04-23-1998 - Laserfiche WebLink

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• I DRAFT- 4/16/98 Terms of the City of Mounds View Interest Subsidy Program for MHFA Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available$40,000 of tax increment funds (TIF) for the purposes of buying down 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. Loans will be originated by participating lender(s). The city will apply for participation in the MHFA Community Fix-up Fund Program. Upon qualification, the MHFA will provide loans with more flexible eligibility requirements including a maximum household income limit of 69,920 and interest rates ranging between 2% - 8%. Maximum loan amounts through this program will be $35,000. The loans will be originated by the participating lenders of Western Bank and 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 the lender 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$10,000 loan at 8%, subsidized to a 5%rate will require a 3%interest payment of$ by the city. MHFA provides reductions based on some loans receiving reductions for early pay off.). Market rate loans will be provided by the lender and subsidized over the term of the loan with monthly payments (i.e. a$10,000 loan at 9% subsidized to a 5%rate will require a 4% interest payment of $ to be payed by the city over the life of the loan. Credit will be given for loans which are paid off early.). Target Properties All owner occupied residential properties having 1-4 units and having a household income of $49,000 or less within the city will qualify for the reduced rate loans. For MHFA loans received through the Community Fix-up Fund program,the city is required to identify a particular home improvement needs/objectives for the use of the funds. The city will identify the older housing stock within the city as the needs/objective. Over 50% of the homes in the city were built before 1965. Because these homes are typically in need of most updating, homes built before 1965 will be targeted for loans through the Community Fix-up Fund program. Program Guidelines 1. Underwriting of these loans will follow the MHFA procedural manuals and normal and prudent underwriting criteria. 2. Participating lender(s) will utilize City of Mounds View Tax Increment Funds to write