Funded
by the State and/or Federal grants, this program offers low-interest,
deferred, (no monthly payment) loans, to low and moderate income
homeowners residing in the Town of Paradise.
If
you are eligible, you may apply for this low interest loan for home
repairs which could include this partial list of projects:
*
Roofing
*
Flooring
*
Electrical
*
Plumbing, including septic system repairs/replacement
For
the past several years, the Town of Paradise has offered housing repair
and rehabilitation services to its residents through federal and state
funded programs. The housing rehabilitation program provides
low-interest loans to low income homeowners. If, after reading the
following information, you would like to be placed on the waiting list
for home repairs, please fill out the attached Program Interest Form
and return it to Business & Housing Services Dept. at the Town of Paradise. The information
on your form will allow us to make a pre-determination of your
eligibility; however, being on the waiting list does not automatically
qualify you or your project for final approval.
BASIC
ELIGIBILITY REQUIREMENTS…
Several
factors will be considered prior to approving a rehabilitation
project—applicant eligibility, property eligibility, and
project eligibility.
Applicant
Eligibility:
The
applicant must meet income guidelines, must own and live
in the home to be rehabilitated, and may not have received Department
funds for any previous projects.
(a)
Income Guidelines
Income
is determined by taking the combined gross income of all members of the
household over the age of 18, whether related or not. Income includes
child support payments, social security, annuities, etc. Please be
aware that trusts and/or other assets may affect your income. The
following chart shows the income limits for the program based on the
number of people in the household.
2008
Income Limits for Butte County
1
Person
2
People
3
People
4
People
5
People
6
People
7
People
8
People
$30,500
$34,900
$39,250
$43,600
$47,100
$50,600
$54,050
$57,550
Property
Eligibility
The
home must be able to support the loan-to-value ratio after the
rehabilitation is complete and be free of any encumbrances, liens or
existing loans that do not meet the requirements of this program.
Ineligible
Properties: Rental property and life estates are not eligible under
this program. Additionally, the property must not be encumbered by
federal and/or state tax liens or other judgments, which may adversely
impact the Title to the property.
The property must pass current state and federal
guidelines regarding lead- based paint. All homes built before 1978
will be inspected to determine if a lead paint hazard is present. The
result of the inspection will determine what action needs to be taken
if a lead-paint hazard is found.
The
after-rehabilitation-value cannot exceed the HOUSING REHABILITATION
program Sales Price/Value Limits.
3. Project Eligibility
a. Conventional Homes
Repairs and improvements needed
to correct any condition causing the home to be substandard.
Cost
of improvements necessary to ensure accessibility of the property to
physically handicapped homeowners or dependents occupying the property,
when other rehabilitation work is being performed.
Improvements
required to correct unsafe, unhealthy, or unsanitary conditions,
including general property improvements when such improvements are
necessary or integral to the rehabilitation work.
Building
permits and other related government fees which are directly related to the
rehabilitation of the property.
Architectural,
engineering, and other consultant services which are directly related
to the rehabilitation of the property.
b. Manufactured Homes:
Repairs and improvements to a manufactured home necessary to correct any condition causing the home
to be substandard pursuant to Section 1704 of Title 25, California Code
of Regulations.
Cost
of improvements necessary to ensure accessibility of the property to
physically handicapped homeowners or dependents occupying the property,
when other rehabilitation work is being performed.
Improvements
required to correct unsafe, unhealthy, or unsanitary conditions
including Mobile Home Park required accessory buildings or structures
when such improvements are necessary or integral to the rehabilitation
work.
Building
permits and other related government fees
Architectural,
engineering and other consultant services which are directly related to
the rehabilitation of the property
When
a manufactured home is deemed not feasible for rehabilitation by
program staff due to extensive costs of repairs, the program may assist
the owner with the replacement of the manufactured home. However,
replacement is strictly governed by state regulations.
Both manufactured and
conventional homes must meet all applicable codes at the completion of
the work. Partial repairs are not eligible.
LOAN
TERMS AND CONDITIONS…
A HOUSING REHABILITATION loan is deferred—meaning that
the homeowner makes no monthly payments. The term of the loan is 30
years, or sometimes longer, depending on the length of the existing
mortgage; however, the loan can be called due in the event that the
property is sold, refinanced, transferred, or rented. The loan can
also be called if there is a violation of the conditions of the
program
The
actual loan amount depends on several factors: the extent of the work,
the available owner-equity in the property, the current monthly housing
costs and, on amortized loans, the homeowner’s ability to
repay.
The
combination of existing debt secured against the property and the
Town’s loan should not exceed the HOUSING REHABILITATION
Program Sales Price/Value Limits after rehabilitation. After
rehabilitation value may be determined by comparable sales, appraisal
by qualified staff, or formal appraisal where other methods are not
feasible.
The
interest rate is 3% simple interest per year. The principal and
interest payments are deferred for the term of the loan. After the 10th
anniversary of the loan, interest will no longer be charged for the
remainder of the loan term.
A
borrower may pay the entire deferred payment loan amount at any time
without penalty.
Loans
must be paid upon sale or transfer of the property, when the property
ceases to be owner-occupied, upon the loan maturity date, or upon
repayment or refinancing of the first mortgage (unless written
subordination request is submitted and approved by Lender (See "g").
Subordination of the Town’s trust deed to any first
Trust Deed loan, made by or held by an institutional lender or investor such as a bank, savings & loan or mortgage banker, in connection with any refinancing of the loan secured by such senior trust deed, can be allowed provided the purpose of the refinancing is:
●
To reduce the interest rate and/or term of the first trust loan;
To pay off documented and verified medical costs incurred by members of the subject household; or
To pay off documented and verified costs of completed capital improvements on the home.
In addition, cash out at the time of refinancing for any reason other than those mentioned above is prohibited and the combination of the newly refinanced first trust deed and the Town’s second trust deed, cannot exceed a 90% loan to value ratio. Requests for subordination must be submitted in writing and approved by the Town.
Loans are not assumable.
The following transfers of interest will not trigger repayment of the loan:
A transfer to a surviving joint tenant by devise, descent, or operation of law on the death of a joint tenant;
A transfer, in
which the transferee is a person who occupies or will occupy the property,
which is
A transfer where the joint tenant becomes an owner of the property
A transfer resulting from a decree of dissolution of marriage, legal separation agreement, or
from an incidental property settlement agreement by which the spouse
becomes an owner of the property;
A transfer into an inter vivos trust in which the borrower is and remains the beneficiary and occupant of the property
All loans for conventional homes, or manufactured homes that are on a permanent foundation on a separate lot, will be secured by a Promissory Note and Deed of Trust against the property. Loans for manufactured homes, in manufactured home parks, will be secured by a Promissory Note and Security Agreement. HOUSING REHABILITATION loans may be in a junior position to existing liens or deeds if adequate security exists to make such a subordinate loan.
All security agreements securing loans against property under this program will contain a maintenance clause requiring owners to properly maintain their properties.
Any cash-out to borrower is prohibited
INSPECTION,
BIDDING, AND CONTRACTS…
An inspector from the program will
conduct an inspection of the home to determine the scope of work. A
repair list will be prepared outlining the work to be done. In some
cases, a pest control report and/or property appraisal will be
required. The housing inspector will then meet with the applicant to
discuss the work. After the applicant accepts the repair list, the
housing inspector will prepare formal plans and specifications that
detail the exact work to be performed.
In most cases, the housing inspector
will conduct a contractor's tour of the property so that all interested
general contractors can survey the premises. Sealed bids are usually
received within two weeks of the tour date. The competitive bidding
process encourages fair bids to the homeowner. The project is typically
awarded to the lowest responsible bidder, but the homeowner makes the
final selection.
After the loan papers and escrow
documents are signed, the contractor can begin the project.
Once
work begins, repairs are expected to be completed in a timely manner.
During the project, a housing inspector will monitor the work to assure
that it is performed according to the contract.
All funds are held at the Town and
progress payments are made as work is completed. Final payment is made
to the contractor 35 days after the housing inspector confirms the work
has been satisfactorily completed.
HOW TO APPLY…
Return the Program Interest Form.
You will be sent a letter stating whether you meet basic eligibility
requirements and your position on the eligibility list. When your
project reaches the top of the eligibility list, you will be sent a
formal application form, which is similar to a bank loan application.
Income, savings, and existing mortgage verifications will be made, and
a credit report will be requested. Projects are taken on a first-come,
first-served basis, except for emergency repairs, which are sometimes
given priority. The time required to complete a project depends on the
extent of repairs needed and may vary due to unforeseen circumstances.
There is no charge to apply for a
loan. All loan costs, such as title insurance, recording fees, termite
report, etc., are included as part of the loan amount.
Loan papers will be signed after
construction bids are submitted and after the Town’s loan
committee or the Town Council approves the loan. Loans are secured by a
Deed of Trust recorded on the property.
The borrower must maintain fire
insurance coverage and stay up-to-date with property tax payments and
any required monthly payments.
For more information about this
program, please contact:
Town of
Paradise
Kate Anderson
Business
and Housing Services Division
5555
Skyway, Paradise, CA 95969
530-872-6986
Hearing-impaired
persons can call 225-4363 if they have a TDD.