Housing Choice Voucher Homeownership Program

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Housing Choice VoucherHomeownership Program

• Section 8 Self Help

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Nick Mitchell-Bennett

• Community Development Corporation of Brownsville
• Brownsville, Texas

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Agenda

• Introductions
• Homeownership Voucher Program Over View
• Pros. Cons. Of Program
• How to over come the Cons.
• CDC of Brownsville Example
• Open Discussion

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Voucher Homeownership Program

• Basic Concept Instead of using voucher subsidy
  to help family with rent, homeownership option
  allows first time homeowner to use voucher
  subsidy to meet monthly homeownership expenses

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PHA Option

• PHA has the option to offer the program or not
  offer the program.
• No separate or additional funding available from
  HUD
• PHA implements by revising PHA Annual Plan and
  administrative plan

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Homeownership Voucher Option

• Family is responsible for finding eligible unit
  to purchase instead of rent
• PHA will make the monthly assistance payment on
  behalf of the homeowner
• PHA may make payment to lender directly

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Homeownership Voucher Subsidy

• Payment standard determines maximum subsidy in
  voucher program
• PHA uses same payment standard for both renters
  and homeowners
• Homeowners family payment standard will never be
  less than payment standard at time homeownership
  assistance commences for the home

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Housing Assistance Payment

• Family must pay at least total tenant payment
  (TTP), may pay more
• Monthly homeownership assistance payment is
  calculated as the lesser of
• Payment standard minus TTP
• Monthly homeownership expenses minus TTP

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Homeownership Expenses

• Principal and interest on mortgage
• Mortgage insurance
• Real estate taxes
• Home Insurance
• PHA allowance for utilities

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Homeownership Expenses

• PHA allowance for routine maintenance
• PHA allowance for major repairs
• Principal and interest on mortgage debt for major
  repairs
• If home is a coop or condo operating may include
  operating or maintenance fees
• Land lease payments

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Family Share

• Family is responsible for all expenses not
  covered by the HAP payment
• If expenses exceed the payment standard, family
  pays the difference out-of-pocket in addition to
  TTP

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Family Share

• 40 of adjusted monthly income limitation does
  not apply to homeownership families (law limits
  amount family may pay for rent)

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Family Eligibility for Homeownership Option

• Current voucher participants are eligible for
  admission
• PHA may not set aside program funding for special
  housing types or require applicant to use the
  voucher for particular housing type
• May not maintain separate admissions waiting list
  or provide selection preference for voucher
  applicants who agree to use voucher for
  homeownership

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Family Eligibility

• No current ownership in a residence at
  commencement of homeownership assistance
• Statute provides exception for coop. Members who
  have acquired coop membership shares prior to
  commencement of assistance

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First-time Homeowner

• No ownership of residence for the past 3 years
• Coop Members
• Family includes person with disability, PHA
  determines use of homeownership option necessary
  as reasonable accommodation

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HUD Minimum Income Requirements

• Non-disabled families minimum wage multiplied
  by 2000 hours (10,300)
• Disabled families SSI monthly payment
  multiplied by 12. (6,624)
• Except for disabled and elderly welfare
  assistance can not be considered in determining
  requirements

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Family Eligibility

• Full time employment 30 hours
• One year of employment minimum
• Disabled and elderly participants not included

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Family Eligibility

• No Mortgage defaults in the past with assistance
• PHA may establish additional requirements

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Pre-Assistance

• Must attend homebuyers counseling approved by the
  PHA.
• Topics include
• Home maintenance
• Budgeting and money management
• Credit counseling repair
• Financing aspects

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Finding a Home

• PHA may establish time limits for purchase
• PHA may not steer or restrict families to certain
  sellers or areas

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Eligible Units

• Unit under construction or already existing at
  time the family enters the contract of sale
• Purchase of home where family does not own fee
  title to real property (land)
• Home must be on permanent foundation
• Family has right to occupy home for at least 40
  years

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Eligible Units

• PHA disapproval of seller. Seller is disbarred
  suspended or subject to limited denial of
  participation

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Inspections Codes

• HQS Inspection and Independent Professional Home
  Inspection
• This must be done by the PHA and a third party.
• Third party inspector is hired BY THE FAMILY

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Contract of Sale

• Family must provide copy of contract of sale to
  PHA
• Contract of sale Must
• Provide for pre-purchase inspection
• Seller certification that he/she not debarred
  suspended or subject to limited denial of
  participation

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Financing

• PHA may not require use of specific lender but
  may establish
• Requirements concerning forms of financing
• Probations on certain forms of financing
• Requirements on terms of financing
• Requirements or restrictions on other debt
  secured by home

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Continued Assistance

• Family Obligations
• Comply with terms of mortgage
• Occupy home
• Report changes in composition/income
• Other family obligation under voucher program
• Comply with any additional PHA requirements
• Sign a Statement of Homeowner Obligations

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Time Limits

• Time limits do not apply to the elderly of
  disabled
• Maximum Term
• 15 yrs. On 20 yr. Or longer mortgage
• 10 yrs. On all other cases
• Time limits apply from initial purchase

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PROS. CONS.
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PROS.

• Free Money for the buyer
• Pool of applicants for our programs
• Free Money for the buyer
• Pool of applicants for our programs

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CONS.

• One more government organization to deal with
• PHA does not have to do this program
• Units need to be complete or under construction
• Set rules for financing of home

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PHA Not Required to do Homeownership

• They reduce vouchers for rentals
• New issues more work
• NO for the PHA

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Set Rules for Financing

• The PHA can set the rules on the type of
  financing the participant can utilize.
• This sounds good, but, what if they say the loan
  must be a fix rate loan.
• The 502 is not fixed

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Construction Complete

• Traditional Rural Self Help closes all loan
  before construction.
• No set price in some cases
• Time frame not exactly short

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CDC of Brownsville

• Section 8 Self Help Housing

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CDC of Brownsville

• Work with the PHA. Help set up the program.
• Make it easy for the PHA to get set up
• Close on the back-end.

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Construction Complete?

• CDCB closes all Self Help Loans when construction
  is complete.
• Allows for more control of participants
• Allows CDCB to use the Section 8 Voucher
• Costs a little more. Not enough to kill the
  program
• Allows CDCB to set the price up front for the
  sales contract

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Other ways around the construction issue

• Co-Ops for the homeowners before they start
  construction.
• Lobby for expansion of the program to fit better
  with Self Help

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DISSCUSSION