shelby county down payment assistance program nacced presentation september 2011

Shelby County Down Shelby County Down Payment Assistance Payment Assistance

ProgramProgram

NACCED PresentationNACCED PresentationSeptember 2011September 2011


ProgramProgram Created in late 2006 as a revolving Created in late 2006 as a revolving

loan pool through a partnership loan pool through a partnership between Shelby County Government between Shelby County Government and the State of Tennessee.and the State of Tennessee.

Specifically the Department of Housing Specifically the Department of Housing and the Tennessee Housing and the Tennessee Housing Development Agency (THDA)Development Agency (THDA)


ProgramProgram The original funding pool came from The original funding pool came from

interest paid on old bonds issued by interest paid on old bonds issued by Shelby County and the State in Shelby County and the State in 1990’s.1990’s.

70% of the pool provided by the State70% of the pool provided by the State 30% of the pool provided by Shelby 30% of the pool provided by Shelby

CountyCounty


ProgramProgram In addition to the original pool, fees In addition to the original pool, fees

were established and collected on were established and collected on permits issued by Shelby County permits issued by Shelby County Code Enforcement. Code Enforcement.

Funds generated are used to operate Funds generated are used to operate the program and build on the revolving the program and build on the revolving loan fund. loan fund.


ProgramProgram Permit Fees consist of:Permit Fees consist of:

$1 for each residential permit issued.$1 for each residential permit issued. $5 for each commercial permit issued.$5 for each commercial permit issued. $5 for each sign permit $5 for each sign permit

issued/renewed.issued/renewed.

Average generated per year from Average generated per year from fees $114,300.00fees $114,300.00


ProgramProgram Original available loan pool: Original available loan pool: $ 3.3 Million$ 3.3 Million

(in 2006)(in 2006)

Current Available loan pool: Current Available loan pool: $ 2.3 Million$ 2.3 Million (in 2011) (in 2011)

Total Loans Made: Total Loans Made: $ 2.3 Million$ 2.3 Million (2006-2011)(2006-2011)

Type of Assistance Type of Assistance ProvidedProvided

Assistance is in the form of a 5% loan for Assistance is in the form of a 5% loan for down payment and closing costs associated down payment and closing costs associated with the purchase of a home.with the purchase of a home.

Loan amount:Loan amount: Up to $ 3,500.00Up to $ 3,500.00 Term:Term: Up to 10 years/120 Up to 10 years/120

monthsmonths Monthly Payment:Monthly Payment: $ 37.12 for 120 months*$ 37.12 for 120 months*

* for maximum loan.* for maximum loan.

Eligibility RequirementsEligibility Requirements

Unit purchased must be located in Unit purchased must be located in Shelby County and be the primary Shelby County and be the primary residence. residence.

Unit may be either existing or a Unit may be either existing or a newly constructed unit newly constructed unit

Homebuyer must qualify for a THDA, Homebuyer must qualify for a THDA, FHA, VA, or Conventional Mortgage.FHA, VA, or Conventional Mortgage.


Homebuyer(s) must invest a Homebuyer(s) must invest a minimum of $500 of their own minimum of $500 of their own savings for closing.savings for closing.

Homebuyer(s) must attend a Homebuyer(s) must attend a homebuyer counseling class.homebuyer counseling class.

The purchase price of the unit must The purchase price of the unit must be less than $200,160.00.be less than $200,160.00.


Ratio for Approval of DPA funds:Ratio for Approval of DPA funds:

Front end: Cannot exceed 33%Front end: Cannot exceed 33%

(Monthly housing expense/stable income)(Monthly housing expense/stable income)

Back end: Cannot exceed 43% Back end: Cannot exceed 43%

(Monthly housing expense + debt/stable (Monthly housing expense + debt/stable

income)income)


Household Income Levels:Household Income Levels:

1 to 2 Person Household 1 to 2 Person Household Minimum $ 26,100.00Minimum $ 26,100.00 MaximumMaximum $ 68,439.00 $ 68,439.00

3 or More person Household3 or More person Household MinimumMinimum $ 26,100.00 $ 26,100.00 MaximumMaximum $ 78,704.00 $ 78,704.00

Eligibility RequirementsEligibility Requirements Purchaser must agree to a Deed of Trust Purchaser must agree to a Deed of Trust

Restriction being recorded on the home at Restriction being recorded on the home at closing.closing.

Purchaser may not at any time lease the Purchaser may not at any time lease the property and such language must be property and such language must be included in all loan documents. included in all loan documents.

Purchaser must sign to a Promissory Note Purchaser must sign to a Promissory Note which also incorporates all requirements which also incorporates all requirements of the loan. of the loan.

Eligible Closing CostsEligible Closing Costs

1.1. Origination Fee (1%)Origination Fee (1%)

2.2. One repair inspectionOne repair inspection

3.3. One lender inspectionOne lender inspection

4.4. Compliance/Final Compliance/Final InspectionInspection

5.5. Engineer’s CertificateEngineer’s Certificate

6.6. Pest InspectionPest Inspection

7.7. Closing/Settlement, Closing/Settlement, Deed of Trust, Note Deed of Trust, Note PreparationPreparation

8.8. Amortization ScheduleAmortization Schedule

9.9. Title ExaminationTitle Examination10.10. Title InsuranceTitle Insurance11.11. Credit ReportCredit Report12.12. SurveySurvey13.13. RecordingRecording14.14. NotaryNotary15.15. Attorney’s fee not to Attorney’s fee not to

exceed $200 exceed $20016.16. Allowable Pre-paysAllowable Pre-pays17.17. InsuranceInsurance

Resale ProvisionResale Provision

All loans contain a resale provision All loans contain a resale provision which requires payoff of the unpaid which requires payoff of the unpaid balance when the property is:balance when the property is:

Sold,Sold, Transferred, orTransferred, or Leased.Leased.

PrepaymentPrepayment

Loan balances may be paid off at any Loan balances may be paid off at any time.time.

There is no penalty for the There is no penalty for the prepayment of the DPA loan prior to prepayment of the DPA loan prior to the maturity date. the maturity date.

Loans By Fiscal YearLoans By Fiscal Year

# of loans# of loans Dollars Loans Average Dollars Loans Average LoanLoan

2006:2006: 1818 $ 57,658 $ 57,658 $ 3,203$ 3,203 2007:2007: 1818 $ 57,020$ 57,020 $ 3,168$ 3,168 2008:2008: 3939 $ 124,588$ 124,588 $ 3,195$ 3,195 2009:2009: 153153 $ 505,047$ 505,047 $ 3,301$ 3,301 2010:2010: 311311 $ 1,018,646$ 1,018,646 $ 3,275$ 3,275 2011:2011: 153153 $ 483,447$ 483,447 $ 3,160$ 3,160

692692 $ 2,246,406$ 2,246,406 $ 3,246$ 3,246

Average Tax Rates Average Tax Rates (January 1, 2006 – (January 1, 2006 –

6/30/2011)6/30/2011)Annual Property Tax Rates:Annual Property Tax Rates:

Shelby CountyShelby County $4.02 (Memphis) $4.06 (Non-$4.02 (Memphis) $4.06 (Non-Memphis)Memphis)

Municipalities*Municipalities*MemphisMemphis $3.19$3.19ArlingtonArlington $1.00$1.00BartlettBartlett $1.49$1.49ColliervilleCollierville $1.43$1.43GermantownGermantown $1.48$1.48MillingtonMillington $1.23$1.23

* Overall Average Municipal Rate: $1.63* Overall Average Municipal Rate: $1.63

Estimated Taxes GeneratedEstimated Taxes Generated(Since January 2006)(Since January 2006)

Average Mortgage Loan: Average Mortgage Loan: $ $ 94,698.0094,698.00

Shelby County Taxes:Shelby County Taxes: $ $ 1,511,331.361,511,331.36

City/Municipal Taxes:City/Municipal Taxes: $ $ 612,809.20612,809.20

Total in Shelby County:Total in Shelby County: $ 2,124,140.56$ 2,124,140.56

Annual DPA Income Loans Annual DPA Income Loans & Fees& Fees

MonthlyMonthly AnnuallyAnnually

Average repaymentsAverage repayments $13,370$13,370$160,440$160,440

Average from permit feesAverage from permit fees $ 9,525$ 9,525 $114,300$114,300

Total revenue collected*Total revenue collected* $ 22,895$ 22,895 $274,740$274,740

* Average as of 6/30/2011* Average as of 6/30/2011

Obstacles In Obstacles In ImplementingImplementing

Household Income Limits Household Income Limits Slow start due to income qualifications. Slow start due to income qualifications.

Originally, the program was set up to mirror Originally, the program was set up to mirror income by household size under the federal income by household size under the federal guidelines which resulted a high volume of guidelines which resulted a high volume of non-qualifying applicants. (Buyers were non-qualifying applicants. (Buyers were pigeonholed.) pigeonholed.)

Because no Federal funds are involved, a Because no Federal funds are involved, a change to State household limits resolved this change to State household limits resolved this issue by freeing up the restricted income levels issue by freeing up the restricted income levels and provided a wider income range. and provided a wider income range.


Shelby County’s Finance DepartmentShelby County’s Finance Department How to issue/cut Down Payment Checks?How to issue/cut Down Payment Checks?

Originally, Finance wanted W-9’s and Vendor Originally, Finance wanted W-9’s and Vendor numbers for each Homeowner receiving numbers for each Homeowner receiving assistance. assistance.

Finally, resolved by agreeing that the lender had Finally, resolved by agreeing that the lender had to be set up as a Shelby County vendor and the to be set up as a Shelby County vendor and the check was cut to the closing attorney on behalf of check was cut to the closing attorney on behalf of the buyer. the buyer.


Shelby County Finance DepartmentShelby County Finance Department Time line for issuing checks and method.Time line for issuing checks and method.

County policy required checks to be mailed County policy required checks to be mailed (no County employee can handle the check) (no County employee can handle the check) and turnaround time was set at 30 days. and turnaround time was set at 30 days.

Negotiated a system whereby checks could Negotiated a system whereby checks could be walked through in 10 days and picked up be walked through in 10 days and picked up and delivered by a Dept. of Housing staff and delivered by a Dept. of Housing staff person.person.


Finding A Loan Servicing Agent:Finding A Loan Servicing Agent: Selection of a Loan Servicer to handle the loans.Selection of a Loan Servicer to handle the loans.

We could not find anyone willing to service such a smallWe could not find anyone willing to service such a small

loan portfolio at a reasonable cost. Issued numerous loan portfolio at a reasonable cost. Issued numerous RFPsRFPs

This was resolved when a Tallahassee, FL company This was resolved when a Tallahassee, FL company mademade

inquiry after seeing the RFP. They ended up securinginquiry after seeing the RFP. They ended up securing

licensing through the State of TN and ended up licensing through the State of TN and ended up becoming becoming

The successful respondent. Cost of servicing is $8 per The successful respondent. Cost of servicing is $8 per loan.loan.

Contacts For More Contacts For More InformationInformation

Jim Vazquez, AdministratorJim Vazquez, Administrator 901-379-901-379-71027102

[email protected]@shelbycountytn.gov

Israel Henry, Finance ManagerIsrael Henry, Finance Manager 901-379-901-379-71167116


Wanda Chambers, DPA SpecialistWanda Chambers, DPA Specialist 901-379-901-379-71007100


shelby county down payment assistance program nacced presentation september 2011

Documents

shelby countyshelby

shelby county government

revolving loan pool

maximum loan

shelby county code enforcement

loan documents

current available loan

original pool