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City of Mounds View - Home Improvement Loan Program Page 2 4111t Program Guidelines The program will follow the following MHFA eligibility guidelines: 1. Underwriting of these loans will follow the MHFA procedural manuals and normal and prudent underwriting criteria. 2. Participating lenders will utilize City of Mounds View TIF funds to write down the interest rate on MHFA loans. MHFA loans will be written down to a maximum effective rate of 5%. Loan interest differentials will be paid by the City of Mounds View. 3. MHFA will be solely responsible for servicing the loans. 4. Eligible improvements and eligible properties are determined in accordance with MHFA guidelines for the individual programs and are stated in the procedural manuals for each program. • 5. Borrower's must provide proof of income, property tax statement, bid for work, and contractor warranty. 6. The property owner has 9 months from the date of closing to complete the improvement(s). 7. Loan proceeds will be disbursed to the borrower at loan closing. 8. Loan proceeds over$2,500 may be secured with a mortgage. 9. Lenders will offer a remodeling counselor to property owners desiring assistance in evaluating and prioritizing improvements to their property. Remodeling counselors will also be available to assist property owners in evaluating bids. Fees for these services will be Alk paid by the City of Mounds View. 10. Sweat equity projects are permitted. However, labor is not eligible for compensation. Sweat equity refers to an arrangement where the property owner(not a contractor) performs the home improvement. 11. Funds must first be used to abate any outstanding orders or code violations from the City of Mounds View. Use of funds is limited to eligible improvements allowable under MHFA's Fix-up Fund Loan Programs specified as Eligibility/Ineligible Requirements of this policy. Eligibility Requirements Owner-Occupied/Permanent Residence The property shall be occupied year round as a permanent residence and shall be occupied by the borrower as his or her principle place of residence within 60 days of the date of Loan closing. A residence is not eligible if now used, or can reasonably be expected to be used, as a recreational home. Business Use of Home If 49% or less of the square footage of a Property, including any basement areas, is now regularly and exclusively used in trade or business(or can reasonably be expected to be so used) then the property is eligible. Improvements must be made to the residential portion of the property only. Completed Property i Properties must be completed. A completed property is either: