Home Improvement

Renville County Housing & Economic Development

500 East DePue Avenue • Olivia, MN 56277

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Home Improvement

Adopted June 26, 2003

Renville County Homeownership Program

Program Criteria

A. Eligible Uses

1) Rehabilitation of owner-occupied dwellings located in Renville County.

2) Downpayment and closing cost assistance for first-time buyers of homes in Renville County for the purpose of owner-occupancy. Residents who have not owned a home in the past three years qualify as first-time homebuyers under the program. Borrowers must have a signed purchase agreement for a home in Renville County at the time of application.

B. Income Requirements

In order to qualify for assistance under the Homeownership Program, households must not exceed the following maximum incomes:

Household Size Income Limits

1 $31,750

2 $36,300

3 $40,800

4 $45,350

5 $49,000

6 $52,600

7 $56,250

8 $59,850

These guidelines are based on 80% of the county median income and will be adjusted as necessary to reflect current data supplied by HUD.

C. Maximum Assistance
Assistance will not exceed $3,000 per household. Borrowers must supply at least a 1:1 match from either borrowed, gifted or personal funds. In the case of downpayment or closing cost assistance, the borrower’s matching funds must consist of their contribution to the downpayment and closing costs. Homeownership Program funds will not be supplied in an amount in excess of that needed to meet minimum downpayment requirements of the lender.

D. Repayment
1. Loans carry 0% interest.
2. Loans for rehabilitation will be repayable in equal monthly installments over a period of five years. For borrowers over 30% of the county median income, repayment will begin the month following disbursement of funds from the Homeownership Program. For borrowers at 30% or less of the county median income, repayment will begin when the loan from the private lending institution, if any, is repaid. The maximum income for deferred repayment is:

Household Size Income Limits

1 $11,900

2 $13,600

3 $15,300

4 $17,000

5 $18,350

6 $19,700

7 $21,100

8 $22,450

3. Loans for downpayment and closing cost assistance will be due and payable when the borrower refinances, moves out of the home, sells the home, or the first mortgage is paid off.

4. Loans made under the Homeownership Program are not assumable.

E. Eligible Properties

1. Properties eligible for rehabilitation funding must be located in Renville County, be the applicant’s principal place of residence and be used primarily for residential purposes. Properties being purchased with downpayment and closing cost assistance must be located in Renville County and the applicant must use the property as their principal place of residence following purchase.

2. For the downpayment and closing cost assistance portion of the program, properties may not be purchased using contract for deed financing.

3. Following an inspection of the property, the HRA/EDA Housing Coordinator shall have the authority to reject an application if he/she determines that the house will not be suitable for habitation after the improvements for which financing is being requested or following purchase. The inspection of the property by HRA/EDA staff does not warrantee that the home is free of hazards or that the structure or the work financed under the Homeownership Program meet the building codes of any unit of government.

4. Mobile homes shall not be eligible for down payment or closing cost assistance. Mobile homes shall not be eligible for rehabilitation assistance except in emergency circumstances and then must meet all other program requirements.

5. No funds will be disbursed for the rehabilitation of a property on which property taxes are delinquent and unpaid.

6. No funds will be disbursed for the rehabilitation of a property which is in default of a mortgage, contract for deed or comparable obligation or if the owner is currently engaged in bankruptcy proceedings.

7. Properties in which staff or Board Members of the Renville County HRA/EDA have an ownership interest are not eligible for funding under the Homeownership Program.

F. Eligible Improvements

1. Improvements must be physically attached to the property and must be permanent in nature. The following types of improvements are eligible:

a. Improvements to and replacement of roofs, floors, exterior walls, interior walls, stairs, sidewalks, foundations, windows, doors and other basic housing features.

b. Functional improvements to and the necessary replacement of electrical systems, plumbing and plumbing fixtures, heating units, individual sewage treatment systems, etc.

c. Improvements that address energy consumption and security.

d. Structural additions.

e. Demolition of structures to allow the construction of a new residence. Construction must begin within six months of demolition.

2. The following improvements and costs are ineligible:

a. Detached garages, fireplaces, air conditioning, or wood stoves.

b. Decks, patios, or landscaping beyond that required in connection with foundation or basement work.

c. Appliances or other improvements not permanently installed or attached to the structure.

d. Payment of assessments for public improvements.

e. Improvements that are done prior to the approval of the loan from the Homeownership Program.

f. Refinancing of existing indebtedness.

g. Payment for labor of borrower.

G. Order of funding

Applicants shall complete the Homeownership Program Application and submit it, along with other required documentation, to the office of the Renville County HRA/EDA at 500 E. DePue Av., Olivia, MN 56277. Applications shall be logged in order of their receipt and qualifying applications funded in order of receipt until funds are fully utilized. Applicants shall be given written notice as to whether their application has been approved.

H. Time of performance

Applicants approved for rehabilitation funding will have 90 days from the date of the approval letter to begin improvements and 270 days from the date of the approval letter to complete improvements. Applicants approved for downpayment and closing cost assistance will have 90 days from the date of the approval letter to close on the purchase of a home.

Program Administration

Administrative Responsibility

The Homeownership Program shall be administered by the staff of the Renville County HRA/EDA under the direction of its Board of Directors. Applications shall be processed and recommended for approval of the Executive Director by the Housing Coordinator. The Executive Director shall have the authority to sign loan documents. Checks for the program shall be signed by the Executive Director and the President of the Board. Board approval shall not be required for the issuance of individual checks for loans under the program or for checks for payment of filing fees. Staff shall provide a monthly report to the HRA/EDA Board regarding funding commitments and expenditures under the Homeownership Program.

Loan repayments will be used to establish a revolving loan fund, which will be used in accordance with the guidelines for the Homeownership Program.

The HRA/EDA will account for the assets and expenditures of the Homeownership Program by establishing a separate group of accounts in the EDA fund. Staff will establish a loan register to record the name of the borrower, the amount of the loan, the date approved, the terms of the loan, payments and current balances.

Application process

Applicants shall complete the Homeownership Program application for housing rehabilitation or downpayment and closing cost assistance. Applications will be accepted in person or by mail at the HRA/EDA office at 500 E. DePue Av. in Olivia. The application shall request information concerning income, assets, property, and the source of matching funds and other financing necessary to complete the proposed rehabilitation or home purchase. The form shall further provide a Notice to Applicant regarding data privacy, misrepresentation, lead-based paint warnings, and inspection considerations.

The program administrator shall obtain supporting documentation which may be deemed necessary to determine eligibility. Applicants shall sign an Authorization for Release of Information form allowing the proper verification of information necessary to document applicant income, assets, status of other project financing and ownership interest in property.

Eligible applications shall be processed and funded on a first-come, first-served basis. All applicants shall be notified in writing as to the approval or rejection of their application.

Applicants must sign a mortgage agreement prior to the beginning of rehabilitation or during the closing on the purchase of the property for which the loan is being made.

Calculation and Verification of Income

Annual income shall be based on, but shall not be limited to, the following:

1. The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services. Unreimbursed employee expenses as declared on the applicant’s Federal Income Tax Return shall be subtracted from annual income.

2. The net income from operations of a business or profession. Annual income from self-employment may be determined as the average net profit from the previous three years’ of self-employment as declared by the applicant in Schedule C, F, or E, Part III, as appropriate, of the U.S. Internal Revenue Service Form 1040.

3. Interest, dividends, and other net income of any kind from real or personal property.

4. Actual annual income from assets. There is no asset ceiling for eligibility under the Homeownership Program.

5. The full amount of periodic payments received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts.

6. Payments in lieu of earnings, such as unemployment and disability compensation, workers’ compensation, and severance pay.

7. Cash assistance from income-based government programs including but not limited to MFIP or General Assistance.

8. Periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling.

9. All regular pay, special pay and allowances of a member of the Armed Forces, whether or not living in the dwelling, who is head of the household, spouse or other person whose dependents are residing in the unit.

10. Any earned income tax credit to the extent it exceeds income tax liability.

Documentation of the amount and source of income is required at time of application. A copy of the last two check stubs from the source(s) of income shall be submitted where applicable. Copies of income tax returns shall be submitted where applicable. If other sources are not available to adequately document income, HRA/EDA staff shall obtain a written release form from the applicant to obtain verification of income.

Annual income does not include temporary, non-recurring or sporadic income such as gifts, reimbursement for medical expenses, inheritances, one-time insurance payments, capital gains, and settlement for personal or property loss, scholarships, hazardous duty pay to military personnel, income from employment of children under 18, payments received for the care of foster children or on-cash benefits such as food stamps.

Verification of Matching Funds

Homeownership Program loans are provided on a matching, 1:1 basis. As part of the application process, staff will verify the availability of matching funds. Methods by which matching funds may be verified include:

1. A current bank statement showing cash sufficient to match the requested Homeownership Program rehabilitation of downpayment/closing cost loan.

2. A loan commitment letter from a lending institution.

Property Inspection

After it has been determined that an application meets the financial qualifications and that funds are available, HRA/EDA staff will perform a physical inspection of the property to determine that it will meet program criterion E(3) regarding building condition.

A final inspection will be done by HRA/EDA staff at the conclusion of rehabilitation projects to verify that work has been completed.

Contracting and Construction

Borrowers are responsible for obtaining bids for all construction labor and materials involved in the project prior to beginning rehabilitation to ensure that sufficient funds are available to complete the project. Copies of the bids shall be provided by the borrower to the HRA/EDA Housing Coordinator to document that there are sufficient funds to complete the project. The contract shall be between the borrower and the contractor. The HRA/EDA is not a party to the construction contract. Payment of local building permit fees and any inspection fees will be the responsibility of the borrower.

Disbursement

HRA/EDA staff shall have the flexibility to disburse funds under the program in such a way as to meet the requirements of lending institutions involved. In general, disbursement under the Homeownership Program shall be made:

Rehabilitation Loans: If the borrower is securing matching funds from another lending institution, Homeownership Program funds shall be deposited into the loan account at the bank or credit union and disbursed by that institution. If the borrower is providing his/her own cash as matching funds, Homeownership Program funds will be disbursed upon receipt of proof of disbursement of matching funds by the borrower to contractors or material suppliers and receipt of invoices from contractors or materials suppliers in the amount of the disbursement from the Homeownership Program. Checks will be issued jointly to the homeowner and the contractor or material supplier.

Downpayment and Closing Cost Loans: The Homeownership Program’s funds shall be disbursed by the delivery of a check to the closing on the purchase of the property.

Mortgages and Repayment Agreements

A mortgage and repayment agreement shall be filed by HRA/EDA staff following disbursement of each loan.

Fair Housing and Equal Opportunity

It is the policy of the Renville County HRA/EDA to comply fully with all Federal, State and local nondiscrimination laws and with the rules and regulations governing Fair Housing and Equal Opportunity in housing and employment. The HRA/EDA shall not deny any family or individual the equal opportunity to apply for or receive assistance under the Homeownership Program on the basis of race, color, sex, religion, creed, national or ethnic origin, age, familial or marital status, handicap or disability or sexual orientation.

Data Privacy

Information on program applicants including, but not limited to, names, financial statements, income calculations and asset information is private data that must be administered in accordance with the Minnesota Government Data Practices Act. Applicants shall be provided with proper written notice as specified under the Act. Solely for the purpose of the administration of the program, information may be made available to the members of the Renville County HRA/EDA Board and its staff.

Conflict of Interest

No member of the HRA/EDA Board or staff is eligible to participate in the Homeownership Program. No employee, officer or agent of the HRA/EDA shall participate directly or indirectly in the selection or in the award or administration of any loan if a conflict, real or apparent, would be involved. Such conflict would arise when a financial or other interest in a firm or individual benefiting from a loan or a contract under the program is held by an employee, officer or agent involved in making the award; a member of his/her immediate family; his/her partner; or an organization which employs, is negotiating to employ, or has an arrangement concerning prospective employment of any of the above. HRA/EDA officers, employees, or agents shall not solicit or accept gratuities, favors, or anything of monetary value from borrowers or contractors, or potential borrowers or contractors, participating in the Homeownership Program and shall not knowingly use confidential information for actual or anticipated personal gain. Borrowers or contractors shall not retain a person to solicit or secure an HRA/EDA loan or contract for a commission, percentage, brokerage, or contingent fee, except for bona fide employees or bona fide established commercial selling agencies.

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