1988-091-Adopting The Housing Conversation Program GuidelinesRESOLUTION NO. 1988 -91
A RESOLUTION OF THE TOWN OF LOS GATOS ADOPTING
THE HOUSING CONSERVATION PROGRAM GUIDELINES
RESOLVED, BY THE TOWN COUNCIL OF THE TOWN OF LOS GATOS, that the Town
Council adopts the attached Housing Conservation Progarm Guidelines.
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los GAtos held on the 16th day of May 1988, by the following
vote:
AYES: COUNCIL MEMBERS: Joanne Benjamin, Thomas J. Ferrito, Robert
L. Hamilton, Brent N. Ventura, and Mayor Eric D. Carlson
NOES: COUNCIL MEMBERS: None
ABSTAIN: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: None
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
ATTEST:
CLERK 07 THE TOWN OF LOS GAT
HOUSING CONSERVATION PROGRAM GUIDELINES
I. PURPOSE
The Town of Los Gatos Housing Conservation Program is funded with CDBG funds
made available through the Housing and Community Development Act of 1974. The aim
of the program is to conserve and improve the quality and safety of the existing
housing stock in the Town. This will be achieved in four ways:
A. Owner occupied housing loans
B. Rental Rehab loans
C. Emergency grants
D. Home Safety grant
II. PROGRAM ELIGIBILITY CRITERIA
A. Structure located within Town's boundary agreement area.
B. Must evidence adequate capacity to repay.
C. Rehab loan in combination with private resources must be sufficient to
eliminate substandard condition.
D. Structure must be of legal status.
E. Sum of mortgages (including rehab loan) not to exceed 90% of appraised
value.
F. Clients may apply for one or more of the available programs.
G. Client's income to debt ratio not to exceed 50% gross income (including
rehab loan debt).
H. Client can't own other real estate (exception: Rental rehab loans).
I. Eligible work determined by County.
J. Eligible structures: single family homes, duplexes, approved mobile homes
(exception: Rental rehab loans).
K. Must have evidence of adequate fire insurance.
III. HOUSING CONSERVATION PROGRAMS
A. Rehab Loans
1. Owner Occupied Housing Loans
- 0% interest rate: client's income under 50% County Median Income -
payments may be deferred.
- 3% interest rate: client's income 50% - 80% County Median Income.
- 3 - 20 year term (Loan Review Committee determines term of loan based
on financial condition).
- Maximum Loan - determined by formula (see Exhibit A).
2. Rental Rehab Loans
- 51% units rented to tenant whose income under 80% County Median
Income.
- 15 year term.
- Maximum loan per unit $15,000 for single unit; $25,000 multi -unit.
Maximum of $100,000.
Eligible structures 1 - 10 unit dwellings.
Payments may be deferred up to five years, upon request of applicant,
upon the approval of the Loan Review Committee based on the pro forma
submitted by the applicant stating costs of the improvements and the
expected return of rental income.
Rent restrictions apply for life of loan - not to exceed Fair Market
Rent Schedule established by HUD for the Section 8 Housing Assistance
Program. Rent restrictions apply only to those 51% of the units
occupied by low- moderate income tenants.
3. Emergency Loans
Income not to exceed 100% County Median Income.
- Maximum loan - $15,000.
- Eligible work - only A rated housing code items.
- 6% interest rate.
- 3 - 5 year term.
- Income to debt ratio not to exceed 50% of client's gross income.
- Owner- occupied housing only.
Emergency condition (threat of life and property) exists.
B. Rehab Grants
1. Emergency Grants
- Income under 80% of County Median Income.
- Maximum grant - $1,500.
- Eligible work - only A rated housing code violations. Resources must
be sufficient to eliminate substandard conditions.
- Owner occupied housing only.
- Emergency condition (threat of life and property) exists.
IV. GENERAL GUIDELINES
A. Guidelines For Loan Approval
1. Credit worthiness verified by credit report mortgage verification
2. Income to debt ratio not to exceed 50% gross
3. Income verified by most recent 1040 or other appropriate means, such
as, but not limited to, recent pay stubs, social security verfication,
and income verification.
B. Subordination
If a client refinances their home moving the Town's position down, the loan
is due and payable, with the exception of Reverse Annuity Mortgage loans.
If the Town's position remains the same or is moved up, the Loan Review
Committee reserves the right to review the client's financial status to
determine whether or not the loan is due and payable.
C. Rental of Property
Owners receiving owner occupied rehab loans are not permitted to lease,
rent, sublet, or otherwise assign his interests in the property, except
that the property may be leased for limited periods of time when the owner
is required to live elsewhere and expects to return. Tenants will be
limited to persons qualified under the Section 8 income limits.
D. Due on Sale clause
In the event the property described in the Deed of Trust or any part
thereof is sold, agreed to be sold, conveyed or alienated by the
Trustor or by the operation of law which includes but is not limited
to transfers resulting from death or otherwise, the obligation
evidenced in the Note, irrespective of the maturity date expressed
herein at the option of the holder thereof and without demand of
notice, shall immediately become due and payable.
E. Delinquencies and Default
A loan is delinquent when it is 30 days or more in arrears. A loan is
in default when it is 60 days or more in arrears, or the Loan Review
Committee determines default has occurred either because the loan is
more than 30 days in arrears, or because of the payment history, the
debtor.
The Town Attorney to take all lawful measures at his /her discretion to
collect amount due. These measures include the exercise of the power
of sale and civil litigation. If, in the Town Attorney's opinion,
there is a question about the adequacy of security or collectability
of a judgment, he /she reports the matter to the Town Council.
V. RESPONSIBILITIES
A. Community Services Division
1. Community Services Specialist - locates eligible clients, determines
eligibility, verifies income data, compiles loan package for Loan
Review Committee, and makes recommendations for loan approval.
Payments monitored on a monthly basis.
2. Community Service Manager - supervises Community Services Specialist
and serves on Loan Review Committee.
B. Loan Review Committee - consists of Director of Planning, Chief Building
Official, Community Services Division Manager. They recommend policy
changes and determine loan approval. Loan Review Committee reviews
eligible work recommended for each project.
C. Town Manager is authorized to sign payment authorization forms, bank
agreements, and other pertinent documents.
D. Treasurer - sign payment authorization forms; can transfer funds within
accounts.
E. County
1. Rehab Specialist - surveys property to determine work necessary; puts
the job out to bid and makes progress and final inspections of all
work done.
2. County Staff - reviews quarterly reports, monitors program.
F. Bank - collects the installment loan payments.
CSD:HSCONSERPR
EXHIBIT A
LARGE LOAN FORMULA
To determine if an applicant should be granted a loan which would bring
his /her outstanding loan balance over $25,000, the following formula must
be solved for LL t:
4-
LLt G B - max (SL, Lt) Z Li
i = t + 1
where,
t = current quarter
LL = large loans; those with an outstanding balance over $25,000
B = budget; funds available for the remainder of the year, t through
4th quarter.
L = estimated loan amount
SL = small loans; those with an outstanding balance of less than $25,000