CC Resolution 8334
RESOLUTION NO. 8334
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CAMPBELL APPROVING REVISED HOUSING
REHABILITATION LOAN PROGRAM GUIDELINES
WHEREAS, the City of Campbell has operated a low interest housing
rehabilitation loan program since 1976; and
WHEREAS, an HCD Loan Committee oversees the eligibility of loan
applicants and approves low interest housing rehabilitation loans to
Campbell residents in need of financial assistance; and
WHEREAS, the City is not in favor of residents using the low interest
rehabilitation loan funds to upgrade their properties for sale.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Campbell hereby approves the attached revised rehabilitation program
guidelines.
PASSED AND ADOPTED this 16th day of June, 1992, by the following roll
call vote:
AYES:
NOES:
Councilmembers: Kotowski, Conant, Watson, Burr
Councilmembers: No ne
ABSENT: Councilmembers: As hwo rth
APPROVED:
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DONALD R. BURR
MAYOR
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CITY OF CAMPBELL
SINGLE FAMILY HOME LOAN
HOUSING REHABILITATION PROGRAM GUIDELINES
SPONSOR
Housing and Community Development Office
City of Campbell
70 N. First Street
Campbell, CA 95008
Phone: Sharon Teeter - (408) 866-2137
PURPOSE
To provide financial assistance to owners of single family homes who lack
sufficient resources to make needed home repairs.
PROPERTY ELIGIBILITY REQUIREMENTS
1. The home must be owner-occupied.
2. A mobile home is eligible for a loan.
3. The property must be substandard and be economically feasible to
rehabilitate to achieve compliance with applicable codes. Private
resources may be added to the loan amount to eliminate substandard
conditions.
APPLICANT ELIGIBILITY REQUIREMENTS
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 upon 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 $25,000,
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 (excluding
two vehicles, the subject property and its furnishings and fixtures)
total in excess of $25,000, that applicant is determined to have
substantial resources and does not qualify for a rehabilitation loan.
Substantial assets include any and all sources of income not
necessarily reported on the income tax form; i.e., insurance policy
payoffs, inheritance, bonds, and IRA's.
HOUSING REHABILITATION PROGRAM GUIDELINES
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 loan would be one who has a
second mortgage for the purpose of assisting family members in
purchase of other property or a loan for a business.)
6. The owner must have adequate equity in the subject property to cover
the amount of the loan.
7. The owner must maintain adequate hazard insurance on the structure.
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 4 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.
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HOUSING REHABILITATION PROGRAM GUIDELINES
LOAN LIMITS
1. The maximum loan amount for either a deferred payment or monthly
amortized loan is $25,000. The maximum loan amount for a mobile home
is $10,000.
2. No more than 25% of any loan (as a percentage of code related
improvements) can be used for general property improvements.
3. The maximum term of an amortized loan shall be 15 years~
LOAN APPLICATION REVIEW
1. A Loan Committee composed of at least four persons, including two City
employees, a City Councilmember, 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 (as needed).
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 $500 and include a basic loan process
preparation fee, credit report, trustee fee, SAFECO Title Report,
Recording fee and escrow fees.
2. 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.)
3. If a loan applicant should drop out of the loan process at any point
in time after fees have been incurred, the loan applicant is
responsible for reimbursing the City. However, if the loan applicant
is turned down for a loan 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 lOX 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.
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AMORTIZED LOAN INCOME l-IMITS
MAY, 1992
Number of
Persons in
Household 3% Loan 4% Loan 5% Loan 6% Loan
1 20,850 22,900 24,950 27,000
2 23,800 26,167 28,534 30,900
3 26,750 29,417 31,784 34,750
4 29,750 32,700 35,650 38,600
5 32,150 36,900 39,300 41,700
6 34,500 37,933 41,366 44,800
7 36,900 40,550 44,200 47,850
8 39,250 43,150 47,050 50,950
DEFERRED LOAN INCOME LIMITS
(Head of household must be 62 years or older to be eligible for a deferred
loan.)
Number of Persons
in Household
Maximum
Household Income
1
2
3
4
5
6
7
8
27,000
30,900
34,750
38,600
41,700
44,800
47,850
50,950
Median Family Income: $59,500
Revised 5/92
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