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POLICIES AND PROCEDURES

This document sets forth the policies and procedures governing the Port St. Lucie (PSL) Housing Assistance Programs.  It is intended as a supplement to the City’s Housing Assistance Plan (HAP) and Hurricane Housing Recovery Plan (HHRP) and may be updated from time to time without notice. Policies and procedures discussed herein are either not addressed in the authorizing legislation, the Florida Housing Finance Corporation (FHFC) implementing regulations, or in the City’s HAP or HHRP, or they may be restated in order to clarify rules and/or regulations that are subject to interpretation by housing program staff.  Unless inherently excluded or otherwise specified, each of the policies and procedures applies to home purchase and repair/rehab strategies.  In addition, the Repair/rehab strategy will, unless otherwise stated, include Hazard Mitigation and Special Needs/Retrofit.

1) CURRENT HOME OWNERSHIP (home purchase only):

Current homeowners will not be eligible for Home Purchase (downpayment) Assistance funding. (A homeowner is someone who owns or co-owns a dwelling that is habitable.)  All current homeowners will need to divest themselves of their improved property before applying for Home Purchase assistance. This policy does not apply to current owners of vacant lots or mobile homes located on land owned by the applicant or rented from a third party.

2) GIFTS/CASH ON HAND:

In general, cash on hand (combined with gifts from family members, if applicable) should not exceed $15,000.  Tax deferred accounts, such as 401(k), IRA, annuity with penalties for early withdrawal, etc. will not be considered for determination of cash-on-hand but may be considered an asset for determining income.  Proof of tax deferment may be required.  Extenuating circumstances may be considered for clients with up to $60,000 cash on hand, (i.e., disabled or elderly with impaired future income capabilities, medical payment requirements, etc.) in which case the file should be documented with the extenuating circumstance. Any down payment assistance clients with cash on hand exceeding $15,000 will be considered on a case by case basis. Please note: Water/sewer assessment grant applicants cannot exceed $60,000 in assets, with no exemptions for tax deferred accounts etc.

3) FORECLOSURES/LIENS (repair/rehab only):

If a home is in foreclosure, if a bankruptcy action affecting the home has been filed, or if there is a mortgage arrearage, program staff may withhold assistance until the payments are brought current and/or timely payments have been made on a repayment plan for a minimum of six months.  This assumes a lien is allowed to be placed on the property.

4) HOME/TERMITE INSPECTIONS:

Port St. Lucie requires and will provide home inspections on all homes to be repaired/rehabilitated under the housing assistance program. There is no inspection required for Water/Sewer hookup or Shutters, when those are the only items requested or required.  We also require and will provide home and termite inspections on all existing homes to be purchased with home purchase assistance.

5) SPOUSAL SIGNATURE:

All spouses must sign the mortgage, regardless of whether or not the spouse is a co-owner or resides in the home.

6) CO-OWNERS WHO DO NOT RESIDE IN RESIDENCE:

If a co-owner of a home is permanently removed from the household, his/her income will not be counted toward household income as long as the applicant can provide documentation that the co-owner does not live in the household.  All co-owners, however, must sign the Housing Assistance Program Mortgage.

7) POOLS AND/OR HOT TUBS:

Pools and/or hot tubs are not eligible for assistance; they cannot be repaired, replaced or constructed with housing assistance funds. Homes with in-ground pools do not qualify for purchase under the housing program.  Above-ground pools and/or hot tubs may be included in the sales contract, but they must be considered of no value, or the homeowner must pay for their purchase outside of the transaction.

8) LENDERS:

Port St. Lucie works with lenders who belong to the St. Lucie County Lending Consortium and offer a special lending package that makes the home buying process more affordable.  By waiving some of the standard fees, these lenders allow recipients to use more of the Home Purchase funds toward down payment on the home.  All lenders are welcome to become members of the lending consortium, but they must agree to adhere to the Uniform Lending Package in order to be able to assist Home Purchase Assistance recipients in the home buying process.  Clients may choose a lender from the list of current St Lucie County Consortium Members.  When bond funding is available and can be utilized in the best interest of the household and the program, lenders outside of the consortium may be utilized. Certain nonprofit organizations, such as Habitat for Humanity, may also be considered approved lenders. These exceptions will be made on a case-by-case basis.

9) INCOME VERIFICATION PROCEDURES:

According to State guidelines, Port St. Lucie is required to consider all regular reoccurring income of all members of a household 18 years of age or older as well as certain types of assets and supplemental funding when qualifying a household in a specific income category. It is recognized that these State regulations do not govern individual lender underwriting guidelines for mortgage qualifying.  Households must remain income qualified until home purchase assistance is provided at closing, upon execution of a preconstruction contract, issuance of a Purchase Order for repairs, or payment of a Water/Sewer assessment.

10) ELIGIBLE REPAIRS/REHAB, HAZARD MITIGATION, & SPECIAL NEEDS/RETROFIT:

• Estimates of eligible repair/rehab, etc. for existing homeowners should total at least $500 before assistance will be awarded; extenuating circumstances will be considered.
• Existing homes purchased with home purchase assistance generally require a minimum of $1,500 in approved repairs/rehab, etc. to qualify for the program.    Approved repairs must have been completed within the 12 month period preceding the closing date or funds can be escrowed for completion, generally within 3 months after closing. All rehabilitation performed before closing must be documented and approved through Community Services.
• All clients must maintain homeowners insurance coverage for at least the amount of the housing assistance mortgage.  The first-year premium may be paid from housing assistance funds if the homeowner has insufficient assets to cover the policy.  Subsequent payments must be made by the client.  Clients will need to call at least two insurance companies for quotes for the maximum amount available to them.  An “Affidavit re Insurance Payment” must be signed by the homeowner before any premium will be paid.
• Homes that are for sale (for example, part of a Divorce Decree requiring sale) and/or listed with a realtor are not eligible for repair.  If program staff members become aware of “for sale” signs, etc., all funding may be stopped. This policy also includes homes eligible for payment of water/sewer assessments.
• No change in quantity or quality of repairs is allowed without approval by Housing Program staff/inspector. Unauthorized repairs or unauthorized upgrades during housing program repairs may result in loss of funding for client and ineligibility of contractor for further housing program work.
• As we all know, the building department allows conversion of garages to living space. However, it has to be done according to code and a permit must be obtained. The following procedures will apply:
1. If the household qualifies for more living space, a partially converted garage can be "brought up to code" and finished for additional living space. A small shed will be attached to the house to accommodate storage.
2. If the household does not qualify for additional living space, but, because of the changes they have already made to the space, it would be just as, or more, cost effective to "bring it up to code" as living space then we will bring it up to code as living space. Again the shed should be attached to the house for storage space.
3. If the household does not qualify for additional living space, and they have made minimal changes to the garage and it would be obviously more cost effective to bring the garage "back to code" as a garage then that is what we will offer as the client’s only option. If the clients do not want to bring the conversion into compliance, then the coordinator will be required to notify the building department. Further, we will not be able to provide any funding for other repairs if the clients will not agree to correct the code violation.

11) ESCROW FOR ELIGIBLE REPAIRS/REHAB OR PURCHASE/REPAIR ASSISTANCE:

All repairs to be performed and paid with Housing Assistance funds after closing must be escrowed by the City and listed as work to be done.  Only approved rehabilitation work may be paid from escrowed funds.  If after completing the required repairs the homeowner has funds remaining in escrow, the remaining funding will be returned to the program and a corrective note will reflect the actual amount expended. In some cases the repairs may be excessive or the home purchaser may benefit from one of our additional repair strategies. In those cases the home purchase client may be approved to immediately go through a repair program. As these repairs are needed as part of the home purchase program we will transfer funding from down payment to repair, if needed.  This policy will allow us to continue assisting this client without negatively impacting clients on any repair/rehab waiting lists that may be established.  

12) REPAIR/REHAB PROCEDURES:

Three bids are required on all rehabilitation (they may be verbal bids up to $1,000 for each item, however, any work exceeding $1,000 must have a written proposal from the contractor) and copies of all bids must be sent to the housing program office.  Community Services must sign off on all contractor work before payment is made. All proposals over $2,500 require a separate contractor agreement and meeting with the inspection service, contractor and homeowner. If the bid exceeds $25,000, Community Services staff may require that repairs be completed by a General Contractor selected from at least 3 qualified bids or through a Request for Proposals (RFP) process.

13) WATER AND SEWER HOOKUP:

Funds for hookup assistance are available if water and/or sewer services are available in the area; water/sewer lines must be in the ground and service must be flowing through the lines.  Funds may also be available to pay off the remaining balance of payments for hook-up already instituted.

14) WAITING LISTS:

When there are insufficient funds or when the number of applicants exceeds the ability of Coordinators to process files, a waiting list may be established. Applicants will be selected from the list on a first-come, first-served basis.  However, names on the list may be considered ahead of new applicants in order to comply with regulations concerning income percentages or expenditure deadlines.  Applicants selected from waiting lists will be given deadlines to pick up and return applications and provide the necessary documents to complete the process. It is the applicant’s responsibility to return the required documentation on or before the deadline specified. Applicants who fail to provide complete documentation within the allotted time period will be notified in writing that they are no longer being considered for assistance.

15)  SUBORDINATION:

Housing Program staff must approve of any refinancing.  The City’s current policy allows for refinancing (subordination of our Mortgage), if the household will benefit with an interest rate and/or housing payment reduction that is sufficient to offset the costs of refinancing.  The client may not receive any funds (cash out) in the transaction, but the City may approve of funds paid directly to a contractor for home improvements.  In general, the City will require that its original Mortgage position be maintained & that tax & insurance payments be escrowed.  This policy is subject to change at any time.

16) CONFLICT OF INTEREST:

While a policy is being formally reviewed by the Legal Department we will abide by the following guidelines for potential conflicts of interest. No Housing Coordinator will take in, or work on, an application submitted by the Coordinator’s relative or close friend. This applies to any assistance provided by this Department. All applications submitted by persons known to the Housing Coordinators (such as City employees/ acquaintances) will be reviewed, throughout the process, by a minimum of two (2) Housing Coordinators.  No preferential treatment shall be given to any individual for any reason.

17) LIMITATIONS FOR HOME PURCHASE STRATEGY:

Funding Assistance for the Home Purchase and Home Purchase with Leveraging Strategies is limited to 50% of the purchase price of the home.  For example, the amount of assistance available for a home with a purchase price of $125,000 would be limited to $62,500; the assistance is also limited according to income level as follows:
Very-low income (50% or less of AMI)         $70,000
Low income (over 50% to 80% AMI)            $60,000
Mod income (over 80% to 100% AMI)          $50,000
Mod income (over 100% to 120% AMI)         $30,000

Ratios are limited as follows:  Front-end ratio must be between 29% and 32%; the ratio may be increased to 35% with mitigating factors, such as minimal increase in monthly housing, sufficient cash reserves (already owned by household) and/or less than 10 payments left in installment debt (unless the amount of the payment significantly affects the borrower’s ability to meet his or her credit obligation). Back-end ratio cannot exceed 45%; lender must call SHIP for any exceptions.

Clients are limited to review by two lenders for loan qualification. If a client is turned down by one lender then they may request an additional review by a second lender within the Lending Consortium, if they are turned down by the second lender then they will be denied SHIP assistance, mitigating factors may apply.

18) FRAUD:

Community Services will request guidance from the legal department on any questions or evidence regarding possible misrepresentation of facts by applicants.  In general, apparent willful misrepresentations of facts concerning income, assets, or liability information relating to financial condition will, at a minimum, result in denial of funding.

19) CODE ENFORCEMENT LIENS:

We have been directed to ensure that none of our clients have Code Enforcement Liens recorded against their property.  A lien search will be done immediately upon receipt of an application, and all documents that pertain to liens by the City of Port St. Lucie will be examined.  Lien searches will also be required on Water/Sewer files.  This policy is currently being reviewed.  Call for updated information.

20) WATER/SEWER FILES AND MORTGAGES:

Effective 5/21/2008, the following policy will be in effect for Water/Sewer files in addition to Repair/Rehab, etc. 

If the applicant’s mortgage loan is delinquent, if a foreclosure action or a bankruptcy action affecting the home has been filed, Community Services staff may defer funding until the delinquency has been cured or the action has been cleared.

This means that you must ask for information on the mortgage and/or any bankruptcy, even though that information is not required on the application.  We will be changing the application to require these documents.