To
the Homeowner Seeking a
Housing Rehabilitation Loan 
To
approve a rehab loan, the City needs to:
Establish your eligibility for the loan program
Check your credit history and ability to repay a loan
Help you develop a rehabilitation plan
Determine the project's financial feasibility
Execute the loan papers
1) ELIGIBILITY.
You may be eligible for a low-interest loan if you live in
the program area (see map)
and if your gross household income falls within the income
guidelines (see guidelines).
You must also be the owner of record of the property, which
allows you to use the rehabilitated property as security for
the loan. This normally means you hold a general warranty
deed that is on record with the County. 2)
CREDIT & BORROWING ABILITY. Once a loan application
has been received, the City will also order a report on your
credit history from the local credit bureau. (However, any
financial and personal information about you is never released
to another agency or anyone outside of the Loan Committee.)
As for borrowing ability, you need to show on your application
that between your total income
and total fixed expenses you could afford to repay a City
housing rehabilitation loan. 3)
REHABILITATION PLAN. A City representative will conduct
a preliminary inspection to get an idea of what would be needed
to upgrade the house according to the City's Housing Rehabilitation
Guidelines and to estimate how much that might cost.
If,
after reviewing the rehabilitation needs list and cost estimate,
you want to go ahead with the project, the City representative
will begin preparing a detailed list of specifications and
drawings for your approval. This plan may go through several
revisions as different solutions are discussed.
The
rehabilitation plan may also involve arrangements for
temporary housing in cases where the renovations would disrupt
the household too much for the family to stay there. Reasonable
expenses for temporary housing normally would be paid by the
City and would not be included in the loan. After the basic
rehabilitation plan has been worked out, general contractors
can be invited to bid on the construction work. The City will
introduce you to some experienced general contractors who
are interested in bidding on City rehab
projects. You have the option of inviting other contractors
to bid, but you are responsible for checking out all bidders'
qualifications and references before deciding which contractor's
proposal to accept. 4)
FINANCIAL FEASIBILITY. While you are developing your rehabilitation
plan and are selecting a contractor to help you carry out
that plan, the City will order an appraisal of the property's
potential market value and search the records to verify the
amount of debt (mortgage) that is already secured by the property.
This information, plus the selected contractor's bid price,
will help the Loan Committee decide whether there would be
enough equity to secure an additional loan by the City. 5)
LOAN PAPERS. Once you have decided to accept the Loan
Committee's loan offer, a loan closing will be scheduled.
At that time you will sign a promissory note for the amount
of the rehabilitation loan. You will also sign a deed of trust
granting the City a security interest in the property until
the loan has been paid off. You will be given a full disclosure
of the finance cost, schedule of payments and other loan terms.
You will have three days from the loan closing in which to
reconsider the deal before it becomes final. After the three
days you will sign the construction contract and send the
general contractor a notice to proceed. Supervision.
A City representative will periodically inspect the work being
done. Payments to the general contractor will be approved
only after you and the City's representative agree the terms
of the contract have been met. The work will be guaranteed
by the general contractor for a year. | 
