Oakland County American Dream Downpayment Initiative

Loan Program Guidelines
Oakland County Community and Home Improvement Division

Introduction

Obtaining downpayment and closing costs is the biggest hurdle to homeownership for low-income families. By providing a dedicated stream of funding to cover these costs, the Oakland County American Dream Initiative (ADDI) Loan Program can increase the homeownership rate, especially among low income and minority households, and can revitalize and stabilize communities. In December 2003, the U.S. Congress authorized the ADDI program to be administered under the U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnership Program. The ADDI program is administered locally by the Oakland County Community and Home Improvement Division. The County’s ADDI Loan Program provides assistance with downpayment and closing costs associated the purchase of eligible single family housing located within participating communities.

General information on the ADDI Program may be found on the HUD website. For Oakland County ADDI information contact the Oakland County Community and Home Improvement Division, Bldg. 38E, 1200 N. Telegraph Rd., Pontiac, MI 48341-0414 (248) 858-0493 or on the website.

Application Procedures

Oakland County ADDI loan applications and a list of participating financial institutions can be obtained from the Oakland County Community and Home Improvement Division Offices at (248) 858-0493.

Targeted Outreach

Outreach efforts will be made to those low-income households who may qualify for ADDI assistance.

Applicant Suitability

The Oakland County Community and Home Improvement Division in partnership with participating financial institutions will evaluate homebuyer suitability for ADDI program.

Homebuyer Eligibility Requirements

Eligible Applicants

Applicants are eligible if they meet suitability criteria and are first time homebuyers purchasing single-family housing units for their own occupancy. (The definition of "first-time homebuyer" is somebody who has not owned a home during the three-year period before the purchase of a home with ADDI assistance.) Exceptions to the rule are defined in 24 CFR 92.2. Eligible applicants must live or work in Oakland County as defined in 24 CFR 982.207 at the time of the application.

Income

Applicants are eligible for ADDI assistance if their gross household income does not exceed 80% of area median income (AMI) as established by HUD. Income limits that vary by family size will be updated in accordance with HUD revisions. Income is determined in accordance with CFR 92.203.

Asset Limitation

Net household assets of the eligible applicant, determined in accordance with 24 CFR 92.203, are limited to no more than $50,000 at the time of the application.

Credit Worthiness

Eligible applicants must satisfy standard credit granting criteria and qualify for a fixed-rate first mortgage. All ADDI mortgages must demonstrate that property taxes and homeowner’s insurance are escrowed as part of the first mortgage.

Homebuyer Education

Eligible applicants must complete pre-purchase homeownership counseling through Oakland County’s HUD approved Housing Counseling Unit, at no cost, after pre-approval by a participating financial institution and before any commitment to purchase. The County’s housing counselor will provide a one-on-one session tailored to meet the needs of the potential homebuyer. Successful applicants must also agree to participate in post purchase counseling with the Oakland County housing counselor within six months of property closing.

Property Eligibility

Maximum Purchase Price

The purchase price of the property may not exceed the applicable Single Family Mortgage Limits under Section 203(b) of the National Housing Act, as periodically adjusted by HUD.

Location and Type

ADDI eligible properties must be located in an Oakland County community participating in Oakland County’s Community Development Block Grant and HOME programs.

An eligible property is a single-family home, attached to a permanent foundation, or a condominium. Mobile homes, co-operative and multi-family units are not eligible.

The property may not be located in a 100-year flood plain.

Homes purchased with ADDI assistance must be for purchaser occupancy.

Property purchased must be currently vacant, owner occupied, or a rental property occupied by the current tenant purchasing the housing unit in which they reside. Homes purchased under the ADDI program may not displace a tenant.

Property Standards

Net household

Funding

Eligible Uses

Funds may be used to pay for downpayment assistance and reasonable and customary closing costs as defined in 24 CFR 92.602. ADDI funds may not be used to complete or pay for any repairs to the property.

Amount of Assistance

The amount of ADDI assistance is a $10,000 loan. ADDI funds will only pay costs incurred in the property purchase. Homebuyers cannot receive cash back at mortgage closing.

Homebuyer Contribution

Homebuyers must personally contribute a minimum of 2% toward the purchase price of the home.

Form of Assistance

Funds will be provided to qualified homebuyers in the form of a zero-interest rate, deferred payment loan. This is a non-transferable loan. This is a non-forgivable loan. The loan becomes due and payable when the mortgagor transfers interest in the property, except as prohibited by law, upon property sale, or when the property changes ownership either by sale, gift, land contract, inheritance or rental property conversion. Homebuyers must execute an Oakland County Mortgage and Note securing the property as collateral for the amount of ADDI assistance.

Subordination

Oakland County may consider subordination of the ADDI loan if the homeowner refinances for a lower interest rate or term and does not take cash out.

Program Income

Program income generated under the ADDI will be treated as HOME program income. These funds will be used to carry out HOME-eligible activities.

FY 2004 Oakland County American Dream Downpayment Initiative (ADDI) Loan Program Guidelines Attachment

Participating Communities

Gross annual income includes income from all household members over age 18, regardless of relationship. Income limits are established annually by the U.S. Department of Housing and Urban Development.

Single Family Mortgage Limit

Maximum Purchase Price: $226,100.00

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The City of Ferndale, Michigan
300 East Nine Mile Road
Ferndale, Michigan  48220
(248) 546-2525