Neighborhood Stabilization Program

Neighborhood Stabilization Program Application

Neighborhood Stabilization Program Credit Report Order Form

The City of Farmington Hills has received funding from the Michigan State Housing Development Authority (MSHDA) to address foreclosed and abandoned housing. Qualified households can purchase vacant foreclosed houses in Farmington Hills as their principal place of residence, through FHA-financed mortgages.

It is important to note and to emphasize that the assistance process with a realtor and a lender will NOT begin until an applicant receives program-eligible status as outlined below. All financial assistance provided will be allocated directly to the FHA-approved lending institution; No funds will be provided directly to eligible applicants.

Who can be assisted?

On a first-come, first-served basis, the City of Farmington Hills will assist program eligible applicants. An applicant will not be considered program-eligible until after all of the following steps are completed:

• The applicant completes and returns to the City a Prospective Homebuyer application and a Credit Report Order Form.
• The applicant’s income eligibility is documented and confirmed by the City.

• The applicant completes an eight-hour NSP Housing Counseling Assistance Program funded by the City.
• The applicant agrees to the City’s terms of assistance.

If you are interested in being considered for assistance through this program, call Rick Lampi at 248-871-2549 or e-mail rlampi@fhgov.com. When submitting an application, a complete copy of your most recent federal and state income tax returns must be attached to determine eligibility. Additional documentation may be required before eligibility is determined. Completed applications and credit report order forms will only be accepted by mail or in person at the Community Development Office. Fax copies will not be accepted.

What are the terms of assistance?

NSP funding is intended to stabilize neighborhoods and provide affordable housing. The City has established financial assistance as a no interest, no monthly payment loan that will be secured by a second lien on the purchased property. The loan will remain due and payable by the applicant for the duration of the following affordability schedule:

If the beneficiary sells the home or ceases to use it as a principal residence within the affordability period, the loan amount shall be recaptured in accordance with this schedule. If the program-eligible applicant maintains ownership and principal residence status through the conclusion of the affordability period, the loan will be forgiven and the continued affordability requirement will be satisfactorily completed.

What is the scope of assistance?

On a first-come, first-served basis, the City will provide the following:

• Low-Income Applicants
  • Up to $31,000 in down payment assistance in accordance with the following distribution:
  • Up to $3,000 to be applied to the closing costs and/or prepaid expenses
  • Up to $8,000 to be applied to the required down payment
  • Up to $20,000 to be applied as a mortgage principal subsidy to provide low-income applicants an increased affordability range (i.e. if the low-income applicant can afford mortgage payments on a property valued at $50,000, the intent of the mortgage principal subsidy is to increase the applicant’s range of housing opportunities to the $50,000-$70,000 price range.)
  • Up to $19,000 will be available for required repairs through the FHA streamlined 203(K) program if the property being purchased requires repairs to achieve compliance with the Michigan Rehabilitation Code for Existing Buildings.
• Middle-Income Applicants
  • Up to $4,000 for closing costs, prepaid expenses, and/or required down payment.
  • Up to $5,000 will be available for required repairs through the FHA streamlined 203(K) program if property purchased requires repairs to achieve compliance with the Michigan Rehabilitation Code for Existing Buildings.

In addition, up to $5,000 is available to both low-income and middle-income applicants for Energy Star appliances.

What are NSP-eligible properties?

Abandoned and foreclosed single family residential properties where the purchase price is at least one percent below the current market appraised value. For the NSP, HUD has established the following definitions:

• Current Market Appraised 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 conformity with the appraisal requirements of the Uniform Relocation Act (URA) at 49 CFR 24.103 and completed within 60 days prior to an offer made for the property by the City, subrecipient, developer, or individual homebuyer.
• Abandoned – A home is abandoned when mortgage or tax foreclosure proceedings have been initiated, no mortgage or tax payments have been made by the property owner for at least 90 days, AND the property has been vacant for at least 90 days.
• Foreclosed – A property “has been foreclosed upon” at the point that, under state or 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.

Which realtors can participate?

Any realtor who signs the City of Farmington Hills NSP Letter of Understanding will be eligible to participate.

Which lenders can participate?

For program-eligible applicants obtaining a mortgage without requiring home repair assistance, any FHA approved lending institution will be eligible to provide lending assistance.

For program-eligible applicants acquiring an NSP-eligible property that requires repairs necessary to achieve compliance with the Michigan Rehabilitation Code for Existing Buildings, an FHA-approved lending institution authorized to provide streamlined 203(k) program funding will be eligible to provide lending assistance.

Which mortgage financing tools will be used?

FHA 30-year and 15-year fixed mortgages.

What is the process for receiving assistance?

1.  Applicant submits application and credit report order form to the Farmington Hills Community Development Office to determine income-eligibility.
2.  Income-eligible applicant must complete eight hour housing counseling course funded by the City before becoming program eligible.
3.  Program-eligible applicant engages a participating local realtor to identify and select an eligible foreclosed property to negotiate purchase as a principal residence.
4.  Once an eligible foreclosed property is selected and a purchase price agreed to, the applicant applies to a participating FHA-approved lending institution for mortgage financing.
5.  The FHA-approved lending institution works with the City of Farmington Hills on a down payment assistance package that will provide a viable and stable mortgage investment to the applicant.
6.  Loan closing is conducted and property is transferred to the applicant.

Contacts

Rick Lampi
Community Development Coordinator
31555 Eleven Mile Road
Farmington Hills MI 48336
248-871-2549
rlampi@fhgov.com

Karen Birkholz
Special Project Coordinator
31555 Eleven Mile Road
Farmington Hills MI 48336
248-871-2503
kbirkholz@fhgov.com

Program requirements are subject to change due to changes in State and Federal laws and regulations.