HomeMy WebLinkAboutResolutions - No. 2011-97RESOLUTION NO. 2011-97
A RESOLUTION OF THE LODI CITY COUNCIL
APPROVING PROGRAM GUIDELINES FOR A REVISED
FIRSTTIME HOME BUYER PROGRAM
WHEREAS, the City of Lodi had received State HOME Program funding for a
First Time Home Buyer Program in 2009 from the State Department of Housing and
Community Development (HCD); and
WHEREAS, the Program Guidelines approved by the City Council at that time
were specifically for Acquisition -only activities; and
WHEREAS, in order to meet the needs of the current real estate market the City
of Lodi wishes to revise the First Time Homebuyer program to provide funding for
Acquisition with Rehab activities.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
approve the Program Guidelines, as attached hereto as Exhibit A, to allow funding for
Acquisition with Rehab activities through the First Time Home Buyer Program pursuant
to the requirements of HCD.
Dated: June 15, 2011
hereby certify that Resolution No. 2011-97 was passed and adopted by the Lodi
City Council in a regular meeting held June 15, 2011, by the following vote:
AYES: COUNCIL MEMBERS — Hansen, Katzakian, Mounce, Nakanishi,
and Mayor Johnson
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
&JOHL
City Clerk
2011-97
ExhibitA
First Time Home Buyer Down-PaymentAssistance
Acquisition with Rehab
Program Guidelines
r 1 0
Cityof L
Homebuyer
Acquisition Only/
Acquisition with Rehabilitation
Program Guidelines
For:
HOME Investment Partnerships Program
Serving the City of Lodi
CalHome Approved (date
CDBG Approved (dat(
HOME Approved (40E
Page 1 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
HOMEBUYER PROGRAM GUIDELINES
Table of Contents
1.0. GENERAL
1.1. PROGRAM OUTREACH AND MARKETING
1.2. APPLICATION PROCESS AND SELECTION
1.3. THE HOME PURCHASE PROCESS
1.4. HOMEBUYER COSTS
1.5. HOMEBUYER EDUCATION
1.6, CONFLICT OF INTEREST REQUIREMENTS
1.7. NON-DISCRIMINATION REQUIREMENTS
2.0. APPLICANT QUALIFICATIONS
2.1. CURRENT INCOME LIMITS
2.2. INCOME QUALIFICATION CRITERIA
2.3. DEFINITION OF AN ELIGIBLE HOMEBUYER
3.0. HOUSING UNIT ELIGIBILITY
3.1. LOCATION AND CHARACTERISTICS
3.2. CONDITIONS
3.3 ACQUISITION WITH REHABILITATION PROCESS
3.4. ANTI -DISPLACEMENT POLICY AND RELOCATION ASSISTANCE
3.5. PROPER NOTIFICATION AND DISCLOSURES
4.0. PURCHASE PRICE LIMITS
5.0. THE PRIMARY LOAN
A. QUALIFYING RATIOS
B. INTEREST RATE
C. LOAN TERM
D. IMPOUND ACCOUNT
6.0. THE PROGRAM LOAN
A. MAXIMUM AMOUNT OF PROGRAM ASSISTANCE
B. NON-RECURRING CLOSING COSTS
C. AFFORDABILITY PARAMETERS FOR HOMEBUYERS
D. RATES AND TERMS FOR PROGRAM LOANS
E. LOAN -TO -VALUE RATIO
7.0. PROGRAM LOAN REPAYMENT
7.1. PAYMENTS ARE VOLUNTARY
7.2. RECEIVING LOAN REPAYMENTS
7.3. DUE UPON SALE OR TRANSFER
7.4. LOAN SERVICING POLICIES AND PROCEDURES
7.5. LOAN MONITORING PROCEDURES
8.0. PROGRAM LOAN PROCESSING AND APPROVAL
8.1. COMPLETION OF UNDERWRITING AND APPROVAL OF PROGRAM LOAN
8.2. PRIMARY AND PROGRAM LOAN DOCUMENT SIGNING
8.3. ESCROW PROCEDURES
9.0. SUBORDINATE FINANCING
10.0. EXCEPTIONS AND SPECIAL CIRCUMSTANCES
10.1. DEFINITION OF EXCEPTION
10.2. PROCEDURES FOR EXCEPTIONAL CIRCUMSTANCES
11.0. DISPUTE RESOLUTION AND APPEALS PROCEDURE
Page 2 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
TABLE OF CONTENTS (CONTINUED)
ATTACHMENTS
ATTACHMENT A: 24 CFR PART 5 ANNUAL INCOME INCLUSIONS AND EXCLUSIONS
ATTACHMENTS: ANNUAL INCOME NET FAMILY ASSET INCLUSIONS AND EXCLUSIONS
ATTACHMENTC: MAXIMUM PURCHASE PRICE/AFTER-REHAB VALUE LIMITS; HOME SUBSIDY
LIMITS PER UNIT-SECTION221(D)(3); CURRENT INCOME LIMITS
ATTACHMENTD: LOAN SERVICING POLICIES AND PROCEDURES
ATTACHMENT E: SELLER'S LEAD-BASED PAINT DISCLOSURE
ATTACHMENT F: DISCLOSURE TO SELLER WITH VOLUNTARY, ARM'S LENGTH,
PURCHASE OFFER
ATTACHMENT G: INSTRUCTIONS TO HOMEBUYER
ATTACHMENT H: LEAD-BASED PAINT NOTICE OF PRESUMPTION AND HAZARD REDUCTION
FORM
ATTACHMENT I: HOMEBUYER PROGRAM LEAD COMPLIANCE DOCUMENT CHECKLIST
ATTACHMENT J: ACQUISITION WITH REHABILITATION CONSTRUCTION CONTRACT
ATTACHMENT K: CONSTRUCTION PAYMENT REQUEST
Page 3 of 51 City of Lodi
Hornebuyer Program Guidelines
HCD Version 12/10
CITY OF LODI
HOMEBUYER PROGRAM GUIDELINES
1.0. GENERAL
The above—named entity, hereinafter referred to as the "Sponsor," has entered into a contractual
relationship with the California Department of Housing and Community Development ("HCD") to
administer one or more HCD-funded homebuyer programs. The homebuyer program described
herein (the "Program") is designed to provide assistance to eligible homebuyers in purchasing
homes, also referred to herein as "housing units", located within the Program's eligible area, as
described in Section 3.1.A. The Program provides this assistance in the form of deferred payment
"silent" second priority loans as "Gap" financing toward the purchase price and closing costs of
affordable housing units that will be occupied by the homebuyers as their primary residence. The
Program will be administered by the City of Lodi Community Development Department, (the
"Program Operator").
1.1. PROGRAM OUTREACH AND MARKETING
All outreach efforts will be done in accordance with state and federal fair lending
regulations to assure nondiscriminatory treatment, outreach and access to the Program. No
person shall, on the grounds of age, ancestry, color, creed, physical or mental disability or
handicap, marital or familial status, medical condition, national origin, race, religion,
gender or sexual orientation be excluded, denied benefits or subjected to discrimination
under the Program. The Sponsor will ensure that all persons, including those qualified
individuals with handicaps, have access to the Program.
A. The Fair Housing Lender and Accessibility logos will be placed on all outreach
materials. Fair housing marketing actions will be based upon a characteristic
analysis comparison (census data may be used) of the Program's eligible area
compared to the ethnicity of the population served by the Program (includes,
separately, all applications given out and those receiving assistance) and an
explanation of any underserved segments of the population. This information is
used to show that protected classes (age, gender, ethnicity, race, and disability) are
not being excluded from the Program. Flyers or other outreach materials, in English
and any other language that is the primary language of a significant portion of the
area residents, will be widely distributed in the Program -eligible area and will be
provided to any local social service agencies. The Program may sponsor
homebuyer classes to help educate homebuyers about the home buying process and
future responsibilities. Persons who have participated in local homebuyer seminars
will be notified about the Program.
B. The Program Operator will work with local real estate agents and primary lenders to
explain the Program requirements for eligible housing units and homebuyers, and to
review Program processes. Local real estate agents and primary lenders will also be
encouraged to have their customers participate in the Program.
C. Section 504 of the Rehabilitation Act of 1973 prohibits the exclusion of an
otherwise qualified individual, solely by reason of disability, from participation
Page 4 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
under any program receiving Federal funds. The Program Sponsor will take
appropriate steps to ensure effective communication with disabled housing
applicants, residents and members of the public.
1.2. APPLICATION PROCESS AND SELECTION
A. The Sponsor maintains a waiting list of applicants. Each applicant is asked to
complete an application form, which asks for sufficient information concerning
income, employment, and credit history to establish preliminary eligibility for
Program participation. Completed applications are processed on a first -come -first-
served basis. Applications are deemed complete only if all information is
completed, the application is signed and dated, and a primary lender's pre -
qualification letter is attached to the application. Incomplete applications are
returned to the applicant and will not be date/time stamped until complete.
B. Once the applicant's name comes to the top of the waiting list, their Program
eligibility is confirmed and they are invited to a briefing regarding participation in
the Program. At the briefing the application is reviewed and the potential
homebuyer is given a "Preliminary Eligibility Letter" for the Program along with
the following forms: Program Brochure, Attachment (G) Instructions to Home
Buyer, List of Participating Lenders, Attachment (E) Sellers Lead -Based Paint
Disclosure and the EPA Booklet (Protect Your Family from Lead in Your Home)
and (F) Notice to Seller.
If the Program Operator encounters material discrepancies and/or
misrepresentations, and/or there are income, asset, household composition, or other
important questions that can't be resolved, the Sponsor reserves the right to deny
assistance to the household. In this case, the applicant may re -apply after six
months have elapsed from the time of written assistance denial.
C. Each applicant must participate in individual Homebuyer Counseling provided by
any HUD -certified homebuyer counseling agency and receive a certificate of
completion.
D. The potential homebuyer is given 60 days in order to find a qualified home and
begin securing a primary loan for the housing unit. If during the 60 -day time
frame, the potential homebuyer is unable to purchase a home, an extension may be
given. However, if it appears the potential homebuyer cannot participate in the
Program, the reservation of funds expires and the next person on the waiting list is
given an opportunity to participate in the Program.
1.3. THE HOME PURCHASE PROCESS
A. The following is a simplified example of how a primary lender would analyze a
homebuyer's finances to determine how much the homebuyer could afford to
borrow from the primary lender towards homeownership.
Page 5 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
DEBT SERVICE
FOR A FAMILY OF FOUR EARNING $3,388 PER MONTH
HOUSING PAYMENTS
Principal & Interest Payment $865
Insurance 82
Taxes 233
Total Housing Expense $1,180
(PITI is 35% of $3,388)
TOTAL OVERALL PAYMENTS
$1,180 Housing
+200 Other Debt Service
$1,380 Total Debt Service
(Overall debt service per month is 41% of $3,388)
OTHER HOUSEHOLD DEBT SERVICE
Car Payment $ 150
Credit Card Payment 50
Total Other Debt $200
A $865 per month loan payment equates to borrowing $143,000 at 5.88% for a 30 year term.
SUBSIDY CALCULATION
FOR A FAMILY OF FOUR EARNING $3,388 PER MONTH
Purchase Price of Property
$ 280,000
Less Primary loan amount
143,000
Less down payment of 1%
2,800
Equals "GAP" $134,200
Plus estimated allowable settlement charges 8,400
Equals Total Subsidy $ 142,600
B. The housing unit selection process will be conducted by the homebuyers. Prior to
making an offer to purchase an eligible housing unit (see Section 3.0), homebuyer
shall provide seller with a disclosure containing the following provisions:
1) Homebuyer has no power of eminent domain and, therefore, will not acquire
the property if negotiations fail to result in an amicable agreement; and
2) Homebuyer's offer is an estimate of the fair market value of the housing
Page 6 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
unit, to be finally determined by a state licensed appraiser;
3) The housing unit will be subject to inspection. The housing unit must
comply with local codes at the time of construction and local health and
safety standards.
4) All housing units built prior to January 1, 1978 will require a lead paint
disclosure to be signed by both the homebuyer and Seller (Attachment E);
g) Since the purchase would be voluntary, the seller would not be eligible for
relocation payments or other relocation assistance;
6) The seller understands that the housing unit must be either: currently owner -
occupied, newly constructed, or vacant for three months prior to submission
of the purchase offer.
7) If the seller is not provided with a statement of the above six provisions prior
to the purchase offer, the seller may withdraw from the agreement after this
information is provided.
C. Applicant submits executed standard form purchase and sale agreement and primary
lender prequalification letter to Program Operator. The purchase and sale
agreement will be contingent on the household and housing unit meeting Program
eligibility requirements and receiving Program loan approval. Program Operator
verifies applicant eligibility, housing unit and loan eligibility and amount of
assistance to be provided consistent with these guidelines.
D. Program Operator, where Program Operator is not the Sponsor, submits
recommendation to the Sponsor for approval or denial, including the reasons for the
recommendation. Sponsor determines Applicant's approval or denial, and instructs
Program Operator to notify Applicant. Program Operator provides written
notification to Applicant of approval or denial with reason and, if denied, a copy of
the Program's appeal procedures.
E. When Primary Lender requirements are met, Program funds are deposited into
escrow, with required closing instructions and loan documents.
F. At the time of escrow closing, the Sponsor shall be named as an additional loss
payee on fire, flood (if required), and extended coverage insurance for the length of
the loan and in an amount sufficient to cover all encumbrances or full replacement
cost of the housing unit. A policy of Title Insurance naming the Sponsor as insured
is also required.
1.4. HOMEBUYER COSTS
A. Eligible households must document that they have the funds necessary for down
payment and closing costs as required by the Primary Lender and the Sponsor. The
Program's down payment requirement (below) is in place even if the Primary
Lender has a lower down payment requirement. If the Primary Lender has a higher
down payment requirement, there is no additional down payment requirement
required by the Program.
B. Homebuyer must contribute a minimum down payment of two percent (2%) of the
Page 7 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
purchase price, but may contribute more if desired.
C. Sponsor will not provide more than forty percent (40%) of the acquisition cost
(purchase price plus all closing costs)]. The subsidy will write down the cost of the
primary lender's loan so that the payments of PITI are within approximately 26 to
32% of the gross household income. The Program Operator will determine the level
of subsidy and affordability during underwriting of the Program's loan to make sure
that it conforms to the requirements of the HCD funding Program.
1.5. HOMEBUYER EDUCATION
Buying a home can be one of the most confusing and complicated transactions anyone can
make. Providing the future homebuyer with informative homebuyer education training, can
bring success to the Sponsor, Program Operator, the Program and most importantly, the
homebuyer. It has been documented that first-time homebuyers that have had homebuyer
education have the ability to handle problems that occur with homeownership. All Program
participants are required to attend a Sponsor -approved homebuyer education class. The
homebuyer education class will cover such topics as the following: preparing for
homeownership; available financing; credit analysis; loan closing; homeownership
responsibilities; home maintenance; impact of refinancing and loan servicing. Methods of
homebuyer counseling and education may include, but are not limited to: one-on-one
counseling between homebuyer, counselor and family/individual and/or group workshops
and informational sessions. Tools of instruction may include fliers, brochures, power point
presentations, worksheets, etc.
1.6. CONFLICT OF INTEREST REQUIREMENTS
When the Sponsor's program contains Federal funds, the applicable Conflict of Interest
requirements of 24 CFR Section 570.611 shall be followed for CDBG assistance, and
Section 92.356 of the HOME Final Rule shall be followed for HOME assistance.
1.7. NON-DISCRIMINATION REQUIREMENTS
The Program will be implemented in ways consistent with the Sponsor's commitment to
non-discrimination. No person shall be excluded from participation in, denied the benefit
of, or be subject to discrimination under any program or activity' funded in whole or in part
with State funds on the basis of his or her religion or religious affiliation, age, race, color,
creed, gender, sexual orientation, marital status, familial status (children), physical or
mental disability, national origin, or ancestry, or other arbitrary cause.
2.0 APPLICANT QUALIFICATIONS
2.1. CURRENT INCOME LIMITS FOR THE AREA, BY HOUSEHOLD SIZE
All applicants must certify that they meet the household income eligibility requirements for
the applicable HCD program(s) and have their household income documented. The income
limits in place at the time of loan approval will apply when determining applicant income
eligibility. All applicants must have incomes at or below 80% of the County's area median
income (AMI), adjusted for household size, as published by HCD. (Attachment C).
Page 8 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Household: Means one or more persons who will occupy a housing unit. Unborn children
do not count in family size determination.
Annual Income: Generally, the gross amount of income of all adult household members
that is anticipated to be received during the coming 12-monthperiod.
2.2. INCOME QUALIFICATION CRITERIA
Projected annual gross income of the applicant household will be used to determine
whether they are above or below the published HCD income limits. Income qualification
criteria, as shown in the most recent HCD program -specific guidance at
littp://www.hcd.ca.aov/fa/cdbg/GuideFedPi•ogi-ams.html, will be followed to independently
determine and certify the household's annual gross income. The Program Operator should
compare this annual gross income to the income the Primary Lender used when qualifying
the household. The Primary Lender is usually underwriting to FHA or conventional
guidelines and may not calculate the household income or assets in the same way as
required by the Program. Income will be verified by reviewing and documenting tax
returns, copies of wage receipts, subsidy checks, bank statements and third -party
verification of employment forms sent to employers. All documentation shall be dated
within six months prior to loan closing and kept in the applicant file and held in strict
confidence.
A. HOUSEHOLD INCOME DEFINITION:
Household income is the annual gross income of all adult household members that
is projected to be received during the coming 12-monthperiod, and will be used to
determine program eligibility. Refer to Income Inclusions and Exclusions for
further guidance to the types of incomes to be included or excluded when
calculating gross annual income. For those types of income counted, gross amounts
(before any deductions have been taken) are used. Two types of income that are not
considered would be income of minors and live-in aides. Certain other household
members living apart from the household also require special consideration. The
household's projected ability to pay must be used, rather than past earnings, when
calculating income.
The link to Annual Income Inclusions and Exclusions is:
http://www.hcd.ca.gov/fa/cdbq/FedProgGuideDocs/AppendixB Annuallncomelnclu
sionsExclusions.doc
See Attachment A: 24 CFR Part 5 Annual Income Inclusions and Exclusions
B. ASSETS:
There is no asset limitation for participation in the Program. Income from assets,
however, is recognized as part of annual income under the Part 5 definition. An
asset is a cash or non-cash item that can be converted to cash. The value of
necessary items such as furniture and automobiles are not included. (Note: it is the
income earned — e.g. interest on a savings account — not the asset value, which is
counted in annual income)
Page 9 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
An asset's cash value is the market value less reasonable expenses required to
convert the asset to cash, including, for example, penalties or fees for converting
financial holdings, and costs for selling real property. The cash value (rather than
the market value) of an item is counted as an asset.
The Link to Asset Inclusions and Exclusions is:
hfi)://www.hcd.ca.gov/fa/cdbq/FedProgGuideDocs/Apl)endixC AnnuallncomeAsse
tlnclusionsExclusions.doc
See Attachment B: Part 5 Annual Income Net Family Asset Inclusions and
Exclusions
2.3. DEFINITION OF AN ELIGIBLE HOMEBUYER
For CDBG, an eligible homebuyer means an individual or individuals or an individual and
his or her spouse who meets the income eligibility requirements and is/are not currently on
title to real property. Persons may be on title of a manufactured home unit, who are
planning to sell the unit as part of buying a home located on real property. Documentation
of homebuyer status will be required for all homebuyers. CDBG-funded programs may
assist eligible homebuyers who are not "first-time" homebuyers.
HOME and CalHome-funded Programs are required to use the following definition of an
eligible homebuyer, which is a "first-time homebuyer" from 8201(1) Title 25 California
Code of Regulations:
"First-time homebuyer" means an individual or individuals or an individual and his
or her spouse who have not owned a home during the three-year period before the
purchase of a home with subsidy assistance, except that the following individual or
individuals may not be excluded from consideration as a first-time homebuyer under
this definition:
1. a displaced homemaker who, while a homemaker, owned a home with
his or her spouse or resided in a home owned by the spouse. A displaced
homemaker is an adult who has not, within the preceding two years,
worked on a full-time basis as a member of the labor force for a
consecutive twelve-month period and who has been unemployed or
underemployed, experienced difficulty in obtaining or upgrading
employment and worked primarily without remuneration to care for his
or her home and family;
2. a single parent who, while married, owned a home with his or her spouse
or resided in a home owned by the spouse. A single parent is an
individual who is unmamed or legally separated from a spouse and has
one or more minor children for whom the individual has custody or j oint
custody or is pregnant; or
3. an individual or individuals who owns or owned, as a principal residence
during the three-year period before the purchase of a home with
assistance, a dwelling unit whose structure is:
a. not permanently affixed to a permanent foundation in
accordance with local or state regulations; or
b. not in compliance with state, local, or model building codes and
Page 10 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
cannot be brought into compliance with such codes for less
than the cost of constructing a permanent structure.
3.0. HOUSING UNIT ELIGIBILITY
3.1. LOCATION AND CHARACTERISTICS
A. Housing units to be purchased must be located within the eligible area. The eligible
area is described as follows: "Within the Lodi city limits"
B. Housing unit types eligible for the homebuyer Program are new or previously
owned single-family residences; condominiums; or manufactured homes on a
single-family lot and placed on a permanent foundation system. HOME does not
allow manufactured homes unless on a permanent foundation system.
C. All housing units must be in compliance with State and local codes and ordinances.
D. Housing units located within a 100 year flood zone will be required to provide proof
of flood insurance with an endorsement naming the City of Lodi as loss payee in
order to close escrow.
E. Housing must be "modest", so it may not exceed three bedrooms and two bathrooms
unless there are documented extenuating circumstances (e.g. it would create an
overcrowding situation, there is not a reasonable inventory of homes of this size,
etc.) and the Loan Committee approves the exception request.
3.2. CONDITIONS
A. Construction Inspection and Determining Need for Repairs.
Once the participating homebuyer has executed a purchase agreement for a housing
unit, and prior to a commitment of Program funds, the following steps must be taken for
the housing unit to be eligible for purchase under the Program:
1) When the Sponsor's Program utilizes Federal funds and if the housing unit was
constructed prior to 1978 then the lead-based paint requirements of Section 3.2.0
will apply.
2) The Program Operator, a certified housing inspector, or a Sponsor representative
will walk through the housing unit, determine if it is structurally sound, and identify
any code related and health and safety deficiencies that need to be corrected. A list
of code related repair items will be given to the homebuyers and their Realtor to be
negotiated with the seller.
If there are one or more health and safety deficiencies, and/or violations of
applicable building codes noted in the written report, the Sponsor will approve the
subsidy only if:
Page 11 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
a. Repair prior to close of escrow. The buyer and seller agree to make necessary
repairs to the dwelling unit prior to transfer of property ownership at their own
expense; or
b. HOME acquisition and rehabilitation loan. If HOME funds are available, the
buyer may use up to $10,000 of the Sponsor's First -Time Homebuyer loan to
make necessary repairs. All health and safety hazards and code violations
must be addressed under this option. Examples of allowable expenses include,
but are not limited to: foundation repair, electrical repair or rewiring,
plumbing or sewer repair, roof repair or replacement, heating system
installation or repair, and repair of structurally -significant damaged wood.
General property improvements are not eligible unless required to bring the
dwelling unit into compliance with local health and safety standards or
applicable building codes. For example, sidewalk repair would not be an
eligible use of funds. However, if a sidewalk must be removed to correct a
sewer problem, funds may be used to replace the portion of the sidewalk
removed for the work.. Buyers should note that the use of any Program funds
for rehabilitation on a home built before 1978 may incur additional lead-based
paint testing. Hiring of a contractor and completion of repairs will be
conducted in accordance with the section entitled "Acquisition with
Rehabilitation Process" below.
3) With the exception of 1)b. above, upon completion of all work required by the
Program Operator, Sponsor, appraiser, pest inspector and/or certified housing
inspector, a final inspection will be conducted prior to close of escrow. The
inspector will sign off on all required construction work assuring that each housing
unit receiving Program assistance is in compliance with local codes and health and
safety requirements at the time of purchase and prior to occupancy.
B. Per Section 8208 of the State HOME regulations, no additional HOME assistance,
including rehabilitation funds, may be provided during the period starting one year
following the filing of the Project Completion Report through the end of the
Affordability Period.
The HOME Affordability Period is as follows (amount includes Activity Delivery
Costs paid to the State Recipient by HCD):
Amount of HOME Assistance
Period of Affordability in Years
Under $15.000
5 vears
$15,000 to $40,000
10 years
Over $40.000
15 vears
C. Lead -Based Paint Hazards: All housing units built prior to 1978 for which HOME or
CDBG funding is anticipated are subject to the requirements of this section 3.2.C. Such
homes must undergo a visual assessment by a person who has taken HUD's online
Visual Assessment course. Deteriorated paint must be stabilized using work safe
methods. Clearance must be obtained after paint stabilization by a DHS certified LBP
Risk Assessor/Inspector. HOME and CDBG general administrative and activity
delivery funds may be used to pay for lead-based paint visual assessments, and if lead
Page 12 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
mitigation and clearance costs are incurred, these programs may incorporate the costs
into the calculation of Program assistance.
The following requirements must be met:
1) Notification: a) Prior to homebuyer's obligation to purchase a pre -1978 home, the
Buyer will be given the most recent copy of and asked to read the EPA pamphlet
Protect Your Family From Lead in Your Home". (EPA 747-K-94-001). A signed
receipt of the pamphlet will be kept in the Sponsor's homebuyer file; b) A notice to
residents is required following a risk assessment/inspection using form DHS 8552,
which is provided by the DHS -certified Risk Assessor/Inspector; c) a notice to
residents is required following lead-based paint mitigation work using Visual
Assessment and Lead-based Paint Notice of Presumption and Hazard Reduction
form, LBP —1 (Attachment H).
2) Disclosure: Prior to the homebuyer's obligation to purchase a pre -1978 housing
unit, the HUD disclosure (Attachment E), "Seller's Lead-based Paint Disclosure"
notice must be provided by the seller to the homebuyer.
3) Inspections: The Inspector shall conduct a "Visual Assessment" of all the dwelling
unit's painted surfaces in order to identify deteriorated paint. All deteriorated paint
will be stabilized in accordance with CFR 35.1330 (a) and (b); and a Clearance shall
be made in accordance with CFR 35.1340.
4) Mitigation: If stabilization is required, the contractor performing the mitigation
work must use appropriately trained workers. Prior to the contractor starting
mitigation work the Program Operator shall obtain copies of the contractor's and
workers' appropriate proof of LBP training, as applicable to the job in order to
assure that only qualified contractors and workers are allowed to perform the
mitigation.
D. The Program Operator will: 1) confirm that the housing unit is within the eligible area,
2) will review each proposed housing unit to ensure that it meets all eligibility criteria
before funding, and 3) ensure a completed Lead Compliance Document Checklist is
placed in each purchaser's file (see Attachment I).
3.3. ACQUISITION WITH REHABILITATION PROCESS
As noted above, when HOME funding is available for First -Time Homebuyer assistance, up
to $10,000 (from all sources) may be used to bring the unit into compliance with health and
safety standards and/or to correct code violations. If such repairs are required, a portion of
this money may be used to make accessibility modifications for a household member with a
disability. With the exception of weatherization improvements, general property
improvements are not allowed.
IMPORTANT: No later than six (6) months following close of escrow, repairs to the
housing unit must address ALL health and safety and code issues, to be in compliance with
HOME regulations; otherwise, the loan becomes due and payable.
Page 13 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
If a portion of the Program loan is used for acquisition with rehabilitation, the following
process will be followed:
o The buyer will be responsible for obtaining three (3) bids from qualified licensed
contractors. The Sponsor's Program Operator has a list of qualified contractors, or
the applicant may solicit bids from other licensed contractors if they meet the
standards described below.
o Any funds used for rehabilitation on homes built prior to 1978 will require testing
for lead based paint. If the total rehabilitation funds are equal to or less than $5,000,
all surfaces disturbed during rehabilitation and lead hazard reduction must be
repaired using safe work practices. If total rehabilitation is between $5,000 and
$10,000, lead based paint must either be presumed to be present or testing and risk
assessment are required. Lead hazard reduction activities must be conducted using
safe work practices. The Sponsor will provide a grant to cover all expenses
incurred as a result o f lead based paint as noted in the section entitled Lead Based
Paint Standards below, but total rehabilitation, including this grant, may not exceed
$10,000.
o Contractors must hold a current and valid State of California General Contractor's
license if the work consists of correction of health and safety issues or code
violations. For accessibility modifications, the Sponsor may exercise discretion
regarding contractors' requirements. The contractor may not be on the State or
Federal debarred contractor lists. The contractor must have current and valid
general liability and workmen's compensation insurance if applicable. The
contractor must provide a one-year warranty for the work per State regulations.
o The buyer will review the bids with the Program Operator/Sponsor to ensure that
the scope of work will correct any deficiencies, that it only includes allowable
expenses and that the bids are reasonable, competitive and complete.
o The applicant will select a contractor from one of the Sponsor's/Program Operator's
approved bids. All bidding contractors will be notified of the status of their
propo sals.
o The applicant will enter into a contract with the contractor (see Attachment J).
o The contractor will be responsible for securing all required permits for the scope of
work.
o Work may not commence until the close of the acquisition loan.
o As work progresses, the contractor shall provide the buyer with a completed
Payment and Construction Approval form (Attachment K) to request progress
payments as outlined in the contract terms. The form must be signed by the
contractor, the buyer, the inspector, and the Program Operator before a payment
may be issued to the contractor.
o Final payment of a 10% retention will be released to contractor once the contractor
submits the following to the Program Operator: (1) lien releases from any
subcontractors, material suppliers, and laborers; (2) final or signed off Building
Inspection card for contracted work (if applicable); (3) Notice of Completion.
3.4. ANTI -DISPLACEMENT POLICY AND RELOCATION ASSISTANCE
Page 14 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Eligible homes will be those that are currently owner -occupied or have been vacant for
three months prior to the acceptance of a contract to purchase. A unit is ineligible if its
purchase would result in the displacement of a tenant. It is not anticipated that the
implementation of the Program will result in the displacement of any persons, households,
or families. However, if tenant -occupied homes are included in the Program and relocation
becomes necessary, the activity will be carried out in compliance with Sponsor's relocation
plan, which describes how those permanently displaced will be relocated and paid benefits
in accordance with the following Federal laws.
A. Uniform Relocation Assistance (URA) and Real Property Acquisition Policies
Act of 1970
The federal URA and Real Property Acquisition Policies, as amended by the URA
Amendments of 1987, contains requirements for carrying out real property
acquisition or the displacement of a person, regardless of income status, for a
project or program for which HUD financial assistance (including CDBG and
HOME) is provided. Requirements governing real property acquisition are
described in Chapter VIII. The implementing regulations, 49 CFR Part 24, require
developers and owners to take certain steps in regard to tenants of housing to be
acquired, rehabbed or demolished, including tenants who will not be relocated even
temporarily.
B. Section104(d) of the Housing and Community Development Act of 1974
Section 104(d) requires each contractor (CHDO or State Recipient), as a condition
of receiving assistance under HOME or CDBG, to certify that it is following a
residential anti -displacement plan and relocation assistance plan. Section 104(d)
also requires relocation benefits to be provided to low-income persons who are
physically displaced or economically displaced as the result of a HOME or CDBG
assisted project, and requires the replacement of low-income housing, which is
demolished or converted. The implementing regulations for Section 104(d) can be
found in 24 CFR Part 570(a).
3.5. PROPER NOTIFICATION AND DISCLOSURES
A. Upon selection of a housing unit, a qualified seller and homebuyer will be given the
necessary disclosures for the Program. The homebuyer must have read and signed
all Program disclosure forms. Any and all property disclosures must be reviewed
and signed by the homebuyer and seller.
B. All owners who wish to sell their housing units must receive an acquisition notice
(Attachment F) prior to submission of the homebuyer's original offer. This notice
will be included in the contract and must be signed by all owners on title. The
disclosure must contain the items listed in 1.3.B. (required for federally -funded
programs).
4.0. PURCHASE PRICE LIMITS
Page 15 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
The purchase price limits for this Program shall not exceed the Maximum HOME Program
Purchase Price/After-Rehab Value Limit for Sponsor's County as updated by HCD or
HUD.
Note: For HOME- and CalHome funded Programs the home purchase price of owner -
occupied and homebuyer properties must be limited as follows: For CalHome funded
Programs, thepurchaseprice can not exceed 100% of the area median purchaseprice as
established by comparable sales or information provided by the California Real Estate
Association; for HOME funded Programs the value (with or without rehabilitation) can
not exceed 95 percent of the area median purchase price as established by HCD and
HUD.
Attachment C: MAXIMUM PURCHASE PRICE/AFTER-REHAB VALUE LIMITS
"Sponsor will update these limits annually as HCD provides new information.
5.0. THE PRIMARY LOAN
Prior to obtaining a loan from the Sponsor, a homebuyer must provide evidence of
financing for the maximum amount the Primary Lender is willing to loan (the "primary
loan").
A. QUALIFYING RATIOS
The front-end (housing) debt -to -income ratio shall be between 26% and 32% and is the
percentage of a borrower's gross monthly income (before deductions) that would cover the
cost of the loan principal and interest payment, property taxes, property insurance,
mortgage insurance, and HOA dues, if any.
The back -end (total) debt -to -income ratio shall be between 30% and 40% and is the
percentage of a borrower's gross monthly income that would cover the cost of housing as
described in the paragraph above, plus any other monthly debt payments like car or
personal loans and credit card debt, as well as child support and alimony payments.
B. INTEREST RATE
The primary loan must have a fixed interest rate that does not exceed the current market
rate, as established by an index identified in the most recent NQFA. No temporary interest
rate buy -downs are permitted.
C. LOAN TYPE AND TERM
The primary loan shall be fully amortized and have a term "all due and payable" in no
fewer than 30 years. There shall not be a balloon payment due before the maturity date of
the Program loan.
D. IMPOUND ACCOUNT
All households will be required to have impound accounts for the payment of taxes and
insurance to ensure they remain current.
Page 16 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
6.0. THE PROGRAM LOAN
A. MAXIMUM AMOUNT OF PROGRAM ASSISTANCE
The amount of Program assistance to a homebuyer toward purchase of a home shall not
exceed the maximum HOME subsidy limit for Sponsor's County per bedroom as
designated by Section 221(d)(3) and shall never exceed more than 20% of the total
indebtedness. See Attachment C. Any approved "grant" amount for lead-based paint
evaluation and reduction activities or for relocation assistance shall be included in this
amount.
B. NON-RECURRING CLOSING COSTS
Non-recurring costs such as credit report, escrow, closing and recording fees, and title
report and title insurance, title updates and/or related costs may be included in the Program
loan.
C. AFFORDABILITY PARAMETERS FOR HOMEBUYERS
The actual amount of a buyer's Program subsidy shall be computed according to the
housing ratio parameters specified in Section 5.0.A.. Each borrower shall receive only the
subsidy needed to allow them to become homeowners ("the Gap") while keeping their
housing costs affordable. The Program Operator will use the "front-end ratio" of housing -
expense -to -income to determine if the amount of the proposed primary loan is acceptable
and, ultimately, the Program subsidy amount required, bridging the gap between the
acquisition cost (purchase price plus closing costs) less down payment, and the amount of
the primary loan.
D. RATE AND TERMS FOR PROGRAM LOAN
All Program assistance to individual households shall be made in the form of deferred
payment (interest and principal) loan (DPL).
The Program loan's term shall be for 30 years.
The Program loan's interest rate shall be 2% simple interest.
All Program loan payments shall be deferred because the borrowers will have their
repayment ability fully utilized under the primary loan. Loan principal shall not be
forgiven, and the loan period cannot be extended.
E. COMBINED LOAN -TO -VALUE RATIO
The loan -to -value ratio for a Program loan, when combined with all other indebtedness to
be secured by the property, shall not exceed 100 percent of the sales price plus a maximum
of up to 5 percent of the sales price to cover actual closing costs.
7.0. PROGRAM LOAN REPAYMENT
Page 17 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
7.1. PAYMENTS ARE VOLUNTARY
Borrowers may begin making voluntary payments at any time.
7.2. RECEIVING LOAN PAYMENTS
A. Program loan payments will be made to:
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
B. The Sponsor will be the receiver of loan payments or recaptured funds and will
maintain a financial record-keeping system to record payments and file statements
on payment status. Payments shall be deposited and accounted for in the Sponsor's
Program Income Account, as required by HCD programs. The Program lender will
accept loan payments from borrowers prepaying deferred loans, and from borrowers
making payments in full upon sale or transfer of the property. All loan payments
are payable to the Sponsor. The Sponsor may at its discretion, enter into an
agreement with a third party to collect and distribute payments and/or complete all
loan servicing aspects of the Program.
7.3. DUE UPON SALE OR TRANSFER
In the event that an owner sells, transfers title, or discontinues residence in the purchased
property for any reason, the principal balance of the DPL is due and payable, except:
A. The owner shall be assured a fair return on investment including the owner's
investment and any capital improvement. If the Net proceeds are insufficient for the
Sponsor to recapture the balance of Program Loan owed, the Sponsor shall share the
Net proceeds with the owner in proportion to each party's investment in the
property. The Net proceeds are the sales price less repayment of the primary loan,
and closing costs.
B. If the owner of the property dies, and the heir to the property meets income
requirements, the First -Time Homebuyer definition, and intends to occupy the home
as a principal residence, the heir may be permitted, upon approval of the Sponsor, to
assume the loan at the rate and terms the heir qualifies for under the current
participation guidelines. If the property owner dies and the heir does not meet
eligibility requirements, the loan is due and payable.
C. If an owner wants to convert the property to a rental unit, or any commercial or non-
residential use, the loan is due and payable.
D. The loan will be in default if the borrower fails to maintain required fire or flood
insurance or fails to pay property taxes. See Attachment D on loan defaults for
further information on property restrictions.
Page 18 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
7.4. LOAN SERVICING POLICIES AND PROCEDURES
See Attachment D for local loan servicing policies and procedures. While the attached
policy outlines a system that can accommodate a crisis that restricts borrower repayment
ability, it should in no way be misunderstood: The loan must be repaid. All legal means to
ensure the repayment of a delinquent loan as outlined in the Loan Servicing Policies and
Procedures will be pursued.
7.5. LOAN MONITORING PROCEDURES
Sponsor will monitor Borrowers and their housing units to ensure adherence to Program
requirements including, but not limited to, the following:
A. Owner -occupancy
B. Property tax payment
C. Hazard insurance coverage
D. Good standing on Primary loans
E. General upkeep of housing units
8.0. PROGRAM LOAN PROCESSING AND APPROVAL
A. Loan Processing
All homebuyers or their representatives will be sent out an eligibility packet with all
the necessary forms, disclosures, information, and application. They should submit
a complete application packet with all the Sponsor's Program loan documents
executed as well as all the information from the Primary Lender. The Primary
Lender should submit: 1) accepted property sales contract with proper seller
notification; 2) mortgage application with good faith estimates and first mortgage
disclosures; 3) full mortgage credit report and rent verification; 4) current third
party income verifications and Verifications of assets; S) homeownership education
certificate, if applicable; and 6) signed underwriting transmittal summary and final
signed loan application, both from primary lender. Staff will work with local
lenders to ensure qualified participants receive only the benefit from the Sponsor's
Program needed to purchase the housing unit and that leveraged funds will be used
when possible.
B. Creditworthiness
Qualifying ratios are only a rough guideline in determining a potential borrower's
creditworthiness. Many factors such as excellent or poor credit history, amount of
down payment, and size of loan will influence the decision to approve or disapprove
a particular loan. The borrower's credit history will be reviewed by the Sponsor
and documentation of such maintained in the loan file. The Sponsor may elect to
obtain a credit report or rely on a current copy obtained by the primary lender.
C. Documents from Primary Lender
Page 19 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
After initial review of the qualified homebuyer's application packet, the Program
Operator will request any additional documents needed. Documents may be faxed,
but originals shall be received through the mail before Program funds are committed
to escrow. Based on receipt and review of the final documents, the Program
Operator will do an income certification (using most recent HCD program's
guidance on income calculation and determination), and homebuyer certification
(review of credit report and income taxes). Documentation of affordability will then
be verified and subsidy requirement determined.
D. Disclosure of Program and Loan Information to Homebuyers
The Program's application and disclosure forms will contain a summary of the loan
qualifications of the borrower with and without Program assistance. Housing ratios
with and without Program assistance are also outlined in these guidelines.
Information on the Program's application will be documented with third parry
verifications in the file. For example, the sales contact will provide the final
purchase price and outline how much of the closing costs are to be paid by the
seller, etc. The appraisal, termite and title report will provide information to
substantiate the information in the sales contract and guide the construction
inspection. The Program loan application will provide current debt and housing
information and will be documented by the credit report and income/asset
verifications. The Primary Lender's approval letter and estimated closing cost
statement should reflect all the information in the loan package and show any
contingencies of loan funding. Reviewing the Primary Lender's loan underwriting
documentation will provide basic information about the qualification of the
applicant and substantiate the affordability provided by the Program loan. By
reviewing and crosschecking all the Primary Lender information, the final Program
loan amount approved will fall within the affordability parameters of the Program.
8.1. COMPLETION OF UNDERWRITING AND APPROVAL OF PROGRAM LOAN
Once the loan approval package has been completed the Program Operator will submit it to
the Sponsor for approval. Sponsor will review the request and may approve it with or
without conditions. Upon approval, a final closing date for escrow is set and Program
funds are accessed for the homebuyer.
8.2. PRIMARY AND PROGRAM LOAN DOCUMENT SIGNING
The homebuyer(s) sign promissory notes, loan agreements, deeds of trust, and statutory
lending notices (Truth In Lending (TIL), etc.); the Deeds of Trust are recorded with the
County Clerk/Recorder at the same time, and the request(s) for copy of Notice of Default
are also recorded with the County Clerk/Recorder.
8.3. ESCROW PROCEDURES
The escrow/title company shall review the escrow instruction provided by the Program
lender and shall issue a California Land Title Association (CLTA) and the American Land
Title Association (ALTA) after closing. The CLTA policy is issued to the homebuyer and
Page 20 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
protects them against failure of title based on public records and against such unrecorded
risks as forgery of a deed. The ALTA is issued to each lender providing additional
coverage for the physical aspects of the property as well as the homebuyer's title failure.
These aspects include anything which can be determined by only physical inspection, such
as correct survey lines; encroachments; mechanics liens; mining claims and water rights.
The Program lender instructs the escrow/title company in the escrow instructions as to what
may show on the policy; the amount of insurance on the policy (all liens should be covered)
and the loss payee (each lender should be listed as a loss payee and receive an original
ALTA).
9.0. SUBORDINATE FINANCING
With today's high costs, in order for a low-income household to obtain a home, several
funding sources might be required. Subordinate loans may be used to cover mortgage
subsidy costs that exceed the Program maximum loan amount. All subordinate liens must
have the payments deferred and the term must be for at least as long as the term of the
Program loan.
10.0. EXCEPTIONS AND SPECIAL CIRCUMSTANCES
The Sponsor may make amendments to these Participation Guidelines. Any changes shall
be made in accordance with regulations and approved by the Sponsor's Loan Committee
and/or governing body. Changes shall then be sent to HCD for approval.
10.1. DEFINITION OF EXCEPTION
Any case to which a standard policy or procedure, as stated in the guidelines, does not
apply or an applicant treated differently from others of the same class would be an
exception.
10.2. PROCEDURES FOR EXCEPTIONAL CIRCUMSTANCES
A. The Sponsor or its agent may initiate consideration of an exception and prepare a
report. This report shall contain a narrative, including the Sponsor's recommended
course of action and any written or verbal information supplied by the applicant.
B. The Sponsor shall make a determination of the exception based on the
recommendation of the Program Operator. The request can be presented to the
Sponsor's loan committee and/or governing body for a decision.
11.0. DISPUTE RESOLUTION AND APPEALS PROCEDURE
Any applicant denied assistance from the Program has the right to appeal. Complaints
concerning the Program should be made to the Program Operator first. If unresolved in this
manner, the complaint or appeal must be made in writing and filed with the Sponsor. The
Sponsor will then schedule a meeting with the Loan Review Committee. Their written
response will be made within thirty (30) working days. If the applicant is not satisfied with
the Committee's decision, a request for an appeal may be filed with the Sponsor's
Page 21 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
governing body. Final appeal must be filed in writing with HCD within one year after
denial.
Page 22 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT A
24 CFR Part 5 ANNUAL INCOME INCLUSIONS AND EXCLUSIONS
Part 5 Inclusions
This table presents the Part 5 income inclusions as stated in the HUD Technical Guide for
Determining Income and Allowances for HOME Program (Third Edition; January 2005).
..
General Category (Last Modified: January 2005)
1 Income from The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips
�es salaries, and bonuses, and other compensation for personal services.
ip , etc
The net income from the operation of a business or profession. Expenditures for business expansion or
amortization of capital indebtedness shall not be used as deductions in determining net income An allowance.
2. Business Income ;for depreciation of assets used in a business or profession may be deducted, based on straight-line
depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the
'operation of a business or profession will be included in income, except to the extent the withdrawal is
reimbursement of cash or assets invested in the operation by the family
^ Interest, dividends, and other net income of any kind from real or personal property Expenditures for —
amortization of capital indebtedness shall not be used as deductions in determining net income An allowance
3 Interest & for depreciation is permitted only as authorized in number 2 (above) Any withdrawal of cash or assets from
an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or
Income assets invested by the family Where the family has net family assets in excess of$5,000, annual income
shall include the greater of the actual income derived from all net family assets or a percentage of the value
of such assets based on the current passbook savings rate, as determined by HUD
:The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement
4 Retirement& funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump -
Insurance Income sum amount or prospective monthly amounts for the delayed start of a periodic payment (except for certain
exclusions, listed in Income Exclusions, number 14).
.. .............. .. .. ......................... ..............__......................... . .._ .... __... ... ............... .................... ..... .............
S. Unemployment & Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation
Disability Income and severance pay (except for certain exclusions, listed in Income Exclusions, number 3)
Welfare Assistance. Welfare assistance payments made under the Temporary Assistance for Needy Families
(TANF) program are included in annual income
Qualify as assistance under the TANF program definition at 45 CFR 260 31, and
Are otherwise excluded from the calculation of annual income per 24 CFR 5.609(c)
If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is
6 Welfare 'subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and
Assistance utilities, the amount of welfare assistance income to be included as income shall consist of
. the amount of the allowance or grant exclusive of the amount specifically designated for shelter or
utilities; plus.
. the maximum amount that the welfare assistance agency could in fact allow the family for shelter and
utilities. If the family welfare assistance is reduced from the standard of need by applying a percentage,
the amount calculated under 24 CFR 5.609 shall be the amount resulting from one application of the
percentage.
....... _ ...... ... .............. ......... _...._ ..... ................ _.__. ..__ _.-. .._..... .......... ......... ......
7. Alimony, Child Periodic and determinable allowances, such as alimony and child support payments, and regular
Support, &Gift
Income contributions or gifts received from organizations or from persons not residing in the dwelling
:
-- _ .... _.. _
8. Armed Forces All regular pay, special day, and allowances of a member of the Armed Forces (except as provided in number
Income 8 of Income Exclusions).
Part 5 exclusions
This table presents the Part 5 income exclusions as stated in the HUD Technical Guide for
Determining Income and Allowances for HOME Program (Third Edition; January 2005).
General Category !(Last Modified: January 2005)
1. Income of Income from employment of children (including foster children) under the age of 18 years.
Children _`_
2. Foster Care $Paymentsreceived for the care of foster children or foster adults (usually persons with disabilities, unrelated
Pavments Ito the tenant family, who are unable to live alone).
3. Inheritance and ]Lump -sum additions to family assets, such as inheritances, insurance payments (including payments under
!Insurance Income !health and accident insurance and worker's compensation), capital gains, and settlement for personal or
I property losses (except for certain exclusions, listed in Income Inclusions, number 5).
14. Medical Expense Amounts received by the family that are specifically for, or in reimbursement of, the cost of medical
Reimbursements expenses for any family member.
.................... ........ .......................- •---.-_..._.._...::...:..........._......_._...._.__....._............_.:.:.....:_.._ .... .:...:.:.......... ........ , _....... __.................................................. - - .......................-............
S. Income of Live-in Income of a live-in aide (as defined in 24 CFR5.4031).
Page 23 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Aides
6 Income from a Certain increase in income of a disabled member of qualified families residing in HOME -assisted housing or
Disabled Member receiving HOME tenant -based rental assistance (24 CFR 5 671 (a))
7. Student Financial i
Aid !The full amount of student financial assistance paid directly to the student or to the educational institution.
........ _.__............... j..._..._.......... _......_._......... _.... ._...._..___•-_.....---..._.-......... _...___.... _... ...... _...... ......... .... _......... -' - -... --.................. .....___.__............ _....... .... _ ............ ..... ............... . _ _..._...._...........
8. "Hostile Fire" Pay !The special pay to a family member serving in the Armed Forces who is exposed to hostile fire.
9. Self-sufficiency a. Amounts received under training programs funded by HUD.
Program Income j b. Amounts received by a person with a disability that are disregarded for a limited time for purposes
of Supplemental Security Income eligibility and benefits because they are set side for use under a
Plan to Attain Self -Sufficiency (PASS).
C. Amounts received by a participant in other publicly assisted programs that are specifically for, or in
reimbursement of, out-of-pocket expenses incurred (special equipment, clothing, transportation,
childcare, etc.) and which are made solely to allow participation in a specific program.
d. Amounts received under a resident service stipend. A resident service stipend is a modest amount
(not to exceed $200 per month) received by a resident for performing a service for the PHA or
owner, on a part-time basis, that enhances the quality of life in the development. Such services
may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, resident
initiatives coordination, and serving s a memberof the PHA's governing board. No resident may
receive more than one such stipend during the same period of time.
e. Incremental earnings and benefits resulting to any family member from participation in qualifying
state or local employment training programs (including training not affiliated with a local
government) and training of a family member as resident management staff. Amounts excluded by
this provision must be received under employment training programs with clearly defined goals
and objectives, and are excluded only for the period during which the family member participates
in the employment -training program. —
€10. Gifts ATemporary, nonrecurring, or sporadic income (including gifts).
€11. Reparation ; Reparation payments paid by a foreign government pursuant to claims filed under the laws of that
_Payments 3government by persons who were persecuted during the Nazi era.
......... .... -
12. Income from Earnings in excess of $480 for each full-time student 18 years old o r older (excluding the head of household
Full-time Students :or spouse).
-___.__ ._....____—___.__—__
13. Adoption ?Adoption assistance payments in excess of $480 per adopted child.
Assistance Payments
14. Social Security &,;Deferred periodic amounts from supplemental security income and social security benefits that are received
SSI Income ;in a lump sum amount or in prospective monthly amounts.
15. Property Tax !Amounts received by the family in the form of refunds or rebates under state or local law for property taxes
Refunds 1paid on the dwelling unit.
16. Home Care AAmounts paid by a state agency to a family with a member who has a developmental disability and is living
Assistance
al home to offset the cost of services and equipment needed to keep this developmentally disabled family
;member at home.
17. Other Federal IAmounts specifically excluded by any other Federal statute from consideration as income for purposes of
Exclusions :determining eligibility or benefits under a category of assistance programs that includes assistance under any
program to which the exclusions set forth in 24 CFR 5.609(c) apply A notice will be published in the Federal
!Register and distributed to housing owners identifying the benefits that qualify for this exclusion. Updates
twill be published and distributed when necessary The following is a list of income sources that qualify for
,that exclusion.
j ► The value of the allotment provided to an eligible household under the Food Stamp Act of 1977,
► Payments to volunteers under the Domestic Volunteer Service Act of 1973 (employment through
i AmeriCorps, VISTA, Retired Senior Volunteer Program, Foster Grandparents Program, youthful offender
incarceration alternatives, senior companions);
► Payments received under the Alaskan Native Claims Settlement Act,
► Income derived from the disposition of funds to the Grand River Band of Ottawa Indians,
► Income derived from certain submarginal land of the United States that is held in trust for certain
Indian tribes;
► Payments or allowances made under the Department of Health and Human ServicesLow-Income
Home Energy Assistance Program.
I ► Payments received under the Maine Indian Claims Settlement Act of 1980 (25 U.S.C. 1721);
i ► The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims
j Commission or the U.S. Claims Court and the interests of individual Indians in trust or restricted lands,
including the first $2,000 per year of income received by individual Indians from funds derived from
interests held in such trust or restricted lands;
► Amounts of scholarships funded under Title IV of the Higher Education Act of 1965, including awards
under the Federal work-study program or under the Bureau of Indian Affairs student assistance
1 programs;
1
► Payments received from programs funded under Title V of the Older Americans Act of 1985 (Green
Thumb, Senior Aides, Older American Community Service Employment Program);
i ► Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or any other
Page 24 of 51
City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
fund established pursuant to the settlement in the In Re Aaent Oranae product liability litigation,
M.D.L. No. 381 (E.D.N.Y.);
► Earned income tax credit refund payments received on or after January 1, 1991, including advanced
earned income credit payments;
► The value of any child care provided or arranged (or any amount received as payment for such care or
j reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act
i of 1990;
I ► Payments received under programs funded in whole or in part under the lob Training Partnership Act
(employment and training programs for Native Americans and migrant and seasonal farm workers, lob s
Corps, veterans employment programs, state job training programs and career intern programs,
I AmeriCorps).
3
1 Payments by the Indians Claims Commission to the Confederated Tribes and Bands of Yakima Indian
Nation or the Apache Tribe of Mescalero Reservation;
i Allowances, earnings, and payments to AmeriCorps participants under the National and Community
Services Act of 1990;
Any allowance paid under the provisions of 38 U.S.C. 1805 to a child suffering from spina bifida who is
the child of a Vietnam veteran;
Any amount of crime victim compensation (under the Victims of Crime Act) received through crime
victim assistance (or payment or reimbursement of the cost of such assistance) as determined under
the Victims of Crime Act because of the commission of a crime against the applicant under the Victims
j of Crime Act; and
3 ► Allowances, earnings, and payments to individuals participating in programs under the Workforce
j Investment Act of 1998.
Page 25 of 51 City of Lodi
Hornebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT B
PART 5 ANNUAL INCOME NET FAMILY ASSET INCLUSIONS AND EXCLUSIONS
This table presents the Part 5 asset inclusions and exclusions as stated in the HUD Technical Guide for Determining
Income and Allowances for HOME Program (Third Edition; January 2005).
Statements from 24 CFR Part 5 — Last Modified: January 2005
Inclusions
1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts, use the
current balance. For checking accounts, use the average 6 -month balance. Assets held in foreign countries are
considered assets.
2. Cash value of revocable trusts available to the applicant.
3. Equity in rental property or other capital investments. Equity is the estimated current market value of the asset
less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees) that would
be incurred in selling the asset. Under HOME, equity in the family's primary residence is not considered in the
calculation of assets for owner -occupied rehabilitation projects.
4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts.
5. Individual retirement, 401(K), and Keogh accounts (even though withdrawal would result in a penalty).
6. Retirement and pension funds.
7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole
life or universal life policy).
8. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc.
9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution,
insurance settlements and other amounts not intended as periodic payments.
10. Mortgages or deeds of trust held by an applicant.
Exclusions
1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars and
vehicles specially equipped for persons with disabilities.
2. Interest in Indian trust lands.
3. Assets not effectively owned by the applicant. That is, when assets are held in an individual's name, but the
assets and any income they earn accrue to the benefit of someone else who is not a member of the household
and that other person is responsible for income taxes incurred on income generated by the asset.
4. Equity in cooperatives in which the family lives.
5. Assets not accessible to and that provide no income for the applicant.
6. Term life insurance policies (i.e., where there is no cash value).
7. Assets that are part of an active business. "Business" does not include rental of properties that are held as an
investment and not a main occupation.
Page 26 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT C
COUNTY NAME One -Family
SAN JOAQUIN
COUNTY NAME
O-BDR
1-BDR
2-BDR
3-BDR
4-BDR
SAN JOA UIN
$137,996
$158,189
$192,358
$248,847
$273,159
INCOME LIMITS FOR SAN JOAQUIN COUNTY*
(Limits are effective 06/26/10)
Number of Persons in Household
1
2
3
4
5
6
7
8
80% of
AMI
$35,350
$40,400
$45,450
$50,500
$54,500
$58,600
$62,650
$66,700
"Sponsor will insert the limits for the county in which the Program is located, and will
update the income limits annually as HCD provides new information. The link to the
official, HCD-maintained, income limits is:
http://www.hcd.ca.2ov/hpd/hrc/rep/state/incNote.html
Page 27 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT D
LOAN SERVICING POLICIES AND PROCEDURES
FOR CITY OF LODI
The City of Lodi, hereafter called "Lender," has adopted these policies and procedures in order to
preserve its financial interest in properties whose `Borrowers" have been assisted with public
funds. The Lender will to the greatest extent possible follow these policies and procedures, but
each loan will be evaluated and handled on a case-by-case basis. The Lender has formulated this
document to comply with state and federal regulations regarding the use of these public funds and
any property restrictions, which are associated with them.
The policies and procedures are broken down into the following areas: 1) making required monthly
payments or voluntary payments on a loan's principal and interest; 2) required payment of property
taxes and insurance; 3) required Request for Notice of Default on all second mortgages; 4) loans
with annual occupancy restrictions and certifications 5) required noticing and limitations on any
changes in title or use of property; 6) required noticing and process for requesting a subordination
during a refinance; 7) processing of foreclosure in case of default on the loan.
1. Loan Repayments:
The Lender will collect monthly payments from those borrowers who are obligated to do so under
Notes which are amortized promissory notes (or Lender will use loan
collection Company to collect payments). Late fees will be charged for payments received after
the assigned monthly due date.
For Notes which are deferred payment loans, the Lender must accept voluntary payments on the
loan. Loan payments will be credited to principal. The borrower may repay the loan balance at
any time with no penalty.
2. Payment of Property Taxes and Insurance:
As part of keeping the loan from going into default, borrower must maintain property insurance
coverage naming the Lender as loss payee in first position or additional insured if the loan is a
junior lien. If borrower fails to maintain the necessary insurance, the Lender may take out force
placed insurance to cover the property while the Borrower puts a new insurance policy in place.
All costs for installing the necessary insurance will be added to the loan balance at time of
installation of Borrower's new insurance.
When a property is located in a 100 -year flood plain, the Borrower will be required to carry the
necessary flood insurance. A certificate of insurance for flood and for standard property insurance
with an endorsement naming the City of Lodi as additional insured will be required at close of
escrow. The lender will verify the insurance on an annual basis.
Property taxes must be kept current during the term of the loan. If the Borrower fails to maintain
payment of property taxes then the lender may pay the taxes current and add the'balanceof the tax
payment plus any penalties to the balance of the loan. Wherever possible, the Lender encourages
Borrower to have impound accounts set up with their first mortgagee wherein they pay their taxes
and insurance as part of their monthly mortgage payment.
Page 28 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
3. Required Request for Notice of Default:
When the Borrower's loan is in second position behind an existing first mortgage, it is the Lender's
policy to prepare and record a "Request for Notice of Default" for each senior lien in front of
Lender's loan. This document requires any senior lien holder listed in the notice to notify the
lender of initiation of a foreclosure action. The Lender will then have time to contact the Borrower
and assist them in bringing the first loan current, if possible. The Lender can also monitor the
foreclosure process and go through the necessary analysis to determine if the loan can be made
whole or preserved. When the Lender is in a third position and receives notification of foreclosure
from only one senior lien holder, it is in their best interest to contact any other senior lien holders
regarding the status of their loans.
4. Annual Occupancy Restrictions and Certifications:
On owner -occupant loans, the Lender will require that Borrowers submit utility bills and/or other
documentation annually to prove occupancy during the term of the loan. Some loans may have
income and housing cost evaluations, which require a household to document that they are not able
to make amortized loan payments, typically every five years. These loan terms are incorporated in
the original Note and Deed of Trust.
5. Required Noticing and Restrictions on Any Changes of Title or Occupancy
In all cases where there is a change in title or occupancy or use, the Borrower must notify the
Lender in writing of any change. Lender and borrower will work together to ensure the property
is kept in compliance with the original Program terms and conditions such that it remains available
as an affordable home for low-income families. These types of changes are typical when
Borrowers do estate planning (adding a relative to title) or if a Borrower dies and property is
transferred to heirs or when the property is sold or transferred as part of a business transaction. In
some cases the Borrower may move and turn the property into a rental unit without notifying the
Lender. Changes in title or occupancy must be in keeping with the objective of benefit to low-
income households (below 80 percent of AMI).
Change from owner -occupant to owner -occupant occurs at a sale. When a new owner -occupant is
not low-income, the loan is not assumable and the loan balance is immediately due and payable. If
the new owner -occupant qualifies as low-income, the purchaser may either pay the loan in full or
assume all loan repayment obligations of the original owner -occupant, subject to the approval of
the Lender's Loan Committee (depends on the HCD program).
If a transfer of the property occurs through inheritance, the heir (as owner -occupant) may be
provided the opportunity to assume the loan at an interest rate based on household size and
household income, provided the heir is income eligible. If the heir intends to occupy the property
and is not low-income, the balance of the loan is due and payable. If the heir intends to act as an
owner -investor, the balance of the loan may be converted to an owner/investor interest rate and
loan term and a rent limitation agreement is signed and recorded on title. All such changes are
subject to the review and approval of the Lender's Loan Committee.
Page 29 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Change from owner -occupant to owner -investor occurs when an owner -occupant decides to move
out and rent the assisted property, or if the property is sold to an investor. If the owner converts
any assisted unit from owner -occupied to rental, the loan is due in full.
Conversion to use other than residential use is not allowable where the full use of the property is
changed from residential to commercial or other. In some cases, Borrowers may request that the
Lender allow for a partial conversion where some of the residence is used for a business but the
household still resides in the property. Partial conversions can be allowed if it is reviewed and
approved by any and all agencies required by local statute. If the use of the property is converted
to a fully non-residential use, the loan balance is due and payable.
6. Requests for Subordinations:
When a Borrower wishes to refinance the property, they must request a subordination request to
the Lender. The Lender will subordinate their loan only when there is no "cash out" as part of the
refinance. No cash out means that there are no additional charges on the transaction above loan
and escrow closing fees. There can be no third -party debt payoffs or additional encumbrance on
the property above traditional refinance transaction costs. Furthermore, the refinance should lower
the housing cost of the household with a lower interest rate, and the total indebtedness on the
property should not exceed the current market value.
Also, provisions of Section 5.0.B and 5.0.0 of these guidelines still apply, which state that
the loan must:
a) be fully amortized and have a fixed interest rate that does not exceed the current
market rate, as established by an index identified in the most recent NOFA;
b) not have a temporary interest rate buy -down;
c) have a term "all due and payable" in no fewer than 30 years; and;
d) not have a balloon payment due before the maturity date of the Program loan.
Upon receiving the proper documentation from the refinance lender, the request will be considered
by the loan committee for review and approval. Upon approval, the escrow company will provide
the proper subordination document for execution and recordation by the Lender.
7. Process for Loan Foreclosure:
Upon any condition of loan default: 1) non-payment; 2) lack of insurance or property tax payment;
3) change in title or use without approval; 4) default on senior loans, the Lender will send out a
letter to the Borrower notifying them of the default situation. If the default situation continues then
the Lender may start a formal process of foreclosure.
When a senior lien holder starts a foreclosure process and the Lender is notified via a Request for
Notice of Default, the Lender, who is the junior lien holder, may cancel the foreclosure
proceedings by "reinstating" the senior lien holder. The reinstatement amount or payoff amount
must be obtained by contacting the senior lien holder. This amount will include all delinquent
payments, late charges and fees to date. Lender must confer with Borrower to determine if, upon
paying the senior lien holder current, the Borrower can provide future payments. If this is the case
then the Lender may cure the foreclosure and add the costs to the balance of the loan with a Notice
of Additional Advance on the existing note.
Page 30 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
If the Lender detennines, based on information on the reinstatement amount and status of
borrower, that bringing the loan current will not preserve the loan, then staff must determine if it is
cost effective to protect their position by paying off the senior lien holder in total and restructure
the debt such that the unit is made affordable to the Borrower. If the Lender does not have
sufficient funds to pay the senior lien holder in full, then they may choose to cure the senior lien
holder and foreclose on the property themselves. As long as there is sufficient value in the
property, the Lender can afford to pay for the foreclosure process and pay off the senior lien holder
and retain some or all of their investment.
If the Lender decides to reinstate, the senior lien holder will accept the amount to reinstate the loan
up until five (5) days prior to the set "foreclosure sale date." This "foreclosure sale date" usually
occurs about four (4) to six (6) months from the date of recording of the "Notice of Default." If the
Lender fails to reinstate the senior lien holder before five (5) days prior to the foreclosure sale date,
the senior lien holder would then require a full pay off of the balance, plus costs, to cancel
foreclosure. If the Lender determines the reinstatement and maintenance of the property not to be
cost effective and aIIows the senior lien holder to complete foreclosure, the Lender's lien may be
eliminated due to insufficient sales proceeds.
Lender as Senior Lien holder
When the Lender is first position as a senior lien holder, active collection efforts will begin on any
loan that is 31 or more days in arrears. Attempts will be made to assist the homeowner in bringing
and keeping the loan current. These attempts will be conveyed in an increasingly urgent manner
until loan payments have reached 90 days in arrears, at which time the Lender may consider
foreclosure. Lender's staff will consider the following factors before initiating foreclosure:
1) Can the loan be cured and can the rates and terms be adjusted to allow for affordable
payments such that foreclosure is not necessary?
2) Can the Borrower refinance with a private lender and pay off the Lender?
3) Can the Borrower sell the property and pay off the Lender?
4) Does the balance warrant foreclosure? (If the balance is under $5,000, the expense to
foreclose may not be worth pursuing.)
5) Will the sales price of home "as is" cover the principal balance owing, necessary
advances, (maintain fire insurance, maintain or bring current delinquent property taxes,
monthly yard maintenance, periodic inspections of property to prevent vandalism, etc.)
foreclosure, and marketing costs?
If the balance is substantial and all of the above factors have been considered, the Lender may opt
to initiate foreclosure. The Borrower must receive, by certified mail, a thirty -day notification of
foreclosure initiation. This notification must include the exact amount of funds to be remitted to
the Lender to prevent foreclosure (such as, funds to bring a delinquent BMIR current or pay off a
DPL).
At the end of thirty days, the Lender should contact a reputable foreclosure service or local title
company to prepare and record foreclosure documents and make all necessary notifications to the
Page 31 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
owner and junior lien holders. The service will advise the Lender of all required documentation to
initiate foreclosure (Note and Deed of Trust usually) and funds required from the owner to cancel
foreclosure proceedings. The service will keep the Lender informed of the progress of the
foreclosure proceedings.
When the process is completed, and the property has "reverted to the beneficiary" at the
foreclosure sale, the Lender could sell the home themselves under a homebuyer program or use it
for an affordable rental property managed by a local housing authority or use it for transitional
housing facility or other eligible use. The Lender could contract with a local real estate broker to
list and sell the home and use those funds for program income eligible uses.
Page 32 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT E
SELLERS LEAD-BASED PAINT DISCLOSURE
Disclosure of Information on Lead -Based Paint and/or Lead -Based Paint Hazards
Lead Warning Statement
Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978
is notified that such property may present exposure to lead from lead-based paint that may place young children at
risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological
damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory.
Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential real
property is required to provide the buyer with any information on lead-based paint hazards from risk assessments
or inspections in the seller's possession and notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is recommended prior to purchase.
Seller's Disclosure
(a) Presence of lead-based paint and/or lead-based paint hazards (check (i) or (ii) below):
(i) Known lead-based paint and/or lead-based paint hazards are present in the housing (explain).
(ii) Seller has no knowledge of lead-based paint and/or lead-based paint hazards in the housing.
(b) Records and reports available to the seller (check (i) or (ii) below):
(i) Seller has provided the purchaser with all available records and reports pertaining to
Lead-based paint and/or lead-based paint hazards in the housing (list documents below).
(ii) feller has no reports or records pertaining to lead-based paint and/or lead-based
paint hazards in the housing.
Purchaser's Acknowledgment (initial)
(c) Purchaser has received copies of all information listed above.
(d) Purchaser has received the pamphlet Protect Your Family from Lead in Your Home.
(e) Purchaser has (check (i) or (ii) below):
(1) received a 10 -day opportunity (or mutually agreed upon period) to conduct a risk assessment or
inspection for the presence of lead-based paint and/or lead-based paint hazards; or
(ii) waived the opportunity to conduct a risk assessment or inspection for the presence of
Lead-based paint and/or lead-based paint hazards (NOT PERMISSIBLE FOR HOME AND CDBG).
Agent's Acknowledgment (initial)
(f) Agent has informed the seller of the seller's obligations under 42 U.S.C. 4852d and is aware
of his/her responsibility to ensure compliance.
Certification of Accuracy
The following parties have reviewed the information above and certify, to the best of their knowledge, that the
information they have provided is true and accurate.
Seller Date Seller Date
Purchaser Date Purchaser Date
Agent Date Agent Date
Page 33 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT F
Disclosure to Seller with Voluntary, Arm's Length Purchase Offer
DECLARATION
This is to inform you that would like to purchase the property, loca -d at
, if a satisfactory agreement can be reached. We are prepared to pay
$ for a clear title to the property under conditions described in the attached proposed
contract of sale.
Because Federal funds may be used in the purchase, however, we are required to disclose to you
the following information:
1. The sale is voluntary. If you do not wish to sell, the buyer, ,
thru the agency, will not acquire your property. The buyer
does not have the power of eminent domain to acquire your property by condemnation
(i.e. eminent domain) and the agency/Sponsor
will not use the power of eminent domain to
acquire the property.
2. The estimated fair market value of the property is $ and was estimated by
,to be finally determined by a
professional appraiser prior to close of escrow.
Since the purchase would be a voluntary, arms length, transaction you would not be eligible
for relocation payments or other relocation assistance under the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (URA), or any other law or
regulation. Also, as indicated in the contract of sale, this offer is made on the condition that
no tenant will be permitted to occupy the property before the sale is completed.
Again, please understand that if you do not wish to sell your property, we will take no
further action to acquire it. If you are willing to sell the property under the conditions
described in the attached contract of sale, please sign the contract and return it to us at:
. If you have any questions
about this matter, please contact at
Sincerely,
Title
Buyer
Date
Buyer Date
Page 34 of 51
City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Form continues on next page with Seller's Acknowledgment
Disclosure to Seller with Voluntary, Arm's Length Purchase Offer (Page 2)
Acknowledgement
As the SellerI/we understand that the will inspect the property for
health and safety deficiencies. I/we also understand that public funds may be involved in this
transaction and, as such, if the property was built before 1978, a lead-based paint disclosure must
be signed by both the buyer and seller, and that a Visual Assessment will be conducted to
determine the presence of deteriorated paint.
As the Seller, I/we understand that under the City of Lodi's program, the property must be
currently owner -occupied, vacant for three months at the time of submission of purchase offer, new
(never occupied), or renter purchasing the unit. I/we hereby certify that the property is:
❑ Vacant at least 3 months; ❑ Owner -occupied; ❑ New; or ❑ Being Purchased by Occupant
Uwe hereby certify that have read and understand this "Declaration"and ❑ a copy ofsaid
Notice wasgiven to meprior to the offer topurchase. If received afterpresentation of the
purchase offer, UWe choose ❑ to withdraw or ❑ not to withdraw,from the Purchase
Agreement.
Seller
Seller
Page 35 of 51
Date
Date
City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT G
CITY OF LODI
INSTRUCTIONS TO HOMEBUYER
A. Participant works with lender of choice to obtain the primary lender's pre-qualificationletter.
B. After consultation with Program Operator regarding approved bedroom and bathroom
maximums (always 3 bedrooms and 2 bathrooms unless extenuating circumstancesjustify more
to be approved), participant works with real estate agent to select home. Program disclosures are
reviewed with agent for presentation to seller. The HOME Program allows only homes vacant
for three months or more prior to the date of the purchase contract, unless the current tenant is
purchasing the home.
C. Participant selects home and enters into a purchase contract (contingentupon receiving Program
loan approval). Lender provides the Program Operator with a copy of:
- real estate sales contract
- residential loan application and credit report
- verified income documentation
- disclosure statement
-proof ofpersonal funds for participation in program
- breakdown of closing costs
- structural pest control clearance
- appraisal with photos and preliminary title report
D. Program Operator reviews paperwork to determine program eligibility and financing
affordability forparticipant.
E. Program Operator staff meets with qualified applicant to provide information relative to the
program requirements, the lending process, and homeownership responsibilities.
F. Program Operator has home inspected to document health & safety and code compliance.
Notice of any deficiencies or needed corrections are given to participant's real estate agent, with
recommended course of action.
G. Program Operator requests loan approval from Sponsor's Loan Review Committee. Following
ioan approval, Program Operator prepares Deed of Trust, Promissory Note, Request for Notice
of Default, Grant Agreement, Owner -Occupant Agreement with City of Lodi, and Escrow
Instructions, and requests check and deposits same into escrow.
H. Escrow company furnishes Program Operator with proof of documents to be recorded, and any
escrow closeout information. After receipt of recorded loan documents, Final HUD -1, Insurance
Loss Payee Certification and Final Title Insurance Policy (Program Operator) closes out the loan
file.
Page 36 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT H
LEAD-BASED PAINT
VISUAL ASSESSMENT, NOTICE OF PRESUMPTION, AND HAZARD REDUCTION FORM
Visual Assessment Date: Report Date:
Check if no deteriorated paint found ❑
Section 3: Notice of Presumption. Fill out Sections 1, 3, 5, and 6. Provide to occupant w/in 15 days of
presumption.
Date of Presumption Notice:
Lead-based paint is presumed to be present ❑ and/or Lead-based paint hazards are presumed to be present ❑
Attachment B: Summary of Presumption:
Section 4: Notice of Lead -Based Paint Hazard Reduction Activity. Fill out Sections 1, 4, 5, and 6. Provide
to occupant w/in 15 days of after work completed.
Date of Hazard Reduction Notice:
Initial Hazard Reduction Notice? Yes ❑ No ❑
Start & Completion Dates:
If "No", dates of previous Hazard Reduction Activity Notices:
Attachment C: Activity locations and types.
Attachment D: Location of building components with lead-based paint remaining in the rooms, spaces or areas
where activities were conducted.
Attachment E: Attach clearance report(s), using DHS form 8552 and 8551 for abatement activities
Section 5: Resident Receipt of Notice for Presumption or Lead -Based Paint Hazard Reduction Activi
Printed Name: Signature: Date:
Section 6: Contact Information Organization:
Contact Name: Contact Signature:
Date: I Address: I Phone:
Page 37 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT I
Homebuyer Program Lead Compliance Document Checklist
The following documents should be in each Homebuyer unit file to document compliance
with the lead requirements:
This was taken from the HUD Website at:
http://www. hud.gov/offices/cpd/affordablehousing/trainingAeadsafelusefulforms/index.cfm#
crosscutting
Page 38 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Document Name
Purpose
Lead Safe Housing Rule Screening Sheet
Documents
exemotions
Physical inspection form (HQS or equivalent)
Documents visual
assessment results
Seller Certification
Seller certifies that
paint was stabilized
by qualified workers
and that safe work
practices were
followed during paint
stabilization
Clearance Report and Clearance Review Worksheet
Documents that unit
assed clearance
Disclosure Form
Documents that
buyer received
disclosure and
pamphlet.
Lead Hazard Reduction Notice
Documents that
buyer received
required lead hazard
reduction notification.
This was taken from the HUD Website at:
http://www. hud.gov/offices/cpd/affordablehousing/trainingAeadsafelusefulforms/index.cfm#
crosscutting
Page 38 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT 3
ACQUISITION WITH REHABILITATION CONSTRUCTION CONTRACT
Home Improvement Construction Contract
This Home Improvement Construction Contract is entered into this day of
20between the following parties: (Owner(s) Name):
and (Contractor's Name and Address):
(Notice of Cancellation, see paragraph 28, may be sent to Contractor at the above address).
The parties agree as follows:
Work to be Performed: Contractor agrees to provide a Schedule of Work, in accordance with the
Work Write-up (Attachment 1) and furnish all supervision, technical personnel, labor, materials,
tools and equipment necessary to complete the work described in the work write-up attached hereto
at the real property commonly described as:
. Contractor will be responsible for all construction means, methods,
techniques, sequences and procedures and for the coordination of all portions of the work under the
Contract. All materials shall be new, unless otherwise specified, and of good quality. Owner has a
right to require the Contractor to have a performance and payment bond; the expense of the bond
may be borne by the Owner.
2. Contract Price: Owner agrees to pay Contractor the sum of $ for the work to be
performed.
3. Completion Time:
a. Approximate Start Date: The Contractor agrees to file a complete permit application within ten
(10) days after receipt of written Notice to Proceed from the Owner. Owner and Contractor
agree that the Start Date of construction shall be the date the permits are issued by the City of
Lodi. In no event shall the Contractor commence work or place any materials on the site
thereofprior to receipt of Notice to Proceed from the Owner.
b. Approximate Completion Date: Contractor shall prosecute the work diligently and continuously
to completion. The work shall be completed within days after the Start Date, subject
to such delays as are permissible under paragraph 7 herein below.
4. Payment:
a. Price will be paid to Contractor in installments based on completion of work tasks and
individual item prices on the Work Write-up attached, and any Change Orders.
b. Contractor shall submit all required payment forms to Owner for approval of payment. Prior to
authorization of payment, the Contractor shall provide lien releases for claims by
subcontractors, laborers, and material suppliers involved in the work and/or represented by
Contractor's invoices. Owner may also request written guarantees and warranties.
c. After approval by Owner, Contractor shall submit payment request forms to the City of
Lodi, hereinafter referred to as "Program Operator." The Program Operator shall then make
payment to the Contractor. The Program Operator may, at its option, inspect the work to
ensure that it has been satisfactorily completed in accordance with the Contract
requirements. Should the Program Operator determine that work has not been performed in
accordance with the Contract, the Program Operator may, in its sole discretion, withhold or
Page 39 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
reduce payment in accordance with the terms of the agreement between Owner and the City
of Lodi.
d. At the time the work is completed, the Contractor shall submit the final pay request along with
the recorded Notice of Completion, final building inspection report, insulation certificate, any
warranties and guarantees, conditional lien releases, and Section 3 report (for contracts over
$100,000).
e. An amount equal to ten percent of the total Contract price, including any Change Orders, will
be withheld by Owner and shall be paid to Contractor 35 days after notice of completion has
been recorded, final inspection by the jurisdiction's building official and approval by Owner,
provided that Contractor is not in default under this Contract. Final payment will be subject to
withholding any amounts due to Owner for actual costs due to unexcused delays.
f. The payment of any progress payment shall not constitute acceptance of defective work or
improper material, nor is it a waiver of the warranties or any other remedies to which the
Owner may be entitled under the terms of this Contract
Relationship of the Parties to the Program Operator: Work to be performed under this Contract is
financedby funds from the Program Operator and administeredby the Program Operator. Owner is
solely responsible for monitoring all work performed under this Contract and enforcing the terms of
this Contract. The Program Operator shall inspect all work for the purposes of monitoring loan
disbursements in accordance with terms of this Contract and enforcing the terms of the loan
agreement. Inspections performed by the Program Operator are solely for the protection of the
lender and solely for the purpose of assuring that the construction is progressing reasonably and that
the lender's collateral interest is adequately protected. Owner acknowledges that the Program
Operator's inspections are not for the purpose of assuring Contractor's compliance with applicable
building codes. The Program Operator shall not be liable under any circumstances for its failure to
discover or require correction by Contractor of work that fails to comply with applicable building
codes or for its failure to discover or require correction of any dangerous condition or defective
work by contractor or by any subcontractor.
The Program Operator shall not, under any circumstances, have any liability either to the Owner
or to the Contractor for any disbursement or refusal to approve of any disbursement requested
by Contractor.
6. Failure to Commence Work: Failure by the Contractor without lawful excuse to substantially
commence work within 20 days from the date specified in the Notice to Proceed is a violation of the
Contractors' License Law.
7. Excusable Delays: Contractor shall not be charged with delay in the completion of the work due to:
any acts of Owner which cause delay; general strikes; acts of God or the public enemy;
unavailability of materials, or casualty beyond Contractor's control, provided, however, that
Contractor promptly (within 14 days) notifies Owner, in writing, of the cause of the delay. If the
facts show the delays to be excusable under the terms of the Contract, the time for completion shall
be extended for a period equal to the amount of time due to such delay.
8. Unexcused Delays: The parties agree that the Owner would incur additional expenses as a result of
Contractor's unexcused delays in the completion of the work. "Additional expenses" shall include
but not be limited to housing and storage costs incurred by the owner due to the inability to fully
occupy the property.
9. Provisions for the Owner: While this Contract is in force, Owner shall permit Contractor the use of
existing utilities including light, heat, power, and water, without charge, in order to carry out and
Page 40 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
complete the work. Owner may continue to occupy the premises during the rehabilitation but shall
cooperate with Contractor to facilitate the performance of the work including the abandonment of
limited areas as may be essential to the conduct of the work.
10. Compliance with the Law: By signing this contract, the Contractor certifies that it is licensed and in
good standing in California, and not listed on the Federal Consolidated List of Debarred, Suspended
and Ineligible Contractors. Contractors are regulated by the Contractors' State License Board which
has jurisdiction to investigate complaints against contractors if a complaint regarding a patent act or
omission is filed within four years of the date of the alleged violation. A complaint regarding a
latent act or omission pertaining to structural defects must be filed within 10 years of the date of the
alleged violation. Any questions concerning a contractor may be referred to the Registrar,
Contractors' State License Board, P.O. Box 26000, Sacramento, California 95826. All work shall
be completed in strict compliance with the laws, ordinances, rules, regulations and Codes of the
State, County, and local governments, whether such applicable laws, ordinances, rules, regulations
and codes are mentioned in this Contract or not. Contractor shall obtain, pay for, and provide
permits and licenses, as required to complete all work outlined under this Contract.
Where applicable, Contractor agrees to the following provisions:
a) Standard Contract Language, All Contracts and Subcontracts, pertaining to civil
rights, HCD, age discrimination, rehabilitation acts assurance, etc. (see Attachment
2).
b) By the statement below, Contractor hereby furnishes Owner with Contractor Notice
in compliance with California Business and Professions Code Section 7159:
INFORMATION ABOUT THE CONTRACTORS' STATE LICENSE BOARD
(CSLB)
CSLB is the state consumer protection agency that licenses and regulates construction
contractors.
Contact CSLB for information about the licensed contractor you are considering including
information about disclosable complaints, disciplinary actions and civil judgments that are
reported to CSLB.
Use only licensed contractors. If you file a complaint against a licensed contractor within the
legal deadline (usually four years), CSLB has authority to investigate the complaint. Ifyou
use an unlicensed contractor, CSLB may not be able to help you resolve your complaint. Your
only remedy may be in civil court, and you may be liable for damages arising out of any
injuries to the unlicensed contractor or the unlicensed contractor's employees.
For more information:
Visit CSLB's Web site at www.cslb.ca.gov
Call CSLB at 800-321-CSLB (2752)
Write CSLB at P. O. Box 26000, Sacramento, CA 95826
c) The contractor hereby agrees to abide by the requirements of Executive Order 11246
and all implementing regulations of the Department of Labor.
11. Notice to Owner (see Attachment 3).
Page 41 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12110
12. Required Insurance: Contractor shall obtain and keep in effect during the life of this contract,
insurance in the following minimum amounts:
Worker's Compensation and Employer's Liability Insurance meeting the statutory requirements of
the State of California.
Comprehensive General Liability and Property Damage Insurance with Combined Single Limits of
at least $1,000,000. This insurance shall be on an occurrence basis and shall protect the Contractor
against liability arising from: Contractor's operations, operations by subcontractors, products,
completed operations or professional liability where applicable and contractual liability assumed
under the indemnity provisions above insured. Any Excavation, Collapse and Underground
exclusions must be deleted when applicable to operations performed by the Contractor or his
subcontractors.
An original certificate of such insurance shall be filed with the City of Lodi. Said certificate shall
evidence coverage through the life of this Contract.
13. Safety to Public and Property: Contractor shall be responsible for initiating, maintaining, and
supervising all safety precautions and programs in connection with the work. In such, Contractor
shall provide reasonable protection to prevent damage, injury, and loss to: all employees on the
work, all work and materials and equipment to be incorporated therein and other property at the site
or adjacent thereto, including trees, shrubs, lawns, pavements, structures, and utilities not
designated for removal or replacement under the terms of this Contract.
14. Hold Harmless: With the exception that this Section shall in no event be construed to require
indemnification by Contractor to a greater extent than permitted under the public policy of the State
of California, Contractor shall indemnify and save harmless Owner and the City of Lodi, including
their officers, agents, employees, affiliates, parents and subsidiaries, and each of them, of and from
any and all claims, demands, causes of action, damages, costs, expenses, actual attorneys fees,
losses or liability, in law or in equity, of every kind and nature whatsoever ("Claims") arising out of
or in connection with Contractor's operations to be performed under this Agreement for, but not
limited to:
(a) Personal injury, including, but not limited to, bodily injury, emotional injury, sickness or
disease, or death to persons, including, but not limited to any employees or agents of
Owner, the City of Lodi, or any other subcontractor and/or damage to property of
anyone (including loss of use thereof), caused or alleged to be caused in whole or in part
by any negligent act or omission of Contractor or anyone directly or indirectly employed
by Contractor or anyone for whose act Contractor may be liable regardless of whether
such injury or damage is caused by a parry indemnified hereunder.
(b) Penalties imposed on account of the violation of any law, order, citation, rule, regulation,
standard, ordinance, or statute, caused by the action or inaction of Contractor.
(c) Infringement of any patent rights which may be brought against the City of Lodi or Owner
arising out of Contractor's work.
(d) Claims and liens for labor performed or materials used or furnished to be used on the job,
including all incidental or consequential damages resulting to the City of Lodi or Owner
from such claims or liens.
(e) Contractor's failure to fulfill the covenants set forth in collective bargaining agreement,
wage order or any other agreement or regulation concerning labor relations.
(fl Failure of Contractor to provide Casualty Insurance.
(g) Any violation or infraction by Contractor of any law, order, citation, rule, regulation,
standard, ordinance or statute in any way relating to the occupational health or safety of
Page 42 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
employees, including, but not limited to, the use of the City of Lodi or other's equipment,
hoist, elevators, or scaffolds. The indemnification provisions of (a) through (g) above
shall extend to Claims occurring after this Agreement is terminated as well as while it is
in force. Such indemnity provisions apply regardless of any active and/or passive
negligent act or omission of Owner or the City of Lodi or their agents or employees.
Contractor, however, shall not be obligated under this Agreement to indemnify Owner or
the City of Lodi for Claims arising from the sole negligence or willful misconduct of
Owner or the City of Lodi or their agents, employees or independent contractors who are
directly responsible to Owner or the City of Lodi, or for defects in design furnished by
such persons.
(h) Contractor shall:
i. At Contractor's own costs, expense and risk, defend any claims that may be brought
or instituted by third persons, including but not limited to, governmental agencies or
employees of Contractor, against the City of Lodi or Owner or their agents or
employees or any of them;
ii. Pay and satisfy any judgment or decree that may be rendered against the City of
Lodi or Owner or their agents or employees, or by any of them, arising out of any
such Claim; and/or
iii. Reimburse the City of Lodi or Owner or their agents or employees for any and all
legal expense incurred by any of them in connection herewith or in enforcing the
indemnity granted in this Section.
(i) All work covered by this Agreement done at the site or in preparing or delivering materials
or equipment, or any or all of them, to the site shall be at the risk of Contractor exclusively
until the completed work is accepted by the City of Lodi.
(j) The indemnities set forth in this Section shall not be limited by any insurance requirements
set forth elsewhere within this agreement.
15. Assignment: Contractor shall not assign or transfer any right or obligation under this Contract
without first obtaining the written consent of Owner. Any attempted assignment by Contractor
shall be void.
16. Changes in Work to be Performed: No changes shall be made in the work, Contract price or
Contract time for completion of work, except by written change order. The change order shall bear
the signatures of the parties to this Contract and approved (by signature) as to propriety with
funding requirements by the City of Lodi. No claim for an adjustment of Contract work, price or
time will be valid unless so ordered. Payment for change orders that bear additional cost shall be
made in accordance with paragraph 4, above.
17. Guarantees and Material Warranties: All labor, materials and installation shall be guaranteed for a
period of one year from the date of final acceptance by Owner, when subjected to normal use and
care, and provided Owner has complied, in full, with the terms and payments and other conditions
of this Contract. Upon written notice from Owner, Contractor shall repair or remedy any defect in
materials and workmanship within the one-year period specified. Contractor shall furnish Owner
with and assign to Owner all manufacturers' and suppliers' written guarantees and warranties
covering materials and equipment furnished under this Contract.
18. Surplus Materials and Clean-up of Premises: All materials and equipment removed and not reused
as a condition of this Contract shall remain or become the property of Owner, unless otherwise so
stated in writing. All surplus materials as well as all rubbish and construction debris resulting from
construction activities shall be removed promptly from the j ob site by Contractor. Upon completion
of the work, Contractor shall leave the building and premises in a "broom -clean" condition.
Page 43 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
19. Divisibility: It is intended that each paragraph of this agreement shall be viewed as separate and
divisible, and in the event that any paragraph shall be held to be invalid, the remaining paragraphs
shall continue to be in full force and effect.
20. Materials Restriction: Lead base paint hazards specified in the work write-up shall be mitigated in
accordance with Federal Lead Based Paint regulations listed at 24 CFR 35. All new paint used
must be a non -lead based paint.
21. Arbitration:
a. Should any controversy arise out of or related to this Contract or the breach thereof, that falls
within the provisions of 7085 et seq. of the California Business and Professions Code, other
than a controversy based upon your failure to comply with a notice to return to the project under
paragraph 23, the parties shall agree to submit the issue to Contractors State License Board
(CSLB) arbitration. The decision of the arbitrator is final and binding on both parties. CSLB
will pay for the hearing, the arbitrator, and the services of one Board -appointed expert witness
per complaint. The parties are responsible for their own attorney fees, if any, and additional
expert witnesses, if any.
b. Any controversy arising out of or relating to this Contract, or the breach thereof, that does not
qualify for CSLB arbitration, or the parties do not agree to CSLB arbitration, shall be submitted
to binding arbitration in accordance with the provisions of the California Arbitration Law, Code
of Civil Procedure 1280 et seq., and the Rules of the American Arbitration Association. The
arbitrator shall have the final authority to order work performed, to order the payment from one
party to another, and to order whom shall bear the costs of arbitration. Costs to initiate
arbitration shall be paid by the party seeking arbitration. Notwithstanding, the party prevailing
in any arbitration proceeding and in any litigation arising out of or relating to this contract shall
be entitled to recover from the other all attorneys' fees and costs of arbitration.
22. Mechanics Liens: Contractor shall pay promptly all valid bills and charges for materials, labor or
otherwise, in connection with or arising out of the rehabilitation of said property and will hold
Owner free and harmless against all of them, filed against the property or any part thereof, and from
and against all expense and liability in connection therewith, including but not limited to, court
costs and attorneys' fees resulting or arising there from. Should any liens or claim of liens be filed
for record against the property, or should Owner receive notice of any unpaid bill or charge in
connection with the Contract, Contractor shall forthwith pay and discharge the same and cause the
same to be released of record. Contractor authorizes the Program Operator to issue joint checks as
part of any disbursement otherwise payable to Contractor whenever the Program Operator, in its
sole discretion, determines that payment in this fashion is necessary in order to protect the interests
of the Lender or the Owner. (See also; Notice to Owner, Attachment 3).
23. Termination of Contract: Should Contractor commit any of the acts specified in this paragraph,
the Owner may, give 72 hours' notice in writing thereof to Contractor, to commence and
continue thereafter to diligently prosecute the correction thereof, and if contractor fails to do so,
then without prejudice to any other rights or remedies given Owner by law or by this contract,
Owner may terminate the services of Contractor under this contract; take possession of said
project and the premises on which it is located; take possession of all materials, located on such
premises; and, complete said project by whatever method Owner may deem expedient.
Contractor shall be deemed to have committed an act specified in this paragraph if contractor
shall:
a. refuse or fail to supply enough properly skilled workers or proper materials to complete
said project in the time specified in this contract and in the approved time schedule.
Page 44 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
b. fail to make prompt payment to subcontractors, laborers, or material men for labor
performed on or materials furnished to said project;
c. fail to comply with the time schedule for completion of the project;
The preceding notwithstanding, the following actions by the Contractor shall be deemed to be
material breaches of the contract which are not subject to cure. Should Contractor commit any
of the acts specified in this paragraph, the Owner may, by giving 72 hours' notice in writing
thereof to Contractor, without prejudice to any other rights or remedies given Owner by law or
by this contract, terminate the services of Contractor under this contract; take possession of said
project and the premises on which it is located; take possession of all materials, located on such
premises; and complete said project by whatever method owner may deem expedient:
d. Commence with any proceedings of bankruptcy;
e. make a general assignment for the benefit of contractors;
f. persist in disregarding any law or ordinance relating to said project or the completion
thereof,
g. suffer the revocation or suspension of its contractor's license.
24. Rights on Termination by Owner: Should Owner terminate the service of Contractor under this
contract and complete said project pursuant to Paragraph 10 of this contract, the Contractor shall not
be entitled to receive any further payment under this contract until said project is fully completed.
On completion of said project by Owner, if the unpaid balance of the contract price exceeds the
expenses incurred by Owner in completing said project, including any compensation paid by Owner
for managerial, administrative, or supervisory services in completing said project, such excess shall
be paid by Owner to Contractor. If the expense incurred by Owner in completion of said project
exceeds the unpaid balance of the purchase price, Contractor shall pay such excess to Owner with
thirty days following written demand by Owner.
25. Force Majeure: Neither Owner nor Contractor shall be deemed to be in default if performance of
the improvements required by this contract is delayed or becomes impossible because of any act of
God, war, earthquake, fire, civil commotion, epidemic, act of government, its agencies or officers,
court order, or any other legitimate cause beyond the control of the party and not caused by the
negligent, unreasonable or intentional acts of the party.
26. Availability of Funds: In the event the loan or grant of funds upon which this Contract is contingent
is not approved, this Contract shall be considered null and void, and shall not create any liability to
either Owner or Contractor.
27. Contract Nullity: This entire Contract shall be considered null and void if either of the following
shall occur:
a. Owner is not approved for funding to finance the Contract Price;
b. Owner chooses not to proceed with the project before construction begins.
28. Three -Day Right to Cancel: "You, the Owner, have the right to cancel this contract within
three business days. You may cancel by e -mailing, mailing, faxing, or delivering a written
notice to the Contractor at the Contractor's place of business by midnight of the third
business day after you received a signed and dated copy of the contract that includes this
notice. Include your name, your address, and the date you received the signed copy of this
contract including this notice.
Page 45 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
If you cancel, the Contractor must return any moneys paid within 10 days of receiving the
notice of cancellation. For your part, you must make available to the Contractor at your
residence, in substantially as good condition as you received it, any goods delivered to you
under this contract or sale. Or, you may, if you wish, comply with the Contractor's
instructions on how to return the goods at the Contractor's expense and risk. If you do make
the goods available to the Contractor, and the Contractor does not pick them up within 20
days of the date of your notice of cancellation, you make keep them without any further
obligation. If you fail to make the goods available to the Contractor, or if you agree to return
the goods to the Contractor and fail to do so, then you remain liable for performance of all
obligations under this Contract."
29. "You, the Owner, are entitled to a completely filled in copy of this Contract, signed by both
you and the Contractor, before any work may be started."
THE OWNER AND THE CONTRACTOR ACKNOWLEDGE THAT THEY HAVE READ,
UNDERSTAND AND AGREE TO ALL PROVISIONS OF THIS CONTRACT INCLUDING ALL
ADDITIONAL CONTRACT DOCUMENTS.
OWNER(S):
CONTRACTOR:
By:
Business Name:
Title:
Address:
Telephone:
License Number:
Tax ID or Soc. Sec. #
Attachments:
1—Work Write-up
2 — Standard Contract Language
3 —Notice to Owner
Page 46 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
STANDARD CONTRACT LANGUAGE:
ALL CONTRACTS AND SUBCONTRACTS
The Civil Rights. HCD. and Age DiscriminationActs Assurances:
During the performance of this Agreement, the Grantee assures that no otherwise qualified person
shall be excluded from participation or employment, denied program benefits, or be subjected to
discrimination based on race, color, national origin, sex, age, or handicap, under any program or
activity funded by this contract, as required by Title VI of the Civil Rights Act of 1964, Title I of
the Housing and Community Development Act of 1974, as amended, and the Age Discrimination
Act of 1975, and all implementing regulations.
2. Rehabilitation Act of 1973 and the "504 Coordinator"
The Grantee further agrees to implement the Rehabilitation Act of 1973, as amended, and its
regulations, 24 CFR Part 8, including, but not limited to, for Grantees with 15 or more
permanent full or part time employees, the local designation of a specific person charged with
local enforcement of this Act, as the "504 Coordinator".
The Training. Employment and Contracting Opportunities for Business and Lower Income Persons
Assurance of Compliance:
a) The grant activity to be performed under this Agreement is on a project assistedunder a
program providing direct federal financial assistance from the Department of Housing and
Urban Development and is subject to the requirements of Section 3 of the Housing and Urban
Development Act of 1968, as amended, 12U.S.0 1701u. Recipients, contractors and
subcontractors shall direct their efforts to provide, to the greatest extent feasible, training
and employment opportunities generated from the expenditure of Section 3 covered
assistance to Section 3 residents in the order of priority provided in 24 CFR 135.34(a)(2).
b) The parties to this Agreement will comply with the provisions of said Section 3 and the
regulations issued pursuant thereto by the Secretary of Housing and Urban Development set
forth in 24 CFR Part 135, and all applicable rules and orders of the Department issued
thereunder prior to the execution of this contract. The parties to this contract certify and agree
that they are under no contractual or other disability which would prevent them from complying
with these requirements.
c) The Grantee will include these Section 3 clauses in every contract and subcontract for Work in
connection with the grant activity and will, at the direction of the State, take appropriate action
pursuant to the contract or subcontract upon a finding that the Grantee or any contractor or
subcontractor is in violation of regulations issued by the Secretary of Housing and Urban
Development, 24 CFR Part 135 and, will not let any contract unless the Grantee or contractor or
subcontractor has first provided it with a preliminary statement of ability to comply with the
requirements of these regulations.
d) Compliance with the provisions of Section 3, the regulations set forth in 24 CFR Part 135, and
all applicable rules and orders of the Department issued thereunder prior to the execution of the
Agreement shall be a condition of the federal financial assistance provided to the project,
binding upon the Grantee, its successors and assigns. Failure to fulfill these requirements shall
subject the Grantee, its contractors and subcontractors, its successors and assigns to those
sanctions specifiedby the grant or contract through which federal assistance is provided, and to
such sanctions as are specified by 24 CFR Part 135.
Page 47 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
4. Assurance of Compliance with Requirements Placed on Construction Contracts of $10,000 or
more
The Grantee hereby agrees to place in every contract and subcontract for construction exceeding
$10,000 the Notice of Requirement for Affirmative Action to ensure Equal Employment
Opportunity (Executive Order 11246), the Standard Equal Employment Opportunity, and the
Construction Contract Specifications. The Grantee furthermore agrees to insert the appropriate
Goals and Timetables issued by the U.S. Department of Labor in such contracts and
subcontracts.
State NondiscriminationClause:
a) During the performance of this contract, contractor and its subcontractors shall not unlawfully
discriminate, harass, or allow harassment against any employee or applicant for employment
because of sex, race, color, ancestry, religious creed, national origin, physical disability
(including HIV and AIDS), mental disability, medical condition (cancer), age (over 40) marital
status, and denial of family care leave. Contractors and subcontractors shall ensure that the
evaluation and treatment of their employees and applicants for employment are free of such
discrimination and harassment. Contractors and subcontractors shall comply with the provisions
of the Housing Act (Government Code, Section 12990 (a -f) et seq.) and the applicable
regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7258 et
seq.) The applicable regulations of the Fair Employment and Housing Commission
implementing Government Regulations, are incorporated into this contract by reference and
made a part hereof as if set forth in full. Contractor and its subcontractors shall give written
notice of their obligations under this clause to labor organizations with which they have a
collectivebargaining or other agreement.
b) Contractor shall include the nondiscrimination and compliance provisions of this clause in all
subcontracts to perform work under the contract.
6. Labor Standards —Federal Labor Standards Provisions
The Grantee shall cause or require to be inserted in full, in all such contracts subject to such
regulations, provisions meeting the requirements of-
Davis-Bacon
f
Davis-Bacon Act (40 USC 276a -276a-5) requires that workers receive no less than the
prevailing wages being paid for similar work in their locality. Prevailing wages are computed
by the Department of Labor and are issued in the form of Federal wage decisions for each
classification of work. The law applies to most construction, alteration, or repair contracts over
$2,000.
Copeland "Anti -Kickback" Act (47 USC 276(c) requires that workers be paid at least once a
week without any deductions or rebates except permissible deductions.
Contract Work Hours and Safety Standards Act — CWHSSA (40USC 327-3331 requires that
workers receive "overtime" compensation at a rate of 1-1/2 times their regular hourly wage after
they have worked 40 hours in one week.
Title 29, Code of Federal Regulations, Subtitle A, Parts 1.3 and 5 are the regulations and
procedures issued by the Secretary of Labor for the administration and enforcement of the
Davis -Bacon Act, as amended.
Page 48 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
NOTICE TO OWNER
"Under the California Mechanics' Lien Law, any contractor, subcontractor, laborer, supplier, or
other person or entity who helps to improve your property, but is not paid for his or her work or
supplies, has a right to place a lien on your home, land, or property where the work was performed
and to sue you in court to obtain payment.
This means that after a court hearing, your home, land, and property could be sold by a court officer
and the proceeds of the sale used to satisfy what you owe. This can happen even if you have paid
your contractor in full if the contractor's subcontractors, laborers, or suppliers remain unpaid.
To preserve their rights to file a claim or lien against your property, certain claimants such as
subcontractors or material suppliers are each required to provide you with a document called a
"Preliminary Notice." Contractors and laborers who contract with owners directly do not have to
provide such notice since you are aware of their existence as an owner. A preliminary notice is not
a lien against your property. Its purpose is to notify you of persons or entities that may have a right
to file a lien against your property if they are not paid. In order to perfect their lien rights, a
contractor, subcontractor, supplier, or laborer must file a mechanics' lien with the county recorder
which then becomes a recorded lien against your property. Generally, the maximum time allowed
for filing a mechanics' lien against your property is 90 days after substantial completion of your
project.
TO INSURE EXTRA PROTECTION FOR YOURSELF AND YOUR PROPERTY, YOU MAY
WISH TO TAKE ONE OR MORE OF THE FOLLOWING STEPS:
(1) Require that your contractor supply you with a payment and performance bond (not a license
bond), which provides that the bonding company will either complete the project or pay damages
up to the amount of the bond. This payment and performance bond as well as a copy of the
construction contract should be filed with the county recorder for your further protection. The
payment and performance bond will usually cost from 1 to 5 percent of the contract amount
depending on the contractor's bonding ability. If a contractor cannot obtain such bonding, it may
indicate his or her financial incapacity.
(2) Require that payments be made directly to subcontractors and material suppliers through a j oint
control. Funding services may be available, for a fee, in your area which will establish voucher or
other means of payment to your contractor. These services may also provide you with lien waivers
and other forms of protection. Any joint control agreement should include the addendum approved
by the registrar.
(3) Issue joint checks for payment, made out to both your contractor and subcontractors or
material suppliers involved in the project. The joint checks should be made payable to the persons
or entities which send preliminary notices to you. Those persons or entities have indicated that they
may have lien rights on your property; therefore, you need to protect yourself. This will help to
insure that all person due are actually paid.
(4) Upon making payment on any completed phase of the project, and before making any further
payments, require your contractor to provide you with unconditional "Waiver and Release" forms
signed by each material supplier, subcontractor, and laborer involved in that portion of the work for
which payment was made. The statutory lien releases are set forth in exact language in Section
3262 of the Civil Code. Most stationery stores will sell the "Waiver and Release" forms if your
contractor does not have them. The material suppliers, subcontractors, and laborers that you obtain
releases from are those persons or entities who have filed preliminary notices with you. If you are
not certain of the material suppliers, subcontractors, and laborers working on your project, you may
obtain a list from your contractor. On projects involving improvements to a single-familyresidence
Page 49 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
or a duplex owned by the individuals, the person signing these releases lose the right to file a
mechanics' lien claim against your property. In other types of construction, this protection may still
be important, but may not be as complete.
To protect yourself under this option, you must be certain that all material suppliers, subcontractors,
and laborers have signed the "Waiver and Release" form. If a mechanics' lien has been filed against
your property, it can only be voluntarily released by a recorded "Release of Mechanics' Lien"
signed by the person or entity that filed the mechanics' lien against your property unless the lawsuit
to enforce the lien was not timely filed. You should not make any final payments until any and all
such liens are removed. You should consult an attorney if a lien is filed against your property."
Read and acknowledged:
Signature
Dated
Signature Dated
Page 50 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
ATTACHMENT K
CITY OF LODI
CONSTRUCTION PAYMENT REQUEST #
Date
Participant Project Job ##
Project Address
Total Contract Amount $ Payment Amount $
Contractor: Construction Supervisor:
Items Completed:
I request payment for work in progress on the above property. I certify that the work itemized above has been
completed as of this date.
Contractor's Signature Date
NOTE: Ten percent (10%) of the total contract amount (including all change orders) will be retained by
the City cf Lodi until 35 days after Notice of Completion is recorded.
The items listed above have been completed satisfactorily.
Please release payment to Contractor as requested (or amended). OWNERS SIGNATURE
DATE
APPROVED FOR PAYMENT:
Neighborhood Services Manager DATE
❑ Mail ❑ Pick-up
NOTES:
Distribution: WHITE: City ofLodi YELLOW: Owner PINK: Contractor . GOLDENROD: Supervisoi
Page 51 of 51 City of Lodi
Homebuyer Program Guidelines
HCD Version 12/10
Exhibit B
Income Qualification Limits
Source: State of California Housing and Community Development2010 CDBG 8 HOME Income Levels
Effective June 26,2010
30% AMI Limit
/ Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons 8 Persons
��d� %'•j�j`Fk'tk x11 � �•` ^' � x � '� '#.' �y '4 +'*�s` F moi?' X z
50% AMI Limit
9 Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons 8 Persons
e k' t . �%..•isN.2kT,>�, r�}. u: �n '67�a.�. 'kN: �'• R .���f•,JL �i�R�M ...F,J.. b.k .l.'••
80% AMI Limit
Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons 8 Persons