Current through December 26, 2024
Under 24
C.F.R. 982.625, the THDA may elect to provide
Housing Choice Voucher assistance to an eligible family who purchases, rather
than rents, a dwelling unit that will be occupied by the family. The
homeownership option does not require, and HUD does not provide, additional or
separate funding. The THDA uses the voucher program funding previously
established under existing Annual Contributions Contracts (ACC) for the Housing
Choice Voucher program to fund the Homeownership Voucher program option. The
program provides additional affordable homeownership opportunities for
low-income families and encourages self-sufficiency among Housing Choice
Voucher Program participants.
(1)
Initial Eligibility Requirements. A Housing Choice Voucher Program family
wishing to utilize the voucher subsidy to purchase, rather than rent a home,
must meet the following initial eligibility requirements to be issued a
Certificate of Eligibility:
(a) Must be a
current participant in the THDA's HCV Program, all adults that would be listed
on the mortgage must be participants in good standing for at least twelve (12)
months, and meet the general requirements for continued participation in the
THDA Housing Choice Voucher Program. If the family is from the THDA's waiting
list or a port-in, this requirement may be waived if the family has had a
Housing Choice Voucher for 12 months, is in good standing, and can provide a
pre-qualification letter for a mortgage and meets the requirements outlined in
this chapter. Although, no homeownership activities may take place until all
port paperwork has been processed under the regular porting policies
(24 C.F.R.
982.625(b);
982.626(b)).
(b) All adult household members may not have
previously lived as an adult in a home that defaulted on a mortgage in the
Homeownership Voucher Program (24 C.F.R. 982.627(a)(5);
(e)).
(c) All household members must be in
compliance with the Housing Choice Voucher family rules and obligations
(24 C.F.R.
982.626(b)).
(d) Must be a "first-time homeowner", meaning
that a family member must not have owned title to a principal residence in the
last three (3) years before commencement of homeownership assistance for the
family.
1. The term "first-time homeowner"
also includes a single parent or displaced homemaker (as those terms are
defined in 12 U.S.C. 12713 ) who, while married, owned a home with his or her
spouse, or resided in a home owned by his or her spouse (24 C.F.R.
982.4).
2. Residents of limited equity cooperatives
are eligible for the homeownership program. An exception to this requirement
may be granted to residents of limited equity cooperatives and families with a
disabled household member who requires a reasonable accommodation. The Housing
Choice Voucher program is readily accessible to and usable by such person, and
single parents or displaced homemakers (as those terms are defined in 12 U.S.C.
§ 12713 ) who, while married, owned a home with a spouse, or resided in a
home owned by a spouse. Mobile homes on rented lots are considered personal
property; therefore, those families are not considered an owner of real estate
for the purposes of this program.
3. The first-time homeowner requirement does
not apply after the initial purchase with Homeownership Voucher (24 C.F.R.
982.4(b)).
(e) The THDA requires that families receive a
minimum of 8 hours of pre-purchase homebuyer education from an approved THDA
Homebuyer Education counselor (24 C.F.R.
982.626(a)(3);
982.630).
(f) The family must demonstrate that one or
more adult members of the family who will own the home at commencement of
homeownership is employed full-time averaging a minimum of 30 hours per week
and who have been continuously employed within the same career field during the
past twelve (12) months before commencement of homeownership assistance.
Federal Work Study income is not eligible to meet work history requirement.
Families whose head of household or spouse is disabled or elderly are exempted
from the employment requirement. In addition, the employment requirement does
not apply to an elderly family or a disabled family. Furthermore, if a family,
other than an elderly family or a disabled family, includes a person with
disabilities, the THDA will grant an exemption from the employment requirement
if the THDA determines that an exemption is needed as a reasonable
accommodation so that the program is readily accessible to and usable by
persons with disabilities (24 C.F.R.
982.627(d)).
(g) Must Have at Least $15,000 Annual Income.
1. Exceptions.
(i) If a family verifies that they have
pre-qualified for a mortgage loan that sufficiently covers the purchase price
of a suitable home in their regional area and meets the THDA's financing
standards prior to being admitted to the Homeownership Voucher Program, then
the family may be determined eligible if their income is at least the Federal
minimum wage (currently $7.25) multiplied by 2,000 hours (currently
$14,500).
(ii) The Federal Social
Security Income Disability standard for families whose head or spouse is
disabled for an individual is ($674) multiplied by twelve (12) months
(currently $8,088).
(iii)
Exceptions may be made due to extreme circumstances such as, global
recession.
(iv) Elderly and
disabled families may use public assistance as income to meet the annual income
requirement.
(v) Employment
Requirement for Disabled Family. The employment requirement does not apply to a
disabled family, which would include a family whose head (which includes
co-head), spouse, or sole member is a person with a disability and receives SSA
Disability Benefits.
(vi) Household
Members Not Receiving SSA Disability Benefits. The household must provide
third-party verification for household members claiming disability who do not
receive SSI or other disability payments from the SSA. The THDA will mail a
Verification of Disability form to a knowledgeable healthcare provider
identified by the household member to verify that the household member meets
the HUD definition of disability.
2. Public assistance includes federal housing
assistance or the housing component of a welfare-to-work grant, TANF assistance
(Families First), SSI that is subject to an income eligibility test, food
stamps, general or other assistance provided under a federal, state or local
program that provides assistance available to meet family living or housing
expenses (24 C.F.R.
982.627(c)).
3. In the event of a loss of employment that
results in employment income of less than $15,000 annually, the household will
be offered six (6) months to secure new employment earning at least $15,000
annually. If at least one household member does not secure new employment
income of at least $15,000 annually within the six (6)-month time period, the
assistance will be terminated. During this time, the family must recertify
income every ninety (90) calendar days.
(i)
Exceptions. An exception to the six (6) month timeframe for securing new
employment may be considered when a household member loses his job due to no
fault of his or her own, such as a factory closing or lay-off.
(ii) An exception may also be considered for
long-term medical incapacitation.
(iii) In this case, the household must send a
letter requesting an exception to the THDA and provide documentation of the job
loss or medical necessity.
4. Seasonal employees, such as teachers, must
be certified annually instead of on an interim basis when income decreases for
a short period of time (i.e. summer vacation).
(h) Must not owe money to the THDA or any
other housing authority (24
C.F.R.
982.626(b)).
(i) Homeownership Voucher applicants must
wait three (3) years from the discharge date of a Chapter 7 bankruptcy and one
(1) year from the discharge date of a Chapter 13 bankruptcy before applying for
the program (24 C.F.R.
982.626(b)).
(j) Married Head of Household.
1. Income. A head of household who is
married, but physically separated, not sharing residence with the spouse in the
assisted unit, and not legally divorced from the spouse, must either divorce or
include the spouse's income in the household for the eligibility determination
(24 C.F.R.
982.626(b)).
2. Promissory Note and Deed of Trust. The
THDA will not require both spouses to sign the promissory note when both
spouses are residing in the assisted unit as their primary residence. However,
the lender may require both spouses to sign the deed of trust in order to
encumber the interest of the spouse who is not on the promissory
note.
(k) At least 1
percent of the purchase price or $1,000, whichever is greater, must come from
the family's personal resources, as evidenced by bank statements. The family
may use grants or other funds to cover the remainder of the down payment and
closing costs when available. In the event that other funding is unavailable,
and closing costs cannot be arranged with the seller, the program participant
may be required to provide the full down payment (24 C.F.R.
982.625(g)(1);
982.626(b)).
(l) The adult member of the household that
will be listed on the mortgage and has the income must have a minimum credit
score of 640. If the applicant has no credit score, a nontraditional credit
history must be established by providing documentation of payment history, such
as but not limited to rent, utility and phone payment records (24 C.F.R.
982.626(b)).
(m) The family must cooperate by attending
required meetings and providing requested documentation within the required
timeframe (24 C.F.R.
982.626(b)).
(n) The family will be issued a Certificate
of Eligibility with a time limit of 180 days to locate a home from the date of
issuance. The Director of Rental Assistance, may approve additional 30-day
extensions not to exceed 270 days. If the time limit is exceeded they will be
denied and may be required to wait one year (24 C.F.R.
982.629(a)).
(o) At any time, if the family no longer
meets the eligibility requirements, they will be denied acceptance into the
homeownership program and may reapply to the program when eligible
(24 C.F.R.
982.626(b);
982.629(c)).
(p) The Head of Household may also enroll and
participate in the Family Self-Sufficiency Program.
(q) Definition of a Disabled Household.
24 C.F.R.
5.403 outlines the definitions of terms to be
used for the Homeownership option. Under the Eligibility Requirements for
Families at 24 C.F.R.
982.627, certain sections offer variances of
the requirements to families based on whether they are a disabled family or a
family that includes a person with disabilities.
1. Disabled family means a family whose head
(including co-head), spouse, or sole member is a person with a disability. It
may include two or more persons with disabilities living together, or one or
more persons with disabilities living with one or more live-in aides.
2. Person with a disability means a person
who:
(i) Has a disability, as defined in
42 U.S.C.
423;
(ii) Is determined, pursuant to HUD
regulations, to have a physical, mental, or emotional impairment that:
(I) Is expected to be of long-continued and
indefinite duration;
(II)
Substantially impedes his or her ability to live independently, and
(III) Is of such a nature that the ability to
live independently could be improved by more suitable housing conditions;
or
(iii) Has a
developmental disability as defined in
42 U.S.C.
15002.
3. Does not exclude persons who have the
disease of acquired immunodeficiency syndrome or any conditions arising from
the etiologic agent for acquired immunodeficiency syndrome;
4. For purposes of qualifying for low-income
housing, does not include a person whose disability is based solely on any drug
or alcohol dependence; and means "individual with handicaps," as defined in
24 C.F.R. §
8.3, for purposes of reasonable accommodation
and program accessibility for persons with disabilities.
(r) Reasonable Accommodation Exception. THDA
may offer an exemption from the Employment Requirement as a reasonable
accommodation to a family that includes a person with disabilities, but only if
the PHA administering the Program determines that an exemption is needed as a
reasonable accommodation so that the Homeownership Program is readily
accessible to and usable by the person with disabilities.
(2) Partner Agencies. The THDA has partnered
with several agencies throughout Tennessee that offer homebuyer education
classes or mortgage loan products. In particular, the THDA has partnered with
all of the Neighborworksreg® Organizations in its jurisdiction. The
Neighborworksreg® Organizations (NWOs) offer homebuyer education based on
the Full Cycle Lending, Neighborhood Reinvestment Corporation, and the
Neighborworksreg® network. The trainers are certified by Neighborhood
Reinvestment. The NWOs may also offer a low-interest second mortgage loan
product for qualified buyers. The THDA has also partnered with Tennessee
Network for Community and Economic Development (TNCED) and Rural Legal Services
for homebuyer education. Rural Development has partnered with the THDA to offer
a low-interest first mortgage loan product for buyers in qualifying
communities. The THDA will partner with other government and nonprofit agencies
as requested and if possible to enable voucher families to purchase a
home.
(3) Pre-Purchase Homebuyer
Education (24 C.F.R.
982.630). The THDA requires families to
receive an 8 hour minimum of pre-purchase homebuyer education from an approved
THDA Homebuyer Education counselor. The family will not be considered eligible
to use their voucher to purchase a home until they have completed the homebuyer
education requirements and secured appropriate financing to purchase a home.
All eligible applicants will be given information on a THDA partner agency that
offers homebuyer education in close proximity to their residence. In addition,
the THDA may conduct additional education and counseling for families.
(a) At a minimum, the homebuyer education
will include the following:
1. Budgeting and
money maintenance;
2. Credit
counseling;
3. Knowing the players
and their roles in the home buying process;
4. How to negotiate purchase price;
5. Preparation for loan qualification and
application;
6. How to obtain
homeownership financing;
7. How to
find a home;
8. Advantages of
purchasing and how to locate a home in an area that does not have a high
concentration of low-income families;
9. Maintaining a home; and
10. Avoiding delinquencies, defaults and
foreclosures.
(b) Upon
completion of the pre-purchase homebuyer education, the THDA voucher
participants should have an understanding of how to do the following:
1. Determine if homeownership is right for
them;
2. Budget and manage their
credit;
3. Determine what they can
afford to spend on a home;
4.
Identify what they want and need in a home;
5. Shop for a home that meets their
needs;
6. Decide how much to offer
for a house;
7. Obtain and use a
home inspection;
8. Shop for an
affordable mortgage;
9. Know what
to expect at closing and settlement;
10. Understand language and terms associated
with mortgages and lending;
11.
Meet the ongoing financial obligations of homeownership and avoid
default;
12. Care for the home
after purchase; and
13. Take
advantage of financial opportunities that come with
homeownership.
(4) Post-Purchase Homebuyer Education. The
THDA requires post-purchase homebuyer education, 6 hours preferred, with all
Homeownership Voucher participants once they have secured a mortgage and have
moved into their home in order to remain in compliance with the program
regulations. The homeowner is required to demonstrate proof of post-purchase
homebuyer education prior to completion of the first year homeownership
anniversary. The THDA will work with the family to schedule the post-purchase
education.
(5) Pre-Qualifying
Application and Mortgage Readiness (24 C.F.R.
982.626(b)). The
Homeownership Voucher program will be reviewed with all eligible voucher
participants through an oral briefing or written, mailed materials. All
interested participants will be forwarded a Homeownership Voucher Program
Pre-Qualifying Application. Once the THDA receives the Pre-Qualifying
Application, it will be reviewed to determine whether the applicant meets the
initial eligibility criteria. If the applicant meets the initial eligibility
criteria, they will be required to provide verifying documents. The
Homeownership Voucher Specialist will schedule an appointment for an
orientation. The applicant will be required to sign forms which may include,
but not limited to, the Certification of Eligibility, Rules and Regulations,
and Homeownership Obligations forms.
(6) Denial. If the Pre-Qualifying Application
is denied, the applicant will be sent a denial letter that includes the reason
the applicant did not qualify at this time.
(7) Financing (24 C.F.R. 982.632).
Participating families are responsible for securing financing for the purchase
of a home that is insured or guaranteed by the State or Federal government,
complies with secondary mortgage market underwriting requirements or complies
with generally accepted private sector underwriting standards. Although the
THDA will not direct families to any particular lender, Neighborworksreg®
Organizations, Rural Development, Fannie Mae, other lenders, and other
non-profit entities currently offer affordable first and/or second mortgages to
low-income families participating in the Homeownership Voucher Program.
(a) The proposed financing terms (Loan
Disclosure) must be submitted to and approved by the THDA prior to the close of
escrow, at least 48 hours prior to the closing and then at least 24 hours in
advance of closing if there is a change. The THDA will review the terms of the
financing for each family to protect the family from predatory or abusive
lending practices.
(b) The
following terms are not acceptable:
1. Loans
with financing costs that are a high percentage of the total loan
amount;
2. Loans that include high
credit insurance premiums;
3. Loans
with balloon payments or adjustable rate mortgages (ARMS) that will not be paid
off by the subsidy before maturity;
4. Loans with above-market interest rates or
discount points;
5. Loans with
pre-payment penalties;
6. Loans
with excessive fees or fees that have not been adequately explained to the
borrower; or
7. Seller financing
that is not an approved institution. For example, foreclosed homes are owned by
a bank are acceptable. However, individual seller financing or lease to own are
not acceptable.
(c) The
THDA may review lender qualifications and the loan terms before authorizing
homeownership assistance. The THDA may disapprove proposed financing,
refinancing, or other debt if the THDA determines that the debt is unaffordable
or the lender or the loan terms do not meet qualifications. In making the
determination, the THDA will take into account other family expenses such as
child care, unreimbursed medical expenses, homeownership expenses, and other
family expenses. Determinations of these factors will be reviewed case by
case.
(d) Financing Models.
Participating families may use one of two financing models in the Homeownership
Voucher Program.
1. One-Mortgage Model. The
one-mortgage model allows the Homeownership Voucher Program participant
borrower to secure a first mortgage that covers the entire purchase price of
the home. HUD's September 7, 2001 Mortgagee Letter (2001-20) advises lenders to
assume the Housing Assistance Payment will continue for at least three years
and also advises lenders on acceptable underwriting methods when working with
Homeownership Voucher participants.
(i) The
following are acceptable underwriting methods for loans made to Homeownership
Voucher Program participants:
(I) Add the
subsidy payment (HAP) to borrower's income as an "other" source of income. In
this model, the subsidy payment may be "grossed up" 25 percent.
(II) Deduct the subsidy payment (HAP) from
the principal, interest, taxes and insurance (PITI). Housing debt to income
ratio is based upon the "net housing obligation" of the
borrower.
(ii) In the
one-mortgage model, the participant makes a payment for his portion of the
monthly mortgage payment, approximately 30% of the monthly adjusted income,
directly to the lender and the THDA pays the remainder of the mortgage payment
directly to the lender or loan servicing company. At the end of the maximum
term, the Housing Choice Voucher mortgage assistance payment ends, and the
family is responsible for the full mortgage payment. For disabled families, the
assistance payment continues as long as they are eligible for HAP. If the
mortgage is paid before the term limit ends and HAP is due, it will be paid
directly to the participant.
2. Two-Mortgage Model. The two-mortgage model
allows a Homeownership Voucher Program participant borrower, which cannot
secure a first mortgage that will be sufficient to cover the full purchase
price of a home in their area, the alternative of combining a first and second
mortgage to purchase a home. The family secures a conventional first mortgage
loan based on their family income. The family is responsible for making monthly
payments for the full amount of the first mortgage directly to the lender. A
THDA partner, typically a nonprofit entity, provides the second mortgage. The
second mortgage is typically a low-interest loan for the maximum term allowed.
The family's Housing Choice Voucher subsidy is applied to the principal and
interest of the second mortgage and is paid directly to the second mortgage
lender or loan servicing company. At the end of the subsidy term, the second
mortgage is paid in full.
(i) If the family's
subsidy payment exceeds the monthly second mortgage loan payment then the
excess monthly payment will be made toward the second mortgage
principal.
(ii) If there is a
remaining term limit, second mortgage is paid, then the HAP may be paid to the
first mortgage lender.
(iii) If the
other lender(s) are unwilling to accept a HAP payment, then it will be the same
procedure as if all mortgages are paid.
(iv) In the event that all mortgages are
paid, HAP is due to the participant, and there is a remaining time on the term
limit; the HAP will be paid to the participant.
(e) THDA Financing. Should the borrower
choose to pursue THDA-funded financing for the first mortgage, the following
steps will be required:
1. Complete an
executed sales contract on a prospective property. This is optional. Given the
nature of the transaction, borrowers may wish to wait for program approval or
loan pre-approval, subject to section (11) below.
2. Contact a THDA approved lender,
Originating Agent, and begin the first mortgage pre-qualification process to
establish preliminary approval for a loan and a reasonable loan amount that the
lender would be willing to make.
3.
Establish the availability and need for any second mortgage assistance to
provide the purchase price amount. If a sales contract is already executed,
need, or lack thereof, will be evident based on difference between the
pre-approved amount of the first mortgage and the actual sale price.
4. If need exists, borrowers must then pursue
secondary financing from a provider.
5. All requirements of the selected THDA
mortgage program must be met.
(8) Final Eligibility Determination
(24 C.F.R.
982.632). A family who chooses to use their
voucher for homeownership may have their income recertified several times
between their initial eligibility determination and the final eligibility
determination and voucher issuance. Once the family completes the homebuyer
education process and is determined mortgage ready, their income eligibility
will be recertified. To ensure an accurate HAP figure for the lender, the
family's income will be recertified again when the THDA is notified of the loan
closing date.
(9) Voucher Issuance
and Timeframe for Utilization (24 C.F.R.
982.629(a)). Actually, no
voucher will be issued. Once the family is approved for a mortgage, they will
have a maximum of 180 days to find a home and enter into a "Contract for Sale."
If a participant is unable to enter into a "Contract for Sale" before the end
of the 180-day deadline, the applicant may be provided an additional 60 days to
either enter into a "Contract for Sale" or the applicant will be denied from
the homeownership program and will be required to wait one year to
reapply.
(10) Subsidy Standards
(24 C.F.R.
982.635(b)(ii)(4)). Subsidy
standards will be the same as those set by the Housing Choice Voucher
Program.
(11) Contract for Sale,
Inspection Requirements, and Appraisals (24 C.F.R. 982.631).
(a) Contract for Sale. Participants in the
Homeownership Voucher program must complete a "Contract for Sale" or
Residential Purchase Agreement (herein "Agreement") with the owner of the
property to be purchased. The Agreement must include the THDA Addendum to the
Sales Contract or Residential Purchase Agreement and must be approved by the
THDA. The Agreement should include at least the home's price and terms of sale,
the purchaser's pre-purchase inspection requirements, notice that the sale is
conditional on the purchaser's acceptance of the inspection report, an
agreement that the seller is obligated to pay for necessary repairs and seller
certification that the seller has not been debarred, suspended, or subject to a
Limited Denial of Participation (LDP) under 2 C.F.R. 180.
(b) Independent Inspection. The participant
must obtain an independent professional home inspection of the unit's major
systems at the participant's expense. The inspection must cover major building
systems and components, including foundation and structure, housing interior
and exterior and the roofing, plumbing, electrical and heating systems. The
report should include a written list of times that are likely to need
replacement or repair within the next one to three years. The THDA will review
the report with the family, and will determine whether to approve the home for
purchase by the family. Even if the unit otherwise complies with the HQS, and
may qualify for assistance under the rental voucher program, the THDA has the
discretion to disapprove the unit for homeownership assistance based on the
information in the inspection report. Reasons for the disapproval of a unit
that would otherwise be in compliance with HQS may include:
1. Conditions that were required to be, but
were not, disclosed to the buyer by the seller.
2. Conditions that normally require
disclosure, of which the owner may not have been aware.
3. Conditions that threaten the health and/or
safety of the family.
4. Conditions
that will require expenditures for repairs or replacement that exceed the
family's resources.
5. Conditions
that can be expected to interfere with the family's use and enjoyment of the
property.
(c) Housing
Quality Standards Inspection. The THDA will conduct a Housing Quality Standards
(HQS) inspection according to the HUD guidelines and will review the
independent professional inspection of the unit's major systems to determine if
the unit may be approved for program participation. The unit must pass the HQS
inspection before commencement of the Housing Assistance Payment.
(d) Environmental Review. Additionally,
according to 24 C.F.R.
58.6, the THDA will conduct an environmental
review to determine whether the unit is located in:
1. A special flood hazard area identified by
the Federal Emergency Management Agency (FEMA). If the unit is located in such
an area, the THDA cannot approve the purchase of the unit unless the family can
demonstrate, prior to settlement, that it has obtained flood insurance for the
property. If a unit is purchased in a special flood hazard area, maintaining
flood insurance is a required condition for continuing assistance to the
family.
2. Though the THDA does not
have any coastal resource, PHA's cannot approve the purchase of a unit located
in the coastal barriers resource system with voucher homeownership
assistance.
3. A civil airport
runway clear zone or a military airfield clear zone. The THDA may approve such
a purchase, but must provide written notification to the buyer that the unit is
located in an airport runway clear zone or an airfield clear zone. The
notification must advise the buyer of what the implications of such locations
are and that the property may, at a later date, be acquired by the airport
operator. The buyer must sign a statement acknowledging receipt of this
information, as described under
24 C.F.R.
58.6.
(e) The THDA retains the right to disqualify
the unit for inclusion in the homeownership program based on either the HQS
inspection or the professional inspection report findings.
(f) Appraisals. The Uniform Residential
Appraisal Report is required for review. The review will include determining
that the sale price is reasonable and assist with the environmental review
(24 C.F.R.
982.628(d)(3)(iv);
982.626(c)).
(12) Portability (24 C.F.R. 982.636).
(a) Port-Out. Families deemed eligible for
homeownership assistance may exercise their right to relocate outside of the
THDA's jurisdiction if the receiving public housing authority is administering
a Homeownership Voucher Program and is accepting new families into its
Homeownership Voucher Program. In the event that a family ports to any county
in the state of Tennessee where the Homeownership Voucher Program is not
administered, then the THDA will continue to administer the Homeownership
Voucher.
(b) Port-In. The THDA may
administer the Homeownership Voucher Program to Housing Choice Voucher
participants under the jurisdiction of another public housing authority within
the state of Tennessee. These families must be determined eligible for
homeownership assistance and are subject to regular homeownership program
guidelines.
(c) Whether the THDA
will allow porting in or out of the THDA's jurisdiction is dependent upon
whether adequate funding exists and will be denied when funding limitations
exists.
(13) Permitted
Unit Types (24 C.F.R.
982.628). The unit must be an existing
dwelling, the foundation must be poured or the unit must be under construction,
before the Contract of Sale is executed. Most single family unit types are
eligible, such as single family homes, condominiums or townhomes, manufactured
homes (must have permanent foundation), or modular or pre-fabricated homes. All
of the unit must be owner-occupied, thus eliminating double-sided duplexes from
eligibility. If the family does not own fee title to the real property on which
the home is located (e.g. manufactured housing on a land lease property), the
family must have the right to occupy the site for a period of at least forty
years to qualify for participation. The home must be located on a permanent
foundation. The unit should be either owner-occupied or vacant at the time of
the contract of sale is executed. The THDA does not allow families to enter
contracts on such units which any tenant is renting. Per the Uniform Relocation
Act, if an existing tenant is renting the home the THDA must be willing to
assume relocation expenses, unless the family is purchasing the home they are
already renting.
(14) Permitted
Ownership Arrangements (24
C.F.R. 982.628). To be approved for the
program, a home must be either under construction or already existing at the
time the THDA makes the final eligibility decision. The homeownership option
may be utilized in the following two types of housing:
(a) A unit owned by the family, where one or
more family members hold title to the home, including homes previously occupied
under a lease-purchase agreement; or
(b) A cooperative unit, where one or more
family members hold membership shares in the cooperative, which applies only to
elderly and disabled persons as a reasonable accommodation.
(15) Homeownership Assistance Payment
(24 C.F.R.
982.635). The participant's total monthly
assistance payments will equal the lower of the following:
(a) The voucher payment standard minus the
Total Tenant Payment (the greater of 30% of monthly adjusted income or 10% of
monthly income or minimum rent); or
(b) The monthly homeownership expenses minus
the TTP.
1. Homeownership Expenses.
Homeownership expenses include principal and interest on the mortgage debt,
mortgage insurance premium, real estate taxes and hazard insurance,
homeownership association fees for cooperatives, maintenance fees for
condominiums, the THDA's allowance for utilities, the THDA's allowance for
Maintenance and Repairs, and other costs as the THDA determines necessary,
including the cost of making the home accessible for a family member with
disabilities, if necessary, as a reasonable accommodation. The THDA's allowance
for maintenance and repairs costs are based on the number of bedrooms of the
unit, not allocation. The THDA's allowance for utilities is the lesser of the
unit size actually selected and the size authorized on the
voucher.
(c) Mortgage
assistance payments will be made by the THDA directly to the approved first or
second mortgage lender or loan servicing company. If the assistance payment
exceeds the amount due to the lender, the THDA must pay the excess directly to
the family. (24 C.F.R.
982.635(d)).
(d) When using the two-mortgage model, the
household is responsible for the first mortgage payment in full at all
times.
(e) The THDA may choose to
perform an interim reexamination and increase the mortgage assistance
payments.
(16) Payment
Standard (24 C.F.R.
982.635(b)(ii)(4)). At
initial move-in to the Homeownership Voucher Program, the payment standard
schedule and amount will coincide with those set by the HCV program. The
payment standard for subsequent years, after the initial year, will be based on
the higher of the following:
(a) The payment
standard in effect at commencement of the homeownership assistance;
or
(b) The payment standard in
effect at the most recent regular recertification of the family's income and
size.
(c) The payment standard is
the lesser of the bedroom size allocated or home selected. Nevertheless, it
will never be below the amount used at closing regardless of the bedroom
allocation.
(17)
Allowance for Routine and Long-Term Maintenance and Repairs (24 C.F.R.
982.635(c)). As required by
HUD regulations, the THDA has established reasonable allowances for routine and
long-term maintenance and repairs. The allowances are determined by taking into
consideration reasonable and ongoing costs to the family for home maintenance,
major repairs and replacements. The family is responsible to make and pay for
all homeownership related costs such as, repairs, replacements, routine and
long-term maintenance.
(18) Utility
Allowance (24 C.F.R.
982.635(b)(ii)(4)). The
regular Housing Choice Voucher Program utility allowance will be utilized for
the Homeownership Voucher Program.
(19) Maximum Subsidy Term (24 C.F.R.
982.634). Homeownership assistance will only
be provided for the time period the family is in residence in the home. Housing
Choice Voucher assistance may be provided for a maximum of fifteen (15) years
if the initial mortgage secured to finance the purchase of the home has a term
that is twenty (20) years or longer. Mortgages shorter than 20 years have a ten
(10)-year term limit. Elderly and disabled families are exempt from a term
limit. The participant will be recertified on an annual basis to determine
income eligibility. In the event that the participant's income increases to the
point that they are no longer eligible to receive a mortgage subsidy (i.e. zero
mortgage assistance payment), the THDA will notify the lenders or loan
servicing company of the family's increased financial responsibility for the
payment. The family, however, remains eligible for the program, in the event
that their income decreases, for 180 days from the date of the change (zero HAP
periods).
(a) In the event that the family no
longer qualifies as a disabled or elderly family, the maximum HAP term rule
goes into effect from the date homeownership assistance commenced. The family
will be provided at least six (6) months of continued assistance after the
maximum term expires, as long as the family continues to be otherwise eligible
for assistance. For example, a family who is no longer considered disabled
after receiving twenty (20) years of HAP will receive six (6) additional months
of HAP beyond the cessation of disabled status. At the end of the six-month
period, HAP will cease since the maximum term of fifteen (15) years has been
exceeded.
(b) The subsidy term
begins on the date the first Homeownership Housing Assistance Payment is paid,
regardless of which PHA paid the HAP.
(20) Annual Recertification (24 C.F.R.
982.633). At least one hundred twenty (120)
days prior to the family's annual recertification date, the THDA will contact
the family and request updated income and other verification information and,
when necessary, schedule an HQS inspection. Additionally, at every annual
recertification the family will be required to provide documentation of
homeownership expenses such as, mortgage statement(s). The family must
cooperate with the recertification process in order to remain eligible to
receive assistance through the Homeownership Voucher Program.
(21) Re-inspections. The THDA will randomly
perform a Housing Quality Standards (HQS) inspection at any time after the home
purchase. The THDA may elect to conduct other HQS inspections at the request of
a partner agency or lender. Based on the inspection, the family will be sent a
list of required repairs. The THDA will conduct another inspection within
thirty (30) days to determine if the repairs have been completed. The family
will be considered non-compliant with the program if they fail to make repairs
within the required timeframe. The HQS report may be shared with the lender at
the lender's request to allow the lender to work with the family on securing
financing for any major repairs necessary to maintain the quality of the home.
The unit may be inspected every year if an extra room was allocated for live-in
aide or reasonable accommodation to verify the room is being used for its
intended purpose. At any time, for auditing purposes or if a complaint is
received, homes may be selected for HQS inspection. The home must always pass
HQS. Homeowners must repair emergency HQS violations within 24 hours.
(22) Asset Income (24 C.F.R.
5.603(b)(4)). The value of
the home will be excluded in the "net family assets" for the first 10 years.
After 10 years of assistance, the equity of the home will be verified and
counted as an asset income.
(23)
Home Sale (24 C.F.R.
982.637). The family must sell their current
home before they may purchase another home with Housing Choice Voucher
assistance. If the family requests to purchase another home with Housing Choice
Voucher assistance after they have sold their first home, they must meet the
eligibility requirements for participation in the Homeownership Program (e.g.
must be employed full-time). The maximum term of homeownership assistance
applies to the cumulative time the family receives homeownership assistance.
The time limit begins from the initial home purchase in any PHA's Homeownership
Voucher program. The family may not move more than once in any twelve
(12)-month period. The THDA may deny permission to move with continued
assistance due to lack of funding to provide continued assistance
(24 C.F.R.
982.637(c)(1)).
(24) Default. If the family defaults on the
home, they will not be issued a rental assistance voucher and will never be
allowed to participate in the homeownership program (24 C.F.R.
982.627(e);
982.638(d)).
(25) Recapture ( 24 C.F.R. 982.640 ). The
THDA will not recapture the Homeownership Voucher payments unless there was an
act of fraud or misrepresentation of a material fact in order to obtain a
benefit. Other program funds that were used to purchase the home may require a
recapture. Depending on the loan product used, the IRS may have a recapture tax
(IRS form 8828).
(26) Taxes,
Insurance, Payments, and Maintenance. The family is responsible to ensure that
all real estate taxes, insurance, and mortgages are paid by the due date.
Additional responsibilities include paying for any maintenance or repairs that
are needed or required for the home. The family is responsible for seeking
advice of a tax attorney to determine how much of the mortgage interest and
real estate taxes may be deducted (Internal Revenue Code of 1986 IRS letter
dated 28th of August 2001).
(27)
Termination of Assistance (24 C.F.R. 982.638;
982.552(b);
982.553). The family must comply
with all Family Obligations. Failure to comply with the Family Obligations of
the Homeownership Voucher program will result in termination of the family's
assistance. Before commencement of homeownership assistance, the participant
must execute a "Statement of Family Obligations for the Homeownership Program."
If a family is terminated from the Homeownership Voucher Program, they must
reapply for the Housing Choice Voucher Program in order to receive rental
assistance. To continue to receive homeownership assistance, a participant must
comply with the following family obligations:
(a) The participant must comply with the
terms of any mortgage securing the debt incurred to purchase the home and any
refinancing of such debt.
(b) The
family may not sell, convey, or transfer any interest in the home to any entity
or person other than a member of the assisted family residing in the
home.
(c) The family may not take
out a home equity loan without the written consent of the THDA and any second
mortgage lender.
(d) The family
must supply required information regarding income and family composition in a
timely manner in order to calculate correctly total tenant payment and
homeownership assistance.
(e) The
family must provide information on any mortgage or other debt incurred to
purchase the home, any refinancing of such debt, and any sale or other transfer
of interest in the home.
(f) The
family must notify the THDA if the family defaults on a mortgage securing any
debt incurred to purchase the home.
(g) The family must notify the THDA before
the family moves out of the home.
(h) At annual recertification, the
participant must document that the mortgage, insurance, and utility payments
are current.
(i) Non-elderly and
nondisabled households must include at least one employed adult family member
at all times during participation in the Homeownership Voucher Program. The
member must earn at least $15,000 annually. In the event of loss of employment
that results in annual income of less than $15,000, the household will be
offered four months to secure new employment or increase paid salary. See
0770-01-05-.34(1)(g).
(j) A
participant defaults on his or her mortgage loan (i.e. fails to fulfill a
monthly payment obligation as required by the Deed of Trust note on a timely
basis), as determined by the lender.
(k) The family has been ejected from the home
due to a judgment or order of foreclosure.
(l) The family transfers or conveys the
ownership of the home.
(m) The
family has been unemployed for more than four (4) months.
(n) A family member has ownership interest in
another residential property.
(o)
The assisted home must be the family's only residence.
(p) The family must not sublet or lease the
unit to someone else.
(q) The head
of household must live in the assisted home.
(r) The family must comply with any
requirement to attend and must complete ongoing homeownership education, such
as post-purchase counseling.
(s)
Must comply with all regulations relating to crime or alcohol abuse by family
members.
(t) Must comply with the
recertification process, report changes, and complete HQS
repairs.
(28) Informal
Hearing Process (24 C.F.R.
982.555). When the THDA makes certain adverse
decisions towards a HCV applicant or participant, there are times when an
informal review or an informal hearing is available. See
0770-01-05-.28.
Authority: T.C.A. §§
13-23-104 and
13-23-115(18),
42 U.S.C. §
1437, and 24 C.F.R., Part
982.
