Program Description


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JEFFERSON PARISH

Department of Community Development

 

FIRST TIME HOMEBUYER PROGRAM GUIDELINES

 

OVERVIEW

Jefferson Parish has been designated as a Participating Jurisdiction for the HOME Program funded by the U.S. Department of Housing and Urban Development (HUD) and as such has designated a portion of its HOME funds for use in the "First-Time Homebuyer Assistance Program." The actual number of households that will be assisted is contingent upon the actual level of assistance received per client participating. Although the program allows assistance up to $50,000 per client, for Jefferson Parish and up to $60,000 per client for Kenner, this average should not be used as an expectation of benefit since the average level of assistance tends to change from year to year.

ELIGIBLE FIRST-TIME HOMEBUYERS

Eligible "First-Time Homebuyers" must be a U.S. Citizen or Legal Alien with permanent residential status (in the U.S), who has not owned a home during the past three year period. Additionally, eligible program participants must also meet income requirements; the selected home for purchase must meet a maximum home appraised value and also meet property standards; other HOME Program criteria also applies as explained throughout this program description.

INCOME QUALIFICATION

The FTHB program is open to LMI individuals only. LMI is defined as having an income less than 80% of the median income for Jefferson Parish. For the FTHB Program clients must fall within the minimum income limits of not less than 51%, The below chart represents the household income limits for 2019. JPDCD will update the below chart annually. Lenders are required to use the most up to date data when determining eligibility. A homeowner cannot use their kid’s income (i.e. social security or child support or any other income of a minor child) as a qualifying income, they must demonstrate sustainably on their own income.

AREA MEDIAN INCOME

When working with an affordable housing project, the local government must pay close attention to the county’s Area Median Income (AMI). The majority of funding sources available to build affordable housing use AMI to determine household eligibility and selection. The US Department of Housing and Urban Development (HUD) estimates the median family income for an area each year and adjusts that amount for family size so that family incomes may be expressed as a percentage of the AMI. These percentages of AMI have been divided by HUD into income categories. Some housing funding sources, such as the low income housing tax credit program, target extremely low and very low income households. Workforce and (JP) homeownership programs will target households in the low and moderate income range.

New Orleans-Metairie-Kenner, LA MSA Median Family Income
PROGRAM LIMIT APPLICABLE
2020 INCOME LIMITS – MEDIAN INCOME OF $ 70,400

1 Person

2 Persons

3 Persons

4 Persons

5 Persons

6 Persons

7 Persons

8 Persons

   

( 51%

To

80 %

Median )

   

24,650 –
  39,450

28,200 –
  45,050

31,700 –
   50,700

35,200 –
  56,300

38,050 –
  60,850

40,850 –
  65,350

43,650 –
  69,850

46,500 –
  74,350

 

HUD INCOME CATEGORIES

CATEGORY

INCOME RANGE

Extremely Low Income

< 30% of AMI

Very Low Income

31% - 50% of AMI

Low Income

51% - 80% of AMI

Moderate Income

81% - 120% of AMI

 

AFFORDABILITY STANDARD

The monthly payment required to service the anticipated primary mortgage may not exceed 33% of the gross monthly household income, after the application of all available down-payment funds and financial assistance. HOME funds will not be used to assist a purchaser when repayable mortgage obligations exceed the 33% affordability standard set by the program.

Example: A gross monthly household income of $2,000 per month cannot have a total monthly mortgage payment greater than $660 per month in order to be eligible for participation. ($2,000 X .33 = $660.00)

HOMEBUYER COUNSELING

Participants must attend a First-Time Homebuyer Training Class and Financial Fitness Class presented by an organization that is a member in good standing of the Louisiana Homebuyer Education Collaborative. (www.gnoha.org/main/the collaborative) Both training certificates must have been awarded to the participant within the last two years (24 month period) in order to be eligible to receive purchase assistance. Training certificates with dates older than two years will require that the client retake the training. It is possible for participants to have two separate training certificates, one for Homebuyer Training and the other for Financial Fitness. If the circumstances are such that one of the two certificates was issued within the last 24 month period, validating acceptability of at least one certificate, the second older non-compliant certificate will be honored without retaking the training.

ELIGIBLE PROPERTY

HOMES MUST BE TURN KEY READY

Only owner-occupied or vacant single-family properties (no tenant occupied properties) are eligible for participation and the property must be located in Jefferson Parish (including the City of Kenner). The property may include the following types of residential property:

  • A single family structure

  • A condominium unit

  • A manufactured home (on land to be owned by applicant)

The property must be intended for use as the principal residence of the applicant and cannot contain any commercial activity or rental units. The property will be inspected by Community Development and must meet the Uniform Physical Condition Standards (UPCS) as set forth by HUD. If the inspection determines repairs are necessary in order for the home to meet UPCS, all corrective work must be completed and re-inspected for acceptability prior to the purchaser receiving the HOME purchase subsidy. The property must also pass a visual Lead Based Paint Inspection conducted by Community Development to verify that no defective paint surfaces exist on houses built before 1978 (chalking, peeling or other defective paint on pre-1978 homes will automatically disqualify them from program participation. No exceptions).

NO TENANT DISPLACEMENTS OR RELOCATIONS ALLOWED

No tenant displacements or relocations are allowed in the program, as tenant occupied properties are not eligible for participation and will thus eliminate any potential involuntary displacement or relocation of occupied houses. The only exception to this requirement is where the tenant is purchasing the rental home they currently occupy (where the homebuyer and the tenant are one and the same). No other occupancy variations will be allowed in the program.

PURCHASE SUBSIDY

Jefferson Parish will use HOME Funding to assist income-qualified First-Time homebuyers to purchase their home by subsidizing the down payment and closing costs associated with the purchase. The subsidy will be awarded to the extent necessary to cause the total monthly payment on the primary mortgage, which is required to be at or below prevailing market rates, to not exceed thirty (33%) percent of the purchaser's total monthly household income. The maximum amount of the HOME purchase subsidy to be used for down payment and/or closing cost assistance will not be more than Fifty Thousand Dollars ($50,000) per client, for Jefferson Parish and not more than Sixty Thousand ($60,000)for Kenner.

As part of the underwriting process, the amount of the HOME Assistance is calculated on a case by case basis by the Department of Community Development utilizing the program's "Assistance Calculation Sheet". After the total monthly housing payment (PITI) on the primary mortgage is calculated, less estimated taxes and insurance, the result is estimated principal and interest. This number is used to amortize the mortgage. The closing cost and pre-paids submitted by the lender become part of the calculation sheet. The sales price less the amortized mortgage, the required contribution of the purchaser, and other funding determines the amount of assistance. Note: the purchaser is required to contribute a minimum of One Thousand Five Hundred Dollars ($1,500) from their own funds towards the purchase of the home in order to receive assistance under the First-Time Homebuyer Program.

SUBSIDY MORTGAGE

The participant will be required to grant a mortgage to the Parish in the full amount of the HOME program purchase subsidy for a term of time as required under the Affordability Requirement of the HOME Program. The participant will not be required to make monthly payments on the secondary HOME subsidy mortgage, but may be required to repay some of the assistance under the program's Affordability and Recapture Provision.

HOME AFFORDABILITY AND RECAPTURE PROVISION

HOME Program regulations specify that certain requirements must be met to ensure affordability for minimum periods when HOME funds are used for homeownership. In order to comply with this requirement, Jefferson Parish has made the decision to implement a recapture provision for HOME funds. The recapture provision will be implemented through the use of a "Deferred Payment Loan Mortgage." The mortgage will be filed in the public mortgage records with the Clerk of Court of Jefferson Parish. The purpose of filing this mortgage is to insure that if the assisted housing does not continue to be the principal residence of the assisted household for the duration of the period of affordability as required by the HOME Program, it will require a recapture (repayment) of the HOME investment by the homeowner. The length of the affordability period and term of the HOME mortgage are based on the amount of HOME Program assistance that is awarded each client in accordance with the following schedule:

 

AMOUNT OF FUNDS

 

PERIOD REQUIRED

 
 

< Less Than $15,000

 

5 Years Required

 
 

$15,000 to $40,000

 

10 Years Required

 

$50,000 above

15 Years Required

RECAPTURE PROVISION

The MORTGAGOR is required to maintain the subject property as the principal place of residence for the duration of the affordability period.

  1. If the MORTGAGOR (also known as the Homeowner) sells the home purchased with the subsidy, or if the home is no longer the principal place of residence of the MORTGAGOR (Homeowner) during the first seven (7) years of the affordability period, the ENTIRE amount of the subsidy amount must be recovered and returned to JPDCD (also known as the MORTGAGEE) from the proceeds of the sale of the home
     
    • Exception: If the net proceeds from the sale of the home are not enough to return the full subsidy amount, the amount returned to JPDCD will be pro-rated based on the amount of time left in the affordability period.

  2. If the MORTGAGOR (Homeowner) sells the home purchased with the subsidy, or if the home is no longer the principal place of residence of the Mortgagor (Homeowner) AFTER the first seven (7) years of the affordability period, a pro-rated amount of the subsidy will be recaptured and returned to JPDCD (MORTGAGEE) from the proceeds of the sale of the home.
    • The pro-rated amount will be based on the amount of time left in the affordability period.

The Homeowner is required to maintain the subject property as the principal place of residence for the duration of the affordability period. If the homeowner, or in the event of the death of the Homeowner, his or her eligible surviving spouse, child, or children, sells the property or the property is no longer the principal place of residence during the affordability period during the first seven (7) years of the affordability period, the full financial assistance provided to the homeowner to acquire the mortgaged property, as represented by the mortgage herein, is subject to recapture and the recapture amount becomes due and payable.

The following additional terms for Recapture shall apply:

  • In case of the death of the Homeowner, the mortgage will continue in force, as above, if it remains or becomes the principal residence of the eligible surviving spouse, child, or children.

  • If there is a voluntary or involuntary sale of the subject property up to seven (7) years into the affordability period:

    • The entire amount of the subsidy shall be returned to (recaptured by) JPDCD by the Seller, if the net proceeds from the sale of the subject property are enough to make this possible. However, if the net proceeds from the sale of the subject property are NOT enough to allow the full amount of the subsidy to be returned (recaptured), then the amount to be recaptured/returned to JPDCD shall be pro-rated.

    • The net proceeds are the sales price minus the superior loan payment (other than HOME funds) and any closing costs associated with the sale of the subject property.

  • If there is a voluntary or involuntary sale of the subject property after seven (7) years into the affordability period:

    • The amount of the subsidy to be recaptured by JPDCD (returned by the homeowner seller) shall be pro-rated based on the amount of time left in the affordability period.

In the event of foreclosure of the primary mortgage, the BUYER(s) agrees that the net proceeds of a foreclosure sale (after payment of the primary mortgage) shall be paid to the PARISH in payment of the amount of HOME Program assistance provided under this agreement.

ALLOWABLE CLOSING COSTS

HOME funds may be used to pay generally acceptable closing expenses as determined by Jefferson Parish Community Development such as: loan points, origination fees, credit and title examination costs, recordation fee, legal fees, land surveys, appraisals, and down-payment costs, with the exception of the purchaser's minimum cash contribution of $1,500. HOME assistance cannot be less than $1,000 or greater than $40,000.

SELECTION OF MORTGAGE LENDER

Applicants are responsible for selecting their own lender for the primary first mortgage loan needed for the purchase of their home. However, the First-Time Homebuyer Program is only designed to work in conjunction with a fixed rate/fixed term primary mortgage. Other unconventional types of mortgages (adjustable rate mortgages, temporary buy downs, balloon mortgages, etc.) will not be allowed for program participation. Additionally, the program has set primary mortgage lender requirements that must be met by participating lenders if HOME funds are to be used in the purchase of the property. Program applicants are solely responsible for meeting their chosen lender's loan underwriting qualifications such as credit scores, length of employment, debt history, etc.

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IN PERSON APPLICATION

At the time of the in-person appointment to complete the application process, applicants are required to make full disclosure of all information that may need clarification for the determination of program eligibility. Refusal to disclose any requested information deemed necessary to evaluate eligibility, willful failure to disclose household income or misrepresentation of household membership information will be grounds for rejection of the application. Depending upon individual circumstances, it may be necessary to assemble and submit additional eligibility documentation as a result of the in-person application. Additional supporting documentation may include information such as the following:

  • Social Security cards for all/each household members
  • Copies of Birth Certificates for all/each household members
  • Immigration Regulations and eligibility as determined by the by the United States Department of Housing and Urban Development (USHUD) and/or Louisiana regulations. Benefits may be prorated based on the income of legal residents in a household. For Documentary Stamp Surtax (Surtax) loans, proof of US permanent resident status or US Citizenship, and/or other related documentation (including special status such as Nicaragua Adjustment and Central American Release Act (NACARA Section 203), Cuban Adjustment Act and political asylum) must be current as of the date of application for assistance from the County, the applicants must be permanent residents of the United States or U.S. Citizens. Must be a U.S. citizen or have legal immigration status.
  • Divorce Judgment, Community Settlement
  • Proof of Custody or adequate documentation to support the contention that a minor child is a member of the applicant’s household
  • Judgment or Agreement for Child Support
  • Verifiable documentation for all other of income besides salary and wages, such as: tips, interest, dividends, alimony, child support, business income, IRA distributions, pensions, annuities, real estate rental payments, unemployment, Social Security and any other form of income that may be received.
  • Proof of consistent (2) years Employment, in the same fill of work with no more than a 30 day break in service
  • Copy of three (3) years taxes
  • Copy of (2) month paycheck stubs for each employed household Member
    Copy of (2) months of most recent statement or accounts Checking/Saving (Bank Statements) issued for each financial account maintained by the applicant(s) and all other working household members
  • Verification of full-time student status, employment, assets and public assistance
  • Copy of Marital Status Documents that may pertain to past and/or present circumstances of the applicant i.e., Legal Judgment or Agreement for child support or Proof of Separate maintenance that may affect household income, Verification Letter of Social Security, SSI, Worker's Compensation Benefits, Pensions, or other income including 401K and/or Assets over $5,000.00
  • Complete the JPDCD FTHB Application DO NOT MAIL IT IN.

  • PLEASE BRING WITH YOU THE REQUIRED DOCUMENTS WHEN YOU COME FOR YOUR SCHEDULED IN PERSON INTERVIEW.

Every effort should be made by the applicant to gather and make available any of the above indicated documentation that may pertain to their circumstances, so it can be presented at the time of the in-person application in order to speed the process.

AWARD OF FUNDING

The HOME funding takes place when a Parish wire is provided to the Title Company or closing attorney at the time of closing arranged by the primary mortgage lender. Prior to this closing (usually an hour or two before the primary mortgage lender's real estate closing) the purchaser will be scheduled to attend Community Development's closing in order to complete the HOME Program's First-Time Homebuyer loan documents. At Community Development, the purchaser will sign the HOME Mortgage, Promissory Note, Homeowner's Agreement and any applicable affidavits. Community Development must also receive a final Closing Statement (CD) from the primary mortgage lender/Title Company NO later than l:00pm (Central Standard Time) the day, before the assistance Wire can be released. Under no circumstances will HOME funding be made payable and given directly to the purchaser. The HOME program closing must take place on the same day as the primary mortgage lender's real estate closing.

NO ASSURANCE OR GUARANTEE OF FUNDING

Home Program funding is not assured and no guarantee is implied that funding will be provided for the purchase of property until all program requirements are fully met by both the applicant and the applicant's mortgage lender. Additionally, all program eligibility information and individual circumstances are subject to full verification, confirmation and documentation to the complete satisfaction of Jefferson Parish Department of Community Development, before any funds are released.

EVENTS OF DEFAULT DURING THE AFFORDABILITY PERIOD

The entire amount of the original HOME Program Assistance may become immediately due and payable should any of the following events of default take place during the Affordability Period:

  • Withholding information for the purpose of fraudulently participating in the program

  • Not maintaining the home as a single residence

  • Not maintaining the home as a principal residence of the purchaser(s)

  • Leasing or renting any part of home

  • Using any part of the home for commercial use

  • Not maintaining the home in an acceptable condition to pass a property inspected by Community Development and must meet the Uniform Physical Condition Standards (UPCS) as set forth by HUD, or not remedying housing code violations

  • Not maintaining required insurance coverage for homeowners and flood insurance in order to guard against a loss

  • Intentionally harming or damaging the home

  • Not disclosing financial transactions that increase the indebtedness of the home through unauthorized refinancing

  • Not disclosing a real estate sale or transaction that transfers unauthorized ownership of the property

    You fully understand that it is a federal crime punishable by fine or Imprisonment, or both, to knowingly make any false statements concerning any of the above information as is applicable under the provision of Title 18, United States Code, Section 1014.

In the event that a condition of default does take place, the Jefferson Parish Department of Community Development will pursue all legal remedies available to ensure that the HOME Program Assistance is recovered as required by the HOME Program.

ADDITIONAL INFORMATION

Additional information about the Jefferson Parish First-Time Homebuyer Assistance Program is available on the Parish's Internet site www.jeffparish.net at or by contacting us at Jefferson Parish Community Development, 1221 Elmwood Park Boulevard, Suite 605, Jefferson, Louisiana 70123; Phone: (504) 736-6262.

ADDITIONAL INFORMATION

This program description may be amended by the Department of Community Development at any time in order to achieve full compliance with the requirements of the HOME Investment Partnership Program and to prioritize applications within funding limitations.

You fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above information as is applicable under the provision of Title 18, United States Code, Section 1014.

 

Revised 8/2020