HomeMy WebLinkAboutRDA RES 570RESOLUTION NO. 570
A RESOLUTION OF THE PALM DESERT
REDEVELOPMENT AGENCY APPROVING THE
NEIGHBORHOOD STABiLtZATION PROGRAM
FOR VERY LOW, LOW AND MODERATE INCOME
HOUSEHOLDS
NOW, THEREFORE, THE PALM DESERT REDEVELOPMENT AGENCY
HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. The City of Palm Desert (the "City"), in cooperation with the
Palm Desert Redevefopment Agency, has established the Neighborhood
Stabilization Program (the "NSP Program") for very low, low and moderate
income households in the City.
Section 2. The NSP Program will provide financial assistance to
qualified buyers in connection with the acquisition and rehabilitation of foreclosed
homes within the designated target areas.
Section 3. The City has a limited budget for the NSP Program. As a
result, the NSP Program is based on a first-come-first-served basis.
Section 4. The Agency Board wishes to approve the NSP Program
Guidelines and Procedures for the Program outlined in Exhibit A attached hereto
and incorporated herein by this reference.
Section 5. The Executive Director may take any action which he
believes is necessary or desirable to implement this Resolution so long as such
action is not inconsistent with the intent hereof.
PASSED, APPROVED AND ADOPTED by the Palm Desert
Redevelopment Agency, this iiT iay of •y<:r , 2010 by the following vote,
to wit:
AYES: BENSON, FERGUSON, RELLY, SPIEGEL, AND FINERTY
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE ` i` , /
indy Fin y, Chairma
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'! . a ' -.: .
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[THIS PAGE AAS INTENTIONALLY BEEN LEFT BLANR.]
Exhibit A
CITY OF PALM DESERT
NEIGHBORHOOD STABILIZATION PROGRAM
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February 5, 2Q10
Program Guidelines
City of Palm Desert
760-346-0611
Mailing Address:
73-510 Fred Waring Drive
Palm Desert, CA 92260
Resolution No. 570
Resolution No. 570
TABLE OF CONTENTS
I) INTRODUCTION .................................................................................................................. 4
a) Purpose ........................................................................................................................... 4
II) GENERAL ELIGIBILITY REQUIREMENTS ........................................................................ 5
a) Eligible Properties ........................................................................................................... 5
b) Characteristics of the Home Buyer .................................................................................. 7
c) Determination of Adjusted Gross Income ........................................................................ 8
d) Assets .............................................................................................................................. 8
e) Other Requirements ........................................................................................................ 8
III) GENERAL LOAN REQUIREMENTS .................................................................................. 8
a) First Loan Requirements ................................................................................................. 8
b) NSP Loan Requirements ................................................................................................. 9
i) Affordability Period ........................................................................................................ 9
ii) Home Buyer Education ................................................................................................. 9
iii) Types of Assistance ..................................................................................................... 9
iv) Minimum and Maximum Assistance .......................................................................... 10
v) Notifications ................................................................................................................ 10
vi) Confidentiality ............................................................................................................ 11
vii) Resales ..................................................................................................................... 11
viii) Subordination .........................................................................................................11
ix Refinancin .....................................................................................11
g ...........................
x) Title Insurance ............................................................................................................ 11
xi) Property Maintenance Requirement .......................................................................... 11
xii) Loss Payee ............................................................................................................... 12
xiii Auditin /Monitorin ..................................... 12
) 9 9 ............................................................
xiv) Conflict of Interest .................................................................................................... 12
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IV) PARTICIPATING LENDERS ............................................................................................ 12
a) Requirements ................................................................................................................ 12
b) Selection Process .......................................................................................................... 12
c) Brokers .......................................................................................................................... 13
d) Removal ........................................................................................................................ 13 ....
e) Authorized Lender Staff ................................................................................................. 13
V) PROCESSING PROCEDURES ........................................................................................ 14
z
Resolution No. 570
a) Pre-Qualification Phase ................................................................................................. 14
b) Application Phase .......................................................................................................... 15
c) Reservation Phase ......................................................................................................... 16
d) Request for Funding Phase ........................................................................................... 16
e) Closing Phase ................................................................................................................ 17
f) Resubmission of Denied Applications ............................................................................. 17
9) Changes in Information .................................................................................................. 18
VI) HOME REPAIR COMPONENT ........................................................................................ 18
a) Requirements ................................................................................................................ 18
b) Application Submission .................................................................................................. 19
c) Prope�ty Repair Assessment ......................................................................................... 19
d) Bid Process .................................................................................................................... 20
VII) CONSTRUCTION AND CHANGE ORDERS .................................................................. 20
a) Construction Phase ....................................................................................................... 20
b) Change Orders .............................................................................................................. 20
VIII) PROJECT COMPLETION AND CONTRACTOR PAYMENT ......................................... 21
APPENDICES....................................................................................................................... 22
APPENDIXA ..................................................................................................................... 23
APPENDIXB ..................................................................................................................... 24
APPENDIXC ..................................................................................................................... 25
APPENDIXD ..................................................................................................................... 30
APPENDIXE ..................................................................................................................... 36
APPENDIXF ..................................................................................................................... 46
APPENDIXG ..................................................................................................................... 48
APPENDIXH ..................................................................................................................... 49
APPENDIXI ....................................................................................................................... 50
3
Resolution No. 570
1) INTRODUCTION
a) Purpose
The City of Palm Desert is offering a Neighborhood Stabilization Program (NSP hereinafter called
"Program"). The primary objective of the Neighborhood Stabilization Program is to stabflize
neighborhoods affected by large number of foreGosed homes. The Program addresses the problem of
abandoned and foreclosed homes in Targeted areas within City of Palm Desert, which will be available
for purchase by first-time homebuyers of low and moderate income. The Program will be available to
anyone who has not owned a home in the last three years, has an annual income that is not greater
than 120% of the area median income as published by the U.S. Department of Housing and Urban
Development (HUD), and is purchasing a vacant foreclosed home in the desis�nated Tars�et areas in
the City of Palm Desert. The maximum household income limit is shown in the attached Appendix A.
ii. This Program will provide purchase price assistance as a silent-second loan to low and moderate
income first-time homebuyers in the amount of twenty percent (20%) of the purchase price of the home.
The maximum amount of assistance is the gap financing limit such that the housing payment to income
ratio is between the range of twenty-five percent (25%) and thirty-five percent (35%). The program will
aiso provide Home Repair Assistance to all foreGosed homes within the program to stabilize the
neighborhoods by incorpo�ating energy-efficie�t improvements for long-term affordability and increased
sustainability to housing and neighborhoods. Activities in the City of Palm Desert home repair
component will include items such as curb appeal and landscaping after the close of escrow. However,
all home repair items will be identified prior to closing. If repair assistance is utilized. the minimum ,,,,�,
amount of re�air assistance shall be $1,500. The total combined amount of ourchase orice assistance
and home repair assistance cannot exceed $75.000. The first loan must be a fully amortized, fixed rate,
thirty-year mortgage and the City of Palm Desert Assistance will be secured by deed of trust recorded in
subordinate position to the first mortgage. Closing cost assistance is not eligible under this Program.
iii. All buyers participating in this Program shall agree to the terms and conditions of an Affordabiliry Period.
The Affordabiliry Period provides that if the property is re-sold within fifteen (15) years, it wifl be offered
or otherwise be made available for purchase by qualified Iow and moderate income families. If the
property is no longer maintained as the principal residence of the buyer or is sold prior to the end of the
Affordability Period, and the homebuyer is not eiigibie for this Program, all NSP funds invested in the
property must be repaid. Properties that remain affordable to program participants throughout the
Affordability Period will have the City of Palm Desert's investment converted to a grant. This program is
available to homes being purchased within the Target Areas Map listed in Appendix B.
iv. All foreclosed homes participating in this program must meet Current Market Appraised Value. The
Current Market Appraised Value means the value of a foreclosed upon home that is established through
an appraisal made in conformity with appraisal reguirements of the Un+form Relocation Assistance Real
Property Acquisition Policies Act of 1970 (URA) at 49 CFR 24.103 and completed within sixty (60)
days prior to a final offer made for the property by individual homebuyer. Any purchase of a foreclosed
home under this Program sha11 be at a discount from the current market appraised value, taking into
account its current condition, and such discount shall ensure that homebuyers are paying below-market
value for the home. Properties must be purchased at a minimum discount rate of one percent (1 %)
below the current market appraised value.
Resolution No. 570
II) GENERAL ELIGIBILITY REQUIREMENTS
a) E►igible Properties
i) Location. The Program will be offered in Targeted areas which are listed below:
• Palma Viilage
• North Sphere
• Palm Desert Country Club
Please check the Target Areas Map listed in Appendix B and the City of Palm Desert website.
ii) Program Price Limits. To be eligible for the Program, the maximum property value shall not exceed the
actual 95 percent of the area median sales price published and updated regularly by U.S.
Department of Housing and Urban Development. The maximum purchase price limit is shown in the
attached Appendix A.
iii) Price Limits. The purchase price of the home must be at least one percent (1%) below the Current
Market Appraised Value of the home. Appraisal must be completed within sixty (60) days of the final
purchase offer. The Uniform Relocation Assistance and Real Properry Acquisition Policies Act (URA)
and its implementing regulations at 49 CFR Part 24 set forth the minimum requirements for real
property acquisitions appraisals for federally-assisted programs. The appraisal will be done through
an independent fee contract appraiser hired by City of Palm Desert. The appraisal must meet the
requirements of the URA at 49 CFR 24.103 for each property that submits an application for NSP
funds. The contract fee appraiser contracted by Ciry of Palm Desert must be State licensed or
certified in accordance with title XI of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (FIRREA) (12 U.S.C. 3331 et seq.). The cost of the appraisal will be part of the
purchase price assistance if the application is successful. All purchase price at the time of application
of NSP funds is received will be considered as initial offer. City of Palm Desert will determine the
appraisal value of the house. The final purchase offer must be at least 1% below the appraised
value. City of Palm Desert will strive to obtain the appraisal value within five (5) days of the
application received. If the initial sales price meets the 1% discount, seller and buyer is required to
submit final NSP-6 form. However, if the purchase price falls short of the 1% discount, the
homebuyer will be required to negotiate a minimum of 1% discount. If the seller and homebuyer
could not reach an amicable agreement for the purchase price of the property meeting the 1%
discount, the application will be denied and the cost of the appraisal will be borne by Ciry of Palm
Desert. The final offer meeting the 1% discount must be received by City of Palm Desert within thirty
days of the completed City of PaVm Desert appraisal or the application will be denied.
iv) Type of Home. The Program may be used to purchase any foreclosed single family home,
condominium /town home that meets all of the following minimum criteria:
a. The home is permanently fixed to a permanent foundation; and
The home is currently vacant and no tenant lived in the property at the time of foreclosure; or
the home is currently vacant and any tenant was given 90 day's notice prior to being asked to
vacate. For properties that were tenant occupied at time of foreclosure, the selling bank must
supply documentation that the tenant was given 90 days written notice to vacate as well as a
copy of the tenanYs lease. Under no circumstances may a lease be terminated for a Section 8
tenant on transactions utilizing the NSP program.
c. The home must be built after 1978 and not be listed on, or eligible for listing on the National
Register of Historic Places.
Resolution No. 570
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d. In-ground Pools and Spas. Single-Family home with in-ground pools or spas are eligible for the
Program.
v) Home Condition. A home sha11 not be eligible for purchase under this program unless it is in standard
condition and suitable for occupancy upon purchase. Under no circumstances shall a home be
modified or altered to qualify a home that is othervvise an ineligible property after submittal of an
application to Ciry of Palm Desert. The following procedures will be used to determine if the home
meets these requirements:
1) Foreclosed Homes
A) All homebuyers of existing homes must obtain a home inspection report prepared according to
industry standards. Any deficient items affecting habitability of the home noted in the home
inspection and the purchase agreement shail be corrected at the close of escrow by seller's
conUactor. If the home inspection report indicates that the home has serious deficiencies, the City
of Palm Desert may inspect the home to determine if it meets the Housing Qualiry Standard (HQS).
The Housing Quality Standard (HQS) is a basic standard of livability based on health and safery
standards. 7he HQS Checklist is attached in Appendix E.
B) Inspection Process. Home Inspections are to be performed by qualified Home Inspection
Professionals in accordance with industry standards. Home Inspectors who are members of the
California Real Estate Inspectors Association, the American Society of Home Inspectors or the
InternaGonal Conference of Building Officials will be presumed to be qualified. Typically, Home
Inspections are 7 to 15 pages in length, and utilize a checklist with explanations of any items that
need work or are not in standard condition. It is strongly advised that the home buyer accompany
....
the Home Inspector during the inspection. The Home Inspector will provide guidance on
maintenance requirements, and will explain any items that need work. No Termite inspection will be
required unless there are signs of active infestation or the appraiser notes the requirement for one `
on the appraisal report. All termite clearance must be done by the Seller prior to close of escrow.
C) Repair Requirements. City of Palm Desert will review the Home lnspection Report and will prepare
a list of required repairs to be completed by seller. A copy of the Home Inspection Report and list of
required repairs is sent to the buyers. The buyer also needs to ensure that the home meets their
requirements and that the repairs have been completed to their satisfacdon. City of Palm Desert will
review the Inspection Report for safery, habitability concems, and cosmetic items. Certain repairs
that will not affect the homebuyer from moving in after the close of escrow and deem beyond the
scope of the lender habitabiliry standard can be included as part of the additional repair assistance
that can be provided by City of Palm Desert. Afl repair that affects the move-in and habitability
standard must be corrected and completed prior to close of escrow as a condition of NSP purchase
price assistance requirements.
D) Lender Certification. Lender will certiry that the required repairs have been completed prior to the
close of escrow. Lender will provide a letter from a licensed contractor or inspector to ascertain that
the work has been done.
E) In addition to the purchase price assistance, City of Palm Desert also provides repair assistance to
homebuyers to include home improvements to increase the energy efficiency or conservation of the
home for long-term affordability and increased sustainability and attractiveness of housing and
neighborhoods. This repair will be limited to the items identified by City of Palm Desert staff prior to
close of escrow and completed through City of Palm Desert approved contractors after the close of .�.�
escrow. The total combined assistance including purchase price assistance cannot exceed $75,000.
The repair portion of the loan will be recorded as a separate deed of trust and will have the same
Resolution No. 570
affordability and term as the purchase price assistance. Any repair works that are identified that
would prevent the homebuyer from moving in after the close of escrow will not be eligible.
vi) Occupancy Standard. One of the purposes of the Program is to address persistent conditions of housing
overcrowding in the Ciry. Therefore, City of Palm Desert is requiring that all homebuyers must meet the
occupancy standard as defined in the Housing Quality Act under 982.401 that states "The dwelling unit must
have at least one bedroom or living / sleeping room for each two persons." Children of opposite sex, other
than very young children, may not be required to occupy the same bedroom or living / sleeping room.
b) Characteristics of the Home Buyer
Income Limits. In order to be eligible for this program, the homebuyers' annual income shall not
exceed 120% of the area median income, as determined by HUD, adjusted for family size. In
addition, family assets, excluding personal properry, funds in restricted retirement accounts, and
funds to be used for the home purchase, shall not exceed a 12 month reserve based on the
maximum income for the family size. The income and assets of all persons age 18 and older who
will reside in the home must be included in the calculation to determine income eligibility. The
current income limits are shown in Appendix A. See item c below for instructions on calculating
annual income.
ii. Co-owners. Co-owners are only permitted if they will occupy the home as their principal residence
and qualify as first time buyers. The income of all co-owners will be included in determining if the
household qualifies as moderate income, as noted in 1 above, as well as appendices A and C.
Cosigners are not permitted.
iii. Minimum Buyer Investment. The buyer shall provide from their own funds a minimum investment of
the amount required by the first mortgage. The buyers' contribution may be used toward the down
payment or closing costs, at their discretion and in accordance with the requirements of the first
mortgage.
iv. Prior Home Ownership Criteria. In order to qualify as a first-time homebuyer, the homebuyer cannot
have owned a home for the previous three years from the date of application to the Program. The
homebuyer must sign a swom application attesting that they have not owned a home, in addition the
last three years tax returns will be reviewed to ascertain that no mortgage interest or real estate tax
deductions have been claimed. First—Time Homebuver 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 (2) 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 difficuity 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 unmarried or legally
separated from a spouse and has one or more minor children for whom the individual has
custody or joint custody or is pregnant; and
3) an individual or individuals who owns or owned, as a principal residence during the three-
year period before the purchase ot a home with assistance, a dwelling unit whose structure
is:
Resolution No. 570
iii) not permanently affixed to a permanent foundation in accordance with local or
state regulations; or
iv) not in compliance with state, local, or model building codes and cannot be
brought into compliance with such codes for less than the cost of constructing
a permanent structure.
For the purposes of determining home ownership, a dwelling unit that was not permanently affixed to
a permanent foundation (i.e. a mobile home), or a dwelling unit that is substandard and cannot be
brought into standard condition for less than the cost of constructing a permanent structure, shall be
not included in the three year requirement.
vi. Buyer's Citizenship. All applicants must be either a US Citizen or a qualified alien as per Section 431
of Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA).
c) Determination ojAdjusted Gross Income
The Program is limited to buyers with an annual income that is one-hundred twenry percent (120%)
or less of the area median income, as determined by HUD. Annual income is the gross amount of
income anticipated to be received by all adults in a family during the twelve months following the
effective date of the determination. Anticipated income is generally determined by annualizing
current income for the next twelve months. The annual income for purposes of qualifying for the
Program includes all income and may be higher or lower than the income amount utilized by the
lender to underwrite the first mortgage.
Annual income includes anticipated income from assets. Please see be{ow for an explanation of
how to determine income from assets. The current passbook rate established by FiUD is 3.50%.
iii. For a detailed explanation of how to calculate various rypes of income, please see Appendix C.
d) Assets
In addition to income, family assets (excluding personal property, funds in restricted reGrement
accounts, and funds to be used for the home purchase) shall not exceed a 12 month reserve based
on the maximum income for the family size. See Appendix A for maximum income limit. See
Appendix C for a detailed expianation of the items to be included and excluded from assets.
e) Other Requirements
Program cannot be combined with Ciry of Pa1m Desert's Home Improvement Program, Energy
Independence Program, or FTHB Program. However, this Program can be combined with
Mortgage Credit Certificate Program.
[II) GENERAL LOAN REQUIREMENTS
The following minimum requirements shall apply to all purchases receiving assistance through the Program.
a) First Loan Requirements
i) The homebuyer shall apply for a first mortgage from a participating lender and provide a
minimum investment of the amount required by the applicable federa{ state. The first mortgage
must be a fully amortized, fixed rate, thirty-year term mortgage. The homebuyer must accept the
highest first mortgage amount (principal amount at going interest rate) for which they can qualify. `�"
Lenders should provide buyers with the best possible interest rate available at the time thei� loan
rate is locked. In general, the participating lender shall be responsible for determining the
Resolution No. 570
buyers' creditworthiness and qualifications for obtaining the first mortgage. However, the
following minimum cnteria must be satisfied:
ii) The buyer shall provide a minimum investment of the amount required by the first mortgage.
This minimum investment may be applied to the down payment and/or closing costs, at the
discretion of the homebuyer and in accordance with the requirements of the first mortgage. The
lender shall verify that the buyer has su�cient funds to meet this requirement. In cases where a
homebuyer has saved cash at home, the lender shall document these savings in accordance
with standard underwriting practices.
iii) The first loan amount shall be the maximum amount for which the homebuyer can qualify, based
on their income, debts, and current interest rates. The total monthly housing payment (principal,
interest, taxes, insurance, private mortgage insurance, flood insurance and home owner
association, if applicable) shall not be less than 25% or more than 35% of the homebuyer's gross
monthly income for a 30-year fully amo�tized fixed rate loan.
iv) The participating lender may only assess those usual and customary fees and charges that
would be assessed for a buyer with the same type of first mortgage who is not participating in the
Program. No additional lender fees may be charged for processing of a loan in conjunction with
this Program.
b) NSP Loan Requirements
i) Affordability Period
In exchange for receiving funds to assist in the purchase of a home, the homebuyer must sign NSP loan
documents, including a Promissory Note, Disclosure Notice, Request for Notice, and Subordinate Deed
of Trust, which will provide that, upon sale, transfer, lease or any other disposition, including refinancing
or incurring of additional debt secured by the home, within 15 years of purchase, the principal amount of
the NSP Assistance is repaid to the City of Palm Desert. Afte� the Affordability Period, the NSP
Assistance is converted to a grant and these obligations are forgiven. If the homebuyer is also getting a
repair assistance identified prior to close of escrow, then that assistance will be in a form of loan with the
same terms and conditions as the purchase price assistance loan.
ii) Home Buyer Education
In order to be eligible for participation in the Program, prospective homebuyers must complete the
minimum requirements of 8 hour education in a Community Home Buyer's Seminar, as approved by the
City of Palm Desert. Buyers should complete this requirement as soon as possible in the purchase
process. Pa►ticipating lenders may contact City of Palm Desert for the names of agencies offering
approved Community Home Buyer's Seminars.
iii) Types of Assistance
The NSP financial assistance can be provided as purchase price assistance and repair assistance
associated with home purchase. The NSP Assistance cannot be used to pay the homebuyer's prepaid
costs (also known as recurring costs). Buyer must make a minimum contribution necessary to comply
with any applicable federal or state requirements. In addition, the buyer needs to satisfy the
requirements of the first mortgage, which may require the homebuyer to pay a minimum down payment
and certain other costs.
1) Home Repair Assistance. In general, NSP funds shall be used primarily for purchase price
assistance. Home Repair Assistance is available to all eligible properties who qualify for NSP. The
maximum amount of assistance for home repair is the remaining balance of $75,000 once the
Resolution No. 570
purchase price assistance has been identified for the property. For example: NSP purchase price
assistance is $40,000; the remaining balance is $35,000 of which the Home Repair Assistance
cannot exceed. The maximum amount of assistance for each property is $75,000.
2) The Home Repair Assistance is contributed in the form of a silent subordinate loan that will sit
behind the NSP purchase price assistance. The loan will stay as a lien on the home for fifteen (15)
years which is identified as the Affordability Period. If the property is no fonger maintaineti as the
principal residence of the buyer or is sold prior to the end of the fifteen (15) year period (Affordability
Period), and the homebuyer is not eligible for this P�ogram, all NSP funds invested in the property
must be repaid. Properties that remain the principal residence of the buyer throughout the
Affordabiliry Period will have the City of Palm Desert 's investment converted to a grant.
�
3) Preliminary Repair Assessment — Ciry of Palm Desert staff or designee will make an on-site visit to
the home to do a preliminary assessment of the house within three (3) working days of the receipt of
NSP funding application. After confirmation of the purchase price discount and tentative approval of
the purchase price assistance and receipt of the inspection report, City of Palm Desert staff or
designee will prepare a scope of wo�k in consultation and approval with the homebuyer. Based on
the approved scope, City of Palm Desert will solicit bids on behalf of homebuyer. A pre-bid walk
through date where contractors will be invited to review the scope of work will be set up in
coordination with the seller. After closing of the bid and review of bids received, City of Palm Desert
staff or designee will select the contractor. City of Palm Desert will determine maximum repair
assistance to be provided to the homebuyer. At no point in time the $75,000 threshold including the
purchase price assistance can be exceeded. Ciry of Palm Desert staff has the discretion to lower
the threshold to aliow for any contingency and complexity of the repair. All the repair work will be
started after the cfose of escrow and completed within 30 days from the close of escrow. "'"
iv) Minimum and Maximum Assistance
The minimum amount of assistance that may be provided is $1,500 per home purchase. The maximum
amount of assistance is the gap financing limit such that the housing payment to income ratio is
between the �ange of twenty-five percent (25°10) and thirty-five percent (35%) with an absolute maximum
amount of $75,000 for purchase price assistance (20% of the purchase price) and home repair
assistance.
v) Notifications
The following notifications are required for participation in this program:
1) Notice to Sellers (NSP-3). This notice shall be provided to the Sellers at the time a purchase
offer is initiated or at the earliest possible date following acceptance of the purchase offer.
The Se{ler shall complete and sign this notice. Compliance with this requirement shall be
demonstrated by submission of a fully executed Form NSP-3 at the time the Lender submits
an application. This Notice will be used to determine if the home is eligible for purchase
under the NSP Program (Home must be vaca�t for at least 90-days).
2) Disclosure Statement. This notice discloses to the homebuyers the terms of the NSP
Assistance. This form is to be signed and notarized at the settlement appointment and
submitted to City of Palm Desert with the closing package.
3) Voluntary Acquisition of Foreclosed Property (NSP-6). This notice shall be provided to the
Sellers at the time the purchase and sale agreement is initiated. The initial form will be used """
at the time the application is submitted indicating the initial offer. Once the Appraisal has
been determined by City of Palm Desert, a final form will have to be signed by both seller
and homebuyer indicating the final agreed purchase price. This notice will identify the
�o
Resolution No. 570
purchase price City of Palm Desert is willing to accept on behalf of the homebuyer for the
Program. The final form must be retumed to City of Palm Desert with accompanying
purchase and sale agreement with the final sales price within sixry days of the appraisal
date.
vi) Confidentiality
NSP Applications are subject to confidentiality requirements and will only be discussed with
representatives of the buyer including their lender, real estate agent, escrow agent, and home inspector.
NSP applications will not be discussed with seller representatives or other outside interests. Items
containing confidential information (i.e. tax returns, pay stubs, employment verification) should not be
faxed.
vii) Resales
Saie, transfer and/or conveyance of the property during the Affordability Period shall trigger repayment
of the NSP Assistance, as detailed in the loan documents.
viii) Subordination
The NSP Assistance shall be recorded in second position to the first mortgage on the property. The
NSP Assistance shall remain in second position and will not be subordinated to any additional debt.
Notwithstanding the above, the NSP assistance will subordinate to CaIHFA financing or any other loans
provided by the City of Palm Desert. In those instances, the NSP shall be recorded in the third position.
The Home Repair Assistance is contributed in the form of a silent subordinate loan behind the NSP
purchase price assistance. The loan will stay as a lien on the home for fifteen (15) years which is
identified as the Affordabiliry Period. City of Palm Desert will not agree to subordinate the NSP
P.ssistance to any other indebtedness with the following exceptions: (1) the first mortgage obtained
concumently with the NSP Assistance to purchase the home; and (2) limited refinancing as detailed in
the following section.
ix) Refinancing
Subordination for refinancing is only permitted with the prior authorization of the Ciry of Palm Desert and
for purposes of reducing the carrying costs of the homebuyer. The Ciry of Palm Desert shall not
authorize refinancing for any of the following purposes: (1) to remove equity from the property; (2) to
consolidate debts; (3) to consolidate the first mortgage with any junior liens or obligations; and/or (4) to
increase the principal indebtedness amount of the first mortgage (except for the amount of the
reasonable and usual costs associated with the refinancing).
x) Title Insurance
The lender will order the title insurance for the property, listing the City of Palm Desert as "additional
insured".
xi) Property Maintenance Requirement
(1) Maintenance. The homebuyer shall agree to maintain the home in standard condition for the
term of the NSP assistance. To this end, the homebuyer shall be required to obtain a one-year
home warranry as part of the home purchase. The costs of the home warranty are eligible for
financial assistance under the NSP program. For newly constructed homes, the builder shall
warranty the home for a minimum of one year from date of purchase. In the absence of a
written warranty from the builder, the buyer shall obtain a one year home warranty from an
independent company.
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Resolution No. 570
(2) Hazard Insurance. The homebuyer shall obtain and maintain, for the term of the City's ��
assistance, a hazard insurance policy for the property, listing the City of Palm Desert as
"additional insured." The hazard insurance policy shall be of a sufficient amount to cover the
Ciry's interest in the home. Full insurance for the amount of the first and second loans, or a
Guaranteed Replacement Cost policy, is acceptable.
(3) Flood Insurance. Properties located in a flood hazard zone shall obtain flood insurance listing
the City of Palm Desert as "additional insured".
xii) Loss Payee
1) The City shaN be listed on the hazard insurance, flood insurance, and title insurance as the loss
payee in the following manner:
A. City of Palm Desert, its successors and assignees
B. 73-510 Fred Waring Drive, Palm Desert, CA 92260, Attn: Housing
xiii) Auditing/Monitoring
All participating lenders shall maintain complete files for each Program participant for at least seven
(7) years. The City will maintain records for each Program participant for the term of Affordability,
plus three (3) years.
2. The City may conduct random audits of lender files to ascertain compliance with the Program. This
may include review of participant files, and review of lender information to document compliance with
all lender requirements. In addition to participant files, participating lenders shall maintain records of
affirmative marketing efforts, Community Reinvestment Act (CRA) compliance, bi-lingual (Spanish --�
speaking) staffing, and efforts to provide assistance with minimal inconvenience to the homebuyer.
3. The City may also conduct surveys of program participants to obtain their input on the program, the
processing of their application, and their level of satisfaction with the results. The results of any such
surveys wi{I be shared with the Participating Lenders. Complaints about patticular individuals or
lenders will be investigated and, if necessary, corrective action may be taken.
xiv) Con�lict of Interest
1. NSP assistance shall not be provided to any person or the immediate family of any person who is in
a decision-making position relative to any aspect of the NSP Program or the associated first
mortgage. This includes, but is not limited to, employees and immediate family members of
empfoyees ot the City of Palm Desert and participating lenders.
IV) PARTICIPATING LENDERS
a) Requirements
i) The City will only accept NSP Applications from Participating Lenders who have been pre-approved through
the Riverside Counry Economic Development Agency.
b) Selection Process
1) The City shall establish minimum criteria for the selection of participating lenders for the NSP Program. All
selected lenders shall enter into a lender pa�ticipation agreement with the City and shall agree to abide by
the City's procedures for all homebuyers participating in the NSP Program. -•-�
The minimum lender criteria for the Neighborhood Stabilization Program are as follows:
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Resolution No. 570
1) Participating lenders be direct lenders with the ability to originate and service loans. Loan brokers are
not eligible for approval as a participating lender.
2) Participating lenders are encouraged to provide staff personnel with the ability to communicate in
Spanish.
3) Participating lenders shall provide application assistance with minimal inconvenience to the homebuyer.
Application assistance shall be provided at a time and place convenient to the homebuyer. This may
include evenings and weekends and travel throughout the City.
4) Participating lenders shall demonstrate a commitment to Community Reinvestment Act (CRA) and
affirmative marketing requirements, and outreach to minority and low income communities. Lenders
shall agree to proactively market the Program to low income and minority people. All advertising to the
general public shall be complimented with advertising targeted to these groups, including, but not limited
to, minority newspaper, television, and radio advertisements. The City will monitor all mariceting efforts
and will require periodic updates on the marketing efforts of participating lenders.
5) Participating lenders shall have demonstrable experience in first time homebuyer program.
6) The selection of participating lenders shall be at the sole discretion of the City Palm Desert. The City
reserves the right to limit the number of approved participating lenders.
c) Brokers
i) Mortgage Brokers are not eligible for designation as participating lenders in the Program. Participating
Lenders may enter into anangements with brokers to process NSP Applications. However, the Participating
Lender shall remain responsible for all submittals to the City and for verifying that all aspects of the
purchase meet the Program requirements.
d) Removal
i) City of Palm Desert may suspend or remove participating lenders ftom the Neighborhood Stabilization
Program in accordance with the provisions of the NSP Program Guidelines. Lenders may be suspended or
removed from the Program based on, but not limited to, the following violations:
1) Failure to follow the Program Guidelines, as described in this Manual and periodic Lender Bulletins.
2) Failure to submit all outstanding documentation within thirty (30) days of loan closing.
3) Withholding information that would result in applicant or property disqualification from the program.
4) Negligent or fraudulent misstatements or actions in regard to the Program.
5) Failure to conduct reasonable verification of applicant qualifications for the Program.
6) Failure to maintain complete applicant records for minimum of (7) years after loan closing.
e) Authorized Lender Staff
i) Staff members of participating lenders that have completed the annual NSP Lender Training Session are
authorized to sign all NSP forms and to make submissions to the Program. Lenders are required to provide
proof of the Certificate indicating that they have completed the necessary training to participate in the
Program from the Lender Training provided by the Riverside Counry Economic Development Agency.
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Resolution No. 570
ii) Staff that has not completed the training may only participate in the Program under the supervision of a staff �� �'
member who has attended the lender training. Staff that has not completed the training is not authorized to
sign the form or to make submissions to the Program.
� PROCESSING PROCEDURES
Completed NSP Applications will be processed by Ciry of Palm Desert on a first-come, first-served basis, in
chronological order as received from participating lenders. City of Palm Desert will maintain a running balance
of funds available, and once funds are exhausted, City of Palm Desert will stop accepting applications and notify
the participa6ng lenders that the Program is out of funds. It is the participating lender's responsibility to verify the
availability of funds prior to loan application submitted. The following procedures are to be followed for NSP
applications.
The Neighborhood Stabilization Program (NSP) will not accept any forms with whiteout. This includes the
required City of Palm Desert NSP forms and all subsequent items that are requested to fund the NSP loan. If
any changes need to be made to forms please lineout and initial the change.
Please note any document submitted during the Reservation Phase that is incomplete or contains whiteout will
cause the file to be retumed back to the lender without being processed. This procedure is in place to maintain
the validity of all documents submitted to the City of Palm Desert and allow other homebuyers with complete
paperwork to move into the Reservation Phase.
a) Pre-Qualification Phase
i) Potential buyer contacts participating lender.
ii) Participating lender screens the buyer for program eligibility (income � first-bme buyer status). """
iii) Participating lender takes a loan application and pre-qualifies buyer for the maximum first loan that they can .,
afford given their income, debts and prevailing interest rates. First loan must be a thirty-year, fully
amortized, fixed rate loan.
iv) Lender provides buyer with a pre-qualification letter that states:
1) the maximum home price that the buyer can afford, based on the maximum first loan amount plus the
maximum NSP Program assistance (a maximum gap finance limit such that the housing payment to income
ratio is between the range of twenty-five percent (25°/a) and thirty-five percent (35%) with an absolute
maximum amount of $75,000 for both purchase price assistance {20% of purchase price} and home repair
assistance;
2) the locations where the buyer may purchase;
3) the home must be a foreclosed or a REO property built after 1978;
4) that the buyer shall provide a Notice to the Sellers (Form NSP-3) by attaching this form to the Purchase
Offer as an Addendum and request that the Se11er(s} sign this form when they accept the purchase offer or
at the earliest possible date following acceptance of the purchase offer; and
5) Any conditions imposed by the lender.
6) Buyer attends a City of Palm Desert -approved 8 hour Home Buyer Education seminar and receives a
Certificate of Completion. The buyer is encouraged to complete this requirement as soon as possible in the
home purchase process. A copy of the Certificate of Completion certifying that the buyer has completed this �"'"
requirement is needed prior to the Request for Funding Phase.
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Resolution No. 570
7) Buyer locates a home and enters into a purchase agreement. Buyer provides Notice to Sellers (NSP-3)
as an addendum to the purchase contract for the Seller to sign at acceptance of purchase offer.
b) Application Phase
i) Lender submits a request for reservation of funds to the City of Palm Desert. Incomplete applications will
not be accepted. All items must be included in initial submittal - faxes will not be accepted for the
Reservation Phase. Reservations that are missing any required items will not be processed and will be
returned to the Lender. Request must include all of the following:
1) Neighborhood StabilizaGon Program Application Form (Form NSP-1).
2) Signed Certification of Homebuyer Form (Form NSP-2).
3) Copy of the signed Sales Agreement, or equivalent, including all counter offers and the Real Estate
Transfer Disclosure Statement.
4) Notice to Sellers (Form NSP-3) fully signed and dated.
5) Copy of the Escrow Instructions.
6) Copy of the complete Preliminary Report of Title.
7) Completed NSP Program Financing Worksheet (Form NSP-4) and Signed Good Faith Estimate of
Closing Costs.
8) Copy of fully completed and signed Loan Application.
9) Copy of last three years federal tax returns or Income Tax Affidavit (Form NSP-5 if applicable). PLEASE
NOTE: The applicant must sign the tax returns stating that "This is a true and exact copy of the returns
submitted to the IRS."
10) Copy of the Standard Flood Hazard Determination (FEMA Form 81-93).
11) For existing homes, a copy of the home inspection.
12) Initial Signed Voluntary Acquisition of Foreclosed Property (Form NSP-6) and Final Signed Voluntary
Acquisition of Foreclosed Property with the amended sales agreement showing the discount requirements
have been met.
13) Attached map showing location of property and eligibility of the property in the Target Area.
14) Copy of Certificate of Occupancy (for new homes only) and HCD Form 433(a) (for manufactured homes
only).
15) Proof that property has been vacant for 90 days.
NOTE: The Home Inspection Report should be submitted to City of Palm Desert as soon as it is available.
Based on an evaluation of this Report, City of Palm Desert may require repairs to be completed prior to
close of escrow. Ciry of Palm Desert will mail a copy of this Report to the homebuyers, for their information.
ii) An independent contract fee appraiser contracted by City of Palm Desert will conduct the required appraisal
meeting the requirements of the URA at 49 CFR 24.103 for each property that submits an application for
NSP funds. Upon preliminary review that the property and homebuyer's income meet the requirement of
the Program, City of Palm Desert will order an appraisal. The appraisal will be completed within seven (7)
working days of receipt of application. It is imperative that access to the house is available and can be
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Resolution No. 570
iii) Agency will review the Application and within ten (10) working days will issue an Acceptance letter or
request that the final offer meeting the 1% discount be obtained within 30 days of the appraisal report or
reject the application. Application requests will be processed on a first come, first served basis. The
application may be rejected for the following reasons:
1) Buyer or home does not meet the Program Requirements.
2) Application package is incomplete; or
3) City of Palm Desert does not have sufficient funds to provide the requested amount of assistance.
c) Reservation Phase
i) A written Funding Reservation will be issued within ten (10) working days of receipt of the Reservation
Request. The Funding Reservation will be conditioned upon certain items, as follows:
1) Transaction must be completed within forty-five (45) days of the Funding Reservation. Requests for
extensions of time shall be submitted in writing at least ten working days prior to expiration of the
Funding Reservation and shall include the reason for the extension. Ciry of Palm Desert will evaluate �
the request for reasonableness and will approve or deny the extension in writing.
2) Any other items needed to verify applicant or property eligibility for the Program.
3) Copy of a new signed sales agreement (if applicable)
4) Any outstanding items noted in the written Application Acceptance letter issued by City of Palm Desert.
ii) The City of Palm Desert will establish the scope of work for all home repair items required for the home such
as curb appeal and landscaping. The buyer will be required to accompany City of Palm Desert staff during
the inspec6on of the home and agree to all items and their costs identified as needing repair.
iii) Lender processes first loan and establishes a closing date.
d) Request for Funding Phase
i) Unless specifically requested by City of Palm Desert, faxes will not be accepted for the Request for Funding
Phase documents. Upon final'loan approval, at least fifteen (15) working days prior to scheduled
funding, Lender submits the following:
1) A true and correct copy of the FNMA Summary Form 10�8 or a true and correct copy of the FHA
Mortgage Credit Analysis Worksheet, Form 92900-WS, as appropriate.
2) Copy of Ce�tificate indicating buyer's completion of the Home Buyer Education class.
3) Any outstanding items noted in the written Funding Reservation letter issued by City of Palm Desert. �
4) Written request from escrow o�cer for NSP funds to be deposited into escrow, including instructions for
wire transfer, if applicable. Wire instructions a�e to be submitted legible with a mi�imum 10 point font �
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Resolution No. 570
size and include the bank name, bank address, ABA number, account number, escrow/title number, and
client vesting. City of Palm Desert requires a minimum of ten (10) working days, excluding
holidays, to process a claim and wire funds to escrow. This time period begins when the
Confirmation letter is issued.
ii) The Ciry of Palm Desert reviews these items within five (5) working days. If all items have been satisfied,
City of Palm Desert will issue a confirmation letter to the Lender and Escrow Company approving the
Agency Assistance and designating the date that funds will be deposited into escrow. The Agency will also
prepare the loan documents and forward them to escrow to be signed by the homebuyer(s).
e) Closing Phase
i) Buyer(s) attend settlement appointment and sign all loan closing documents including all legal documents
prepared by City of Palm Desert. City of Palm Desert documents to be signed at closing are as follows:
1) Neighborhood Stabilization Assistance Program Disclosure Statement.
2) Promissory Note.
3) Subordinate Deed of Trust.
4) Itemization of Amount Financed
5) Escrow Officer Checklist (to be initialed and signed by the Escrow Officer)
ii) Escrow submits the signed Neighborhood Stabilization Assistance Program Disclosure Statement (Form
NSP-7), Promissory Note, Buyer's Affidavit, Escrow Officer Checklist and proof of property insurance to Ciry
of Palm Desert as soon as they are executed.
iii) Escrow submits a copy of the Estimated HUD-1 Statement with signed loan documents.
iv) City of Palm Desert reviews Estimated HUD-1 Statement and executed loan documents and issues funding
approval via fax to Escrow.
v) Loans are funded and home purchase closes.
vi) Lender notifies City of Palm Desert of the closing and Escrow submits a copy of the Final HUD-1 Statement
vii) Title Company provides City of Palm Desert with a copy of the Title Insurance Policy insuring the City's
interest in the property.
vifi)FAILURE TO SUBMIT CLOSING DOCUMENTS WITHIN THIRTY (30) DAYS OF CLOSING MAY RESULT
IN SUSPENSION OF LENDER FROM THE NSP PROGRAM. CLOSING DOCUMENTS INCLUDE, THE
PROOF OF PROPERTY INSURANCE, FINAL HUD-1, TITLE POLICY, AND THE CITY OF PALM
DESERT LOAN DOCS. CITY OF PALM DESERT WILL NOT ACCEPT FUNDING RESERVATION
REQUESTS FROM SUSPENDED LENDERS.
ix) Escrow/Title Company closes out the NSP File and records a Request for Notice.
� Resubmission of Denied Applications
i) City of Palm Desert will only process resubmissions of denied applications if it can be demonstrated that the
reasons for denial were based on inaccurate or missing information. Back-up documentation to support all
such resubmissions shall be submitted, and the Application will be processed as indicated above. For
example, if an application was denied for not being a first-time home buyer, the resubmission shall include
evidence that the buyer did not have any ownership interest in their principal residence. Examples of such
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Resolution No. 570
evidence may include, but are not limited to, a chain of title, copies of deeds, copies of divorce papers or
other legal documents showing ownership of property.
g) Changes in Information
i) In some cases there may be changes in information between the date the Reservation Request is submitted
and the date of the closing. All such changes shall be handled in the following manner:
1) ChanQe in Home Beina Purchased. No changes are allowed. The application will be rejected and Ciry of
Palm Desert must be notified immediately. Failure to notify City of Palm Desert within three days may
result in suspension of Lender to participate in this Program. Homebuyer may resubmit up to rivo
additional chances under this Program in one year if Buyer and Seller cannot agree on the final
purchase price discount of 1%.
2) Chan4es in Income. The ini6al income determination is valid for six months. A re-verification of income
wiil be required if more than six months elapse from date of income determination. Any changes in
income that increase the household income must be re-submitted for an eligibility determination. This
includes the addition of additional household members age 18 and older, or increases in the income of
any household member. Changes in income shall be immediately reported by submitting a new, fully
signed, Certification of Homebuyer (Form NSP-2).
3) Marria4e and/or the Addition of New Adult Household Members. The addition of any new adults to the
household shall be immediately reported by submitting a new, fully signed, Certification of Homebuyer
(Form NSP-2), as well as the last three years tax retums for the new family members. All new adult
household members must meet the first dme home buyer requirement, and the income of all adult
household members shall be included in determining income eligibility.
4) Interest. If the homebuyers acquire an ownership interest in their principal residence at any time prior to
closing, the household no longer meets the first time buyer requirement and is ineligible for the
Program. The Application and Reservation are automatically denied if this should occur.
5) Increase in Price. No changes are allowed. The application will be rejected and Ciry of Palm Desert
must be notified immediately. Failure to notify City of Palm Desert within three days may result in
suspension of Lender to participate in this Program.
6) Decrease in Price. If the price of the home decreases, the amount of NSP assistance will decrease.
The City of Palm Desert shall be notified no later than the Request for Funding. The Lender shall note
the decrease on the Request for Funding Cover Sheet and shall include the new price in the Lender's
Certification.
VI) HOME REPAIR COMPONENT
a) Requirements
i) Minimum eligibility requirements include:
1) The Home Repair Assistance is in conjunction with the purchase price assistance received by the home
buyer in purchasing the foreclosed home. No Home Repair Assistance will be provided as a stand alone
activity. All scope of work is pre-identified and agreed on by the homebuyer prior to close of escrow.
2) All repair work will not be initiated until after close of escrow is complete. 3) City of Palm Desert staff or
designee will make certain allowances to include items not identified prior to close of escrow but ^'
essential and incidental to the repair work.
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Resolution No. 570
3) The homebuyer will be required to sign a Deed of Trust and Note covering the portion of the repair
assistance iden6fied. All the terms and conditions will be the same as the purchase price assistance
provided by City of Palm Desert under this Program.
4) All homebuyers shall indemnify and hold the Ciry of Palm Dese�t and their elected officials, directors,
officers, agents, employees and independent contractors free and harmless from any liabi�iry
whatsoever, based or asserted upon any act or omission of the homebuyers and guarantors, its officers,
agents, employees, contractors, subcontractors and independent contractors for property damage,
bodily injury, or death or any other element of damage of any kind or nature, relating to or in any way
connected with or arising from its used and responsibilities in connection therewith of the property or the
condition thereof, and all homebuyers and guarantors shall defend, at its expense, including attorney
fees, the City of Palm Desert and their elected officials, officers, agents, employees, and independent
contractors in any legal action based upon such alleged acts or omission.
b) Application Submission
i) Applications are accepted, reviewed, and awards made on a first-come, first-served basis.
ii) In order to request financial assistance for home repair, the homebuyer shall:
1) Indicate in the purchase price assistance program application their intention to apply for home repair
assistance.
2) Provide Ciry of Palm Desert with access to all contact information, prior to close of escrow, for the
purpose of doing an on-site assessment of the property to determine repair needs.
iii) Program activities will be coordinated between City of Palm Desert, contractor, and homebuyer throughout
the initial assessment, home buying and home repair construction process.
iv) The City of Palm Desert staff or designee will review findings on the property Home Inspection Report
identified during escrow. City of Palm Desert will issue repair letters to be done prior to the close of escrow
meeting the requirements of purchase price assistance standards. This repair work needs to be corrected
by seller to the satisfaction of City of Palm Desert. In addition, City of Palm Desert will identify additional
repairs needed to meet habitability, and energy-efficient improvements for long-term affordability. These
repairs will be identified with the approval of homebuyer and the work will be done after the close of escrow.
All home repairs are subject to final approval by City of Palm Desert management. The funding will be
determined based on the amount left after the purchase price assistance for the purchase of the home and
subject to the availability of funds for home repair
c) Property RepairAssessment
i) City of Palm Desert or designee will make a preliminary on-site cursory inspection of the property within
three (3) working days of the purchase price assistance program applica6on is received to verify the
occupancy of the unit and to assess preliminary general condition of the home. A preliminary statement of
work will be prepared.
ii) Once eligibiliry has been determined, home inspection report received, correction letter issued, if applicable,
City of Palm Desert or designee will schedule an initial on-site inspection of the property to include the
homeowner.
iii) Ciry of Palm Desert staff or designee will inspect the property and ensure the homeowner is informed of all
program requirements, terms of program participation, processes, and work write up in cooperation with
the homeowner. Certain improvements are subject to specific requirements and limitations. Any
rehabilitation work shall be to the extent necessary to comply with Housing Quality Standards meeting the
U.S. Department of Housing and Urban Development (HUD). All work shall comply with applicable laws,
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Resolution No. 570
codes, and other requirements to housing safety, quality, and habitability. Ciry of Palm Desert reserves the �^
right to disallow certain improvements.
d) Bid Process
i) Ciry of Palm Desert or designee will finalize the statement of work, prepare bid package and solicit bids on
behalf of the homeowner.
ii) A pre-bid walk thru will be set up by City of Palm Desert or designee and closing bids will be established.
iii) City of Palm Desert or designee will review all bids received and select the lowest responsive bids in
accordance to HUD procurement requirements. The bids will be reviewed for cost-reasonableness,
consistency and accuracy with respect to the requested repairs.
iv) Once the amount of repair assistance has been determined, a deed of trust and note for that amount will be
prepared, app�oved and signed by homebuyer. A co�tract agreement between the contractor and
homebuyer will also be prepared and executed.
v) City of Palm Desert or designee will schedule a Pre-Construction Conference to review the home repair
work order with the homeowner and the selected contractor. The conference will be used to go over the
scope of work, time line, disbursement of funds process, and completion and close out of work. ConVactor
is expected to provide sample products and color selection for approval by homebuyer.
vi) A Notice to proceed will be issued at the end of the pre-construction conference. All work must be
completed within thirty days.
vii) City of Palm Desert will require the contractor to provide warranty statements directly to the homebuyer. "^"
Vli) CONSTRUCTION AND CHANGE ORDERS
a) Construction Phase
1) Ciry of Palm Desert staff or designee will schedule site visits inspection as needed during
construction to ensure satisfactory work and progress. Periodic phone calls to the contractor or
homeowner will also be done.
2) Ciry of Palm Desert staff or designee will inspect the property at least once during the construction
phase.
3) Upon receipt of notice from the contractor that the repairs have been completed, City of Palm
Desert staff or designee will complete a final on-site property inspection in cooperation with the
homeowner to verify all repairs are complete to their satisfaction.
4) Upon completion of all work, Ciry of Palm Desert staff or designee will photograph the house and
yard.
b) Change Orders
In the event certain repair works were not identified prior to close of escrow and deemed necessary as part
of the repair work, City of Palm Desert staff or designee will review request for the change order. A change
order shall be approved only if the additional work is a direct result of the scope of work and not caused by
fault of the contractor. Under no circumstances can the totat repair assistance including change order and
purchase price assistance exceed $75,000. A revised deed of trust and note will be prepared together with '�""
the approved change order.
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Resolution No. 570
The engaged contractor must submit a request for change order to the City of Palm Desert staff or
designee. Requests may be made verbally for field changes but need to be followed by a written request
that provides justification for the change. Written request from engaged contractor must be submitted on
contractor's company letterhead prior to performing repairs.
VIII) PRO�ECT COMPLETION AND CONTRACTOR PAYMENT
Upon receipt of notice from the contractor that the repairs have been completed, City of Palm Desert staff or
designee will complete a final on-site property inspection in cooperation with the homeowner to verify all
repairs are complete to their satisfaction. City of Palm Desert will ensure that all billings are submitted and
processed in a timely manner. All work including punch list must be completed before any final payment can
be issued. No progress or advance payment can be made. However, Ciry of Palm Desert reserves the right
to release the payment to the contractor if City of Palm Desert or designee determined that all repairs has
been completed in accordance to the scope of work established and homeowner has been unreasonably
withholding final inspection sign off. The final deed of trust for the home repair assistance will then be
recorded and become a lien to the property.
21
APPENDICES
A. INCOME AND PROPERTY PURCHASE LIMITS
B. NEIGHBORHOOD STABILIZATION PROGRAM TARGET AREAS
C. CALCULATING ANNUAL INCOME
D. NEIGHBORHOOD STABILIZATION PROGRAM DEFINITIONS
E. HOUSING G�UALITY STANDARD CHECKLIST
F. NEIGHBORHOOD STABILIZATION PROGRAM APPLICATION CHECKLIST
G. NEIGHBORHOOD STABILIZATION PROGRAM APPLICATION PHASE FORMS
H. NEIGHBORHOOD STABILIZATION PROGRAM REG�UEST FOR FUNDING FORMS
I. NEIGHBORHOOD STABILIZATION PROGRAM CLOSING PHASE FORMS
Resolution No. 570
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Resolution No. 570
APPEND/X A
NEIGHBORHOOD STABILIZATION PROGRAM
INCOME AND PROPERTY VALUE LIMITS
Maximum Annual Household Income Adjusted for Family Size
Effective February 10, 2009
Househoid Size Maximum Annual Income
1 $54,200
2 $61,900
3 $69,650
4 $77,400
5 $83,600
6 $89,800
7 $96,000
8 $102,150
MAXIMUM PROGRAM PURCHASE PRICE LIMIT
The maximum property purchase shall be established by an appraisal prepared according to 49 CFR Part 24.
This Neighborhood Stabilization Program purchase price limit cannot exceed the actual 95 percent of the area
median sales price for the Riverside Counry published by U.S. Department of Housing and Urban Development.
The maximum program purchase price for the property limit should not exceed a292,686.
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Resolution No. 570
APPENDIX B
• Palma Village
• Palm Desert Country Club
• North Sphere
Please refer to the Target Area Maps in the Ciry of Palm Desert website www.Ciry of Palm Desert.org
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Resolution No. 570
APPENDIX C
CALCULATING ANNUAL INCOME
1) Annual income is the gross amount of income anticipated to be received by all adults in a family during
the 12 months following the effective date of the determination. Anticipated income is generally determined by
annualizing current income for the next 12 months. Annual income includes anticipated income from assets. The
following chart generally describes how to calculate various types of income. A more detailed explanation is
provided in the subsequent paragraphs.
Source of Income Guidance for Calculation
Use current circumstances to anticipate future
earnings. Include all family members over age 18,
including income of a temporarily absent spouse or
Earned Income other usual family member.
Make sure to use annual figures. If wages are paid
hourly, assume 2080 hours for full time employment.
If under $5,000, use the actual income. If over
Income from Assets (interest earning bank $5,000, use the greater of the actual or the imputed
accounts, stocks and bonds, CDs, IRAs, Keogh income based on the passbook rate established by
accounts, etc.) HUD. Assets disposed of for less than fair market
value are counted for two years. The current HUD
Passbook rate is 3.5%.
Contributions and gifts Include as income if contributions are made on a
regular basis.
Alimony and child support Include if the support is actually being provided.
Income from a business Generally, this is gross income less expenses.
Insurance settlements, inheritances, proceeds from Generally, these are assets and not income.
sale of property and other lump sum payments
Count the basic welfare grant, and in states with
Income from welfare assistance separate welfare rents", the maximum allowed for
shelter and utilities.
Periodic payments, such as social security, Make sure to calculate the annual value of periodic
pensions, etc. payments. Lump sum payments are treated as
assets.
2) The following income is to be included when calculating annual income:
a) All wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation
for personal services (before any payroll deductions);
b) Net income from the operation of a business or profession. Expenditures for business expansion or
amortization of capital indebtedness cannot be used as deductions in determining net income; however,
an atlowance 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 is included in income, except to the extent the
withdrawal is reimbursement of cash or assets invested in the operation by the Family;
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Resolution No. 570
c) Interest, dividends, and other net income of any kind from real or personal property. Expenditures for "'
amortization of capital indebtedness cannot be used as a deduction in determining net income. An
allowance for depreciation is permitted only as authorized in paragraph (b) of this section. 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 assets invested by the Family. Where the Family has Net
Family Assets in excess of $5,000, Annual Income includes the greater of the actual income derived
from Net Family Assets or a percentage of the value based on the current passbook savings rate, as
determined by HUD;
d) All gross periodic payments received from social security, annuities, insurance policies, retirement
funds, pensions, disability or death benefits, and other similar rypes of periodic receipts, including a
lump-sum payment for the delayed start of a periodic payment (except social security);
e) Payments in lieu of eamings, such as unemployment, worker's compensation and severance pay (but
see paragraph (3c} under Income Exclusions);
f) Welfare Assistance. If the Welfare Assistance payment includes an amount specifically designated
for shelter and utilities that is subject to adjustment by the Welfare Assistance agency in accordance
with the actual cost of shelter and utilities, the amount of Welfare Assistance income to be included as
income consist of:
i) The amount of the allowance or grant exclusive of the amount specially designated for shelter
or utilities; plus
ii) The maximum amount that the Welfare Assistance agency could in fact allow the Family for
shelter and utilities. If the Family's Welfare Assistance is ratably reduced from the standard of ^�^�
need by applying a percentage, the amount calculated under this paragraph is the amount
resulting from one application of the percentage; .
g) Periodic and determinable allowances, such as alimony and child support payments, and regular
contributions or gifts received from persons not residing in the dwelling. Alimony and child support
amounts awarded as part of a divorce or separation agreement are included as income unless the
homebuyer (1) certifies that the income is not being provided, and (2) takes all reasonable legal actions
to collect amounts due; and
h) All regular pay, special pay, and allowances of a member of the Armed Forces (whether or not living
in the dwelling) who is head of the Family, spouse, of other person whose dependents are residing in
the unit (but see paragraph (g) under Income Exclusions);
3) The following income is to be excluded when calculabng income:
a) Income from employment of children (including foster children) under the age of 18 years;
b) Payments received for the care of foster children;
c) Lump-sum additions to Family assets, such as inheritances, insurance payments (including payments
under health and accident insurance and worker's compensation), capital gains and settlement for
personal or property losses (but see paragraph (e) of Income Inclusion);
d) Amounts received by the Family that are specifically for, or in reimbursement of, the cost of Medical
Expenses for any Family member;
e) Income of a live-in aide;
.-�.
2s
Resolution No. 570
� Amounts of educational scholarships paid directly to the student or to the educational institution, and
amounts paid by the Government to a veteran, for use in meeting the costs of tuition, fees, books,
equipment, materials, supplies, transportation, and miscellaneous personal expenses of the student.
Any amount of such scholarships or payments to a veteran not used for the above purchases that is
available for subsistence are to be included in income;
g) The special pay to a Family member serving in the Armed Forces who is exposed to hostile fire;
h) Amounts received under training programs funded by HUD;
i) Amounts received by a Disabled person that are disregarded for a limited time for purposes of
Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to
Attain Self Sufficiency (PASS); or
j) 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, child
care, etc.) and that are made solely to allow participation in a specific program;
k) Temporary, non-recurring, or sporadic income (including gifts);
I) Reparation payments from foreign govemments in connec6on with the Holocaust;
m) Lump sum payments of SSI and Social Security benefits; or
n) Amounts specifically excluded by other Federal Statute for consideration as income for purposes of
determining eligibility or benefits under a category of assistance programs that includes assistance
under the 1937 Act, including:
i) The value of the allotment provided to an eligible household under the Food Stamp Act of
1977;
ii) Payments to volunteers under the Domestic Volunteer Act of 1973 (employment through
VISTA Retired Senior Volunteer Program, Foster Grandparents Program, youthful offenders
incarceration altematives, and senior companions);
iii) Payments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626 (a));
iv) Income derived from certain submarginal land of the United States that is held in trust for
certain Indian tribes (25 U.S.C. 259e);
v) Payments of allowances made under the Department of Health and Human Services' Low
Income Home Energy Assistance Program (42 U.S.C. 8624 (�);
vi) Payments received under programs funded in whole or in part under the Workforce
Investment Act;
vii) Income derived from the disposition of funds of the Grand River Band of Ottawa Indians;
viii) The first $2,000 of per capita shares received from judgment funds awarded by the Indian
Claims Commission, or the Court of Claims (25 U.S.C. 1407-1408), or from funds held in trust
for an Indian tribe by the Secretary of Interior (25 U.S.C. 117);
ix) 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 programs (20 U.S.C. 1087 uu);
27
Resolution No. 570
x) Payments received from program funded under Title V of the Older Americans Act of 1965 "'"
(42 U.S.C. 3056 (�);
xi) Any earned income tax credit;
xii) Payments received after January 1, 1989 from the Agent Orange SetUement Funds or any
other funds established pursuant to the settlement in Re Agent Orange product liability litigation,
MDL No. 381 (E.D.N.Y.);
xiii) The value of any chifd care provided or arranged (or any amount received as payment for
such care or reimbursement for costs incurred for such care) under the Child Care and
Development Block Grant Act of 1990 (42 USC 9858q); and
xiv) Payments received under the Maine Indian Claims Settlement Act of 1980.
4) Income from assets is to be included when determining total income. The income to be counted is: (a) the
actual income from assets if total assets are $5,000 or less; or (b) if assets are more than $5,000, the greater of
the actual income from assets, or the total assets times the passbook rate.
5) Assets include the following items:
a) Amounts in savings and checking accounts.
b) Stocks, bonds, savings certificates, money market funds and other investment accounts.
c) Equity in real property or other capital investments. Equity is the estimated current market value of
the assets less the unpaid balance on all loans secured by the asset and reasonable costs (such as ^r
broker fees) that would be incurreci in selling the asset.
d) The cash value of trusts that are available to the household.
e) IRA, Keogh and similar retirement savings accounts, even though withdrawal will result in a penalty.
f) Contributions to company retiremenUpension funds that can be withdrawn without retiring or
terminating employment.
g) Assets which, although owned by more than one person, allow unrestricted access by the
homebuyer.
h) Lump sum receipts such as inheritances, capital gains, lottery winnings, insurance settlements, and
other claims.
i) Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc.
j) Cash value of insurance policies.
k) Assets disposed of for less than fair market value during two years preceding the income
determination.
6) Assets do not include the following items:
a) Necessary personal property, except as noted in 5. i. above.
b) Interest in Indian trust lands.
..-„
28
Resolution No. 570
c) Assets that are part of an active business or farming operation. Note: Rental properties are
considered personal assets held as an investment rather than business assets unless real estate is the
homebuyer's main occupation.
d) Assets not accessible to the family and which provide any income to the family.
e) Vehicles especially equipped for the handicapped.
f) Equiry in owner-occupied cooperatives and manufactured homes in which the family lives.
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Resofution No. 570
APPEND/X D
NEIGHBORHOOD STABILIZATION PROGRAM
DEFINITIONS
Abstract or Title Search, 7itle Examination, Title Insurance Binder. These charges cover the costs of the
search and examination of records of previous ownership, transfers, etc., to determine whether the seller can
convey clear title to the property, and to disclose any matters on record that could adversely affect the buyer or
the lender. Examples of title problems are unpaid mortgages, judgment or tax liens, and conveyances of mineral
rights, leases, and power line easements or road right-of-ways that could limit use and enjoyment of the real
estate. In some areas, a title insurance binder is called a commitment to insure.
Additional Settlement Chars�es. The lender or the 6tle insurance company may require that a surveyor
conduct a property survey to determine the exact location of the home and the lot line, as well as easements
and rights of way. This is a protection to the buyer as well. Usually the buyer pays the surveyor's fees, but
sometimes this may be handled by the seNer.
Amortization. The gradual repayment of a mortgage with equal monthly payments over the life of the loan.
Annual Assessments - Recurrina. This reserve item covers assessments that may be imposed by
subdivisions or municipalities for special improvements (such as sidewalks, sewers or paving) or fees (such as
homeowners' association fees).
Annual Income. Gross amount of income anticipated to be received by all adults in a household during the 12 ,,,",
months following the effective date of the determination. Anticipated income is generally determined by
annualizing current income for the next 12 months. See Appendix C for income to be included and excluded
from the annual income calculation. �
Aaaraisal Fee. The fee charged for the preparation of an appraisal of property value.
Aqaraisal. The value of a foreclosed upon home completed within 60 days of the offer made for the property.
The appraisal must meet the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA)
and its implementing regulations at 49 CFR Part 24 for real property acquisition appraisals for federally assisted
programs.
Assumation Fee. This fee is charged for processing papers for cases in which the buyer takes over the
payments on the prior loan of the seller.
Attornev's Fees. You may be required to pay for legal services provided to the lender in connection with the
settlement, such as examination of the title binder or sales contract. Occasionally this fee can be shared with
the seller, if so stipulated in the sales contract. If a lawyer's involvement is required by the lender, the fee will
appear on this part of the form. The buyer and seller may each retain an attorney to check the various
documents and to represent them at all stages of the transaction, including settlement. Where this service is not
required and is paid for outside of closing, the person conducting settlement is not obligated to record the fee on
the settlement form.
California Housins� Finance As�encv (CaIHFAI. California Housing Finance Agency (CaIHFA) assists first-time
homebuyers by providing financing and programs that create safe, decent and affordable housing opportunities
for individuals within specified income ranges. CafFiFA was chartered as the State's affordable housing bank to
--�
make below market-rate loans through the sale of tax-exempt bonds. A completely self-supporting State
agency, bonds are repaid by revenues generated through mortgage loans, not taxpayer dollars.
30
Resolution No. 570
Citv/Countv Proaertv Taxes - Recurrins�. The lender may require a regular monthly payment to the reserve
account for property taxes.
Closins� Costs. Fees and exoenses, in addition to the down payment, that are required to complete a real
estate transaction. Closing costs may be non-recurring or recurring. Non-recurring costs are only paid once and
include, but are not limited to items such as loan origination fees, points, title fees, recording fees, transfer
taxes. Recurring costs are paid at closing and will be incurred again after purchase. Examples of recurring
costs are property taxes, hazard insurance, interest, mortgage insurance and mortgage insurance premiums,
and annual assessments. Closing costs are not eligible for payment by the Program.
Closins�. The final step in transferring ownership of a property from seller to buyer.
Credit Reoo�t Fee. This fee covers the cost of the credit report, which shows how you have handled other
credit transactions. The lender uses this report in conjunction with information you submitted with the application
regarding your income, outstanding bills, and employment, to determine whether you are an acceptable credit
risk and to help determine how much money to lend you. When credit reporting problems are encountered, you
have protection under the Fair Credit Laws.
Current Market Aoaraised Value. The current market appraised value means the value of a foreclosed upon
home or residential property that is established through an appraisal made in conformiry with the appraisal
requirements of the URA at 49 CFR 24.103 and completed within 60 days prior to an offer made for the property
by homebuyer.
Deed. A legal document conveying tiUe to a property.
Discount. Any purchase of a foreclosed upon home under this Program shall be at a discount from the current
market appraised value of the home, taking into account its current condition, and such discount shall ensure
that homebuyers are �aying below-market value for the home. Properties must be purchased at a minimum
discount rate of one percent (1%) below the current market appraised value.
Document Preparation. There may be a separate document fee that covers preparation of final legal papers,
such as a mortgage, deed of trust, note, or deed. You should check with the settlement agent to see that these
services, if charged for, are not also covered under some other service fees.
Elis�ible Proaertv. A foreclosed vacant property to be used as the buyers' principal residence which is located
in a Target Area and has an appraised property value that does not exceed the property value limit established
by the Program and meeting the discount value established.
Equity The owner's value or interest in a property. Equiry is computed as the difference between the marlcet
value of a property and the owner's indebtedness incurred against the property.
Escrow. The placement of money or documents with a third party for safekeeping pending the fulfillment or
performance of a specific act or condition.
Existins� Home. Any residence that has been previously occupied for residential purposes.
Foreclosed home. A properry or home has been foreclosed upon at the point that, under state of local law, the
mortgage or tax foreclosure is complete. HUD generally will not consider a foreclosure to be complete until after
the title for the property has been transferred from the former homeowner under some type of foreclosure
proceeding or transfer in lieu of foreclosure, in accordance with state or local law.
FHA Mort4aQe. A mortgage loan insured by the Federal Housing Administration.
31
Resolution No. 570
Fannie Mae. A nickname for the Federal National Mortgage Association (FNMA), a tax paying corporation "�'
created by Congress to support the secondary mortgage insured by FHA or guaranteed by VA, as well as
conventional home mortgages.
First Mortaas�e. A mortgage, the proceeds of which are used to purchase the property, issued by a participating
lender and recorded in first position on the deed.
First-Time Home Buver. An individual or an individual and his or her spouse who have not owned their
principal residence during the three-year period before the purchase of a home with HOME assistance, except
that the following persons shall not be excluded from consideration as a first-time Home Buyer:
A person who owns or owned a principal residence during the three year period which is not permanently affixed
to a permanent foundation in accordance with local or other applicable regulations.
Foreclosure. A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Foreclosure laws are based on the statutes of each state.
Freddie Mac. A nickname for the Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled
and operated corporation to support the secondary mortgage market. Freddie Mac purchases and sells
conventional home mortgages.
Government Recordins� and Transfer Charaes. These fees may be paid either by borrower or seller,
depending upon your contract when you buy the home or accept the loan commitment. The borrower usually
pays the fees for legally recording the new deed and mortgage. These fees collected when property changes
hands or when a mortgage loan is made, may be quite large and are set by State and/or local governments.
City, county and/or State tax stamps may have to be purchased as well. .�..
Hazard Insurance Premium - Recurrinq. This premium prepayment is for insurance protection for you and the
lender against loss due to fire, windstorm, and natural hazards. This coverage may be included in a
homeowner's policy which insures against additional risks which may include personal liability and theft.
Lenders often require payment of the first year's premium at settlement. Hazard insurance or homeowner's
policy may not protect you against loss caused by flooding. If your mortgage is federally insured and your
property is within a special flood hazard area identified by FEMA, you may be required by Federal law to carry
flood insurance on your home. Such insurance may be purchased in participating communities under the
National Flood Insurance Act.
Hazard Insurance - Recurrins�. The lender determines the amount of money that must be placed in the reserve
in order to pay the next insurance premium when due.
Home. A one-unit dwelling, including a single family home, condominium or manufactured home on a
permanent foundation that will be the buyers' permanent residence.
HOA. A homeowners' association (abbrev. HOA1 is the legal entity created by a real estate developer for the
purpose of developing, managing and selling a community of homes. It is given the authoriry to enforce the
covenants, condi6ons, and restrictions (CC8�Rs) and to manage the common amenities of the development. It
allows the developer to legally exit responsibility of the community typically by transferring ownership of the
association to the homeowners after selling off a predetermined number of lots. Most homeowners' associations
are non-profit corporations, and are subject to state statutes that govern non-profit corporations and
homeowners' associations.
Home Buver Education. A course or class designed to prepare persons for homeownership. Topic covered
include the home buying process, obtaining a loan, and responsibilities associated with homeownership,
including, but not limited to, maintenance and payment obligations.
32
Resolution No. 570
Home Inspection Reuort. A pre-purchase inspection prepared by a qualified home inspector which documents
the condition and working order of the home and all fixtures included in the home purchase agreement. The
inspection and report shall be prepared in accordance with industry standards. The report shall list any and all
condi6ons which impair the habitability of the unit. The Home Inspection Report is used to determine that the
home is in standard condition and will comply with Housing Quality Standards upon occupancy.
Home Warrantv. A wananty provided by an independent company that provides for the repair of specified items
in a home during the warranty period, usually for a small deductible. 11/3/2009 26
Homeownershiq. Ownership in fee simple title or a 99 year leasehold interest in a one- to four-unit dwelling or
in a condominium unit, or ownership or membership in a cooperative. The ownership interest may be subject
only to mortgages, deeds of trust, or other liens or instruments securing debt on the property; resale restrictions
imposed through this Program; or any other restrictions or encumbrances that so not impair the good and
marketable nature of title to the ownership interest.
Household. One or more persons occupying a housing unit.
Housinst Qualitv Standard. A minimum standard of habitability established by the Public Housing Authority.
HUD. The United States Department of Housing and Urban Development, a federal governmental agency
established to implement certain federal housing and community development programs.
tmaound Account. That portion of a mortgagor's monthly payment held in trust by the lender to pay for taxes,
hazard insurance, mortgage insurance, lease payments, and other recurring items, as they become due. Also
referred to as an escrow payment.
Interest - Recurrins�. Lenders usually require that borrowers pay at settlement the interest that accrues on the
mortgage from the date of settlement to the beginning of the period covered by the first monthly payment. For
example, suppose your settlement takes place on April 16 and your first regular monthly payment will be due
June 1 to cover interest charges for the month of May. On the settlement date, the lender will collect interest for
the period from April 16 to May 1. If you borrowed $60,000 at 12 percent interest, the interest item would be
$303.30.
Items Reauired bv Lender To Be Paid In Advance. You may be required to prepay certain items, such as
interest, mortgage insurance premium and hazard insurance premium, at the time of settlement.
Lender's Insaection Fee. This charge covers inspections, often of newly-consVucted housing made by
personnel of the lending institution or an outside inspector.
Lender's Title Insurance. A one-time premium may be charged at settlement for a lender's title policy which
protects the lender against loss due to problems or defects in connection with the title. The insurance is usually
written for the amount of the mortgage loan and covers losses due to defects or problems not identified by title
search and examination. The borrower may pay all, a part of, or none of this cost depending on the terms of the
sales contract or local custom.
Lien. A legal claim against a property that must be paid when property is sold.
Loan Oris�ination Fee. The charge assessed by a lender for processing a mortgage.
Loan-to-Value Ratio. The ratio of the mortgage loan principal (amount borrowed) to the property's appraised
value (selling price).
Morts�as�e. A lien on real estate given by the buyer as security for money borrowed from a lender.
Morts�as�ee. The lender of money or the receiver of the mortgage document.
33
Resolution No. 570
Morts�as�or. The borrower of money of the giver of a mortgage document.
Morts�as�e Insurance Premium - Recurrins�. Mortgage insurance protects the lender from loss due to payment
default by the borrower. The lender may require you to pay your first premium or a lump sum premium covering
the life of the loan in advance, on the day of settlement. The premium may cover a specific number of months,
a year in advance or the total amount. With this insurance protection, the lender is willing to make a larger loan,
thus reducing your down payment requirements. This rype of insurance should not be confused with mortgage
life, credit life, or disability insurance designed to pay off a mortgage in the event of physical disability or death
of the borrower.
Morts�as�e Insurance - Recurrina. The lender may require that part of the total annual premium be placed in
the reserve account at settlement. The portion to be placed in reserve may be negotiable.
Morts�as�e Insurer A�plication Fee. This fee covers processing the application for private mortgage insurance
which may be required on certain loans. It may cover both the appraisal and application fee.
New Home. A residence that has received a certificate of occupancy but has never been previously occupied
for residential purposes by any person. Also referred to as newly constructed.
Non-recurrins� Closina Costs. One-time fees and expenses paid at the time of closing. Non-recurring costs
are paid in full at the time of closing.
Notary Fee. This fee is charged for the cost of having a licensed person affix his or her name and seal to
various documents authenticating the execution of these documents by the parties.
Note. A written promise to pay a certain amount of money.
Owner's Title Insurance. This charge is for owner's title insurance protection and protects you against losses
due to title defects. In some areas it is customary for the seller to provide the buyer with an owner's policy and
for the seller to pay for this policy. In other areas, if the buyer desires an owner's policy he or she must pay for
it.
Pest and Other Insqections. This fee is to cover inspections for termite or other pest infestation of the home.
This may be important if the sales contract included a promise by the seller to transfer the property free from
pests or pest-caused damage. Be sure that the inspection shows that the property complies with the sales
contract before you complete the settlement. If it does not, you may wish to require a bond or other financial
assurance that the work will be completed. This fee can be paid either by the borrower or seller depending
upon the terms of the sales contract. Lenders vary in their requirements as to such an inspection.
Purchase Discount. See definition under Discount.
Point. One percent of the loan amount.
Princiaal and Interest Pavment (P811. - A periodic (usually monthly) payment that includes the interest
charges for the period plus an amount applied to amortization of principal balance.
Principal, Interest, Taxes, and Insurance Payment (PITI). The periodic payment that includes a principal and
interest payment plus a contribution to the escrow account set up by the lender to pay insurance premiums and
property taxes on the mortgage property.
�
�
Princiqal Residence. The primary dwelling unit in which a family resides. The residence can be a single family
property, a condominium unit, a manufactured home on a permanent foundation or a cooperative unit. ..�..
Professional Propertv Insqection. A pre-purchase inspection that is conducted to determine the condition of a
property prior to purchase. See also Home Inspection Report.
34
Resolution No. 570
Purchase Price. The total purchase of a property as established in an appraisal by a qualified appraiser. The
purchase price shall not exceed 95% of the area median purchase price for that rype of housing, as annually
determined by the United States Department of Housing and Urban Development (HUD).
REO . Real Estate Owned Properties are properties that had been foreclosed upon and owned by a bank,
lender, or other financial institution or third party due to a foreclosure-related proceeding. When a borrower
avoids foreclosure by moving out and turning over the property's deed to the bank or loan servicer (a process
known as a"deed in lieu"), the property also becomes part of the servicer's REO inventory.
Reserves Deposited With Lenders. Reserves (sometimes called "escrow" or "impound" accounts) are funds
held in an account by the lender to assure future payment for such recurring items as real estate taxes and
hazard insurance.
Settlement or Closins� Fee. This fee is paid to the settlement agent. Responsibility for payment of this fee
should be negotiated between the seller and buyer at the time the sales contract is signed.
Short Sale. Short sales are rypically used to prevent foreclosure. Owners use the proceeds of short sales to
settle outstanding obligations with lenders. As such, the title to the property remains in the hands of the
homeowner until the sale is executed. Accordingly, a short sale property would not meet the definition of a
foreclosed upon property funded under this Program.
Sins�le aarent. An individual who is (1) unmarried or legally separated from a spouse and (2) has one or minor
children for whom the individual has custody or joint custody, or (3) is pregnant.
Survev. The lender or the title insurance company may require that a surveyor conduct a property survey to
determine the exact location of the home and the lot line, as well as easements and rights of way. This is a
protection to the buyer as well. Usually the buyer pays the surveyor's fees, but sometimes this may be handled
by the seller.
Title. The accumulation of all rights in a property, often used interchangeably with the word ownership. Also
refers to the document that is evidence of ownership.
Title Chars�es. Title charges may cover a variety of services performed by title companies and others and
include fees directly related to the transfer of title (title examination, title search, document preparation) and fees
for title insurance, legal charges, which include fees for lenders, seller's or buyer's attorney or the attomey
preparing title work and fees for settlement agents and notaries. Due to the great diversity in practice from area
to area, your particular settlement may not include all of these items or may include others not listed. Ask your
settlement agent to explain how these fees relate to services performed on your behalf.
Title Insurance. The total cost of owner's and lender's title insurance is shown here. The borrower may pay
all, a part or none of this cost depending on the terms of the sales contract or local custom.
Title Search. A check of title records to identify liens, encumbrances and ownership rights to the property.
VA Morts�as�e. A mortgage loan guaranteed by the Veterans Administration, an agency of the federal
government that provides services for eligible veterans.
35
Resolution No. 570
APPENDIX E
HOUSING QUALITY STANDARD CHECKLIST
The following checklist will be utilized by the City of Palm Desert to determine a minimum level of habitability for
all homes purchased through the Neighborhood Stabilization Program.
Home inspectors should not use this form - it is provided here for informational purposes only. Home inspectors
should prepare their reports in accordance with industry standards for that profession, and should use forms and
methods in accordance with those standards.
...,,
..o.
36
Resolution No. 570
Housing Quality Standards (HQS) Inspection Form
A. General Information
Date of Inspection:
Address of Inspected Unit: Street:
City: County: State: Zip:
Name of Family:
Current Address of Family: Street:
City: Counry: State: Zip:
Current Telephone of Family:
B. How to Fill Out This Checklist
Proceed through the inspection as follows:
Area Checklist Cate o
1. Living Room
2. Kitchen
Room by Room 3. Bathroom
4. All Other Rooms Used for Living
5. All Seconda Rooms Not Used for Livin
Outside 6. Buildin Exterior
Basement or Utili Room 7. Heatin and Plumbin
Overall 8. General Health and Safe
Each part of the checklist will be accompanied by an explanation of the item to be inspected.
Important: For each item numbered on the checklist, check one box only (e.g., check one box only for item 1.4
"Security," in the Living Room).
In the space to the right of the description of the item, if the decision on the item is "Fail," write what repairs are
necessary.
Also, if "Pass" but there are additional code items or items not consistent with rehab standards or area codes,
write these in the space to the right.
1. LIVING ROOM For each item numbered, check one box onl .
Item # Descri tion Decision Re airs Re uired
Yes, PASS No, FAIL
LIVING ROOM PRESENT Is
1.1 there a livin room?
ELECTRICITY Are there at least
two working outlets or one
working outlet and one working
1.2 li ht fixture?
ELECTRICAL HAZARDS Is the
room free from electrical
1.3 hazards?
SECURITY Are all windows and
doors that are accessible from
1.4 the outside lockable?
37
RESOLUTION NO. 570
, WINDOW CONDITION Is there
� at least one window, and are all
� windows free of signs of severe
deterioration or missing or broken
1.5 out anes?
CEILING CONDITION Is the
ceiling sound and free from
1.6 hazardous defects�
WALL CONDITION Are tf�e walls
sound and free from hazardous
1.7 defects?
FLOOR CONDITION Is the floor
sound and free from hazardous
1.8 defects?
, LEAD PAINT Are all interior
� surfaces either free of cracking,
i scal�ng. peeling, ch�pping, and
I loose paint or adequately treated
and covered to prevent exposure
of the occupants to iead �ased
1.9 aint hazards?
WEATHER STRIPPING Is
weather stripping present and in
good condition on all windows
1.1 and exterior doors?
__ 1.11 OTHER
; 1.12 OTHER
2. KITCHEN
Item # Descri tion
KITCHEN AREA PRESENT Is
2 1 there a kitchen�
ELECTRICITY Is there ac least
one working electnc outlet anci
one working, permanently
2.2 installed li ht fixture?
ELECTRICAL HAZARDS Is the
kitchen free from electrical
2.3 hazards?
SECURITY Are all windows and
doors that are accessible from
2.4 the outside lockable?
WINDOW CONDITION l�re all
windows (ree o( siyns �(
deterioration or missing or broken
----2-5-- out panes? --- --- -
� ,
i
I
�.. _
,�
I
For each item numbered, check one box on
Decision Re airs Re uired
Yes. PASS No. FAIL
R •�,
38
Resolution No. 570
CEILING CONDITION Is the
ceiling sound and free from
2.6 hazardous defects?
WALL CONDITION Are the walls
sound and free from hazardous
2.7 defects?
FLOOR CONDITION Is the floor
sound and free from hazardous
2.8 defects?
IEAD PAINT Are all interior
surfaces either free of cracking,
scaling, peeling, chipping, and
loose paint or adequately treated
and covered to prevent exposure
of the occupants to lead based
2.9 aint hazards?
STOVE OR RANGE WITH
OVEN Is there a working oven
and a stove (or range) with top
2.1 burners that work?
REFRIGERATOR Is there a
refrigerator that works and
maintains a temperature low
enough so that food does not
spoil over a reasonable period of
2.11 time?
SINK Is there a kitchen sink that
works with hot and cold running
2.12 water?
SPACE FOR STORAGE AND
PREPARATION OF FOOD Is
there space to store and prepare
2.13 food?
WEATHER STRIPPING Is
weather stripping present and in
good condition on all windows
2.14 and exterior doors?
2.15 OTHER
2.16 OTHER
3. BATHROOM For each item numbered, check one box onl .
Item # Descri tion Decision Re airs Re uired
Yes, PASS No, FAIL
BATHROOM (see description)
3.1 Is there a bathroom?
ELECTRICITY
Is there at least one permanently
3.2 installed li ht fixture?
39
ELECTRICAL HAZARDS
Is the bathroom free from
3.3 electrical hazards?
SECURITY
Are all windows and doors that
are accessible from the outside
3.4 lockable?
WINDOW CONDITION
Are all windows free of signs of
deterioration or missing or broken
3.5 out anes?
CEIIING CONDITION
Is the ceiling sound and free from
3.6 hazardous defects?
WALL CONDITION
Are the walls sound and free from
3.7 hazardous defects?
FLOOR CONDITION
Is the floor sound and free from
3.8 hazardous defects?
LEAD PAINT
Are all interior surfaces either
free of cracking, scaling, peeling,
chipping, and loose paint, or
adequately treated and covered
to prevent exposure of the
occupants to lead based paint
3.9 hazards?
FLUSH TOILET IN ENCLOSED
ROOM IN UNIT
Is there a working toilet in the unit
for exclusive private use of the
10 tenant?
FIXED WASH BASIN OR
LAVATORY IN UNIT
Is there a working, permanently
installed wash basin with hot and
3.11 cold runnin water in the unit?
TUB OR SHOWER IN UNIT
Is there a working tub or shower
with hot and cold running water in
3.12 the unit?
VENTILATION
Are there operable windows or a
3.13 workin vent s stem?
WEATHER STRIPPING
Is weather stripping present and
in good condition on all windows
3.14 and exterior doors?
3.15 I OTHER
3.16 I OTHER
Resolution No. 570
ao
�
Resolution No. 570
4. OTHER ROOMS USED FOR LIVING AND HALLS For each item numbered, check one box onl .
Item # Descri tion Decision Re airs Re uired
Yes, PASS No, FAIL
ROOM CODE and ROOM ROOM CODES
LOCATION: 1= Bedroom or any other room used for sleeping (regardless of type of
room)
2= Dining Room, or Dining Area
3= Second Living Room, Family Room, Den, Playroom, N Room
righUleft 4= Entrance Halls, Corridors, Hal1s, Staircases
fronUrear 5 = Additional Bathroom
4.1 floor level 6= Other
ELECTRICITY If Room Code = 1,
are there at least two working
outlets or one working outlet and
one working, permanently
installed light fixture? If Room
Code does not = 1, is there a
4.2 means of illumination?
ELECTRICAL HAZARDS Is the
room free from electrical
4.3 hazards?
SECURITY Are all windows and
doors that are accessible from
4.4 the outside lockable?
WINDOW CONDITION If Room
Code = 1, is there at least one
window? And, regardless of
Room Code, are all windows free
of signs of severe deterioration or
4.5 missin or broken out anes?
CEILING CONDITION Is the
ceiling sound and free from
4.6 hazardous defects?
WALL CONDITION Are the walls
sound and free from hazardous
4.7 defects?
FLOOR CONDITION Is the floor
sound and free from hazardous
4.8 defects?
LEAD PAINT
Are all interior surfaces either
free of cracking, scaling, peeling,
chipping, an loose paint, or
adequately treated and covered
to prevent exposure of the
occupants to lead based paint
4.9 hazards?
WEATHERSTRIPPING
Is weather stripping present and
in good condition on all windows
4.10 and exterior doors?
4.11 OTHER
a�
----. . _. - ------ --r
i
Resolution No. 570
4.12 OTHER
5.ALL SECONDARY ROOM NOT USED FOR LIVING For each item numbered, check one box onl .
Item # Descri tion Decision Re airs Re uired
Yes, PASS No, FAIL
5.1 NONE. GO TO PART 6
SECURITY !\re �II windows and
doors that are accessible froni fhe
5.2 outside lockable in each room?
ELECTRICAL HAZARDS Are all
these rooms free from electrical
5.3 hazards?
OTHER POTENTIALLY
HAZARDOUS FEATURES IN
ANY OF THESE ROOMS Are all
of these rooms free of any other
potentially hazardous (eatures?
For each room with an other
potentially nazardous feature" '
explain hazard and means of
5.4 control of interior access to room."
5.5 I OTHER
i......
� 5.6 OTHER
6. BUILDING EXTERIOR For each item numbered, check one box onl .
Item # Descri tion Decision Re airs Re uired
Yes, PASS No, FAIL
� CONDITION OF FOUNDATION Is
the foundation sound and free
i 6.1 from hazards?
CONDITION OF STAIRS, RAILS,
AND PORCHES Are all the
i exterior stairs, rails and porches �
6.2 sound and free from hazards?
CONDITION OF ROOF AND
� GUTTERS Are the roof. gutters
Iand downspouts sound and free
6.3 from hazards?
CONDITION OF EXTERIOR
� SURFACES Are exterior surfaces
6.4 sound and free from hazards?
� CONDITION OF CHIMNEY Is �r�e
ch�mney sound and free from
6 5 hazards? �
a2
Resolution No. 570
LEAD PAINT: EXTERIOR
SURFACES Are all exterior
surfaces which are accessible to
children under seven years of age
free of cracking, scaling, peeling,
chipping, and loose paint, or
adequately treated or covered to
prevent exposure of such children
6.6 to lead based aint hazards?
MOBILE HOMES: TIE DOWNS If
the unit is a mobile home, it is
properly placed and tied down? If
not a mobile home, check Not
6.7 A licable." "
MOBILE HOMES: SMOKE
DETECTORS {f unit is a mobile
home, does it have at least one
smoke detector in worlcing
condition? If not a mobile home,
6.8 check Not A licable." "
CAULKING Are all fixed joints
including frames around doors
and windows, areas around all
holes for pipes, ducts, water
faucets or electric conduits, and
other areas, which may allow
unwanted air flow appropriately
6.9 caulked.
6.10 OTHER
6.11 OTHER
7.HEATING, PLUMBING AND INSULATION For each item numbered, check one box onl .
Item # Descri tion Decision Re airs Re uired
Yes, PASS No, FAIL
ADEQUACY OF HEATING
EQUIPMENT a. Is the heating
equipment capable of providing
adequate heat (either directly or
indirectly) to all rooms used for
living? b. Is the heating equipment
oversized by more than 15%? c.
Are pipes and ducts located in
7.1 unconditioned s ace insulated?
SAFETY OF HEATING
EQUIPMENT Is the unit free from i
unvented fuel burning space
heaters, or any other rypes of
7.2 unsafe heatin conditions?
VENTILATION AND ADEQUACY
OF COOLING Does this unit have
adequate ventilation and cooling
by means of operable windows or
7.3 a workin coolin s stem?
43
Resolution No. 570
HOT WATER HEATER Is hot
water heater located, equipped,
7.4 and installed in a safe manner?
WATER SUPPLY Is the unit
served by an approvable public or
7.5 rivate sanita water su I?
PLUMBING Is plumbing free from
major leaks or corrosion that
causes serious and persistent
levels of rust or contamination of
7.6 the drinkin water?
SEWER CONNECTION Is
plumbing connected to an
approvable public or private
disposal system, and is it free
7.7 from sewer back uo?
I INSULATION Are the attic and
walls appropriately insulated for
7.8 re4ional conditions?
7.9 I OTHER
7.1 I OTHER
8. GENERAL HEALTH AND SAFETY For each item numbered check one box on
Item # Description Decision Reaairs Reauired
Yes, PASS I No, FAIL
ACCESS TO UNIT Can the unit
be entered without having to go
8.1 throu h another unit?
EXITS Is there an acceptable fire
exit nom this building that is not
8.2 blocked?
EVIDENCE OF INFESTATION Is
the unit free from rats or severe
8.3 infestation b mice or vermin?
GARBAGE AND DEBRIS Is the
unit free from heavy accumulation
of garbage or debris inside and
8.4 outside?
REFUSE DISPOSAL Are there
adequate covered facilities for
temporary storage and disposal of
food wastes, and are they
8.5 aaproved bv a local aaencv?
aa
Resolution No. 570
INTERIOR STAIRS AND
COMMON HALLS Are interior
stairs and common halls free from
hazards to the occupant because
of loose, broken or missing steps
on stairways, absent or insecure
railings; inadequate lighting, or
8.6 other hazards?
OTHER INTERIOR HAZARDS Is
the interior of the unit free from
any other hazards not specifically
8.7 identified reviousl ?
ELEVATORS Where local
practice requires, do all elevators
have a current inspection
certificate? If local practice does
not require this, are they working
8.8 and safe?
INTERIOR AIR QUALITY Is the
unit free from abnormally high
levels of air pollution from
vehicular exhaust, sewer gas, fuel
8.9 as, dust, or other Ilutants?
SITE AND NEIGHBORHOOD
CONDITIONS Are the site and
immediate neighborhood free
from conditions, which would
seriously and continuousfy
endanger the health or safery of
8.1 the residents?
LEAD PAINT: OWNER
CERTIFICATION If the owner of
the unit is required to treat or
cover any interior or exterior
surfaces, has the certification of
compliance been obtained? If the
owner was not required to treat
8.11 surfaces, check Not A licable." "
8.12 OTHER
8.13 OTHER
as
Resolution No. 570
APPENDIX F
NEIGHBORHOOD STABILIZATION PROGRAM (NSP)
APPLICATION CHECKLIST
All applications must be typed or printed neatly. All forms should be filled out completely. Make sure
applications are signed, and notarized, where required. Incomplete applications will not be accepted. All
items must be included in initial submittal - faxes will not be accepted for the Reservation Phase. Applications
tr�at are missing any required items or contain white-out will not be processed and will be returned to the Lender.
The Program uses a four-phase process: application. reservation. request for funding, and closing.
NSP Application. The following items are required in order to accept an application for a specific homebuyer.
NSP Reservations are accepted on a first come, first served basis. City of Palm Desert will accept a maximum
of two applications per lender branch, per day. City of Palm Desert will review the following items according to
1he NSP Manual guidelines and respond to any application acceptance request within ten (10) working days.
Cover Letler
Neighborhood Stabilization Program Application (NSP-1)
Certification of Homebuyer (NSP-2)
- Notice to Sellers and Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards
(NSP-3)
NSP Program Financing Worksheet (NSP-4)
Income Affidavit (NSP-5) - (if applic�ble)
Voluntary Acquisition of Foreclosed Property (NSP-6) - Initial and Final Form
In addition to these forms, please submit these non-City of Palm Desert forms:
Copy of Signed Sales Agreement, including all counter offers and Transfer Disclosure Statements
Copy of Escrow Instructions
Attached Map showing location of the house inside NSP Target Area
Copy of Complete Prelin�inary Report
Copy of Certificate of Occupancy (for new homes only)
- Copy of HCD Form 433 (a) (for manufactured homes only)
:_ Copy of Fully Completed and Signed Loan Application
= Copy of Home Inspection for existing homes. (This can be submitted after Final NSP-6 is signed and
completed establishing tfie final value).
Copy of the Signed Good Faith Estimate closiny form
Copy of Standard Flood Hazard Determ�nat�on (FEN1A Forrn 81-93), or copy of FEMA website
deterrnination.
as
Resolution No. 570
❑ Last three (3) years of federal tax returns
PLEASE NOTE: For each year of tax returns submitted the statement "This is a true and exact copy of
the tax returns submitted to the IRS" must be added to each tax return with the homebuyer's wet
signature next to the statement.
a�
Resolutio� No. 570
r..,..
APPEND/X G
NEIGHBORHOOD STABILIZATION PROGRAM (NSP)
APPLICATION PHASE
(Application is on separate attachment)
......
�
48
Resolution No. 570
APPEND(X H
NEIGHBORHOOD STABILIZATION PROGRAM
REQUEST FOR FUNDING FORMS
❑ Cover Letter
u True and Correct copy of FNMA Summary Form 1008, OR True and Correct copy of FHA Mortgage
Credit Analysis Worksheet, Form 92900-WS
❑ Copy of Certificate of Completion of Home Buyer Education Class
❑ Written Proof of items listed in Home Inspection or Purchase Agreement completed prior to occupancy
have been completed
o Written request from escrow officer for deposit of NSP funds (wire instructions must be submitted in a
font size 10 or larger and include the bank name, bank address, ABA/routing number, account number,
escrow/title number, and client vesting)
IVOTE: These documents will be drawn by City of Palm Desert and delivered to escrow for the
homebuyer to sign.
� Disclosure Statement Promissory Note for the Purchase Price Assistance
n Subordinate Deed of Trust for Purchase Price Assistance
❑ Subordinate Deed of Trust for Home Repair Assistance (outside of escrow)
O Promissory Note for the Home Repair Assistance (outside of escrow)
❑ Itemization of Amount Financed
r� Escrow Officer Checklist (to be initialed and signed by Escrow Officer)
49
Resolution No. 570
APPENDIX 1
NEIGHBORHOOD STABILIZATION PROGRAM
CLOSING PHASE FORMS
Escrow to submit the following:
NSP Disclosure Statement.
NSP Promissory Note.
NSP Subord�nate Deed of Trust (cert�fied copy)
Request for Notice (certified copy)
NSP Itemization of Amount Financed
Escrow Officer Checklist (to be initialed and signed by the Escrow Officer)
Proof of Property Insurance
Estirnated HUD-1
NOTE:
Escrow submits a copy of the Final HUD-1 statement within ten (10) working days after closing.
Title Company provides City of Palm Desert with a copy of the Title Insurance Policy insuring the City's
Interest in the property Table of Contents.
50