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HomeMy WebLinkAboutExhibit ECITY OF MIAMI HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT SINGLE FAMILY PROGRAM POLICY AND PROCEDURES MANUAL Revised 12-2018 Single Family Programs Contents 1. Definitions 2. General Policy 3. Program Summaries 3.1. Single Family Rehabilitation Program 3.2. Single Family Replacement Program 3.3. First time Homebuyer Program 3.4. Emergency Loan Program 3.5. Foreclosure Prevention Program 4. Single Family Rehabilitation Program 5. Single Family Replacement Program 6. First-time Homebuyer Program 7. Emergency Loan Program 8. Foreclosure Prevention Program 9. Single Family Rehabilitation Construction 9.1. Inspections and Office Estimates 9.2. Bidding 9.3. Selection of Contractors 9.4. Progress Inspections and Management 9.5. Change Orders and Loan Modifications 10. Reimbursement Procedure 11.Appendix Page 2 of 49 SECTION 1: DEFINITIONS Amortize: To liquidate, or pay off, a debt (such as a mortgage) by installment payments. Combined Loan to Value Ration (CLTV): The aggregate principal of all mortgages on a property divided by its appraised value or purchase price, whichever is less. It is an amount which simply represents the first position mortgage or loan as a percentage of the property's value. Decent, Safe and Sanitary Housing: A dwelling unit or building meeting Federal Occupancy Standards as defined in 24 CFR 882.109 and CFR 882.405. Dwelling Unit: An independent living unit containing, at a minimum, a bathroom, kitchen or kitchenette and a living area/bedroom. Grant: An outright gift of cash requiring no repayment. Hazardous Condition: A code violation that is an immediate, serious threat to the health and/or safety of the occupant(s) of a dwelling unit. Income: The gross amounts received from all sources and by every person, residing in the dwelling, including wages, pension, social security, interest, rent, dividends, etc. Income Limits: The maximum amounts that can be earned to qualify for a specific assistance category, based on family size (those actually living in the dwelling unit). Derived from a percentage of the median income for Miami as determined by the Department of Housing and Urban Development (See Appendix for current limits). Investor -Owned: The owner of a residential property who does not live in the structure. Loan: An advance of funds which must be repaid and is secured by a mortgage on the property. Owner -occupant: The title holder to a residential property whose primary living unit is located in the structure. Single Family Dwelling: A family with one to four dwelling units. Target Area: An administratively designated geographic part of the City of Miami in which Community Development activities are being carried out. Underwriting: The act of assuming financial responsibility for a loss or guaranteeing against failure for future losses. Page 3 of 49 SECTION 2. GENERAL POLICY 2.1 INTRODUCTION The Department of Housing and Community Development utilizes the grant funds it receives from federal, state and local government sources to aid in the development of viable urban communities. The thrust of this objective is to provide decent housing, a suitable living environment and the expansion of economic opportunities for the neediest persons in our community. The Department serves as an advocate for disenfranchised and economically disadvantaged residents by carrying out a wide range of community development activities directed toward neighborhood revitalization, economic development, improved community facilities and services, and assisting those least likely to benefit from the economic growth and prosperity projected for the City of Miami. The Single Family Program of the Department of Housing and Community Development is designed to fulfill the department's goal of providing safe and decent housing to all residents of this great City. The policies enumerated here were pulled from US and Federal Statutes and regulations governing the programs we manage, as well as industry practices that ensure prudent and efficient use of limited government resources for the benefit of the residents of the City of Miami. 2.2 STATUTES AND REGULATIONS The Single Family Program utilizes Federal and State affordable housing funds. The following Statutes and regulations govern the program and are the basis of the policies in this document. 2.2.1 HOME Program: Federal Statutes: Title 42 of the United States Code ("USC") - The Public Health and Welfare, Chapter 130 (National Affordable Housing), Subchapter II (Investment in Affordable Housing) The text of the statute can be viewed online at: http://www. hud.gov/offices/cpd/affordablehousinq/Iawsandregs/laws/index.cfm Title 24 of the Code of Federal Regulations ("CFR"), Subtitle A, Part 92. The text of the regulation can be viewed online at: http://www.access.gpo.gov/nara/cfr/waisidx 07/24cfr92 07.html Page 4 of 49 2.2.2 CDBG Program: Federal Statutes: Title 42 of the USC — The Public Health and Welfare, Chapter 69 — Community Development The text of the statute can be viewed online at: http://www.access.qpo.qov/uscode/title42/chapter69 .html Title 24 of the CFR, Subtitle B, Part 570. The text of the regulation can be viewed at: http://www.access.gpo.gov/nara/cfr/waisidx 07/24cfr570 07.html 2.2.3 SHIP Program Florida Statute: Florida Administrative Code, Chapter 67-37, State Housing Initiatives Partnership Program The text of this statute can be viewed at: https://www.flrules.org/gateway/ChapterHome.asp?Chapter=67-37 2.3 ELIGIBLE PROPERTIES 2.3.1 All properties assisted by this department must be within the corporate limits of the City of Miami. 2.3.2 The property shall not consist of more than four (4) residential units. However, most of the programs are limited to one (1) residential unit. For properties with more than one unit, further investigation may be required to ensure that assistance can be provided. 2.3.3 The property must conform to the requirements of the City of Miami Zoning Ordinance. 2.4 MAXIMUM ASSISTANCE The maximum assistance to be provided to applicants for all Single Family programs shall be governed by the Housing Policy approved by the City Commission for the period in question. In the event the Housing Policy approved by the City Commission conflicts with the Code of Federal Regulations or United States Code, the federal rules and regulations take precedence. Page 5 of 49 2.5 SECURITY All financial assistance provided to residents must be secured by a mortgage lien on the property. The term of the lien shall be based on the Housing Policy, as approved by the City Commission, for the period in question. The lien shall be subordinated only to the first mortgage lender and any State or County first-time homebuyer programs. For assistance provided using HOME funds, the term of the lien shall not be less than the affordability period as stipulated in 24 CFR 92.240. 2.6 UNDERWRITING METHODS Loans will be underwritten using standard industry risk assessment tools that evaluate the ability and willingness of the applicant to make payments on this loan, if any, and all other obligations. In addition, applicants and the property will be underwritten for program eligibility based on the source of funds being used for the program. Funds available for the Single Family Program can be from the Community Development Block Grant program (CDBG), the Home Investment Partnership program (HOME), American Dream Down payment Initiative (ADDI), the State Housing Initiative Program (SHIP) and SURTAX from Miami -Dade County. 2.7 APPRAISALS All loans originated by the Single Family Unit must have one of the documents below, indicating the value of the property. 2.7.1 For rehabilitation loans, the Market Value of the property as determined by the County Appraiser shall be used. In situations where the use of this value results in a higher than the maximum Loan -to -Value ratio for the program, an appraisal or a Value Estimator, using technology from an established secondary market company, will be required. 2.7.2 For Replacement and First-time Homebuyer programs, appraisals by a licensed professional appraiser will be required, whether the property purchased is existing or new construction. This appraisal must be assigned to the City. Appraisers are not procured by the City. They are required by the lender and are paid for by the buyer. 2.8 TOTAL LOAN -TO -VALUE, Maximum This is the sum of all loans on the property as a percentage of the value of the property. The value of the property is the lesser of the market value as determined above in section 2.7 or the purchase price. Page 6 of 49 The following is the maximum Total (or Combined) Loan to Value ratios ("CLTV"): 2.8.1 Single Family Rehabilitation program 150% 2.8.2 Replacement Homes 125% 2.8.3 Homebuyer Assistance 105% Loans with CLTV above the maximum can only be originated with an exception request as noted in Section 2.17 2.9 SCOPE OF WORK All rehabilitation and replacement loans will require a Scope of Work from the Inspection Services Unit. The scope of work should be signed by the applicant before being submitted to contractors for bidding. In emergency situations, requirements may be waived according to the rules set forth in sections 2.17 and 7. In cases where consultants are used, the Inspection Unit Manager will be required to review and either reject or accept the Scope of Work done by the inspector. The review will determine the feasibility and appropriateness of the project, the thoroughness and accuracy of the Scope of Work, and the reasonableness of the job cost estimate. The Inspection Unit Manager's signature will be required in order for the work to be submitted for bidding. 2.10 MAXIMUM HOUSEHOLD INCOME 2.10.1 The maximum household income for all down payment, rehabilitation, and replacement loans is 80% of the median household income, adjusted for family size, based on the most recent figures from the US Department of Housing and Urban Development and approved by the Florida Housing Finance Corporation. 2.10.2 For loans funded using SHIP, the income limit can be as high as 120%, however, approval by the Loan Program Manager is required to ensure that the total grants or loans funded at the various income levels are within the statutory ratios. 2.10.3 For loans using CDBG, where the rehabilitation work will eliminate "spot, slum, and blight" conditions, the 80% income limit may not apply. Such criteria should only be used in extenuating circumstances and with approval of the Director or his/her designee. Annual Household Gross Income for the SHIP program is as defined by Florida Statutes Chapter 420.9071, which is attached as Appendix 2A and incorporated Page 7 of 49 into this policy. Also refer to Determining Annual Income: Appendix 2B as provided by the SHIP program. 2.11 HOUSEHOLD A household is defined as immediate members of a family living together who may be expected to contribute to the income of the house for a substantial period of the term of the loan. Households may also include unmarried adults living in the same unit as the applicant if they are expected to contribute to the income of the household for a substantial period of the term of the loan. Households MUST include all persons living at the address of the borrower unless such persons are categorically excluded according to 24 CFR 5.609 (commonly referred to as Part 5 income definition). 2.12 CONFLICTS OF INTEREST As mandated by the City Commission, no loans will be made to City of Miami Employees or their immediate relatives without the express written permission of the City Manager. The Housing Program Manager will ensure that none of his staff underwrites or processes a loan for a relative. All loans to a Housing and Community Development Department employee or relatives shall be pre -approved by the Department Director and CFO, prior to submission to the City Manager. For programs with Federal funds, the Department will seek a conflict of interest waiver from HUD in accordance with departmental policies and 24 CFR 92.356 of the Final HOME Rule and 24 CR 570.611 of the CDBG regulations. 2.13 ESCROW, CONSTRUCTION LOAN Loan funds will be escrowed at closing and drawn in accordance with the payout schedule agreed to by the applicant, the contractor, and the Department Inspection Unit. The Inspector of record for the project will be responsible for ensuring that draw -downs are made in accordance with the Loan Agreement and all applicable Department of Housing and Community Development and City of Miami procurement and contracting policies. All payments requested by the Inspection Unit must be submitted to, and approved by, the Assistant Director for Housing. 2.14 ESCROW, REAL ESTATE TAXES, INSURANCES, RESERVES The City of Miami will escrow real estate taxes and homeowners' hazard or flood insurance, if the City's loan will be the first mortgage or if the first mortgage lender does not escrow for taxes and insurances. In situations where the homeowner has shown the ability to make such payments over a considerable amount of time, an Page 8 of 49 exception to this policy may be granted according to the procedure set forth in section 2.17. For all other loans, the City will require annual proof of payment of real estate taxes, insurance and homeowner's association dues, if applicable. In all cases, applicants will be required to add the City of Miami as additional insured on all insurance policies. All properties located in flood zones must have flood insurance. 2.15 FEES The City shall charge applicable loan closing costs to the applicant by making them part of the loan. Such fees may include the title commitment, appraisal, credit report, and any other third party fee that the City may incur in the issuing of the loan. 2.16 LOAN APPROVALS Loans will be recommended for approval by the Loan Officer after the application undergoes a program eligibility and credit review. The Housing Program Manager will review the file and approve the loan based on the current policies for the program as approved by the City Commission for the period in question. Authority to commit the City to making a single family loan is vested in the Assistant Director, Housing. Single family loans do not go to the Housing and Commercial Loan Committee. 2.17 EXCEPTIONS Exceptions to this policy will be considered on a case -by -case basis. Requests for an exception must be presented, in writing, to the Housing Program Manager on behalf of the applicant, by the Loan Officer. At a minimum, requests should include the policy for which the exception is being sought, and the reason for the exception. The Program Manager must review the request and make a recommendation to the Assistant Director for approval or rejection, citing reasons for the decision made. The decision to allow an exception must be based on the ability of the City to make that exception and whether granting the exception will not put the City's investment at risk. In situations where the exception sought contradicts the statutes or regulations of the funding source, an exception should first be obtained from the funding source. Such exception requests should be in writing, and a written response solicited, which should be made part of the loan file. 2.18 ADDITIONS AND CONVERSIONS Page 9 of 49 It is not the policy of the City to finance additions to existing buildings or projects that require a change to the Certificate of Occupancy. However, in overcrowding situations, an exception to this policy can be granted by the Department Director or her/his designee. In providing an exception, the Director will review the composition of the family to ensure that the family composition will remain the same in the foreseeable future. 2.19 SWEAT EQUITY The City of Miami will not finance any rehabilitation in cases where the applicant performs the work, or any portion of the work. 2.20 PERMITS, LICENSES AND INSURANCES The City of Miami will not issue a Notice to Proceed on any job unless all applicable licenses and proof of insurance, including workers compensation, have been presented to the Inspection Services Unit. In addition, the loan will not be disbursed unless a proper permit is filed with the City for the work to be performed. All contractors working on the Single Family Rehabilitation and the Replacement Home Programs will be required to add the City of Miami as an additional insured on all insurance policies. A license from the Department of Business and Professional Regulation or from Miami -Dade County for the particular trade area is required. It is the responsibility of the General Contractor to ensure that all sub -contractors are licensed and insured. The City will require Workers' Compensation Insurance and General Liability coverage of not less than one million dollars ($1 million) in addition to the homeowner's liability insurance carried by the applicant. 2.21 OTHER REQUIREMENTS 2.21.1 ENVIRONMENTAL All rehabilitation work will be done in accordance with Federal and State environmental regulations. With respect to any assistance using HOME or CDBG funds, environmental review will be performed in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) and the related authorities listed in HUD's implementing regulations at 24 CFR parts 50 and 58. 2.21.2 OTHER FEDERAL REGULATIONS When federal funds are used, the assistance provided will be in accordance with all other federal requirements regarding the use of CDBG or HOME funds. Such requirements include, but are not limited to, affirmative marketing, labor, displacements and relocations, lead -based Page 10 of 49 paint, and any other requirement in force at the time of the processing of the assistance in accordance with 24 CFR 92 or 24 CFR 570. 2.22 ESTABLISHMENT OF A WAITING LIST 2.22.1 The availability of funds for all Single Family programs will be advertised in a Daily Newspaper with Citywide coverage at least 30 days before the acceptance of applications. In addition, efforts will be made to advertise the availability of funds in other languages widely spoken in the City of Miami. 2.22.2 A period of not less than two weeks will be established for the receipt of applications. All applications received will be logged in the order received. Applications will be processed on a first -come, first -served basis from all applicants meeting program eligibility criteria, subject to funding availability. Applicants will be funded on a first -come, first —ready basis with priority given to the elderly and disabled homeowners. In addition, residents of the Neighborhood Development Zones and Model Blocks will also receive priority. Applicants not funded will be put on a Waiting List and will receive priority in the next funding cycle. 2.22.3 The Waiting List will be managed by the Housing Program Manager. It will only be opened for additional applications upon the approval of the Department Director or his/her designee. 2.22.4 An applicant can only be allowed priority, irrespective of the Waiting List, upon petitioning the Department Director and the submission of proof of imminent danger to the health and safety of the residents. Upon petition approval, the applicant will receive funding subject to the availability of funds. 2.22.5 All applicants with Code Violations will be given priority. SECTION 3. PROGRAM SUMMARY 3.1 SINGLE FAMILY REHABILITATION 3.1.1 Program Description: The program provides low- or no -interest loans to homeowners in the City of Miami on a first -come, first -served basis, to repair their properties. Homeowners select their contractors based on three bids. The work is inspected by Housing and Community Development inspectors and contractors are paid for completed work following approval by the homeowner and the inspector. Page 11 of 49 Source of Funding: CDGB or SHIP Maximum Assistance: $50,000 3.1.2 Eligible Rehabilitations: All repairs necessary to bring the house to a decent, safe, and sanitary condition. The following are the eligible trade areas: Plumbing, Electrical, Roofing and Structural. 3.1.3 Eligible Properties: Single family owner -occupied units in the City of Miami. The tax assessed market value of the property can't be more than $300,000. 3.1.4 Eligible Owners: Households with income less than or equal to, 80% of median income adjusted for family size. However, in the case of rehabilitation funded by SHIP funds, the maximum household income can be 120%. Owners able to afford a monthly payment based on income and debt. Owners current in their mortgage, insurance, and taxes. 3.1.5 Loan Terms: Maximum Loan: $50,000 Terms: 3 % non -amortizing 10 year deferred loans. The entire principal and accrued interest will be forgiven at the end of the term. Underwriting Ratios: 60% Total debt to income ratio. CLTV of 150% (Combined Loan to Value ratio) Security: The loan will be secured by a second mortgage on the property. Restrictions: Principal and all accrued interest will be due on sale or transfer of the property prior to loan maturity. In the case of a refinancing, the City Manager or his designee will determine the amount that has to be paid on such refinancing. 3.2 SINGLE FAMILY REPLACEMENT HOME Page 12 of 49 3.2.1 Program Description: The Single Family Replacement Housing Program is designed to address substandard and dilapidated housing units whose cost of repairs cannot be addressed through the Single Family Rehabilitation Programs. It involves the demolition and reconstruction of a new 3 bedroom 2 bath house on the same lot. Source of Funding: SHIP Maximum Assistance: $150,000 3.2.2 Eligible Costs: All soft and hard costs relating to the construction of the new home is eligible. In addition, relocation, moving, and storage charges can also be paid out of the loan proceeds. 3.2.3 Eligible Properties: Single family owner -occupied units in the City of Miami with major structural defects that cannot be rehabilitated. The property must be free and clear of all liens and mortgages, except City of Miami municipal liens. Properties with first mortgages will qualify for replacement only if the Department is able to secure additional funding to pay off the first mortgage and the homeowner can afford the monthly payment associated with the new mortgage or the first mortgage lender subordinates to the City. 3.2.4 Eligible Owners: Households with income less than or equal to 80% of median income, adjusted for family size. Preference is given to elderly homeowners. Homeowners able to afford their current monthly debt obligations. Homeowners current in their mortgage, insurance and taxes. However, one year's insurance and taxes can be paid from the loan proceeds. 3.2.5 Loan Terms: Maximum Loan: $150,000 Interest Rate: 3% Term: 30 years. Underwriting Ratios: 60% Total debt to income ratio. Page 13 of 49 CLTV of 150% (Combined Loan to Value ratio) if applicant has a first mortgage. Security: The loan will be secured by a second mortgage on the property. Restrictions: Principal and all accrued interest will be due on the sale or transfer of the property prior to loan maturity. In the case of a refinancing, as mandated by the City Commission, the City Manager or his designee will determine the amount that has to be paid on such refinancing. 3.3 FIRST TIME HOMEBUYER PROGRAM 3.3.1 Program Description: The First Time Homebuyer Program provides zero percent (0%) deferred loans to first-time homebuyers purchasing property in the City of Miami. The buyer selects their own house and lender. The City of Miami underwrites the loan based on the first mortgage lender's commitment. Source of Funding: HOME, ADDI or SHIP depending on the applicant's characteristics. 3.3.2 Eligible Properties: Single family owner -occupied units in the City of Miami. As set forth by the Housing Policy, the maximum purchase price cannot exceed 95% of the median purchase price for the area as annually determined by HUD for both new and existing homes. The property to be purchased must meet Housing Quality Standards (24 CFR 982.401). All repairs to bring the property to Housing Quality Standards must be completed prior to closing or be made as part of the purchase. (Repair escrow will be required.) 3.3.3 Eligible Buyers: Households with incomes less than or equal to 80% of median income adjusted for family size. Buyers able to afford a monthly payment based on the income and debt. Buyers contributing at least $500.00 of personal funds towards the purchase of the home. The buyer must not have owned a home in the last 3 years. Exceptions will be made to single parents who are displaced homemakers. Page 14 of 49 The buyer's credit must be acceptable to the first mortgage lender. However, the City of Miami reserves the right to reject any application based on buyer's credit. 3.3.4 Loan Terms: Amount of assistance: Minimum of $1,000 and maximum amount based on the number of bedrooms as annually determined by HUD under Section 221(d)(3) and 234. Terms: 0% non -amortizing; 30 year deferred loan. Payment of principal will be forgiven at the end of the maturity period provided that the homeowner resided in the house as their primary residence. Underwriting Ratios: The Total Housing to income ratio must be at 30% unless the first mortgage lender approves ratios more than 30%. Total Debt to Income ratio must be at 45%. CLTV (Combined Loan to Value ratio) of 105%. 3.3.5 First Mortgage Restrictions The City of Miami will only provide down payment and closing cost assistance on first mortgages that meet the following terms: a. The term of the loan must be 30 years. b. The interest rate must be fixed and cannot be more than 150 basis points over Freddie Mac's weekly average 30 year rate, as published in the Primary Mortgage Market Survey ("PMMS"). The PMMS can be accessed at http://www.freddiemac.com. c. No adjustable rate mortgages. d. No prepayment penalties. e. Loan must be full documentation only. No stated income and/or assets loans. f. The total percentage charged for Discount, Origination and Broker fees cannot exceed 2 points. All other lending fees (e.g., application fees, processing fees, tax service fees, administration fees, etc.) must be reasonable. However, they cannot exceed $500 or 0.5% of the loan amount, whichever is less. g. Security: Second Mortgage. Restrictions: The applicant must reside in the house at all times. The loan will be due at sale, transfer of the property or if it ceases to be the residence of the applicant. Page 15 of 49 If the owner sells and/ or transfer the house before the end of the City's mortgage term, the following provisions will apply: 1) In the case of the sale or transfer of the property, the borrower will be required to repay the original amount given as assistance. 2) Also the City shall share in any `gain' realized by the borrower, based on its pro -rated share of participation in the original purchase. Furthermore, if the sale occurs within the first 3 years, the City shall keep 100% of its pro -rated share of the `gain', from year 3 up to year 20, the City's share of its pro -rated `gain' shall decrease by 5% every year, while in turn, the owner's share shall increase by 5% each year. At year 20 up to the City's loan maturity, the owner shall retain 100% of the City's `gain'. This above share gain proposal terminates in the event of a foreclosure, with the lender required to provide the City the right of first refusal to purchase the loan at a negotiated price. 3) Forgivable loan after the affordability period of 30 years 4) In the event of a foreclosure, the City will recapture any amount of net proceeds available from the sale of the property. 5) In the case of refinances, the City Manager or his designee will determine the amount that has to be paid back based on the funding source. 3.4 EMERGNECY LOAN PROGRAM 3.4.1 Program Description: The program provides assistance to eligible homeowners to carry out limited repairs such as roofing, electrical and plumbing to immediately rectify life hazardous and potentially hazardous conditions that threaten the safety and Page 16 of 49 health of the occupants of the home. Homeowners select their contractors based on three bids. The work is inspected by Housing and Community Development inspectors and contractors are paid for completed work following approval by the homeowner and the inspector. Source of Funding: CDGB or SHIP Maximum Assistance: $20,000 3.4.2 Eligible Rehabilitations: All the repairs necessary to bring the residence to a decent, safe, and sanitary condition. The following are the eligible trade areas: Plumbing, Electrical and Roofing, etc. 3.4.3 Eligible Properties: Single family owner -occupied units in the City of Miami. The tax assessed market value of the property can't be more than $300,000. 3.4.4 Eligible Owners: Households with income less than or equal to, 80% of median income adjusted for family size. However, in the case of rehabilitation funded by SHIP funds, the maximum household income can be 120%. Owners able to afford a monthly payment based on income and debt. Owners current in their mortgage, insurance, and taxes. 3.4.5 Loan Terms: Maximum Loan: $20,000 Terms: 3 % non -amortizing 10 year deferred loans. The entire principal and accrued interest will be forgiven at the end of the term. Underwriting Ratios: 60% Total debt to income ratio. CLTV of 150% (Combined Loan to Value ratio) Security: The loan will be secured by a second mortgage on the property. Page 17 of 49 Restrictions: Principal and all accrued interest will be due on sale or transfer of the property prior to loan maturity. In the case of a refinancing, the City Manager or his designee will determine the amount that has to be paid on such refinancing. 3.5 FORECLOSURE PREVENTION PROGRAM 3.5.1 Program Description: The Foreclosure Prevention Program is designed to prevent foreclosure by paying delinquent mortgage payments (PITI) to assist with bringing the mortgage current including late fees, attorney fees, homeowner's association payments, special assessments, taxes, insurance and other foreclosure associated costs. This program is intended to maintain affordable homeownership within the lower income population of the City of Miami. Source of Funding: SHIP 3.5.2 Eligible Properties: Single family residence (one unit), townhouse or condominium located in the City of Miami. The tax assessed market value of the property can't be more than $300,000. The Property must be owner -occupied with homestead exemption. 3.5.3 Eligible Buyers: Household income less than or equal to 80% of the median income adjusted for family size; The homeowner must demonstrate their ability to make future mortgage payments after assistance is received and provide a revised monthly budget. The homeowner must prove that delinquency is due to a significant loss of household income (loss of employment, sudden medical illness or expenses, divorce or separation), death in the family, predatory lending practices, reset of an adjustable rate mortgage and unforeseen / unexpected / unanticipated home repairs; The homeowner can't own any other property at the time of assistance; Page 18 of 49 The homeowner can apply only once for the Foreclosure Prevention Program; The homeowner must undergo Foreclosure Prevention counseling from a HUD -certified Counseling Agency. 3.5.4 Loan Terms: Amount of assistance: The lesser of $7,500 or the amount necessary to bring the property out of foreclosure. Terms: 0% non -amortizing; 10 year deferred loan. Payment of principal will be forgiven at the end of the maturity period provided that the homeowner resided in the house as their primary residence. Underwriting Ratios: Total Debt to Income ratio must be at 45%. CLTV (Combined Loan to Value ratio) of 105%. Security: The loan will be secured by a mortgage on the property. Restrictions: The applicant must reside in the house at all times. The loan will be due at sale, transfer of the property or if it ceases to be the residence of the applicant during the term of the loan. SECTION 4: SINGLE FAMILY REHABILITATION PROGRAM 4.1 PROGRAM OBJECTIVES The objectives of the Single Family Rehabilitation Program are: a. To prevent moderately declining neighborhoods in the City from further deterioration by providing assistance for rehabilitation. b. To provide safe and decent housing to residents of the community by rehabilitating owner -occupied single unit properties. c. To encourage interest in preservation in the broader neighborhood through rehabilitation activities. d. To partner with contractors and the construction industry in providing access to jobs in declining neighborhoods by encouraging the hiring of neighborhood residents. Page 19 of 49 4.2 MAXIMUM ASSISTANCE a. The Loan Amount for the applicant will be determined by calculating the sum of the cost of the rehabilitation, a 10% contingency, and all loan related costs paid to third parties. b. The Loan Amount, as determined in 4.2(a) above, cannot be more than the maximum loan amount for the program as established by the Housing Policy in effect for the applicable year. 4.3 ELIGIBLE REHABILITATION COSTS a. The actual cost of rehabilitation necessary to bring the property to a decent, sanitary standard, (i.e. correct health and safety violations). b. The actual cost of rehabilitation necessary to bring the property into compliance with the South Florida Building Code, (i.e. correct code violations). c. The cost of rehabilitation to correct or remove incipient violations including all physical conditions of the property which, if not repaired, would deteriorate into actual violations of the decent, safe, and sanitary standards of the South Florida Building Code within two years. d. The cost of building permits and related fees required to carry out the proposed rehabilitation work, including but not limited to, architectural and engineering fees. 4.4INELIGIBLE COSTS a. Work so extensive as to be equivalent to new construction or reconstruction of the property. (This does not exclude gut rehabilitation of a property if necessary to meet the South Florida Building Code, provided it can be accomplished within the maximum amount established under the program). b. General property improvement for cosmetic reasons. c. The repair or construction of swimming pools, but not the cost to fill in or eliminate them from the property. d. Materials, fixtures, equipment, or landscaping of a type or quality which substantially exceeds that customarily used in Miami for properties of the same general type as the property to be rehabilitated. e. Purchase, installation or repair of furnishings. f. Cost of acquiring the property to be rehabilitated. g. Any reimbursement for work done or contracted for, either verbally or in writing, prior to approval of financial assistance. Page 20 of 49 h. Payment of any lien or judgment against the property including back taxes. However, the cost of an annual property insurance premium can be paid out of the loan proceeds. 4.5 SELECTING HOMEOWNERS a. The availability of rehabilitation funds will be advertised as stated in Section 2.22.1. b. Applicants will be funded on a first —come, first -served basis. c. Priority will be given to: i. Elderly and disabled residents. ii. Residents in Neighborhood Development Zones and Model Blocks. iii. Applicants with code violations. d. Applicants not funded will be put on a waiting list and will receive priority in the next funding cycle. 4.6 UNDERWRITING 4.6.1 REQUIRED DOCUMENTATION The applicant's application package must contain sufficient information for the City to reach an informed decision about the loan. Emphasis must be placed on documents ensuring the loan meets programmatic guidelines. At a minimum, all files must have the following documents: a. City of Miami Pre -Application (Appendix 4A). b. Scope of Work or Specs with office estimates (Appendix 4B). c. Appraisal Report (if required), Property Value from Appraiser's web site (Appendix 4C). d. Verification of Household Income. e. Verification of Household Assets. f. Verification of Mortgage/Rent. g. Credit Report. h. Credit explanations (If delinquencies within the past year). i. Proof of ownership (Deed). j. Proof of Insurance (can be paid from loan proceeds). k. Proof of payment of taxes. I. Copies of identification cards for all applicants. m. Copies of birth certificates for all dependents. Page 21 of 49 n. Additional documentation may be required based on the employment situation, property type, or apparent environmental hazard. Credit documents must be no more than 120 days old on the date the loan is closed. 4.6.2 CREDIT: The selection of applicants will not be made solely on credit, however, the City's interest will be protected by ensuring that applicants have the willingness and ability to make all monthly obligations, particularly, housing payments. Such willingness and ability to make all monthly obligations must be determined by reviewing the number and severity of delinquencies within the last 12 months. a. All judgments, collections, and profit and loss write-offs within the last 12 months must be satisfactorily explained. b. All bankruptcies must be discharged for at least 24 months. c. The absence of a credit profile will not disqualify any applicant from receiving assistance. d. Credit scores will not be used for making decisions on the credit profile of applicants. 4.6.3 RATIOS: The ability of the applicant to make all monthly obligations will be measured by the percentage of their monthly income spent on housing payments as well as the percentage spent on all monthly obligations, including housing. The percentage of the applicant's housing payments (mortgage, insurance, taxes, and homeowner association dues), as compared to income, should not be more than forty percent (40%). And the percentage of the applicant's total monthly obligations (housing payment and all other debts), as compared to income, must not be more than 60%. This percentage may be higher under the following conditions: a. The applicant has consistently made such higher payments over the last 12 months without any delinquencies. b. The applicant is a senior citizen (over 62 years) or disabled and on a fixed income. 4.6.4 COLLATERAL: The value of the property cannot be more than the maximum purchase price for existing properties as established by the Florida Housing Finance Corporation and adopted by the City Commission in the Housing Policy for the Community Development Department. (See Section 3) In addition, the CLTV percentage of all existing mortgages on the property, including the rehabilitation loan as compared to the value of the property, cannot be more than 150%. However, in cases where an appraisal is not available and the County Appraiser's Market Value is used, the CLTV can be more than 150%. Page 22 of 49 4.6.5 ASSETS: The interest from all interest earning assets must be added to the income of the household. The total assets of the applicants, with the exception of funds in a retirement account, cannot be more than $10,000. The City will expect applicants with liquid assets in excess of $10,000 to use the excess liquid assets in the rehabilitation of the property. Any shortfall will then be covered using funds from the program. 4.6.6 INCOME: Income must be derived for the household according to SHIP and HUD guidelines as enumerated in Section 2. Applicants must establish long-term, stable income, from employment or other sources. The loan officer must verify the applicant's employment for the two full years that preceded the loan application using W-2 forms. If the applicant has an employment history of less than two years, and was previously in school or the military, the loan officer must obtain a copy of his or her diploma, transcripts or discharge papers (DD Form 214). The Loan Officer must determine the probability, stability, and continuance of employment. Applicants who are in a line of work in which advancement is possible because of a continuing demand for that kind of service, and who have demonstrated an ability to maintain full employment, and advance in standing, will receive favorable consideration. The potential for future income can have a positive influence for applicants who have recently entered the job market. These applicants will be considered favorably if adequate future income can be anticipated because their education and training will expand their job opportunities. An applicant who changes jobs frequently to advance within the same line of work and who is successful in that work will receive favorable consideration. On the other hand, job-hopping without advancement, or from one line of work to another, may indicate an inability to master a job and could lead to unstable income. Applicants with questionable employment histories must have offsetting financial strengths to be considered for maximum financing. 4.7 PROCESSING 4.7.1 Pre -intake a. Review Pre -application form (Appendix 4A) to ensure that the property is in the City of Miami, no taxes are owed, and the income denoted on the pre -application form is within the income limits set forth in this policy. Use the property information as obtained from the property appraiser's website. (Appendix 4C) b. Complete a denial form letter for Housing Program Manager's (HPM) signature if applicant does not qualify based on the above. (Appendix 4D) Page 23 of 49 c. Schedule intake. Allocate not more than one and a half hours for an intake. Do not schedule more than 2 intakes in a day. All information collected during each intake must be input into the Genesis program that same day. Generate any missing information letters that same day, if necessary. 4.7.2 Intake a. Type or handprint legibly all the information on a blank Fannie Mae 1003 form (Appendix 4E). Denote as "N/A" any information that does not pertain to the applicant. b. Make sure the applicant signs the application. c. The loan officer or intake specialist must sign the application after the applicant signs. d. Collect all documents from the applicant, checking off each document on the checklist (Appendix 4F), as it is handed to you. e. Review all the documents while the applicant is with you to ensure that you have the correct documents and that each is completed correctly and signed by the appropriate parties. f. Prepare a missing documents letter (Appendix 4G), if necessary, for the applicant and keep a copy in the applicant's file. 4.7.3 Input into Genesis Program a. Immediately input all information into Genesis after the intake. b. Ensure that all pertinent information is complete in Genesis. c. Complete the tracking form. 4.7.4 Review all documents — Processing and Underwriting a. Review all documents presented. Ensure that the applicant has ownership interest in the property. Verify that the addresses on the various documents presented are the same and reflect the property address. b. Calculate income per pay stub or available income documents per HUD/SHIP guidelines. c. Send out Verifications per HUD/SHIP guidelines. (Print verifications from the system). For other non applicant members of the household, use blank verification forms printed from Genesis. (Appendix 4H) d. Submit file for HPM review while awaiting verifications. 4.7.5 Request HPM to review (only necessary for new Loan Specialist) 4.7.6 Request Loan Number Page 24 of 49 a. Send an email to HPM providing the name of the applicant, address of the property, purpose of the loan project (purchase or rehab), if applicable, and the source of funds, if known. (Appendix 41) 4.7.7 Request Inspection a. Complete the request for inspection form (Appendix 4J). b. Make sure that the amount stipulated on the request is the maximum amount Tess the closing cost. c. Attach a copy of the property information from the county appraiser's web site. 4.7.8 Complete Red -line memo for the Housing Program Manager, Assistant Director, Housing, Financial Director and Assistant Director, Policy's Signatures (Appendix 4K) a. Use the maximum possible loan amount for Redline memo if the rehabilitation estimate is not available. Otherwise, use the rehabilitation estimate and add title costs and recording fees. (Consult Program Manager for such fees.) b. Complete only after receipt of all verifications and re -calculations of the household income are complete. Use HUD's Income Determination website and print the findings for the file. (Appendix 4L.) c. All parts of the redline memo must be completely filled out. 4.7.9 Request HUD Environmental Review a. Request Environmental Review, by completing the Environmental Request Memo from the Loan Review Specialist to the Assistant Director, Housing (Appendix 4M(i)), and the Project information (Appendix 4M(ii)) with the following attachments: I. Property Information from County Appraiser's website. II. Signed Application for assistance (FNMA Form 1003 from Genesis, Appendix 4E). III. Office Work Write (Appendix 4B). IV. Proof of flood insurance (if property is in a flood zone). V. First two pages of the property appraisal report (if available). 4.7.10 Request Title Search and Title Insurance a. Complete Title request form or send an email to the Title company b. The email should include: (Appendix 4N) I. Property Address II. Name of Applicant Page 25 of 49 c. Upon receipt of Title Report, send the report to HPM for review. 4.7.11 Prepare SHIP Certification (Appendix 4P) and Award letter (Appendix 4Q), if applicable. a. This takes place after the receipt of bids from the inspection unit. b. Use the selected bid amount and add all closing costs as the loan amount. c. Ask applicant to come in and sign SHIP Income certification or mail income certification to applicant with a self-addressed stamped envelope. All applicant signatures on mailed income certifications must be notarized. d. Upon receipt of SHIP income certification, submit to SHIP Administrator (Housing Program Manager) for his signature. e. Print Commitment letter (or use award letter) and mail to applicant and all interested parties. 4.7.12 Prepare Closing Papers a. Contact the applicant and Inspector to schedule closing. b. Prepare closing papers using closing checklist (Appendix 4R) to ensure that all required documents are printed. c. Review the documents to ensure that the (i) names, (ii) address of the property, (iii) closing date, and (iv) term, are correct with no spelling errors. d. Put signature tabs on all pages requiring applicant and co -applicant signatures. 4.7.13 Close Loan a. Ensure that the applicant and co -applicant sign all required pages. b. Ensure that the contractor signs all required pages of the Contractor - Homeowner agreement and the Notice of Commencement. 4.7.14 Send Closed File to Servicing after expiration of the 3 day notice of rescission. SECTION 5: REPLACEMENT HOME PROGRAM 5.1 PROGRAM OBJECTIVES The objectives of the Replacement Home Program are: a. To prevent moderately declining neighborhoods in the City from further deterioration by replacing dilapidated homes. Page 26 of 49 b. To provide safe and decent housing to residents of the community. c. To encourage interest in preservation in the broader neighborhood through replacement home activities. d. To partner with contractors and the construction industry in providing access to jobs in declining neighborhoods by encouraging the hiring of neighborhood residents. 5.2 MAXIMUM ASSISTANCE: a. The Loan Amount for the applicant will be determined by the hard and soft costs of the new construction and all loan related costs paid to third parties. b. The Loan Amount, as determined in 4.2(a) above, cannot be more than the maximum loan amount for the program, as established by the Housing Policy in effect for the applicable year. 5.3 ELIGIBLE COSTS a. All hard and soft costs associated with the construction of the replacement home. b. All costs associated with the demolition of the property and the preparation of the lot for the new replacement home. c. All costs associated with the relocation of the homeowner during the period of construction including, but not limited to, rent, moving expenses, and storage expenses. 5.4INELIGIBLE COSTS a. Materials, fixtures, equipment, or landscaping of a type or quality which substantially exceeds that customarily used in Miami for properties of the same general type as the property to be replaced. b. The repair or construction of swimming pools, but not the cost to fill in or eliminate them from the property. c. Purchase, installation, or repair of furnishings. d. Cost of acquiring the property to be replaced. e. Any reimbursement for work done or contracted for, either verbally or in writing, prior to approval of financial assistance. f. Payment of any lien or judgment against the property, including back taxes. However, the cost of an annual property insurance premium can be paid out of the loan proceeds. Page 27 of 49 5.5SELECTING HOMEOWNERS a. The availability of rehabilitation funds will be advertised as stated in Section 2.22. b. Applicants will be funded on a first -come, first -served basis. c. Priority will be given to: i. Elderly and disabled residents. ii. Residents in Neighborhood Development Zones and Model Blocks. iii. Applicants with code violations. d. Applicants not funded will be put on a waiting list and will receive priority in the next funding cycle. 5.6 UNDERWRITING Applications for replacement homes will be underwritten using the criteria established in Section 4.6. 5.7 PROCESSING Replacement home applications will be processed as enumerated in Section 4.7. SECTION 6. FIRST-TIME HOMEBUYER PROGRAM 6.1 PROGRAM OBJECTIVES The objectives of the First -Time Homebuyer Program are: a. To provide assistance to First -Time Homebuyers purchasing properties in the City of Miami. b. To increase the homeownership rates in the City, thereby bringing stability to our neighborhoods. c. To increase the wealth of our residents through the building of equity as homeowners. d. To partner with the financial sector in bringing investments in our community. 6.2 MAXIMUM ASSISTANCE: Page 28 of 49 a. The Maximum Assistance provided under this program is established by the Housing Policy in effect. b. However, not withstanding the above, the City Manager or his designee can recommend an amount higher than the maximum assistance if such higher amount, The Loan Amount, as determined in 4.2(a) above, cannot be more than the maximum loan amount for the program as established by the Housing Policy in effect for the applicable year. 6.3 ELIGIBLE COSTS a. All down payment and closing costs associated with the purchase of a single family home, condominium, or a co-operative in the City of Miami. However, the applicant must contribute at least five hundred dollars ($500.00) of his or her own funds. b. Rehabilitation costs can be made part of the purchase transaction, however, the funds must be escrowed by the first mortgage lender and a certificate of completion must be provided to the City upon the completion of the rehabilitation. 6.4INELIGIBLE COSTS a. If rehabilitation is financed with the purchase, the following will not be an eligible cost: i. Materials, fixtures, equipment, or landscaping of a type or quality which substantially exceeds that customarily used in Miami for properties of the same general type as the property to be replaced. ii. The repair or construction of swimming pools, but not the cost to fill in or eliminate them from the property. b. Closing costs that are predatory and not customary to a purchase transaction. c. Cost of acquiring furnishings as part of the purchase transaction. 6.5SELECTING APPLICANTS a. The availability of down payment and closing cost funds will be advertised in a Daily Newspaper with Citywide coverage at least 30 days prior to the acceptance of applications. In addition, efforts will be made to advertise the availability of funds in at least two other languages widely spoken in the City of Miami. b. An application period of not less than two weeks will be established for the receipt of applications. Page 29 of 49 c. All applications received will be logged in the order received. d. Applications will be processed on a first -come -first served basis from all applicants meeting program eligibility criteria, subject to funding availability. e. Applicants not funded will be put on a waiting list and will receive priority in the next funding cycle. 6.6 UNDERWRITING Underwriting under the First-time Homebuyer program is restricted to programmatic eligibility. Credit underwriting is limited to the ability of the borrower to manage the housing payments and to cover leveraging of the property. 6.6.1 REQUIRED DOCUMENTATION The applicant's application package must contain sufficient information for the City to reach an informed decision about the loan. Emphasis must be placed on documents ensuring the loan meets programmatic guidelines. At a minimum, all files must have the following documents: a. Application for Down Payment Assistance (City of Miami form). b. Application Form 1003- (handwritten or typed) and signed by client. c. Good Faith Estimate and Truth —in-Lending forms from First Mortgage lender. d. Credit Report. e. Verification of Income and Employment. f. Verification of Down Payment. g. Most Current Income Tax Returns. h. IRS Form 4506. i. Previous 3 months' bank statements (VOD); 6 months if using SHIP. j. Verification of Rent. k. Sales Contract. I. Commitment letters from all other lenders. m. Copy of Appraisal. n. Certificate of Homeownership Training. o. Title Commitment Endorsement. p. Loan Closing Protection Letter from Closing Agents. Page 30 of 49 q. Insurance Endorsed to City of Miami (hazard, flood, windstorm, if applicable). r. Certificate of Occupancy (if new construction). s. Tax print-out of property. Credit documents must be no more than 90 days old on the date the loan is closed. 6.6.2 CREDIT: The selection of applicants will not be made solely on credit. However, the City's interest will be protected by ensuring that applicants have the willingness and ability to make all monthly obligations, particularly, housing payments. Such willingness and ability to make all monthly obligations must be determined by reviewing the number and severity of delinquencies within the last 12 months. a. All judgments, collections, and profit and loss write-offs within the last 12 months must be satisfactorily explained. b. All bankruptcies must be discharged for at least 24 months. c. The absence of a credit profile will not disqualify any applicant from receiving assistance. d. Credit scores will not be used for making decisions regarding the credit profile of applicants. 6.6.2 RATIOS: The applicant's ability to make all monthly obligations will be measured by the percentage of their monthly income spent on housing payments, as well as the percentage spent on all monthly obligations, including housing. The percentage of the applicant's housing payments (mortgage, insurance, taxes and homeowner association dues), as compared to income, should not be more than thirty percent (30%). And the percentage of the applicant's total monthly obligations (housing payment and all other debts), as compared to income, must not be more than forty-five percent (45%). This percentage may be higher if the first mortgage lender is willing to make loans at higher ratios. However, the first mortgage must meet Fannie Mae, Freddie Mac, or FHA standards. Under no conditions will a loan be made at higher ratios when the first mortgage is a sub -prime loan. 6.6.3 COLLATERAL: The value of the property cannot exceed the maximum purchase price for existing properties as established by the Florida Housing Finance Corporation Page 31 of 49 and adopted by the City Commission in the Housing Policy for the Housing and Community Development Department. (See Section 3) In addition, the CLTV percentage of all existing mortgages on the property, as compared to the value of the property, cannot be more than 105%. 6.6.4 ASSETS: The interest from all interest earning assets must be added to the income of the household. The total liquid assets of applicants, with the exception of funds in a retirement account, cannot exceed $10,000. The City will require applicants with liquid assets in excess of $10,000 to use the excess liquid assets as down payment. Any shortfall will then be covered using funds from the program. 6.6.5 INCOME: Income must be derived for the household according to SHIP and HUD guidelines as enumerated in Section 2. Applicants must establish long-term, stable income from employment or other sources. The loan officer must verify the applicant's employment for two full years preceding the loan application using W-2s. If the applicant has an employment history of less than two years and was previously in school or the military, the loan officer must obtain a copy of his or her diploma transcripts or discharge papers (form DD 214). The Loan Officer must determine the probability, stability, and continuance of employment. Applicants who are in a line of work in which advancement is possible because of a continuing demand for that kind of service, and who have demonstrated an ability to maintain full employment and advance in standing, will receive favorable consideration. The potential for future income can have a positive influence for applicants who recently entered the job market. These applicants will be considered favorably if adequate future income can be anticipated because their education and training will expand their job opportunities. An applicant who changes jobs frequently to advance within the same line of work and who is successful in that work will receive favorable consideration. On the other hand, job-hopping without advancement, or from one line of work to another, may indicate an inability to master a job and could lead to unstable income. Applicants with questionable employment histories must have offsetting financial strengths to be considered for maximum financing. 6.7 PROCESSING Page 32 of 49 The City of Miami expects that all First-time Homebuyer applications will be received from a lending institution or a non-profit organization. However, any application received in the department, whatever the source, must be processed and a letter sent to the borrower and all interested parties as to the disposition of the application. 6.7.1 Review for Completeness a. Review the City of Miami Homebuyer Application form (Appendix 6A) to ensure that the property is in the City of Miami, and the income denoted on the application is within the income limits. b. Check that the homebuyer signed the application. c. Review all the documents submitted to ensure that you have the correct documents and that each is signed by the proper parties. d. Prepare a missing documents letter, if applicable (Appendix 6B), with copies to applicant, first mortgage lender, and the non-profit organization, if applicable. 6.7.2 Input into Genesis a. Input the loan information into Genesis after the review. b. Ensure that all pertinent information is completed in Genesis. c. Do not forget to complete the tracking form. 6.7.3 Review all documents — Processing and underwriting a. Review all documents presented. Verify that the addresses on the various documents presented are the same and reflect the property address. b. Verify that all documents were dated within the last 90 days. c. Calculate income per pay stub or available income documents as per HUD/SHIP guidelines. d. Send out Verifications as per HUD/SHIP guidelines. (Print verifications from the system). For other non -applicant members of the household, use blank verification forms printed from Genesis. e. Submit file for HPM review while awaiting verifications. 6.7.4 Request HPM to review (for new Loan Review Specialist) 6.7.5 Request Loan Number Send an email to HPM providing the name of the applicant, address of the property, purpose of the loan, project (if applicable), and the source of funds (if known). (Appendix 41) Page 33 of 49 6.7.6 Complete Red -line memo for the Housing Program Manager, Assistant Director, Housing, Financial Director and Assistant Director, Policy's Signatures (Appendix 4K) a. Use the lesser of the amount of the request from the lending institution, or the maximum possible down payment amount necessary to achieve a 30% housing ratio, or the maximum loan amount. b. The Redline memo must be completed only after receipt of all verifications and re -calculation of the household income. Use HUD's Income Determination website and print the findings for the file (Appendix 4L). c. All sections of the redline memo must be completed. 6.7.7 Request HUD Environmental Review Request Environmental Review by completing the Environmental Request Memo from the Loan Review Specialist to the Assistant Director, Housing (Appendix 4M(i)) and the Project information (Appendix 4M(ii)) with the following attachments: a. Property Information from County Appraiser's website. b. Signed Application for assistance (FNMA Form 1003 from Genesis, Appendix 4E) . c. Office Work Write (Appendix 4B). d. Proof of flood insurance (if property is in a flood zone). e. First two pages of the property appraisal's report (if available). 6.7.8 Prepare SHIP Certification (Appendix 4P) and Award letter (Appendix 4Q), if applicable. a. This takes place after receipt of bids from the inspection unit. b. Use the selected bid amount and add all closing costs as the loan amount. c. Ask the applicant to sign the SHIP Income Certification. If you mail the Income Certification to applicant, enclose a self-addressed, stamped envelope. All applicant signatures on mailed Income Certifications must be notarized. d. Upon receipt of SHIP Income Certification, submit to SHIP Administrator (Housing Program Manager) for signature. e. Print a Commitment Letter (or use award letter) and mail to applicant and all interested parties. 6.7.9 Request Closing Documents from Lender or Title company Page 34 of 49 a. The following documents must be requested: i. Title Commitment ii. Loan Closing Protection Letter from Closing Agents iii. Insurance Endorsed to City of Miami (hazard, flood, windstorm, if applicable) iv. Certificate of Occupancy (if new construction) v. Preliminary HUD-1 Form 6.7.10 Request Check Send an email (Appendix 6B) to Finance requesting a loan closing check to be made payable to the Title Company. Attach: i. A copy of the signed Red Line Memo. ii. The IDIS number. iii. A copy of environmental clearance. iv. W-9 Form, if this is a new vendor. 6.7.11 Prepare Closing Papers a. Contact the lending institution and the non-profit organization for a closing date. b. Prepare closing papers using the closing checklist (Appendix 4R) to ensure that all required documents are printed. c. Review the documents to ensure the (i) name, (ii) address of the property, (iii) closing date, and (iv) term, are correct, with no spelling errors. d. Put signature tabs to all pages requiring applicant and co -applicant signatures. e. Attach the Loan Closing Instruction Sheet (Appendix 6C). 6.7.12 Post -Closing Review a. Ensure that the applicant and co -applicant signed all required pages. b. Verify that no disbursement went to the homebuyer on the HUD-1 form and that it was signed by the homebuyer. 6.7.13 Send Closed File to Servicing Page 35 of 49 SECTION 7: SINGLE FAMILY EMERGENCY REHABILITATION PROGRAM 7.1 PROGRAM OBJECTIVES The objectives of the program are as follows: a. To provide immediate assistance to homeowners to prevent further deterioration of the property. b. To provide safe and decent housing to residents of the community by rehabilitating owner -occupied single unit properties. 7.2 MAXIMUM ASSISTANCE a. The Loan Amount for the applicant will be the sum of the cost of the rehabilitation, a 10% contingency, and all loan related costs paid to third parties. b. The Loan Amount, as determined in 4.2(a) above, cannot be more than the maximum loan amount for the program as established by the Housing Policy in effect for the applicable year. 7.3 ELIGIBLE REHABILITATION The following are eligible repairs for this program: 7.3.1 Plumbing: a. No running cold or hot water in the entire building. b. Sewage accumulation. c. Dangerously broken plumbing d. House sewer obstructed. e. Supply line obstructed. 7.3.2 Central Heating and Cooling Systems: a. Boiler defective and inoperative, missing (existing). b. Gas burner defective and inoperable. c. Central AC defective and inoperable (when AC is medically necessary). 7.3.3 Plastering: Plaster loose, bulging, in unkempt condition, and in imminent danger of collapse. 7.3.4 Egress: a. Doors and/or bulkheads broken and not secure. b. Stairs at entrance broken and causing hazard. Page 36 of 49 7.3.5 Electrical: a. Electricity not provided for entire building or visibly hazardous electrical defects. b. Water leakage affecting electrical fixtures, creating fire hazard. 7.3.6 Roofing: a. Cornice defective and in danger of falling. b. Parapet walls leaning or bulging, in danger of falling. c. Rain leaders and gutters defective, causing water to enter premises. d. Roof leaking or open to the elements. 7.3.7 Glazing: Windows and skylights broken and missing, permitting the elements to enter premises,(windows must be out, not just cracked) 7.3.8 Other Hazardous Conditions: Any documented unsafe condition. 7.4 DECLARING EMERGENCY SITUATION An emergency situation is declared by the Inspection Supervisor through a memo to the Housing Program Manager, showing the nature of the emergency and the cost to repair it. 7.5 COMPETITIVE BIDS For an emergency loan, only one bid will be required. However, the Inspector will ensure that the bid is responsible and within 5% of the office estimate. 7.6 UNDERWRITING 7.6.1 REQUIRED DOCUMENTATION In emergency situations, collect the minimum documents to decide program eligibility. All other documents can be collected during construction or at a later stage. At a minimum, all files must have the following documents: a. City of Miami Pre -Application (Appendix 4A). b. Scope of Work or Specs with office estimates (Appendix 4B). c. Appraisal Report (if required), including the Property Value from Appraiser's web site (Appendix 4C). d. Self Income Certification. Page 37 of 49 e. Credit Report. f. Proof of ownership (Deed). g. Proof of payment of taxes. h. Copies of identification cards for all applicants. i. Copies of birth certificates for all dependents. j. Additional documentation may be required based on the employment situation, property type, or apparent environmental hazard. Credit documents must be no more than 120 days old on the date the loan is closed. 7.6.2 OTHER UNDERWRITING CRITERIA Same as for Single Family Rehabilitation Program (Section 4.6). 7.8 PROCESSING 7.8.1 Pre -intake a. Review Pre -application (Appendix 4A) to ensure that the property is in the City of Miami, no taxes are owed, and the income denoted on the pre -application is within the income limits. Use the property information obtained from the property appraiser's website (Appendix 4C). b. Complete a denial form letter for Housing Program Manager's (HPM) signature if applicant does not qualify based on the above (Appendix 4D). c. Schedule intake within 24 hours. Allocate not more than one and a half hours for an intake. Do not schedule more than 2 intakes in a day. All information must be input into the Genesis program the same day it is collected, and any missing information letters must also be generated that same day. 7.8.2 Intake a. Handwrite all the information on a blank Fannie Mae 1003 form (Appendix 4E). Denote as N/A any information that does not pertain to the applicant. b. Make sure that the applicant signs the application c. The Loan Officer or intake specialist must sign the application after the applicant signs. d. Collect all documents from applicant, checking off the document on the checklist (Appendix 4F) as it is handed over to you. Page 38 of 49 e. Review all the documents while the applicant is with you to ensure that you have the correct documents, and that all documents are signed as required. f. Prepare a missing documents letter (Appendix 4G) for the applicant and keep a copy in the applicant's file. 7.8.3 Input into Genesis Program a. Input the information into Genesis after the intake. b. Ensure that all pertinent information is completed in Genesis. c. Complete the tracking form. 7.8.4 Review all documents — Processing and Underwriting a. Review all documents presented. Ensure that the applicant has ownership interest in the property. Check to ensure that the addresses on the various documents presented are the same and reflect the property address. b. Calculate income per pay stub or available income documents as per HUD/SHIP guidelines. c. Send out Verifications as per HUD/SHIP guidelines. (Print verifications from the system). For other non -applicant members of the household, use blank verification forms printed from Genesis (Appendix 4H). d. Submit file for HPM review while awaiting verifications. 7.8.5 Request HPM to review (only necessary for new Loan Specialist) 7.8.6 Request Loan Number a. Send an email to HPM providing the name of the applicant, address of the property, purpose of the loan (purchase of rehab), project (if applicable), and the source of funds, if known (Appendix 41). 7.8.7 Request Inspection (if this has not been done) a. Complete the request for inspection form (Appendix 4J). b. Make sure the amount stipulated on the request is the maximum amount, Tess the closing cost. c. Attach a copy of the property information from the county appraiser's web site. 7.8.8 Complete Red -line Memo for the Housing Program Manager, Assistant Director, Housing, Financial Director and Assistant Director, Policy's Signatures (Appendix 4K) a. Use the maximum possible loan amount for the Redline Memo if the rehabilitation estimate is not available. Otherwise, use the rehabilitation Page 39 of 49 estimate and add title costs and recording fees (consult Program Manager for fees). b. Must be completed only after receipt of all verifications and re- calculation of the household income. Use HUD's Income Determination website and print the findings for the file (Appendix 4L). c. All parts of the redline memo must be completely filled out. 7.8.9 Prepare SHIP Certification (Appendix 4P) and Award letter (Appendix 4Q), if applicable. a. This takes place after receipt of bids from the inspection unit. b. Use the selected bid amount and add all closing costs as the loan amount. c. Ask applicant to sign SHIP Income Certification or mail income certification to applicant with a self-addressed stamped envelope. Applicant's signature on mailed income certifications must be notarized. d. Upon receipt of SHIP Income Certification, submit to SHIP Administrator (Housing Program Manager) for his signature. e. Print Commitment Letter (or use award letter) and mail to applicant and all interested parties. 7.8.10 Prepare Closing Papers a. Contact the applicant and Inspector to schedule closing. b. Prepare closing papers using the closing checklist (Appendix 4R) to ensure that all required documents are printed. c. Review the documents to ensure the (i) name, (ii) address of the property, (iii) closing date, and (iv) term, are correct with no spelling errors. d. Put signature tabs on all pages requiring applicant and co -applicant signatures. 7.8.11 Close Loan a. Ensure the applicant and co -applicant sign all required pages. b. Ensure the contractor signs all required pages of the Contractor - Homeowner agreement and the Notice of Commencement. 7.8.12 Send Closed File to Servicing after expiration of the 3 day notice of rescission. Page 40 of 49 SECTION 8. FORECLOSURE PREVENTION PROGRAM 8.1 PROGRAM OBJECTIVES To prevent foreclosure by paying delinquent mortgage payments to assist with bringing the mortgage current. The program is designed to maintain affordable homeownership within the lower income population of the City of Miami. 8.2 MAXIMUM ASSISTANCE: The Maximum Assistance provided under this program is established by the Housing Policy in effect. 8.3 ELIGIBLE COSTS All foreclosure related costs to include mortgage payments (PITI), late fees, attorney fees, homeowner's association payments, special assessments, taxes, insurance and other foreclosure associated costs., . 8.4INELIGIBLE COSTS a. Payment of any other debts to reduce ratios b. Payment of credit cards or other consumer debt 8.5SELECTING APPLICANTS a. The availability of foreclosure prevention funds will be advertised in a Daily Newspaper with Citywide coverage at least 30 days prior to the acceptance of applications. In addition, efforts will be made to advertise the availability of funds in at least two other languages widely spoken in the City of Miami. b. An application period of not less than two weeks will be established for the receipt of applications. c. All applications received will be logged in the order received. d. Applications will be processed on a first -come -first served basis from all applicants meeting program eligibility criteria, subject to funding availability. e. Applicants not funded will be put on a waiting list and will receive priority in the next funding cycle. Page 41 of 49 8.6 UNDERWRITING Underwriting under the Foreclosure Prevention program is restricted to programmatic eligibility. Credit underwriting is limited to the ability of the borrower to manage the housing payments. 8.6.1 REQUIRED DOCUMENTATION The applicant's application package must contain sufficient information for the City to reach an informed decision about the loan. Emphasis must be placed on documents ensuring the loan meets programmatic guidelines. At a minimum, all files must have the following documents: a. Application for Foreclosure Prevention Assistance (City of Miami form). b. Copy of Mortgage Documents (Note, Mortgage, Closing Statement, Deed to Property and Homeowner's Title Insurance Policy) c. Copy of mortgage payment coupon or billing. d. Proof of "Foreclosure Notice" from primary lender (all correspondence). e. Copy of latest utility bills, credit card statements, car loan statements, Student loan statements or other consumer debt statements. f. Hardship Letter. g. Proof of income: VOE (required), Pay stud (60 days), Social Secuirty Award Letter, Pension, etc. h. 2 Most Current Income Tax Returns. i. Last 6 months' bank statements (checking and savings) I. Copy of any income reports from income producing assets, such as stocks, Bonds, certificate of deposit, real property, etc. k. Copy of Homeowners Insurance or Fire Hazard Insurance Policy/ Flood / Windstorm. I. Proof of legal status (birth certificate, resident alien card, etc.). Credit documents must be no more than 90 days old on the date the loan is closed. 8.6.2 CREDIT: Page 42 of 49 The selection of applicants will not be made solely on credit. However, the City's interest will be protected by ensuring that applicants have the willingness and ability to make all monthly obligations, particularly, housing payments. Such willingness and ability to make all monthly obligations must be determined by a revised monthly budget. a. All judgments, collections, and profit and loss write-offs within the last 12 months must be satisfactorily explained. b. All bankruptcies must be discharged for at least 24 months. c. The absence of a credit profile will not disqualify any applicant from receiving assistance. d. Credit scores will not be used for making decisions regarding the credit profile of applicants. 8.6.2 RATIOS: The applicant's ability to make all monthly obligations will be measured by the percentage of their monthly income spent on all monthly obligations including housing. The percentage of the applicant's total monthly obligations (housing payment and all other debts), as compared to income, must not be more than forty-five percent (45%). 8.6.3 COLLATERAL: The value of the property cannot exceed the tax assessed market value of $300,000. In addition, the CLTV percentage of all existing mortgages on the property, as compared to the value of the property, cannot be more than 105%. 8.6.4 ASSETS: The interest from all interest earning assets must be added to the income of the household. The total liquid assets of applicants, with the exception of funds in a retirement account, cannot exceed $10,000. The City will require applicants to use all liquid assets to assist in bringing the mortgage current prior to any City funds. 8.6.5 INCOME: Income must be derived for the household according to SHIP and HUD guidelines as enumerated in Section 2. Page 43 of 49 Applicants must establish long-term, stable income from employment or other sources. The loan officer must verify the applicant's employment for two full years preceding the loan application using W-2s. If the applicant has an employment history of less than two years and was previously in school or the military, the loan officer must obtain a copy of his or her diploma transcripts or discharge papers (form DD 214). The Loan Officer must determine the probability, stability, and continuance of employment. Applicants who are in a line of work in which advancement is possible because of a continuing demand for that kind of service, and who have demonstrated an ability to maintain full employment and advance in standing, will receive favorable consideration. The potential for future income can have a positive influence for applicants who recently entered the job market. These applicants will be considered favorably if adequate future income can be anticipated because their education and training will expand their job opportunities. An applicant who changes jobs frequently to advance within the same line of work and who is successful in that work will receive favorable consideration. On the other hand, job-hopping without advancement, or from one line of work to another, may indicate an inability to master a job and could lead to unstable income. Applicants with questionable employment histories must have offsetting financial strengths to be considered for maximum financing. 8.7 PROCESSING The City of Miami expects that all Foreclosure Prevention applications will be received from participating non-profit organizations specializing in Loss Mitigation Counseling. However, any application received in the department, whatever the source, must be processed and a letter sent to the borrower and all interested parties as to the disposition of the application. 8.7.1 Review for Completeness a. Review the City of Miami Foreclosure Prevention Application form (Appendix 6A) to ensure that the property is in the City of Miami, and the income denoted on the application is within the income limits. b. Check that the homebuyer signed the application. c. Review all the documents submitted to ensure that you have the correct documents and that each is signed by the proper parties. d. Prepare a missing documents letter, if applicable (Appendix 6B), with copies to applicant, first mortgage lender, and the non-profit organization, if applicable. 8.7.2 Input into Genesis a. Input the loan information into Genesis after the review. Page 44 of 49 b. Ensure that all pertinent information is completed in Genesis. c. Do not forget to complete the tracking form. 8.7.3 Review all documents — Processing and underwriting a. Review all documents presented. Verify that the addresses on the various documents presented are the same and reflect the property address. b. Verify that all documents were dated within the last 90 days. c. Calculate income per pay stub or available income documents as per HUD/SHIP guidelines. d. Send out Verifications as per HUD/SHIP guidelines. (Print verifications from the system). For other non -applicant members of the household, use blank verification forms printed from Genesis. e. Submit file for HPM review while awaiting verifications. 8.7.4 Request HPM to review (for new Loan Review Specialist) 8.7.5 Request Loan Number Send an email to HPM providing the name of the applicant, address of the property, purpose of the loan, project (if applicable), and the source of funds (if known). (Appendix 41) 8.7.6 Complete Red -line memo for the Housing Program Manager, Assistant Director, Housing, Financial Director and Assistant Director, Policy's Signatures (Appendix 4K) a. Use the lesser of the amount of the request from the lending institution, or the maximum possible foreclosure payment amount necessary to achieve a 45% total date ratio, or the maximum loan amount. b. The Redline memo must be completed only after receipt of all verifications and re -calculation of the household income. Use HUD's Income Determination website and print the findings for the file (Appendix 4L). c. All sections of the redline memo must be completed 8.7.7 Request HUD Environmental Review Request Environmental Review by completing the Environmental Request Memo from the Loan Review Specialist to the Assistant Director, Housing (Appendix 4M(i)) and the Project information (Appendix 4M(ii)) with the following attachments: a. Property Information from County Appraiser's website. Page 45 of 49 b. Signed Application for assistance (FNMA Form 1003 from Genesis, Appendix 4E) . c. Office Work Write (Appendix 4B). d. Proof of flood insurance (if property is in a flood zone). e. First two pages of the property appraisal's report (if available). 8.7.8 Prepare SHIP Certification (Appendix 4P) and Award letter (Appendix 4Q), if applicable. a. This takes place after receipt of bids from the inspection unit. b. Use the selected bid amount and add all closing costs as the loan amount. c. Ask the applicant to sign the SHIP Income Certification. If you mail the Income Certification to applicant, enclose a self-addressed, stamped envelope. All applicant signatures on mailed Income Certifications must be notarized. d. Upon receipt of SHIP Income Certification, submit to SHIP Administrator (Housing Program Manager) for signature. e. Print a Commitment Letter (or use award letter) and mail to applicant and all interested parties. 8.7.9 Request Closing Documents from Lender or Title company a. The following documents must be requested: i. Title Commitment ii. Loan Closing Protection Letter from Closing Agents iii. Insurance Endorsed to City of Miami (hazard, flood, windstorm, if applicable) iv. Certificate of Occupancy (if new construction) v. Preliminary HUD-1 Form 8.7.10 Request Check Send an email (Appendix 6B) to Finance requesting a loan closing check to be made payable to the Title Company. Attach: i. A copy of the signed Red Line Memo. ii. The IDIS number. iii. A copy of environmental clearance. iv. W-9 Form, if this is a new vendor. Page 46 of 49 8.7.11 Prepare Closing Papers a. Contact the lending institution and the non-profit organization for a closing date. b. Prepare closing papers using the closing checklist (Appendix 4R) to ensure that all required documents are printed. c. Review the documents to ensure the (i) name, (ii) address of the property, (iii) closing date, and (iv) term, are correct, with no spelling errors. d. Put signature tabs to all pages requiring applicant and co -applicant signatures. e. Attach the Loan Closing Instruction Sheet (Appendix 6C). 8.7.12 Post -Closing Review a. Ensure that the applicant and co -applicant signed all required pages. b. Verify that no disbursement went to the homebuyer on the HUD-1 form and that it was signed by the homebuyer. 8.7.13 Send Closed File to Servicing SECTION 9: SINGLE FAMILY REHABILATION AND REPLACEMENT HOME INSPECTIONS FROM INSPECTIONS UNIT 9.5 CHANGE ORDERS AND LOAN MODIFICATIONS It is the policy of the City to minimize Change Orders. All efforts will be made to correctly identify all work that must be done to bring the property being rehabilitated to a safe and sanitary condition. This policy is meant to prevent contractors from using Change Orders as a means to additional profits and to prevent homeowners from using them to do other work that is cosmetic in nature and has no bearing on the safety or health of the occupants of the home. However, in rehabilitating older homes, the City expects that there may be additional work required due to unforeseen conditions. Since a Change Order and a Loan Modification add significant time to the construction period, all efforts must be made, by all staff involved, to process them Page 47 of 49 as quickly as possible. All requests for Change Orders will be tracked by the Administrative Assistant in the Single Family division. a. All unforeseen conditions identified by the contractor should be brought to the attention of the Inspector responsible for the project within 24 hours, with an estimate which outlines the condition and the cost of remedying the condition. b. The inspector has 24 hours to visit the property to document the unforeseen conditions and to check if the cost submitted by the contractor is reasonable. The inspector at this stage explains the situation to the homeowner and advises him or her as to how it will be remedied and the cost. c. The inspector must review the scope of work and determine if the homeowner has any funds under the loan cap to do the extra work, or if some items can be deleted to make room in the contract for the additional work required. d. If the work can be done within the current contract or under the loan cap, the inspector will submit a memo stating the reasons the additional work was unforeseen. The Inspector must also certify the reasonableness of the additional cost, and request an approval to change the scope of work or add extra funds to the loan within the loan cap to the Housing Program Manager (sample attached as Appendix 7A). The following documents must be attached to the memo: i. The Change Order form signed by the contractor, the homeowner and the inspector (sample attached as Appendix 7B). ii. Pictures showing the nature of the unforeseen conditions. e. The Housing Program Manager reviews the request, makes a determination of the validity of the unforeseen situation, and submits a memo to the Assistant Director, referencing the memo from the Inspector and attaching all the documents mentioned in section(4) above within 48 hours. (Sample attached as Appendix 7C). f. The Assistant Director reviews the recommendation from the Housing Program Manager and approves, disapproves, or requests additional information from the Housing Program Manager and/or the Inspector. Upon approval, the Housing Program Manager instructs the Loan Review Specialist to prepare a loan modification to reflect the new loan amount, if needed, for the Homeowner's signature (Sample attached as Appendix 7D). g. Page 48 of 49 h. Upon execution of the Loan Modification, the Housing Program Manager changes the loan amount in the Loan System to reflect the new loan amount. i. The documents collected as part of this Change Order and Loan Modification are then sent to Servicing and Finance for final processing. SECTION 10: REIMBURSEMENT PROCEDURE FROM FINANCE UNIT Page 49 of 49