Frequently
Asked HOME Program Questions
No - loan funds from the HOME program can be used only for renovations
or new construction of rental housing - Is
is OK if I already have a loan on the property when I apply for
a city loan?
Yes - the
city can take a second lien (deed of trust) behind a conventional
lender (but not an individual) so long as the property appraises
for a value on an "as-improved" basis sufficient to cover
all debt on the property. If the property is seller-financed
or another individual holds the first deed of trust, then they
would be asked to subordinate their lien to a potential city loan
during the application process - Can I
do the work myself and be the general contractor?
Usually not, unless you are experienced, licensed and creditworthy
as a contractor. We have a contractor list where all contractors
are notified of your project and given an opportunity to
bid, which provides the necessary competitive bidding when
federal funds are involved.
- What
if I already have a tenant living in the unit(s) when I apply
for a loan?
Our staff will need
to verify your existing tenant's household income to insure
they are low to moderate income, which is a requirement of the HOME
program. Depending on the extent of the rehabilitation necessary,
your tenant may need to be temporarily relocated during the
renovations. Each situation is different and our staff will
assist you during this process. It is always easier to process
applications when the units to be renovated are already vacant.
- Can I rent the unit(s) to relatives?
No. Regulations do not allow relatives of borrowers to occupy
HOME-assisted projects. - What if I don't
have a very good credit report?
Derogatory
items on your credit report will need explanation. However, a bad
credit report will not necessarily prevent you from obtaining a
city loan, depending on the circumstances. Good credit is preferable,
but there are other factors that are considered.
- Can I utilize the loan program to fix up a house and
then sell?
No. The HOME program
requires a long term commitment for the property to be maintained
as affordable housing for rental purposes, for anywhere from five
(5) to twenty (20) years, depending on the renovation cost per unit
or if the project involves new construction. Should you decide
to sell the property during the affordability period, subsequent
buyers will be required to remain in compliance with the
covenant in the HOME agreement, and complete the affordability term. OTHER
HOME REQUIREMENTS: 
Affirmative Marketing Agreement, executed at closing, which requires
advertising of vacancies with equal housing opportunity slogan.
Rehabilitation Operating data for cash flow projections.
Competitive Bids required; City will provide an eligible contractor
list.
Residential prevailing wage applies if over 12 units.
Affordability period (5-20 years) based on cost of rehabilitation
per unit; all new construction projects have 20 year affordability
requirement.
After-rehabilitation or as-improved appraisal.
Covenant that runs with the land must be signed by existing lender
(when
applicable) regarding affordability requirements. City
monitors property and verifies tenant incomes annually for duration
of affordability period. City handles all loan closings, fund
disbursement and loan servicing.
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