Neighborhood Stabilization ProgramPasco County Community Development Division

Lender and Realtor Training

Pasco County: Want to be

Homeowners? Game ON!

February 11, 2009

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 are going towards 2 programs: Homebuyer Assistance Program

Pasco Opportunity Program

General Rules of ProgramAny 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

Other Rules of ProgramSales Price must be less than 85% of the

appraised valueLender’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

Homebuyer Assistance ProgramModerate/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

Certain Essential Service Workers Can Receive $10,000 More in Homebuyer AssistanceGovernment Employees – Local, State, and

FederalSchool Board EmployeesOther Educational Employees, including

Private Education and Higher EducationLaw Enforcement PersonnelActive and Retired MilitaryHealth Care Workers

Other Funding AvailableFamilies 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

Homebuyer Assistance ProgramLow Income Households can receive up to

half of the amount of the sales priceMaximum 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

Rehabilitation Standards and Other Federal RequirementsHouses assisted must meet County

Rehabilitation Standards (to be discussed)Houses Built before 1979 must meet Lead

Based Paint StandardsHouses 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

Process and TimelineHomebuyer attends County-sponsored

homebuyer education classAfter homebuyer signs contract for home and

is approved by lenderLender sends Reservation Form to CountyWithin 5 days, home is inspected by County

staffIf necessary, lead based paint assessment is

completed

If No Repairs Are Necessary…County approves application packageCounty contracted appraiser completes

appraisalHomebuyer meets with homebuyer counselorLender signs anti-predatory statementMortgage package e-mailed to title companyHomebuyer assistance check wired to title

companyClosing occurs

If Repairs Are Necessary…County approves application packageCounty contracted appraiser completes appraisal for

pre- and post-rehabilitated propertyHomebuyer meets with homebuyer counselorMortgage package e-mailed to title companyHomebuyer assistance check wired to title companyClosing occursRepairs completed after closing, under County

managementMaximum County Loan cannot exceed 50% of sales

price

Application PackageCounty Checklist Form Bank Application (1003)Verification of Income and Assets of everyone

living in property (3rd party verification)Credit ReportReal Estate ContractGood Faith EstimateProof of Minimum Investment ($500 for

Moderate Income, $1,250 for Moderate/Middle Income)

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

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

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

What Is Not An Asset?Necessary personal propertyInterest 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 handicappedEquity in owner-occupied cooperative and manufactured

homes in which the family livesAssets held in applicants' name but which are actually

owned by someone else. Cash value of life insurance policies

Rehabilitation StandardsBeyond County Code and FHA StandardsAll Homes will be inspected for these codesInspections will be done by County Housing Staff

– all are general contractors or building inspectors

Access needs to be given to staffInspections will be done within 5 daysElectricity will have to be turned onSeller will provide well and septic results, if

applicableSeller may correct violations only if estimated

repairs are less than $1,000, or appliances

Examples of Rehab StandardsAll appliances must have at least 5 years of

life remainingA/C must be at least 11 SEER, 1 ton for every

500 square feet of air conditioned spaceCarbon monoxide and smoke detectors are

requiredArc-fault for each bedroomHard-wired ceiling fansElectric panel must be 125 amp minimum

Wind-Borne Debris RegionDoors, windows, garage doors must meet wind

standards

Rehabilitation After PurchaseLoan will close with funds held in escrow by

County at closing for repairsConstruction will be managed by County staffHomebuyer 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

Rehabilitation ActivitiesDeficiencies noted on Inspection Reports

must be correctedLead based paint issues must be addressedHouse can be made accessible for physically

disabled family membersAdditions can be constructed if house is too

small for family

Pasco County AssistanceLoan 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 homebuyer cannot 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

Recapture Affordability ProvisionsPasco 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.

Two Examples

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 StandardsAll other rules are the sameAs much as possible, will try to target houses in

most needRealtors and Lenders– contact POP agencies if

you have homes that you want to sell