DeKalb NSP Second Mortgage Program Guide September 2009

1

DeKalb NSP Second Mortgage Program

Program Guide

Table of Contents

Overview .................................................................................................................................. 4

Loan Terms............................................................................................................................... 4-8

Repayment ............................................................................................................................... 9

Participating Lenders................................................................................................................ 9

Eligible Applicants ................................................................................................................... 9

Eligible Properties .................................................................................................................... 10

Purchase Discount Requirements ............................................................................................. 10

Property Standards/HQS Inspections ....................................................................................... 11

Appraisals................................................................................................................................. 11

Environmental Review ............................................................................................................. 11

Minor repairs and Final Inspection........................................................................................... 12

Eligible Loans........................................................................................................................... 12

Mortgage Insurance Requirements........................................................................................... 12

Loan Origination ...................................................................................................................... 13

Maximum Rate and Closing for First Mortgage ...................................................................... 13

NSP Origination Fee ................................................................................................................ 13

Underwriting ............................................................................................................................ 14

Issuance of Reservation............................................................................................................ 14-20

Second Mortgage Loan Closing Documents ............................................................................ 20

Second Mortgage Loan Documents ......................................................................................... 21

Survey....................................................................................................................................... 21

Title Insurance Policy............................................................................................................... 21

Hazard Insurance...................................................................................................................... 22

Flood Insurance ........................................................................................................................ 22

Flood Hazard Zone Certification.............................................................................................. 23

Termite Letters ......................................................................................................................... 23

Other Government Funding...................................................................................................... 23

Ownership Interest ................................................................................................................... 23

DeKalb NSP Second Mortgage 2 Program Guide September 2009

Principle Residence Requirement............................................................................................. 24

Co-Signers ................................................................................................................................ 24

Liquid Assets Limitations......................................................................................................... 24

Household................................................................................................................................. 25-28

Termination of Employment .................................................................................................... 29

Child Support/Alimony ............................................................................................................ 29

Overtime/Bonuses .................................................................................................................... 29

Unemployment Compensation ................................................................................................. 29

Non-payroll Deposits ............................................................................................................... 29

Self-Employed Applicants........................................................................................................ 30

Homebuyer Education .............................................................................................................. 30

Bank Statements & Paystubs.................................................................................................... 30

Tax Returns .............................................................................................................................. 31

Maximum Purchase Price......................................................................................................... 32

Manufactured & Modular Homes ............................................................................................ 32

Trade, Business, or Investment Property.................................................................................. 32

Property Standards ................................................................................................................... 32

Private Wells ............................................................................................................................ 33

Septic System ........................................................................................................................... 33

Acreage .................................................................................................................................... 33

Environmental Impact .............................................................................................................. 33

Plumbing, Electrical, and/or Heating ....................................................................................... 34

Lead Paint................................................................................................................................. 34

Appendix .................................................................................................................................. 35

DeKalb NSP Second Mortgage 3 Program Guide September 2009

DeKalb NSP Second Mortgage Program

Introduction

As part of the Housing and Economic Recovery Act (HERA), passed by Congress in July of 2008, $3.92 billion was provided to communities hardest hit by residential foreclosures and mortgage delinquencies. Title III of Division B of the HERA Act provides for a grant, commonly known as the Neighborhood Stabilization Program (NSP). DeKalb County received $18,545,013 of NSP funds to assist DeKalb County in acquiring, rehabilitation, redevelopment, and resell of foreclosed properties that might otherwise become sources of abandonment or blight within communities. The NSP Substantial Amendment to the 2008-2012 Consolidated Plan, along with subsequent responses to questions from HUD, sets forth the Countys plan to use NSP funds.

DeKalb County has approved Atlanta Neighborhood Development Partnerships (ANDP) lending affiliate, the Community Redevelopment Loan and Investment Fund, Inc. (CRLIF) to assist in the implementation of the DeKalb NSP Second Mortgage Program. DeKalb County will provide $3.5 million towards the funding of this program.

Overview

The DeKalb NSP Second Mortgage Program provides homebuyers with a deferred repayment subordinate mortgage for principal reduction and minor repairs associated with the purchase of eligible NSP single family property. Funds may not be applied to discount points.

NSP funds must be used first for principal reduction (2nd Mortgage). Any remaining funds may be used for minor property minor repairs necessary to bring the property up to Housing Quality Standards (HQS). If minor repairs are not needed or are not made a part of the financing, the entire amount must be used for second mortgage. The DeKalb NSP Second Mortgage loan will be provided in the form of a subordinate lien that will be recorded.

Loans will be made available to homebuyers for eligible properties purchased within four identified Tiers of DeKalb Countys NSP Areas of Greatest Need, please reference Appendix A for map of targeted areas.

Loan Terms

The DeKalb NSP Second Mortgage Program provides up to $25,000.00 for principal reductions and minor repairs for buyers of foreclosed h