City of Macon Offers Relief for Homebuyers Updated 6/16/2008
THE CITY OF MACON’S
HOME PURCHASE PROGRAM Processing Guidelines
–Subject to Change
Click here for Homes in Target areas:
http://maconpub.ezlistmls.com/
Income/Household Size Requirements
1 person $30,800
2 people $35,200
3 people $39,600
4 people $44,000
Buyer’s household income and size cannot exceed HUD income /household size limits shown above
1. Loans Available–Down payment and closing cost assistance for homes located within the city limits of
Macon, Georgia.
2. ECDD 2nd Mortgage Loan Terms (Terms are subject to change)
(A) Homes in target areas and built by the city of Macon’s development partners
–The maximum loan amount: $20,000.00
–The maximum deferral period: 5 years
–The payment will be based on 60% of the amount the applicant has available for the ECDD 2nd
mortgage payment after the 5-year deferral period. The total term cannot exceed 30 years.
PAYMENT CALCULATION EXAMPLE (Based on projection of borrower’s income and debts after the five-year deferral period):
MONTHLY INCOME = $1,000.00
$1,000.00 X 45% (Maximum Debt Ratio 45%) = $450.00 (Debt Service Income)
DEBT SERVICE INCOME $450.00 (45% of Monthly Income)
OTHER DEBT PAYMENTS - $350.00 (Includes all non-housing debt & 1st Mortgage PITI)
AVAILABLE FUNDS $100.00 (Amount available for ECDD 2nd mortgage payment)
MINIMUM ECDD 2ND MORTGAGE PAYMENT= $60.00 (60% of Available Funds)
–Minimum ECDD 2ND mortgage term = 5 years
–Total term cannot exceed 30 years
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(B) Homes in target areas but not built by the city of Macon’s development partners
–The maximum loan amount: $10,000.00
–The maximum deferral period: 5 years
–The total paying term cannot exceed 10 years
–Minimum ECDD 2ND mortgage term = 5 years
–Total term cannot exceed 15 years
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(C ) Homes located citywide (not in target area and not built by development partners)
–The maximum loan amount: $5,000.00
–The maximum deferral period: 3 years
–Total paying term cannot exceed 5 years
–Minimum ECDD 2ND mortgage term = 5 years
–Total term cannot exceed 8 years
ECDD 2ND Mortgage Loan Terms (Continued)
Deferment periods are allowed, but not required. On deferred-payment loans, the payments will not be counted in the initial debt-to-income ratio by most first mortgage lenders. The homebuyer must be pre-approved for as much as possible by the 1st mortgage lender and ECDD will fill in the GAP up to the maximum loan amount allowed (See #2) . Exceptions to the maximum loan amounts, deferral period, and terms will be considered on a case-by-case basis for applicants on a fixed income; i.e ., disabled individuals, elderly individuals on a fixed income, individuals whose primary income may be from social security, etc. These exceptions must be pre-approved by ECDD prior to approval of the 1st mortgage in order to prevent any misunderstanding or confusion.
3. Maximum Sales Price Limit– $190,152.00 (HUD Limits- Subject to Change)
4. Deferral Period–determined by location of home (See #2)
5. Credit/Debt Concerns–Applicant can have no delinquent federal debt, no delinquent child support, no Chapter 13 Bankruptcy within 12 months of application and no Chapter 7 Bankruptcy within 12 months of application. No minimum credit score is required; however, borrower may be required to pay off some collections, liens, etc. prior to ECDD approval.
6. ECDD 2nd Mortgage Interest Rates –ECDD will offer a 2%, fixed interest rate.
7. The first Mortgage Interest Rate-Cannot exceed 1 point above prime at the time of application & it must
be a fixed rate.
8. Debt-to-Income Ratio–The maximum DTI ratio allowed initially (before the deferral period) is 50% which means that when the file is received, the first mortgage PITI and any non-housing debt cannot exceed 50% of the borrower’s monthly income. The maximum DTI ratio allowed at the time repayment begins is 45% which means that at the end of the borrower’s deferral period, their 1st and 2 nd mortgage PITI (ECDD), along with any non-housing debt payments, cannot exceed 45% of their projected gross income at the time of payment to ECDD
9. Environmental Clearance– Environmental Clearance is required. Performed by ECDD Construction Division.
10.Inspection– If the home is not newly constructed, an inspection by a certified inspector or contractor is required. The home must be inspected and the copy of the inspection forwarded to the City of Macon’s Construction Manager. If the inspection indicates the home does not meet HUD’s Minimum Housing Quality Standards, the City’s Construction Manager will indicate the required repairs and all required repairs must be completed and approved prior to loan closing.
11. Out Of Pocket Cost–The minimum out-of-pocket contribution required by the applicant is $500.00. The Good Faith Estimate and HUD-1 must show the minimum required contribution.
11. Seller Paid Closing Costs on Homes Developed by Non-Profit Partners–Cannot exceed $2, 500.00.
12. Sales/Broker’s Commission on Homes Developed by Non-Profit Partners–Cannot exceed 5% of sales price plus additional $1, 000.00. EXAMPLE: Sales price = $73,000.00
5% of sales price = $3,650.00 plus additional $1,000.00 = $4,650.00 (Maximum sales/broker’s commission allowed)
13. Lender’s Fees–Must not be greater than 3% of 1st mortgage loan amount.
14. Brokerage Firm Fees–Cannot exceed 4% of 1st mortgage loan amount.
15. ECDD Loan Fees–ECDD loan fees must be included on HUD-1
16. Escrow Account–An Escrow Account to cover taxes and insurance by the 1st mortgage lender is required.
17. Title Insurance–Required for ECDD second mortgage. Title Insurance Policy should read:
The City of Macon Economic and Community Development Department, and/or their successors and assigns as their interests may appear.
18. ECDD Participation–Required in the purchase of all homes built by ECDD Development Partners, regardless of whether or not ECDD 2nd Mortgage assistance is needed. Realtor must submit the following documents to ECDD prior to closing: Restrictive Covenant Deed; Income Verification; 1003; HUD-1 and Bank Note.
19. Homeownership Training Required–A Housing Counseling Certificate of Completion for homeownership training with Macon Middle Georgia Housing Counseling Center is required. If the applicant has not completed the class prior to loan closing, arrangements must be made for “special consideration counseling” before the loan can be closed. Please contact Macon Middle Georgia Housing Counseling Center at
478-803-2373 ASAP so that the loan closing will not be delayed. Certificates are valid for two years.
20. Income Considerations
Grossing Up Incomes
ECDD will consider “grossing up” the monthly income only for applicants who receive Social Security or Social Security Supplement. This will be allowed so that all debt ratio calculations will be based on “gross income,” as is allowed by most other lending sources. The percentage is 115% and will be utilized only when necessary.
Future Income Projections for Borrower’s Deferral Period–The projected increase in monthly income will be based on the three-year historical income provided on the Verification of Employment (VOE), or from copies of complete, signed, past three years tax returns. We will use the average of any increases indicated during that three-year period. Social Security/SSI Projections–Future income will be projected at a 2.9% annual increase.
21. ECDD Loan Position– It is imperative that ECDD loans are in second position
22. Firm Commitment Letter–Prior to closing, a firm commitment letter of approval, stating final terms must be submitted. The firm commitment letter should be submitted after the “clear to close” and must specify the FINAL conditions. The firm commitment letter must be received before ECDD second mortgage funds can be requested. See below:
–Name and address of 1st mortgage lender
–Purchase price
–First mortgage loan amount
–First mortgage interest rate and terms
–The amount requested for ECDD second mortgage
–Attorney’s name, contact person, address and telephone number
–The projected loan closing date & time
Please note. The funds for the ECDD 2nd mortgage loan will not be requested until the firm commitment letter of approval has been received.
Important Notes
The initial file received from lender cannot be faxed, emailed, etc. However, once processing begins, any updates may be faxed or emailed to us. Documents do not have to be originals; copies are acceptable. All documents must be signed where required. The file is not logged into our system until all necessary documents; i.e., (GFE, 1003, Sales Contract, etc.) are received, signed and are consistent with our program guidelines and requirements.
- Please note that the first mortgage interest rate must be a fixed rate and is not to exceed one point above the prime interest rate on the date of file receipt by ECDD.
- Homebuyers must have a household income at or below the HUD Section 8 low income and very low limits (see current Income Guidelines enclosed).
- ECDD must receive the required documents from the attorney’s office one day (24 hrs.) prior to the scheduled loan closing time in order for us to complete our loan package.
- ECDD must be included in loan closing schedule. We cannot request funds until we receive firm commitment letter. A representative from ECDD will attend loan closings.
- It is important that we receive all applicable information ASAP so that ECDD file processing will not be delayed. If ECDD requires documents for processing that are not required for the first mortgage, lender should consider providing documents to eliminate processing delays. Once the above information has been received, the applicant will be contacted for an application appointment. Remember, ECDD must be allowed time to process the file.
CITY OF MACON’S HOME PURCHASE PROGRAM (HPP)
Home Buyer ORIGINATION CHECKLIST
- Pre-approval letter from lender addressed to ECD must accompany loan package. Pre-approval letter should specifically state the applicant’s first mortgage has been pre-approved, the conditions ( i.e., purchase price, first mortgage loan amount, interest rate and terms, and the amount requested from ECDD for the second mortgage). Brokers, please include name and address of lender.
- Verification of Income or VOE (all income sources).
- Two recent paycheck stubs for applicant and co-applicant.
- Social Security, retirement benefit statement, etc.
- Documents showing the income and benefits of all other persons 18 years of age or older who will be living in the home. If employed, submit copies of two recent paycheck stubs.
- Notarized income Affidavit on unemployed spouse and all other unemployed household members 18 years of age or older (Income Affidavit provided by ECDD).
- Two year’s complete federal tax returns (three years if annual increase is to be included in projected income). Note: We must receive the complete returns, not W2s. (See page 4)
- Divorce Decree, if alimony or child support is court-ordered. If alimony or child support is not currently being received, proof must be submitted.
- Two most recent bank/credit union statements.
- Landlord/rental information or Verification of Rent (VOR).
- Copy of first mortgage lender’s credit report. Applicant can have no delinquent Federal debt, no Chapter 13 within 12 months of application and no Chapter 7 within 12 months of application. ECDD will also pull credit report.
- Chapter 13 bankruptcy papers. If currently in chapter 13, ECDD must get pre-approval from the bankruptcy courts.
- Chapter 7 bankruptcy dismissal papers.
- Letter of explanation, if applicable.
- Delinquent federal debt correspondence; i.e., proof of satisfactory student loan repayment arrangements.
- Executed Sales Contract (must be signed by all parties involved)
- Good Faith Estimate
__Must indicate ECDD second mortgage request
__$500.00 out of pocket contribution
__Taxes and insurance estimate
__Combined total origination fees and discount points cannot exceed 3% of loan amount
__First mortgage interest rate cannot exceed 1 point above prime on the date the package is received
- Copy of 1003 (Loan Application) from first mortgage lender
- Truth-In-Lending Statement
- Attorney’s Selection document, if applicable
- Appraisal must be received prior to loan closing. Home must appraise for sales price or more.
- Copy of Certificate of Occupancy must be received prior to loan closing
- Copy of termite inspection is required prior to loan closing
- Title insurance for ECDD second mortgage is required
- Certificate of Completion for homeownership training with Macon Middle Georgia Housing Counseling Center is required. If the applicant has not completed the class prior to loan closing, arrangements must be made for “special consideration counseling” before the loan can be closed.
- Firm Commitment Letter of Approval stating final terms (prior to loan closing). Firm Commitment letter should specify the FINAL conditions (i.e., purchase price, first mortgage loan amount, interest rate and terms, and the amount you are requesting from ECDD for the second mortgage). If broker, also include name and address of lender. Attorney’s name, address and telephone number as well as the projected closing date & time should also be included.
Click below for Listings in Target areas:
http://maconpub.ezlistmls.com/