Housing - Item 1 o Rosemead Housing Development Corp.
RHDC 8838 Valley Blvd., Rosemead, CA 91770 (818) 288-6671 Telecopier 8183079218
TO: HONORABLE CHAIRMAN
AND MEMBERS
ROSEMEAD HOUSING DEVELOPMENT CORPORATION
FROM: FRANK G. TRIPEPI, EXECUTIVE DIRECTOR C
DATE: NOVEMBER 5, 1998
RE: APPROVAL OF GUIDELINE PROVISIONS FOR FIRST TIME HOMEBUYER
PROGRAM
This item was considered originally by the Housing Development Corporation Board on October 27,
1998. During that meeting,the Board requested additional information regarding the applications
for program assistance to date. Attached is a spread sheet stating the household income, employer
and occupations of those applying thus far. The Board should note that among the twenty-eight
approved applications,five(5) are classified as Moderate Income households (as determined by the
California Department of Housing and Community Development), nineteen (19) are Lower Income
households; and four (4) are Very Low Income households. The information is presented
anonymously and no names have been listed.
Staff has attached the original staff report for this item dated October 27, 1998, a copy of"Exhibit
A"outlining the proposed Equity Share Program and a copy of the Guidelines&Procedures Manual.
RECOMMENDATION:
It is recommended that the Rosemead Housing Development approve the amendments outlined in
the attached Guidelines and Procedures Manual for the Rosemead First Time Homebuyer Program.
HOUSING AGENDA
MOV 101998
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o Rosemead Housing Development Corp.
RHDC 8939 Valley Blvd., Rosemead, CA 91770 (818) 265-6671 Telecopier 8183079215
TO: HONORABLE CHAIRMAN
AND MEMBERS
ROSEMEAD HOUSING DEVELOPMENT CO ORATION
FROMt-FRKANK G. TRIPEPI, CITY MANAGER,`'
DATE:I� OCTOBER 22, 1998
RE: APPROVAL OF GUIDELINE REVISIONS FOR FIRST TIME HOMEBUYER
PROGRAM
In April 1998,the Rosemead Housing Development Corporation approved guidelines and procedures
for the City's First Time Homebuyer Program. Since that time, staff has spoken with persons daily
regarding the program and mailed out nearly one-hundred and fifty "Guidelines & Procedures
Manuals" and pre-application forms. To date, staff has granted preliminary approval for
participation in the program to twenty-eight (28) residents. From that group, two families have
opened escrow on homes that they intend to purchase in Rosemead. One escrow is expected to close
this week after the City receives final approval from Fannie Mae on the loan documents.
Though the program has drawn considerable interest within the community, staff has concluded that
the guidelines may be too rigid to generate significant participation among residents. Accordingly,
staff is suggesting four specific changes to the program. The revised "Guidelines & Procedures
Manual" is attached for the Board's review.
The first suggested change is that the Corporation approve full-time and full-time equivalent
members of City staff as eligible participants. Several members of staff have expressed interest in
the program-either because they once lived in Rosemead and are desirous of moving back or simply
because they seek to live in the City in which they work. Regardless, employee eligibility in the
program would expand the pool of eligible applicants and meet the goal of the program in promoting
home-ownership in the community.
HaiSi \G AGENDA
OCT 271998
ITEM No. I.
First Time Homebuyer Revisions
October 22, 1998
Page 2.
Second, staff is proposing a more stringent definition for applicant income. Over the past several
months, the City has defined income as that earned during the previous year, and the final
determinant of that income has been the most recent tax return filed by applicant households.
However, upon examining the situation closely, it has become evident that an applicant's income
may change from one year to the next. For example, under the current guidelines, an applicant may
qualify for the program based on the household's 1997 income. However, recent pay stubs may
indicate that the applicant's income has increased to the point that the household is no longer
eligible. To clarify that situation for applicants and the City, staff proposes that income be defined
as follows:
Annual income is the gross amount of income anticipated to be received by all household
members over the age of eighteen (18) during the twelve (12) months following the
effective date of loan approval. Anticipated income is generally determined by
annualizing current income for the next (12) months.
Third, staff is recommending that the Corporation approve an "equity sharing"formula to determine
the amount owed to the Corporation when a home purchased under the program is sold. Current
guidelines require that an"affordability covenant" be recorded against the housing unit assisted by
the program. In addition, the current guidelines state that the Corporation begin receiving interest
payments during the sixth year after the unit is purchased. Staff recommends changing the
affordability covenant so that it is in effect"for the earlier of: (1) ten years; or (2) upon sale of the
home to a non-qualified buyer" under the terms explained in Section 6 of the guidelines entitled
"Equity Share Program."
The Equity Share Program proposed by staff would be structured as follows. The Corporation would
eliminate restrictions on the amount the home may be sold for after the expiration of the ten-year
affordability covenant. However, if the participant wishes to sell the property free and clear of all
restrictive covenants, he or she must repay all outstanding principal and interest on the Corporation
loan and must agree to pay the corporation a share of any appreciation realized upon sale of the
property pursuant to the following formula:
[Program Loan + (Purchase Price + Qualified Capital
Improvements)] x Total Appreciation=Corporation Equity Share
Please note that"Total Appreciation"is defined as the final sale price of the house minus the original
purchase price plus improvements. An example of this formula based on a property purchased
originally for$100,000,improved by the owner with a$15,000 room addition and sold for$150,000
is detailed in"Exhibit A. " Staff is recommending this change because a large number of households
applying to date appear to have little potential for income growth over the next five years.
Accordingly, a requirement to repay interest back to the Corporation during the sixth year of the loan
might prove to be an unmanageable burden for some households. By amending the repayment
First Time Homebuyer Revisions
October 22, 1998
Page 3.
requirements to an"equity share"situation at time of sale,the Corporation may stimulate additional
interest in the program.
Finally, staff is recommending that the Corporation reduce the down payment requirement from 5%
of purchase price to 3% of purchase price. Again, this change is recommended to allow additional
participation in the program. Staff has determined that many persons may be excluded from the
program because the current down payment requirement is difficult to meet. Originally, the
Corporation Board expressed concern that a minimum of$500.00 in liquid assets be required of all
approved applicants. Certainly, that requirement has been met to date. In fact, it is extremely
unlikely that an applicant could qualify for the program and purchase a home in Rosemead under the
current guidelines without providing several thousand dollars of their own assets. Consequently,
staff recommends a reduction in the down payment requirement in an effort to allow more
households to participate in the program. By lowering the amount to 3% of the purchase price, it
would possible to accomplish that goal without compromising the Board's position with respect to
the applicant's contribution of personal funds.
Attached for the Board's review is`Exhibit A,"outlining the proposed Equity Share Program, and
a revised copy of the Guidelines &Procedures Manual.
RECOMMENDATION:
It is recommended that the Rosemead Housing Development Corporation approve the amendments
outlined in the attached Guidelines and Procedures Manual for the Rosemead First Time Homebuyer
Program.
«i,lemo.2hmhuy rgi
"EXHIBIT A"
EQUITY SHARE PROGRAM EXAMPLE
Formula:
[Program Loan+(Purchase Price+Qualified Capital Improvements)]
x Total Appreciation = Corporation Equity Share
(Please note that"Total Appreciation" is defined as the final sale price of the home
minus the original purchase price plus improvements)
Example:
Program Loan = S10,000
Purchase Price = 5100,000
Qualified Capital Improvements = S15,000
(e.g., room addition)
Sales Price = 5150,000
Total Appreciation = S35,000
ISI50,000-($100,000+S15,000)]
Corporation Equity Share = S3,043
Formula Equation:
[510,000 (Program Loan) +($100,000 (Purchase Price)+$15,000 (Capital
Improvements)] x$35,000 (Total Appreciaton) = $3,043(Corporation Equity Share)
Rosemead Housing Development Corporation
HOME PURCHASE PROGRAM
A Program for First Time Homebuyers
Guidelines & Procedures Manual
Revised October 1998
TABLE OF CONTENTS
Section 1. Introduction 1
A. Program Overview 1
B. Program Goals 2
C. Program Administration 3
Section 2. Program Guidelines 4
A. Location of Program Activity 4
B. Eligible Participants 4
C. Eligible Property 6
D. Affordable Housing Costs 6
E. Occupancy Standards 8
F. Covenants and Restrictions 8
G. Participation Priorities 10
H. Financing 10
I. Rehabilitation Loans 12
J. Amendments 13
Section 3. Educational Services 14
A. About the Educational Program 14
B. Referral Services 14
Section 4. Program Procedures 15
A. Initiation and Submission 15
B. Applicant Intake and Eligibility Determination 15
C. Other Programmatic Requirements 17
List of Tables
Table I -Maximum Income Qualifications for Los Angeles County, 1998 4
Table 2-Maximum Housing Costs By Unit Size and By Income Category for Los
Angeles County, 1998 7
Table 3 -Terms of Corporation Loan I I
II?PROJECTS\tOSEMEAUVIOUSINGWJRS771.41 2HUC3.doc
Rosemead(/musing Development Corporation
Home Purchase Program
Section 1. Introduction
A. Program Overview
This document summarizes the Rosemead Housing Development
Corporation's (the "Corporation") Home Purchase Program (the
"Program"). This Program was established to assist in the removal of
certain barriers to homeownership that exist within the community.
Property values that are too high and personal savings that are too little to
permit families to become homeowners are the barriers that this Program
is intended to overcome.
The Program has been designed to benefit individual households and
properties located within the City of Rosemead (the "City") by providing a
financing tool for those unable to afford homeownership. Participation in
this Program is reserved for low- and moderate-income households that
could not enjoy the benefits of homeownership without Program
assistance.
This Program is funded by the Rosemead Redevelopment Agency (the
"Agency") through the Corporation.
Home Purchase Fragrant Guidelines&Procedures Manual•I
Rosemead Housing Development Corporation
B. Program Goals
The Corporation understands that neighborhoods containing a high
proportion of owner-occupied single-family properties remain more
economically stable and more physically attractive than comparable
neighborhoods with a higher percentage of investor-owned single-family
housing. The pride of ownership evident among many owner-occupants
can increase neighborhood property values and enhance the local property
tax base.
Homeowners' long-term commitment to a "home" and to the
neighborhood as a whole can also result in lower subsequent public
expenditures for property rehabilitation. Affordable homeownership
provides benefits to low- and moderate-income families as well as the
communities in which they live.
The goals of the Program are:
I. To encourage home ownership and increase the number of owner-
occupied single-family properties in the community;
2. To preserve and promote decent affordable housing opportunities
within the community;
3. To beautify neighborhoods;
4. To make neighborhoods safe; and
5. To instill neighborhood pride.
Home Purchase Program Guidelines&Procedures Manual•2
Rosemead Housing Development Corporation
C. Program Administration
To the extent possible, all requests for assistance and Program inquiries
will be coordinated through the City Manager's office. The
Administrative Services Director (the "Program Manager") will manage
the day-to-day activities of the Program and will assist the applicant in
making applications for financial assistance. This will allow a single
source of contact with the public, and will enable the Corporation to
allocate the resources of the Program to the mutual benefit of the applicant
and the Corporation.
The Corporation will conduct outreach to all households within the City
and to all City employees to make potential homebuyers aware of the
Program. This outreach will be in the form of published notices and
printed brochures outlining the Program and application procedures.
Participation in the Program will be on a first come, first serve basis,
although certain priorities have been set if more than one application is
pending at a time.
Once potential buyers submit applications for assistance, the Corporation
will conduct a screening and selection process. This five-step process
includes: 1) determination of the eligibility and priority status of the
applicant; 2) selection of eligible applications; 3) qualification by the
lender for the first trust deed loan; 4) eligibility of the property; and 5)
execution of the first and second trust deed loans.
i 1
Home Purchase Program Guidelines&Procedures Manual•3
Rosemead Housing Development Corporation
Section 2. Program Guidelines
A. Location of Program Activity
The Program will apply to the entire City of Rosemead.
B. Eligible Participants
The Program is designed to increase the level of affordable
homeownership for low- to moderate-income households. As such, the
Program is limited to first-time homebuyers, as defined herein, who will
occupy the property as their principal residence.
1. Income Limits
In order to qualify for the Program, an applicant's total combined gross
household income cannot exceed 120% of area median income adjusted
for family size as follows:
Table I - Maximum Income Qualifications for Los Angeles County,
1998
Income Level Iperson 2person 3person 4person 5person 6person
household household household household household household
Very Low S17,950 $20.500 $23.100 525.650 527.700 529,750
Lower $28,950 532850 $36950 $41,050 $44300 547.600
Medina $35,900 $41.050 $46.150 551300 555.400 $59,500
•
Moderate $43,100 549.250 $55400 $61550 $66,450 $71,400
Source Health&Safety Code,Section 50052.5
GRC Associates,Inc.
Home Purchase Program Guidelines&Procedures Manual•4
Rosemead Housing Development Corporation
The maximum income a household may earn to qualify for Program
participation is established and published by the California Department of
Housing and Community Development. These income standards are
adjusted annually. Each year the Program Manager will update the
program income requirements (Table I) to reflect any adjustments to these
income limits.
2. Income Defined
Annual income is the gross amount of income anticipated to be received
by household members over the age of eighteen (18) during the twelve
(12) months following the effective date of loan approval excluding
income from full-time students. Anticipated income is generally
determined by annualizing current income based on the last six months
income for the next 12 months.
The Program Manager has the discretion to adjust the annual income if the
homebuyer can demonstrate a history of income different than the annual
income derived from the method described above.
3. First Time Homebuyer
An applicant is a first time homebuyer for the purposes of this Program if
any of the following apply:
A. Applicant has not owned a residential property at any time
during the thirty-six (36) months immediately preceding the
date of the applicant's initial application for a loan.
B. Borrower is a single parent with custody or joint custody of
one or more minors.
C. Applicant is a full time or full time equivalent City employee.
4. Residence Requirement
The applicant must be a resident of the City of Rosemead for a minimum
of six (6) months prior to submission of an application for this Program.
In the event the applicant is a City employee, the employee must have
worked for the City of Rosemead for not less than one(1) year.
Home Purchase Program Guidelines&Procedures Manual•5
Rosemead Housing Development Corporation
5. Maximum Liquid Assets
The applicant's liquid assets cannot exceed the sum of (i) the portion of
the down payment to be paid from applicant's personal funds; (ii) the
portion of the closing costs to be paid from the applicant's personal funds;
(iii) an amount equal to six months' payments of principal and interest on
the first trust deed; and (iv) Ten Thousand Dollars ($10,000).
C. Eligible Property
Only properties that will serve as the principal residence of the purchaser
can be used in this Program. This includes:
1. single-family homes (one unit); and
2. condominium units (in a single-family or multifamily building).
The dwelling unit purchased must be located within the City of Rosemead.
An independent third party inspector at buyer or seller's expense must
inspect all properties. The condition of the property as reported by such
inspector must satisfy the standards established by the institutional lender
funding the first trust deed loan. In addition, any serious code violations
or other health and safety deficiencies reported by such inspector must be
corrected as a condition precedent to funding the Program assistance.
D. Affordable Housing Costs
California Redevelopment Law establishes the maximum allowable
amount qualified participants may pay for housing related expenditures
when participating in a redevelopment-funded owner-occupied housing
program. The maximum amount a household may spend on housing-
related
ousingrelated costs is shown in Table 2.
"Housing-cost" is defined as the estimated monthly cost for housing-
related
ousingrelated expenses for a twelve (12) month period. in calculating housing
costs, all of the following expenses associated with the financing and
maintenance of the home shall be included:
1. Principal and interest on a mortgage loan including any rehabilitation
loans, and any loan insurance fees;
Hone Purchase Program Guidelines&Procedures.Manual•6
Rosemead Housing Development Corporation
2. Properly (axes and assessments;
3. Fire and casualty insurance covering replacement value of property
improvements;
4. Property maintenance and repairs;
5. A reasonable allowance for utilities (Utility allowances are provided
by the County of Los Angeles and are updated annually.); and
6. Homeowners Association fees.
Table 2 - Maximum Housing Costs By Units Size and By Income
Category for Los Angeles County, 1998
For Very Low Income Buyers:
1 bedroom, $513
2 bedroom $577
3 bedroom $641
4 bedroom $693
5 bedroom $744
For Lower Income Buyers:
1 bedroom $718
2 bedroom $808
3 bedroom $898
4 bedroom $970
5 bedroom $1,041
For Moderate'Income Buyers:
1 bedroom $1,317
2 bedroom S1,481
3 bedroom S1,646
4 bedroom S1,777
5 bedroom 51,909
Source: GRC Associates.Inc.
Health&Safety Code.Section 50052.5
Home Purchase Program Guidelines&Procedures Manual•7
Rosemead Housing Development Corporation
Housing cost limitations vary depending on the income category an
applicant falls within and the size of the unit being purchased. To
determine the appropriate total monthly housing costs, the applicant must
contact the Program Manager.
E. Occupancy Standards
The dwelling unit must be used as the principal residence of the applicant
and applicant's family and for no other purpose. The maximum
occupancy of the dwelling unit shall not exceed two persons per bedroom
plus one.
F. Covenants and Restrictions
Maintenance, criminal activity and affordability covenants are required as
a condition of the Home Purchase Program participation. It is required
that these convenants or restrictions be recorded in the office of the county
recorder for each parcel or unit of real property subject to these covenants.
1. Maintenance Covenant
A maintenance covenant is a promise to maintain the property and
improvements in a reasonable manner and consistent with community
standards which will uphold the value of the property.
2. Criminal Activity Covenant
A criminal activity covenant is a promise to keep the property free from
drug-related activities or from other felonious criminal activity or public
nuisance.
3. Affordability Covenant
An affordability covenant is a promise to maintain ownership of the
property for a specified period of time, or a promise to sell only to a low-
and moderate-income buyer at an affordable housing cost.
4. Residential Overcrowding Restriction
A restriction against residential overcrowding will be required as a
condition of participation in the Home Purchase Program. Single-family
Home Purchase Program Guidelines&Procedures Manual•8
Rosemead Housing Development Corporation
and owner-occupied residences are housing units intended and used for
occupancy by one household. A household as defined by the Program
must occupy the housing unit.
5. Time Periods Required for Covenants
The maintenance and criminal covenants doe not expire until the Agency
loan is repaid in full. The affordability covenant is in effect for the earlier
of: I) ten years; or 2) upon sale of the home to a non-qualified buyer under
the terms described below.
7. Equity Share Program
While the goal of the Program is to encourage long-term, homeownership,
the Corporation recognizes that in some instances a participant may wish
to sell their home to a non-qualified buyer at a price which does not
comply with the terms of the affordability covenant. The Corporation can
release the affordability covenant and permit the resale of the property at a
cost higher than permitted under the affordability covenant only pursuant
to an adopted program which protects the Corporation's investment.
Under the Program, there are no restrictions on the amount the home may
be sold for after the expiration of the ten-year affordability covenant.
However, if the participant wishes to sell his or her property free and clear
of all restrictive covenants, the participate must repay all outstanding
principal and interest on the Corporation loan and must agree to pay the
Corporation a share of any appreciation realized upon sale of the property
pursuant to the following equity sharing formula:
Corporation Equity Share equals
(Program Loan/(Purchase Price+Qualified Capital Improvements)
x Total Appreciation
The "Program Loan" is the amount of the loan provided by the
Corporation to the Participant pursuant to the Program.
The "Purchase Price" is the original purchase price paid by the Participant
to the seller for the seller's interest in the property excluding escrow fees,
title insurance costs, broker's commission, loan fees of any other closing
or transaction costs.
Home Purchase Program Guidelines&Procedures Manual•9
Rosemead Housing Development Corporation
"Qualified Capital Improvements" is the total cost of verifiable major
capital improvements (not to include maintenance projects such as
plumbing repairs etc.) to the Property in excess of Two Thousand Five
Hundred Dollars ($2,500) made while the Participant owned and occupied
the property.
"Total Appreciation" is the amount equal to the price to be paid by the
non-qualified buyer to the Participant for the Participant's interest in the
property less the sum of the original Purchase Price and Qualified Capital
Improvements excluding escrow fees, title insurance costs, broker's
commissions, loan fees or any other closing or transaction costs.
7. Compliance Monitoring
California Redevelopment Law requires the Corporation to monitor, on an
annual basis, compliance with the requirements of this Program. Program
participates must agree to the Corporation's Compliance Monitoring
Procedures as setforth in the Program Procedures.
G. Participation Priorities
Households currently residing in the City of Rosemead who qualify to
participate in the Program, shall be given priority status during the
application intake and the loan approval processes.
H. Financing
Households financing the purchase of a qualified unit must meet the
financing criteria set forth below.
1. First Deed of Trust
In order to finance a home under this Program, applicants must obtain a
mortgage loan secured by a First Trust Deed from a private lending
institution. Any institutional lenders approved by the State of California
may participate in the Program. The financial criteria used by the private
lender may be different and possibly more stringent than that used by the
Corporation. Default in payments on the first mortgage will also cause a
default in the second trust deed loan, and may result in foreclosure. The
Corporation is not required to approve any financing that cannot be
demonstrated to he at fair market lending rates in the Corporation's sole
and exclusive discretion.
Home Purchase Program Guidelines&Procedures Manual•10
Rosemead Housing Development Corporation
2. Second Deed of Trust
While the first mortgage loan is obtained from a private lender, with
conventional terms of financing, the second mortgage is provided by the
Corporation under the following terms:
Table 3 - Terms of Corporation Loan
I. Maximum assistance Lesser of$20,000 or the amount required to make
the home purchase affordable under
Redevelopment Law.
2. Interest rate One percent (1%) simple interest for the term of
the loan.
3. Down payment A minimum of three percent (3%) of the sales
price excluding closing costs.
4. Loan to Value Total encumbrances (the sum of the first lien and
the Corporation Loan) may not exceed ninety-
seven percent (97%) of the current fair market
value of the property as determined by the private
lender's appraisal.
5. Security Subordinated second trust deed.
6. Term of Loan Payments of the principal and interest are due
upon sale or transfer. If the property is refinanced
to take out equity, is no longer owner-occupied, or
the owner is in violation of any restrictive
covenant, the loan becomes immediately due and
payable.
7. Equity Sharing As described in Section E.
8. Main Covenants Affordability covenant is in affect for 10 years,
criminal activity and maintenance covenants are in
affect for life of the Agency-funded loan.
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Rosemead Dousing Development Corporatism
3. Prohibition of Co-Signors
There will he no co-signing for the Corporation loan by non-applicants.
All applicants and co-applicants shall meet all of the eligibility
requirements for a Corporation loan.
4. Prohibition of Additional Deeds of Trust
Without the consent in writing of the Corporation, the property cannot be
used to secure a debt other than the first mortgage held by a private lender
and the second trust deed held by the Corporation.
5. Insurance
The Corporation will require that the applicant maintain, during the term
of the Corporation Loan, an all-risk property insurance policy insuring the
property in an amount equal to the full replacement value of the structures
on the property. The Corporation will obtain Loss Payable Endorsements
to said policies.
Any certificate of insurance must be, in form and content and with
insurance companies, approved by Corporation.
6. Use of Proceeds
Assistance from a Home Purchase Loan can be used in various ways
including:
1. Write down of purchase price;
2. Down-payment;
3. Closing costs, not to exceed Five Thousand Dollars ($5,000); and
4. Rehabilitation.
L Rehabilitation Loans
When all or a portion of the proceeds of a Corporation Loan are used to
rehabilitate property, the guidelines and procedures for a rehabilitation
loan shall comply with the existing guidelines and procedures utilized by
the City of Rosemead in its current rehabilitation program (except for
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Rosemead([musing Development Corporation
those requirements not required by California law for redevelopment
agencies undertaking rehabilitation programs).
J. Amendments
These guidelines may be changed in the future by action of the
Corporation. The Executive Director of the Corporation is also given
discretion to make certain technical changes to these guidelines as the
program is implemented if those changes are necessary due to regulatory
changes applying to lenders participating in the program, government
requirements or loan guarantee entities such as FHA. The Executive
Director will report to the Corporation on any such changes.
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Rosemead Housing Development Corporation
Section 3. Educational Services
A. About the Educational Program
The Corporation understands that the success of the Program depends on
the Corporation's ability to clearly communicate the benefits of
responsible homeownership. For this reason, various education programs
that focus on the needs of homeowners will be provided to families who
participate in this Program. These educational programs include referral
services for matters relating to housing or neighborhood improvement,
educational workshops, and volunteer opportunities.
The City Manager's Department will be sponsoring educational seminars
on budgeting, the home purchasing process, property maintenance, and
other subject matters related to purchasing, and owning a home. Seminars
will also be held which explain the City's code enforcement, planning and
building inspection processes, and the Neighborhood Watch programs.
B. Referral Services
The City Manager's Department will maintain a list of agencies that
provide housing-related services to homeowners. Information regarding
the Community Reinvestment Act, Fair Housing Foundation, Section 8
and graffiti removal programs are sone examples of the information that
will be available through the Program.
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Rosemead Housing Development Corporation
Section 4. Program Procedures
A. Initiation and Submission
The Corporation announces the initiation of the Home Purchase Program
and conducts outreach to all households within the City.
Upon commencement of the application process, interested persons will be
required to complete and submit all the required information contained in
the application packet to qualify for the Program.
B. Applicant Intake and Eligibility Determination
1. Pre-Screening
To the extent possible, prospective applicants shall be pre-screened for
basic eligibility requirements over the telephone by calling the City
Manager's Department at (626) 288-6671. The Corporation shall maintain
a log of such calls. If the prospective applicant believes he/she may be
qualified to participate in the Program an application will he mailed to the
interested party.
2. Application
Prospective applicants must return completed applications to the Program
Manager at the City offices located at 8838 East Valley Blvd., Rosemead,
CA 91770. Applicants are requested to carefully read this Program and
Procedure Manual and will be required to sign a statement on the
application that he/she has read the Manual and based on the requirements
hereof believes that he/she is eligible for a Corporation Loan; and, in the
event assistance is awarded, shall comply with the procedures and
requirements set forth herein.
Each application must be completed in its entirety, including signature(s)
of all borrowers, and submitted together with all of the required
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Rosemead Housing Development Corporation
documentation to be considered complete and eligible for review by the
Program Manager. All complete applications will be date stamped when
received. Incomplete applications will not be processed until all requested
information is submitted. The applicant shall submit all documentation
required for a complete application,including the following:
• Authorization for Release of Information.
• Such other documentation as may be requested by City staff.
Applications will be reviewed in a two-step process. Applications from
households currently residing in the City of Rosemead and from
employees of the City will be reviewed first in the order in which they are
received. Following the review of the priority applications, all other
applications will be reviewed in the order in which they are received. The
Corporation will maintain a waiting list for all prospective clients.
Unqualified applicants shall be notified by letter of their ineligible status.
Within the time frame established for the application process, application
packets are submitted for review and screening.
Failure by applicants to comply with application procedures will result in
disqualification. The qualification of an application shall not be final and
the rights to a Corporation Loan shall not vest until the applicant and the
Corporation, or its authorized designee, have executed a Loan Agreement
and related loan documents.
3. Verification and Eligibility Determination
Upon funding availability, the Program Manager shall contact qualified
applicants to schedule an initial interview at the City offices to review
applicant's file' to review the procedure of verifying Program eligibility
and outline the procedures of the Corporation Loan.
The Corporation shall verify all application information. Applicants will
be notified in writing regarding eligibility status. Applicant is given a
letter of qualification for lender, showing amount of assistance available.
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Rosemead[foueing Development Corporation
4. Lender Process
The applicant is qualified for First Trust Deed by the lender. The First
Trust Deed and the Second Trust Deed are executed and escrow closes.
5. Processing
As a goal, processing time from the date the Corporation determines that
the applicant is eligible for assistance under the Program until a loan is
approved or denied shall be a maximum of sixty (60) days.
C. Other Programmatic Requirements
1. Bonus, Commission or Fee
The applicant shall not pay any bonus, commission or fee, for the purpose
of obtaining approval of the loan application, or for any other approval or
concurrence required by the Corporation.
2. Conflict of Interest
No Corporation Loan will be granted to any member of the governing
body of the Corporation, nor any designee of the Corporation, who
exercises any functions or responsibilities in connection with the
administration of the Program; no member of the above stated
organizations shall have any interest, direct or indirect, in the proceeds
from the Corporation Loan or in any contract entered into by the applicant
for the performance of the work financed, in whole or in part, with the
proceeds of the loan.
3. Disclosure of Information
The Corporation is a public agency and any information or records
submitted or released to it by the applicant upon the consent of the
applicant may be public records and subject to disclosure under the Public
Records Act, Government Code section 6250 et seq.
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Rosemead Housing Development Corporation
5. Equal Opportunity Policy
The Corporation shall not discriminate upon the basis of sex, age, race,
creed, color, religion, national origin, marital status, ancestry or physical
handicap in accepting applications and processing Corporation loans.
6. Fire and Flood Insurance Requirements
Applicants are obligated to carry sufficient fire insurance coverage (and
flood insurance where applicable) on the property to be
purchased/rehabilitated under this Program, prior to any loan assistance.
Minimum fire insurance coverage for each dwelling unit must be
equivalent to the value of dwelling including rehabilitation improvements,
if applicable. Uninsured applicants must obtain coverage in the required
amount prior to receiving assistance. Applicants in a 'Flood Hazard Area'
will be required to purchase flood hazard insurance if required by the
federal government.
7. Lead Base Paint Notification
The Corporation as part of the application process shall provide a Lead
Base Paint Notification to all applicants. Such notice shall be signed and
dated by the applicant and a copy shall be maintained in the project file. A
lead base paint inspection shall also be performed as part of the initial
inspection.
8. Historic Preservation
In order to comply with Section 106, National Historic Preservation Act of
1966 as amended (I 6 U.S.C. 470) and CDC guidelines, the Corporation
shall prepare a Basic Property Identification Form for each structure to be
improved. When the subject structure is determined to be fifty (50) years
old or older, such form shall be accompanied by a set of four (4) photos,
and shall be submitted to the Corporation for review and clearance.
9. Conflict Resolution
Complaints concerning the Program must be in writing and addressed to
the Program Manager. The Program Manager will contact the
complainant and attempt to resolve the problem. A written response will
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Rosemead Housing Development Corporation
be made within thirty (30) days of receipt of a written complaint. If the
complainant is not satisfied after the written response, a complaint may be
tiled with the Corporation's Executive Director who will schedule a
meeting with the Program Manager. A written response by the
Corporation's Executive Director will be made within fifteen (15) working
days of the receipt of the complaint.
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