Agenda Item # 3
Columbus Consolidated Government
Council Meeting
Date
Agenda Report # ___55____
TO: Mayor and Councilors
SUBJECT: American Dream Downpayment Initiative (ADDI) Program
INITIATED BY: City Manager?s Office
___________________________________________________________________________
Recommendation: Approve a resolution authorizing the adoption of the policies
and procedures for American Dream Downpayment Initiative (ADDI) program.
Background: The American Dream Downpayment Initiative (ADDI) was signed into
law on December 16, 2003. ADDI aims to increase the homeownership rate,
especially among lower income and minority households, and to revitalize and
stabilize communities. ADDI will help first-time homebuyers with the biggest
hurdle to homeownership ? the down payment. The definition (for purpose of the
ADDI Funds) of a first-time homebuyer is a person who has not owned a home
during the three-year period prior to the purchase of a home with ADDI
assistance. The City of Columbus first two allocations of funds equal
$127,767. This funding will provide approximately 12 homeowners.
Analysis: The ADDI program will provide assistance in the form of a
low-interest rate loan deferred until the time of sale, transfer or end of
affordability period (five years). The deferred loan will be in the amount of
$10,000 or six (6) percent of the purchase-price of the home whichever is
greater. The maximum purchase price of the home will be $95,000 under this
program.
The ADDI Program, will be targeted to the City of Columbus? redevelopment areas
to help stimulate both the existing property sales and new construction, while
increasing the level of affordable housing. The redevelopment areas are 2nd
Avenue, South Lawyers Lane, Beallwood, 5th/6th Avenue, East Highlands and the
Medical Center areas (see attached maps).
Financial Considerations: Funding for this program is provided by the
Department of Housing and Urban Development through the American Dream
Downpayment Initiative (ADDI) Program. There will no impact on the operating
budget of the City.
Recommendations/Actions: Approve a resolution authorizing the adoption of the
policies and procedures for American Dream Downpayment Initiative (ADDI)
program.
A RESOLUTION
NO. _____
A RESOLUTION AUTHORIZING THE ADOPTION OF THE POLICIES AND PROCEDURES
FOR AMERICAN DREAM DOWNPAYMENT INITIATIVE (ADDI) PROGRAM.
WHEREAS, the Consolidated Government of Columbus, Georgia has received funding
from the Department of Housing and Urban Development for the American Dream
Downpayment Initiative (ADDI) Program; and,
WHEREAS, the ADDI Program aims to increase the homeownership rate, especially
among lower income and minority households, and to revitalize and stabilize
communities; and,
WHEREAS, the policies and procedures as written for the Consolidated
Government of Columbus, Georgia has been developed as prescribed by the Federal
Regulations of the Department of Housing and Urban Development; and,
WHEREAS, the Council of Columbus Georgia has reviewed the policies and
procedures.
NOW, THEREFORE, THE COUNCIL OF COLUMBUS, GEORGIA, HEREBY RESOLVES AS FOLLOWS:
1. That the attached Policies and Procedures for the ADDI Program for the
Consolidated Government of Columbus Georgia is hereby approved.
2. The City Manager and/or his designee is hereby authorized to execute all
contracts, agreements and understandings related to the ADDI Program.
Introduced at a regular meeting of the Council of Columbus, Georgia, held the
_________day of _____________, and adopted at said meeting by the affirmative
vote of ____________members of said Council.
Councilor Allen voting __________.
Councilor Anthony voting __________.
Councilor Davis voting __________.
Councilor Henderson voting __________.
Councilor Hunter voting __________.
Councilor McDaniel voting __________.
Councilor Turner Pugh voting __________.
Councilor Rodgers voting __________.
Councilor Suber voting __________.
Councilor Woodson voting __________.
___________________________________ ____________________________
Tiny B. Washington, Clerk of Council Robert S. Poydasheff, Mayor
Columbus Consolidated Government
Community Reinvestment
American Dream Downpayment Initiative (ADDI)
HOME Program
Adopted By Council on: TBD
1. Purpose
The American Dream Downpayment Initiative (ADDI) was signed into law on
December 16, 2003. ADDI aims to increase the homeownership rate, especially
among lower income and minority households, and to revitalize and stabilize
communities. ADDI will help first-time homebuyers with the biggest hurdle to
homeownership ? the down payment. The definition (for the purposes of the ADDI
Funds) of a first-time homebuyer is a person who has not owned a home during
the three-year period prior to the purchase of a home with ADDI assistance.
The ADDI Program, will be targeted to the City of Columbus? redevelopment areas
to help stimulate both existing property sales and new construction, while
increasing the level of affordable housing. The redevelopment areas are 2nd
Avenue, South Lawyers Lane, Wynnton Park, Beallwood, 5th/6th Avenue, East
Highlands and the Medical Center areas (see attached maps of each area).
2. Type of Assistance
Assistance will be provided in the form of a low-interest rate loan deferred
until the time of sale, transfer, or end of affordability period. The deferred
loan will be in the amount of $10,000 or six percent of the purchase-price of
the home whichever is greater. Up to $1,000 will be allowed for pre-paid fees
(taxes and insurance). Funds cannot be used for closing cost.
3. Eligible Participants
There are three primary eligibility requirements for participation in the ADDI
Program. These are:
A. One must be a low income family or individual. Low income means the
individual or family must have a gross income that does not exceed 80% of the
median income for the area, as determined by HUD, with adjustments for smaller
or larger families. Gross annual income is defined as all income anticipated
to be received from all sources by each family member residing in the home in
the next twelve months. The income limits are established by HUD for the
Columbus MSA and are adjusted annually. The current limits that were most
recently provided in spring of 2004 are:
1 Person - $ 26,800
2 Persons - $ 30,650
3 persons - $ 34,500
4 Persons - $ 38,300
5 Persons - $ 41,400
6 Persons - $ 44,450
7 Persons - $ 47,500
8 Persons - $ 50,600
B. Prior to the lender submitting an ADDI Application Package to the Community
Reinvestment Division the applicant must attend a HUD approved Homebuyer
Counseling Seminar (and obtain a completion certificate); also the Homebuyer
Assistance Application Package must be complete. The Community Reinvestment
Staff will then review the packet for approval. Upon approval the Community
Reinvestment staff will submit a Loan Commitment Voucher to the lending
Institution for further processing. Lending Institutions may also forward a
letter of approval along with the completion certificate from the HUD Approved
Housing Counseling Agency to reserve funds. The Loan Commitment Voucher will be
issued to the lender at the time the complete package has been approved. The
Loan Commitment Voucher will expire 60 Days from the date it is issued. (See
loan commitment voucher for further instructions)
C. The Participant must occupy the property as their principal residence for
five years. A deed covenant will be used to ensure the participant maintains
the property as their principal residence.
4. Eligible Properties
Any new or existing single-family house may be eligible. According to HUD
regulations the purchase price for units assisted under this Program cannot
exceed 95% of the median purchase price of homes in the Columbus MSA or FHA
Mortgage limits for the MSA. Within these limits the City has set $95,000 as
the current maximum purchase price for homes assisted under this program.
These limits may be adjusted as additional HUD data is received.
Administrative Policy Revisions may be used to make these adjustments.
Homes to be assisted must pass the International Building Codes as most
currently updated and must meet all applicable Lead Based Paint Standards.
5. Affordability Period
A primary objective of ADDI Funds and the HOME program is to supply permanent
affordable housing over an extended period of time. The extended period is
called the period of affordability. For this Program the Period shall not be
less than five years.
6. Resale and Recapture Provisions
All properties purchased with assistance provided through this program will be
subject to resale and recapture provisions.
The recapture provisions require that if the property is sold or if the buyer
discontinues occupancy prior to completion of the affordability period, or the
property goes into foreclosure, the recapture amount will be based on the net
proceed available from the sale. If there is no net proceeds from the
foreclosure, repayment is not required and HOME requirements are considered to
be satisfied. The affordability period will begin on the date of the loan
closing and continue for a period of five years.
7. Use of Resale Funds
Any funds recaptured from the resale of properties under the ADDI Program prior
to the expiration of the affordability period of 5 years will be available to
new homebuyers in the City?s redevelopment areas creating a new affordability
period and ensuring an ongoing commitment to the Program.
8. Second Mortgage Position
The City of Columbus will take a second mortgage position for the amount of the
loan plus interest for a term to coincide with the affordability period. The
second mortgage will specify the "Diminishing Subsidy" provision and
forgiveness of the loan in the event the purchaser maintains the property as
their principal residence throughout the affordability period. The City of
Columbus will subordinate its security deed to a refinanced first mortgage,
PROVIDED that:
1. Providing the new mortgage meets one of the following two tests:
a. The interest rate on the new mortgage shall be lowered a minimum of
1.5% from the interest rate on the original mortgage; or
b. Closing costs can be amortized in 36 months or less
2. The new mortgage has as its base a minimum of the first 5 years a
fixed rate.
3. A fee of $100.00 will be charged for each Subordination Agreement
executed by the City. This Fee must be paid by the Lender and not included in
the costs for the homeowner. The check shall be made payable to the
Consolidated Government of Columbus, Georgia. The office of Community
Reinvestment is located at 420 Tenth Street, 2nd Floor, Columbus, Georgia
31902.
4. A fully executed copy of the ?GA Fair Lending Tangible Net Benefit
Worksheet? (filled out completely) and a check in the amount of $100.00 shall
be forward with each Subordination Agreement.
5. The payoff from the first mortgage company must be submitted with
the Subordination Agreement.
9. Private Sector Involvement
The Community Reinvestment Staff of the City of Columbus will work closely with
the banks and mortgage lenders to assist in the development of methods and
programs designed to assist homebuyers in obtaining first mortgage financing
and will approve only fixed rate mortgages as long as they meet other program
guidelines. Adjustable Rate Mortgages (ARM?s) and Balloon Mortgages are not
authorized under our program.
Violation of the above policy will result in the following administrative
actions:
First Offense: Will result in a one (1) year suspension of the organization
from participating in the program.
Second Offense: Will result in permanent expulsion of the organization from
participating in the program.
10. Compliance
The Community Reinvestment Staff will monitor the program to assure compliance
with all rules and regulation pertaining to the ADDI and HOME Program,
including but not limited to affirmative action to encourage Disadvantaged
Business Participation (MBE/WBE) and Affirmative Marketing Policies and
Procedures.
11. Revisions
Changes in the ADDI Program will be made as necessary and will require approval
of the Council of Columbus or Chief of Community Reinvestment, as appropriate.
12. Closings
Closings for homes to be assisted through the City's ADDI Program should not be
scheduled prior to 10 business days after verification that all required
information has been correctly supplied to the Columbus Community Reinvestment
Division and an approval letter issued. The Division will make every effort to
process documentation as quickly as possible, but adherence to this policy
should allow the Program to work more effectively.
13. Closing Documents
The agency attorney will provide the first mortgage-closing attorney with the
documentation to be signed by the homebuyer at closing and the $10,000.00
assistance check. The first mortgage closing attorney shall within 5 business
days return to the agency?s attorney the signed documentation plus copies of
other documents from the first mortgage closing file that are necessary to
demonstrate the purchase was closed in compliance with program guidelines.
The City of Columbus Community Reinvestment reserves the right to refuse to
allow its assistance proceeds to be disbursed by, and its loan closed by,
attorneys who are chronically tardy and uncooperative in returning
documentation.