05-28-1998 - Laserfiche WebLink

Home Browse Search

Exhibit B DRAFT S/22/98 City of Mounds View Interest Subsidy Program Terms for MHFA Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available$40,000 in tax increment funds (TIF) for the purpose of subsidizing the interest rate of home improvement loans under this program. The loans will be Minnesota Housing Finance Agency (MHFA) originated by participating lenders and subsidized by the City of Mounds View. The city will provide interest subsidies for MHFA loans. Maximum loan amounts through this program will be $35,000. The loans will be originated by the participating lenders of Western Bank and Center for Energy and the Environment(CEE). The program expects to provide subsidized.loans for a period of at least two years. The City of Mounds View will provide funds in an account at participating lenders for the purpose of subsidizing qualifying home improvement loans. Loans provided by MHFA and originated by the lender will be subsidized in a lump sum payment from the city account(i.e. a$10,000 loan for a term of 10 years at 8%subsidized to a 5%rate will require a 3% interest payment of$ by the city. Target Properties All owner occupied residential properties having 1-4 units. For MHFA loans received through the Community Fix-up Fund program, the city has identified homes built before 1965 as the need/objective for the use of these funds. Homeowners qualifying for the Community Fix-up Fund program must have an adjusted household income of$69,900 or less. All other properties qualifying for MHFA loans mgay receive a reduced rate loan. `.3.c �. i-e"12 f j 1%S Qd-u . c ' - L11(e00 Program 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 tax increment funds to write down the interest rate on the MHFA loans. MHFA loans will be written down to an effective rate of 5%. Loan interest differentials will be paid by the City of Mounds View. 3. MHFA,cFg an will be responsible for servicing the loans. 5. Eligible improvements and eligible properties are determined by the MHFA for the individual programs and are stated in the procedural manuals for each program. 6. Borrower's must provide proof of income, property tax statement, bid for work, and contractor warranty. 7. The property owner has 9 months from the date of closing to complete the improvement(s). 8. Loan proceeds will be dispersed to the borrower upon loan closing. 9. Loan proceeds over$2,500 will be secured with a mortgage. 10. Lenders will offer a remodeling counselor for any property owner desiring assistance in