09-14-2016 Workshop Packet - Laserfiche WebLink

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ATTACHMENT #4 PROPOSAL FROM THE GREATER METROPOLITAN HOUSING CORPORATION TO ADMINISTER A HOME IMPROVEMENT LOAN PROGRAM ON BEHALF OF THE CITY OF LITTLE CANADA September 9, 2016 The Greater Metropolitan Housing Corporation (GMHC) is submitting a proposal to the Little Canada City Council to administer a city sponsored home improvement loan program for the residents of Little Canada. I. PROPOSED LOAN PROGRAM The primary features of the proposed loan program include: Eligible Properties: Owner-occupied single-family units and duplexes that were built at least 15 years prior to date of application that are located within the city limits. This includes townhomes and condominiums for that portion of the property that is owned by the homeowner. Common areas are not eligible nor are homeowners’ associations. Borrower Income Limit: Annualized gross household income of the borrower, borrower’s spouse and any other household resident who has an ownership interest in the property to be improved cannot exceed _______% of area median income, as determined by the U. S. Department of Housing and Urban Development. To be determined. (Limits used by Minnesota Housing and other cities include 115% AMI = $98,670; 120% AMI = $102,960; 125% AMI = $107,250. The City may want to use one of these limits, or a different limit or no income restriction at all.) Loan Amount: Minimum loan of $3,000. Maximum loan of $40,000. Interest Rate: ______%. To be determined. (In today’s lending environment a 1% or 2% interest rate is generally viewed as favorable, particularly the former. At least one funder is charging a no-interest, principle only installment loan, which has gotten a lot of interest by residents. Loan programs directed at households under 80% AMI are generally no-interest, deferred or forgivable loans. For example, the Ramsey County loan program. Our experience has been that some households that income-qualify for a deferred loan will choose to get on a wait list, even if it takes a couple of years, rather than pay an installment loan regardless of interest rate. Maximum Loan Term: Fifteen years. Loan Security: All loans will be secured with a mortgage in favor of the City of Little Canada. Debt to Income Ratio: Borrower must have the ability to repay the loan. Applicants who have a debt to income ratio in excess of 55%, including the loan amount, will be denied loan financing. Loan to Value Ratio: The ratio of all loans secured by the property, including the new loan, must not exceed 110% of the property’s estimated market value. Property value is based on market value listed on current property tax statement.