CC Resolution 9412
Resolution No. 9412
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAMPBELL
REVISING THE HOUSING REHABILITATION LOAN PROGRAM GUIDELINES
WHEREAS, Campbell has operated a Housing Rehabilitation Loan Program since 1979
for individuals and families earning less than 80% of the Santa Clara County median; and
WHEREAS, the City Council has periodically updated the Housing Rehabilitation Loan
Program guidelines and policies based on changes in household incomes, age of housing, and
housing needs of Campbell residents; and
WHEREAS, the City of Campbell continues to support a housing rehabilitation loan
program for individuals and families who need to make repairs to their homes.
NOW, THEREFORE, be it resolved that the City Council of the City of Campbell hereby
amends the City's Housing Rehabilitation Loan Program Guidelines as depicted on the attached
Exhibit A.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Campbell this 21 st day of July 1998, by the following vote:
AYES:
Councilmembers: Conant, Furtado, Dougherty, Dean, Watson
NOES:
Councilmembers: None
ABSENT:
Councilmembers: None
APPROVED:
ATTEST:
tZ-&~
Anne Bybee, City Clerk
EXHIBIT A
CITY OF CAMPBELL
HOUSING REHABILITATION LOAN PROGRAM GUIDELINES
SPONSOR
Housing and Community Development Office
City of Campbell
70 N. First Street
Campbell, CA 95008
Phone: Sharon Teeter - 866-2137
PURPOSE
To provide financial assistance to owners of single family homes and mobile homes who lack sufficient
resources to make needed home repairs.
LOAN LIMITS
The maximum loan amount for single family homowners is $40,000 and $15,000 for mobile
homeowners depending upon the equity in the mobile home.
PROPERTY ELIGIBILITY REQUIREMENTS
1. The home must be owner-occupied.
2. A mobile home is eligible under the loan program depending upon equity in the property.
3. The property must be substandard and be economically feasible to rehabilitate to achieve
compliance with applicable codes.
APPLICANT ELIGIBILITY REOUIREMENTS
1. An owner of a single family home must use the dwelling as a principal residence and must have
either a fee simple title or a purchasers interest in a land sales contract on the property.
2. Depending on household income and size of family, applicants may qualify for a below market
interest rate loan to be repaid in monthly installments. If the loan amount is under $10,000, the
loan term is ten years; if the loan amount is $10,000 to the maximum of $40,000, the loan term
is fifteen years.
3. Annual income shall be based on the 12 month period prior to the loan application date. The
owner must show evidence of adequate capacity to repay the loan.
4. SUBSTANTIAL RESOURCES - If an applicant's current assets plus fixed assets (excluding
two vehicles, the subject property and its furnishings and fixtures) total in excess of $25,000
$50.000 that applicant is determined to have substantial* resources and does not qualify for a
rehabilitation loan.
*Substantial assets include aRr aRG all sources of income such as the interest and
dividends from IRA's. stocks. bonds. mutual funds and other sources of income not
necessarily reported on the income tax form; i.e., insurance policy payoffs and/or
inheritance., eeH6s, aBd IRA!.fr. Additional sources of income not included in
substantial assets are pre-tax payroll deductions. such as deferred compo 401 K. health
or dependent care. If substantial sources of income can be convened easiN into cash
without a penaltv. and eQuals over $50.000. the applicant does not Qualifv for a City
Rehabilitation Loan.
5. An applicant may have no more than two other liens on the subject property to be eligible for a
loan under this program. The liens must be related directly to the property in need of
rehabilitation and/or personal debts of the applicant. (Example of an applicant not eligible for
the City's low interest program would be one who has a second mortgage for the purpose of
assisting family members in purchase of other properties or a loan for a business, vehicle, etc.
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Housing Rehabilitation Loan Program Guidelines
Page 2
7. The owner must have adequate equity in the subject property to cover the amount of the loan.
8. AMORTIZED LOANS - Households with a gross annual income between 50% and
80% of the annual median income of the San Jose SMSA, based on family size, as
certified annually by the U. S. Department of Housing and Urban Development, are
eligible for below market interest rate loans to be repaid on a monthly basis.
50% or less of median income - Eligible for 3 % interest rate
51 % to 60% of median income - Eligible for 4% interest rate
61 % to 70% of median income - Eligible for 5% interest rate
71 % to 80 % of median income - Eligible for 6 % interest rate
(SEE PAGE 3 FOR INCOME LIMITS)
9. DEFERRED LOANS-
A. Households whose head is at least 62 years of age may receive a zero interest deferred
loan if
a) monthly income is less than $900 gross for a single person, less than $1,200
gross for two persons, or less than $1,500 gross for a household of three; and
b) total assets are $10,000 or less; and
c) household debt totals more than 30% of income with a City
rehabilitation loan. (Call the Housing and Community Development
Office for further clarification on eligibility for deferred loans.)
B. If hardship circumstances can be proven, a household, whose head is less than 62 years
of age with income below 50% of the median, may be eligible for a deferred payment
loan at the discretion of the loan committee.
All deferred loans become due and payable when the property is sold or the title is
transferred, or when the house is no longer owner occupied.
LOAN LIMITS
1. The maximum loan amount for either a deferred payment or monthly amortized loan is
$40,000.
2. No more than 25 % of any loan (as a percentage of code related improvements) can be used for
cosmetic improvements; i.e., paint, carpeting).
3. The maximum term of an amortized loan shall be 15 years.
LOAN APPLICA nON REVIEW
1. A loan committee composed of at least three persons, including two City employees and a
representative of a financial institution, will review all loan applications. All other program
criteria must be satisfied before an application is brought before the loan committee.
2. The City's participating lender performs the following review on all applications -
employment/income verification, mortgage verification, credit check, savings/checking deposit
verification and an appraisal on the property.
FEES
1.
In addition to the cost of the rehabilitation work are standard loan fees. The fees, if the
applicant chooses, may be added to the rehabilitation work costs and amortized over the 10 or
15 year loan period. The fees average $400 and include a basic loan process preparation fee;
credit report; trustee fee; SAFECO Title Report; and SAFECO Recording fee.
If a loan applicant does not wish to have the fees amortized with the overall loan, he or
she may pay for them at the time loan documents are signed. (On occasion, the loan
fees, rehabilitation costs and 10% contingency added to the loan to cover unexpected
extra rehabilitation work has increased the monthly payment.)
2.
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Housing Rehabilitation Loan Program Guidelines
Page 3
3. If a loan applicant should drop out of the loan process at any point in time after the fees have
been incurred, the loan applicant is responsible for reimbursing the City. However, if the loan
applicant is turned down by the City's Loan Committee, the City will be responsible for any
and all fees.
4. If a loan applicant should sell his or her property within eighteen months from the date
of the loan, a penalty fee of 10% of the loan amount shall be imposed. The purpose of
the rehabilitation loan program is to provide loan funds to make needed repairs, not to
upgrade the property for sale. Under certain extenuating circumstances the fee may be
waived.
AMORTIZED LOAN INCOME LIMITS
January, 1998
Household Size 3 % Loan 4 % Loan 5 % Loan 6 % Loan
1 $27,000 $28,733 $30,466 $32,200
2 $30,900 $32,867 $34,834 $36,800
3 $34,750 $36,966 $39,182 $41,400
4 $38,600 $41,066 $43,532 $46,000
5 $41,700 $44,366 $47,032 $49,700
6 $44,800 $47,650 $50,500 $53,350
7 $47,850 $50,917 $53,984 $57,050
8 $50,950 $54,200 $57,450 $60,700
DEFERRED LOAN INCOME LIMITS
(Head of household must be 62 years or older to be eligible for a deferred loan.)
Household Size Maximum Household Income
1 $32,200
2 $36,800
3 $41,400
4 $46,000
5 $49,700
6 $53,350
7 $57,050
8 $60,700
3
.
EXHIBIT B
COMPARISON OF JURISDICTIONS -
HOUSING REHABILITATION LOAN PROGRAM SUBSTANTIAL ASSET
ELIGmILITY
Campbell $25,000+ considered
substantial assets, (includes
IRA's)
Cupertino No substantial assets,
eligibility is made on a case-
by-case
Los Gatos No substantial assets,
eligibility is made on a
case-by-case basis
Milpitas Eligibility is made on a
case-by-case basis
Morgan Hill No substantial assets,
eligibility is made on a
case-by-case basis
Los Altos $50,000 maximum
substantial assets, (excludes
IRA's),
eligibility made on a
case-by-case basis
Santa Clara County $50,000 maximum
substantial assets, (excludes
IRA's),
eligibility made on a
case-by-case basis
Saratoga $50,000 maximum
substantial assets, (excludes
IRA's),
eligibility made on a
case-by-case basis