in prior contracts will remain in force. 4yper, Pre nt Innovative Housi4Development Corporation II - Oy - 94 Date RESOLUTION NO. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City Manager is hereby authorized to enter into a one (1) year contract in the amount of$300,000 with the Innovative Housing Development Corporation to continue the Homebuyer Assistance Program. The contract is substantially in the form attached hereto as Exhibit "A". PASSED BY THE CITY COUNCIL of the City of Beaumont this the day of , 1995. - Mayor - CONTRACT THE STATE OF TEXAS § COUNTY OF JEFFERSON § WHEREAS, the City of Beaumont has received a grant from the United States Department of Housing and Urban Development (HOME Program No. M-94-MC-48-0201); WHEREAS, these funds will be used to subsidize the purchase of standard housing units to enable low-income and moderate-income families to own their own homes; WHEREAS,the Innovative Housing Development Corporation provides various services to low-income and moderate-income families of the City of Beaumont, Jefferson County, Texas that enable such families to obtain a suitable place to reside; WHEREAS,the City of Beaumont and the Innovative Housing Development Corporation desire to enter into a Contract and Agreement whereby the City of Beaumont will furnish said federal grant funds to the Innovative Housing Development Corporation for the purposes of lowering mortgage interest rates and/or mortgage principal buy down, assisting in the down- payment and assisting in the payment of the closing costs and any other eligible costs for low-income and moderate-income families. NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS: That for and in consideration of the mutual covenant, promises, and agreements contained therein, The City of Beaumont, hereinafter referred to as "City", acting by and through Ray A. Riley, its duly authorized City Manager, and the Innovative Housing Development Corporation, hereinafter referred to as "Grantee",acting by and through Gaylyn Cooper, its duly authorized President, do hereby covenant and agree as follows: EXHIBIT "A" 1 . Grantee covenants and agrees to expend federal grant funds herein provided in accordance with its proposed Innovative Housing Guidelines contained in Exhibit "A". It is expressly understood and agreed by Grantee that this Contract and the procurement authorized and provided for hereunder have as their purpose or goal to lower mortgage interest rates, assisting with principal reduction and down-payments and assisting in the payments of closing costs for low-income and moderate-income families. Grantee agrees to do all things necessary under the Contract to complete the program set out in Exhibit "A", attached hereto. 2. It is understood and agreed that in no event shall the total distribution of federal grant funds made to or in behalf of the Grantee pursuant to this Agreement exceed the total sum of THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000). 3. The City agrees to provide Grantee with THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000) to be available on or after the effective date of this Contract. Grantee agrees to complete the program set in Exhibit "A", attached hereto, within one (1) year from the execution of the Agreement with Housing and Urban Development (HUD). Payment shall be made by the U. S. Treasury, who will disburse HOME funds (wire transfer) through Cash Management Information System (CM/0 directly to the City, who will make payments upon receipt of invoices or payment vouchers from Grantee certifying that all requirements have been met and a closing date has been finalized. The Grantee understands that all grant monies awarded may be terminated for convenience. Grantee further agrees that any funds remaining after this Agreement expires will revert to the City. 2 4. It is expressly understood and agreed by and between the City and Grantee that this Agreement is wholly conditioned upon the actual availability of federal grant funds under the United States Department of Housing and Urban Development (HOME Program No. M-94-MC- 48-0201) and that all monies distributed to or in behalf of Grantee hereunder shall be exclusively from federal monies received under said HOME Program, and not from any other monies of the City. 5. Grantee agrees to keep accurate records to document its adherence to applicable federal regulations and all "other federal requirements",along with documentation and records of all expenditures of said HOME Program funds. City shall reserve the right to investigate, examine and audit, at any time, any and all such records relating to the operations or expenditures of Grantee under this Agreement. 6. Grantee covenants and agrees to fully cooperate with the City in monitoring the effectiveness of the expenditure of grant funds and the City shall have access at all reasonable times to the offices, premises and records of Grantee in regard to the administration of this Contract. 7. Grantee shall operate hereunder as an independent contractor and not as an officer, agent, servant or employee of the City. Grantee shall have exclusive control of the program and all persons involved in same subject only to the terms of this Agreement and shall be solely responsible for the acts and omissions of its officers, members, agents, servants, employees, subcontractors, program participants, licensees and invitees. It is expressly 3 understood and agreed, other than those people who receive wages on a regular basis from Grantor, that no officer, member, agent, servant, employee, subcontractor, licensee, invitee of Grantee nor any program participant hereunder is in the paid service of the City. It is also expressly understood and agreed that Grantor will provide technical assistance to Grantee in the furtherance of its program. 8. Grantee hereby covenants and agrees, in consideration for the funds herein provided to subsidize the purchase of standard housing units for low-income and moderate-income families in Beaumont, Jefferson County, Texas, by using the funds to lower mortgage interest rates, assisting with the down-payments and assisting in the payments of closing costs or any other eligible subsidy assistance. The Grantee will adhere to all HOME affordability requirements. 9. No officer, employee or member of Grantee or Grantee's subcontractors shall have a financial interest, direct or indirect, in this Contract or the monies transferred hereunder, or be financially interested, directly or indirectly, in any Contract relating to the operations conducted by it, nor in any Contract for furnishing services or supplies to Grantee. Any willful violation of this paragraph with the knowledge, expressed or implied, of Grantee or its subcontractors, shall render this Contract voidable by the City of Beaumont. 10. No grants shall be made by Grantee to its directors or officers, either directly or indirectly, through family members, business partners or employees. Grantee agrees that no HOME funds shall be used, either directly or indirectly, for religious purposes. Any willful 4 violation of this paragraph with the knowledge, expressed or implied, of Grantee shall render this Contract voidable by the City of Beaumont. 11. Grantee covenants and agrees that its officers,members,agents, employees, program participants and subcontractors shall abide by and comply with all Federal, State and local laws, including all ordinances, rules and regulations of the City of Beaumont, as amended. Grantee further covenants and agrees that it will fully comply with the terms and conditions of the HOME Program under which these funds are granted. 12. The provisions of this Agreement are severable and if for any reason a clause, sentence, paragraph, or other part of this Agreement shall be determined to be invalid by a court or federal or state agency, board or commission having jurisdiction over the subject matter thereof, such invalidity shall not affect the other provisions which can be given effect with the invalid provision. 13. The failure of the City to insist upon the performance of any term or provision of this Agreement or to exercise any right herein conferred shall not be construed as a waiver or relinquishment to any extent of the City's right to assert or rely upon any such term or right on any future occasion. 5 14. This written instrument constitutes the entire Agreement by the parties hereto concerning the matter performed hereunder and any prior or contemporaneous, oral or written Agreement which purports to vary from the terms hereof shall be void. IN WITNESS WHEREOF,the parties hereto have executed this Agreement in Beaumont, Jefferson County, Texas, this day of A.D., 19 THE CITY OF BEAUMONT ATTEST: By: Ray A. Riley Rosemarie Chiappetta City Manager City Clerk THE INNOVATIVE HOUSING DEVELOPMENT CORPORATION ATTEST: By: Gaylyn Cooper Marilyn S. Adams President Secretary 6 EXHIBIT "A" INNOVATIVE HOUSING GUIDELINES Purpose The Innovative Housing Program is designed to assist families to procure affordable housing by providing funds to buy down mortgage principal or interest and/or assist with closing costs. Eligibility Requirements To be eligible to receive a grant from the Innovative Housing Development Corporation (IHDC), applicants must meet the following requirements: 1. Applicants total family income must be eighty percent (80%) or less than the current Jefferson County median income range (see Table I), as established by the Department of Housing and Urban Development (HUD). 2. Applicants must be a first time home buyer. 3. Applicants must have at least two (2) or more related persons residing in the household; they must be related or any co-borrower willing to enter a contractual agreement must occupy the mortgage premises as his/her primary residence if any income was used to qualify. 4. Applicants must be a resident of the City of Beaumont or currently employed by a business located and operating in Beaumont, Texas. 5. Applicants must be 18 years old or older. 6. Applicants must be citizens of United States. 7. Applicants must be able to obtain financing from private or public lending sources. 8. Applicants' family size must be appropriate for the number of bedrooms in the available units. 9. The applicants monthly payments (PITT) must not exceed 409o' of the applicant families monthly gross income; the IHDC Board of Directors or staff may consider ratios in excess of 40% in light of the borrower's record of paying higher percentage of obligations- to-income in the past. 10. Applicants must successfully complete a home buyers course. Individuals sent to class by IHDC will have the first opportunity to purchase homes. 11. Applicants must sign an Authorization For Release Of Information for verification of credit report. 12. Applicants must provide proof of income. Applicants meeting these criteria shall be processed on a first-come, first-served basis. Application Process 1. In the event there is not a sufficient number of applicants, a funding availability "Notice" shall be published in the media to alert additional prospective applicants. 2. Interested applicants will be given an application form, requirement verification and instructions for completion. The City's Housing Services Division personnel will explain the program requirements in detail at the time the Application form is given to an applicant. 3. Upon receipt of a completed Application, qualified applicants will be added to the waiting list. 4. When an applicant reaches the top of the waiting list, he/she will be contacted and required to update all information on the application form. If still eligible, applicants will be required to complete a Home Buyers Course. Upon completion of the Home Buyers Course and depending on funds availability the applicant shall be directed to find a suitable and affordable house and submit an Earnest Money Contract on the property within four (4) weeks. Extensions will be granted only after a request from the IHDC Board or Staff. Applicants applications are subject to cancellation if an Earnest Money Contract is not presented to staff within ninety (90) days. 5. The Applicants Waiting List will be updated annually. 2 6. Applicants falsifying information an/or failing to adhere to said eligible requirements will be disqualified from participating in the IHDC Program. Grant Amounts Eligible applicants will be given grants of fifteen percent (15%) of the sales price plus closing costs, not to exceed $3,000 for homes located outside the CDBG strategy area - and twenty percent (20%) of the sales price plus closing costs, not to exceed $3,000 for homes located inside the CDBG strategy area. Loan Application Process 1. Application - Lending Institutions A. Applicants seeking conventional, FHA or VA financing must contact a lending institution of their choice and make application. B. A written application, signed by the applicant(s), accompanied with required fees for the appraisal and credit report, including other information required by lender, shall constitute an application. C. The IHDC Board of Directors will issue a Letter Of Commitment to applicant in lieu of earnest-money to be given to the lender/seller upon receipt of earnest money contract showing amount of down payment and closing cost. D. IHDC Board of Directors will respect the decision of lenders to approve or reject any loan. 2. Loan Application - Owner Finance A. A written application, signed by the applicant(s)and accompanied with attached requirements, (see Requirement Verification), shall constitute an application. B. In case of owner financing, applicants must submit to staff proof of completion of a Home Buyers 3 Course and an Earnest Money Contract properly completed and signed by all parties (buyer and seller). C. The IHDC Board of Directors will issue a Letter Of Commitment to applicant in lieu of earnest-money to be given the seller and/or realtor showing amount of downpayment and closing cost. 3. Loan Approval A. The completed written loan data is reviewed by the lender and the loan is either: 1. Approved, 2. Conditionally approved subject to additional terms; or, 3. Rejected. B. Once notification of loan approval is received, the IHDC will issue a Grant Agreement to be signed by the applicant. The grant Agreement stipulates that the applicant must remain in the home for at least fifteen (15) years. In case the property is sold or rented within the 15 years the applicant must pay the full grant amount to the IHDC. 4. Preparation for Loan Closing All loans, bank-financed or owner-financed, will close at a local Title Company. A. Title Check 1. Firm commitment of loan approval is made. 2. Commitment of Title, property survey and an estimate of yearly tax assessment is ordered from a title company chosen by the borrower. 4 3. The applicant is instructed to provide information regarding his property insurance coverage to the title company. B. Legal Document Preparation. 1. The title company forwards the Commitment Of Title, survey, tax and insurance information to the lender. 2. The lender reviews the documents and forwards them to an attorney for preparation of the loan documents. 3. The lender's closing instructions, legal documents from the attorney and a loan proceeds check are sent to the title company for loan closing. 4. The title company reviews the documents, completes the requirements and sets a date for closing. 5. Loan Closing The borrower(s) and seller(s) sign the legal documents at the title company; the loan proceeds are disbursed and the transaction is completed. Grant Approval Process 1. The signed earnest-money Contract, Home Buyers Certificate, required financial information for the past two (2) years and two (2) current check stubs shall be submitted to the Housing Services Division. 2. The Housing Services Division Staff will review the earnest-money Contract and financial information, and submit the completed documents. 5 3. The approved applicant will be issued a Letter Of Grant Commitment and given instructions to contact one of the local financial institutions for a mortgage loan application or arrange for owner financing. 4. Properties must be inspected by the City of Beaumont Code Enforcement Division or any other agent that IHDC board appoints for code violations as per Standard Building Codes. A letter of compliance is issued when the property meets code. Eligible Properties One family owner-occupied single family principle residence. All properties participating in the IHDC Program requires an inspection by a Certified Inspector. Rehabilitation, if any, must be completed prior to closing of the loan. If repairs are major, and seller needs proceeds from the loan to make repairs, the lending institution may close loan but not fund the loan until all required repairs are completed. Minimum/Maximum Original Loan Amounts There is no minimum loan size. Maximum loan size is $40,000. Loan Term Term should be fixed where payments are affordable, based on the income per household. The IHDC Board of Directors prefers a level payment mortgage. The IHDC Board of Directors will not issue a Grant Commitment letter if the rate of interest being asked is more than 1.5 percentage points above the rate charged by lending institutions. Gifts Gifts can be used for down payment and closing cost including pre-paid items, if the donor is a family member or a nonprofit organization. The HIDC Board of Directors will give eligible applicants grants of fifteen percent (15%) of the sales price for homes located outside the CDB11-v strategy area, and twenty percent (20%) of the sales price of homes located inside the CDBG strategy area. IHDC will give a grant not to exceed $3,000 for closing cost and/or pre-paids. 6 Credit History and Credit Reports A residential mortgage credit report or an in file credit report from an independent credit reporting agency that meets the IHDC's or local lending institutions guidelines is required. The IHDC and the lenders should develop a credit history for borrowers who normally do not use credit. Credit history may be developed by verifications from utility companies, current and previous landlords, and other sources of credit or services where the borrower was or is required to meet regular financial obligations. The IHDC Board of Directors will review the credit history and credit reports, however, derogatory ratings will not necessarily cause a negative response from the IHDC Board. Inspections IHDC requires all properties be inspected by a Certified Inspector or a representative or agent appointed by the IHDC to assure that properties are in accordance with the program requirements. IHDC reserves the right to perform its own inspection of any unit prior to settlement. If the Certified Inspector rules that any repair is necessary on the house, those repairs must be completed within 30 days by the owner or the house is no longer eligible under the IHDC program. IHDC will pay for the initial inspection and a follow up inspection to make certain the repairs have been made. Any other inspections that are necessary because of failure to make necessary repairs are the financial responsibility of the owner of the house. All properties must be inspected for termites. Monthly Housing Maximum Expenses The maximum monthly housing expense-to-ratio is 40% of the borrowers stable monthly income. Ratios exceeding 32% will be reviewed in light of the borrower's record of devoting a higher percentage of income to housing in the past. Maximum Obligations to Income The maximum obligation to income is 40% of the borrowers stable income. This is defined as a total indebtedness. 7 Down Payment Currently the IHDC is granting fifteen percent (15%) of sales on properties out of CDBG strategy areas and twenty percent (20%) of sales on properties in CDBG strategy areas as down payment. This percentage is subject to revision by the IHDC Board of Directors if deemed necessary. Closing Cost and/or Pre-settlement Costs Eligible applicants will receive a grant for closing cost and/or pre-paid items not to exceed $3,000. Any amount exceeding $3,000 must be paid by the borrower from personal resources, if available. Mortgage Instruments All closing papers must be drawn up by an attorney representing a local title company. Current "Fannie Mae/Freddie Mac" uniform instruments may be used. Title Insurance Required on all loans. Appraisals Required on all loans. Surveys Required on all loans. Age Of Loan Loans can be new origination and assumptions. 8 Home Buyers Education Borrowers must participate in a buyers home ownership program offered by the Beaumont Independent School District or the G. E. Mortgage Home Buyers Program. Participation in the training program will be documented in the loan file by a copy of the certificate issued by the teaching agency. Borrower's Income The borrower's income shall not be greater than 80% of the area median income as published by the U. S. Department of Housing and Urban Development. Staff and/or lenders must verify income for two (2) full consecutive years in order to determine adequacy and continuance. On a case-by-case basis, non-seasonal, part-time income with less than two years, but not less than one year will be considered. The employer must verify the continuation of part-time employment. Verification of alimony or child support income for qualifying purposes is not restricted to divorce decrees or separation agreements. Other forms of verification are acceptable so long as they verify the amount received, can demonstrate two years of past history and the continuation of income. 9