The Atlantic County Improvement Authority (ACIA), Home Buyers and Lenders utilizing approved Mortgage programs. The ACIA reserves the right to reject mortgages that contain terms and/or conditions that conflict with the goals of the program.
To increase home ownership opportunities in Atlantic County by overcoming the obstacles created by the down payment and closing cost requirements faced by low/moderate income families when purchasing a home.
HOUSEHOLDS
These income levels are (2023):
| # of Household Members | 80% of Median Income | |
1 Person |
$54,900.00 | |
2 Persons |
$62,750.00 | |
3 Persons |
$70,600.00 | |
4 Persons |
$78,400.00 | |
5 Persons |
$84,700.00 | |
6 Persons |
$90,950.00 | |
7 Persons |
$97,250.00 | |
8 Persons |
$103,500.00 | |
It is ACIA’s Office of Community Development’s (ACIA) responsibility to determine that the applicant household is in compliance with the Atlantic County HOME Program’s guidelines, to collect appropriate documentation, to provide and record the proper HOME Program documents as required.
Therefore, ACIA will determine the following:
Additionally, ACIA will see that the proper documentation is collected and maintained in the file and that all documents required by the HOME Program are provided, signed and recorded as needed. The HOME Program documents are listed below.
Other document prepared by ACIA:
The application must be completed and submitted to the Office of Community Development. Conditions of approval include the following:
The household composition listed on the application can and MUST be verified with support documentation. For minor children, this can be accomplished through scrutinizing income tax returns, child custody documents and/or court-ordered child-support documents.
Income Eligibility is based on whether or not the TOTAL HOUSEHOLD income falls below 80% of the area median for the family. ONLY the HUD Income Scale Guidelines, or any updated guidelines, can be used. (See Attachment III).
Household size is determined as any combination of people, regardless of age or relationship to the applicant (or whether or not their name will appear on the mortgage documents), who either currently live within the household and/or will live within the household after purchase.
ALL income for each member MUST be considered in order to determine household income. That includes net income from a business, salaries (full and part-time, depending on the length of part-time employment), child support, alimony, and benefits, such as Welfare, Social Security, Social Security Disability, VA, military pensions or any other pension or annuity. Additionally, income from other assets, such as net rent collected from rental property, stocks, bonds, investments, CD’s or savings, 401K, etc., will be counted.
Calculation:
Down Payment + Closing Costs = Total Needed
Amount deposit made + Gift + Seller’s Assist + Savings Available + financed up front mortgage insurance premium + anything already paid out of closing (POC) that appears on Loan Estimator (LE)*** = Total Available.
Total Needed – Total Available = Amount of Assistance Needed
Upfront mortgage insurance premiums are borrowed in an FHA mortgage. If that amount is included in the total for closing costs as seen on the Loan Estimator, then add that amount to the buyer’s funds available. If it does not appear on LE, do not add it to that.
Items POC could include application fee, credit report, points, commitment fee, first year’s insurance premium and termite certification. Only deal with items that appear on the LE. Also, consider anything additional monies paid toward down payment, prior to closing.
The Final HOME Rule, published on July 24, 2013, requires underwriting/subsidy layering analysis of any project that receives HOME Investment Partnerships Program Funds. The County of Atlantic has adopted the following underwriting and subsidy layering policy to comply with the new requirements per §24 CFR Part 92.250(b). All of the HOME-assisted units developed under the County’s HOME Program must be households whose incomes do not exceed 80 percent of the area median as published each year by HUD.
The Atlantic County Improvement Authority on behalf of the County of Atlantic (hereafter the “County”) is responsible for preparing subsidy layering/underwriting analysis and documentation that demonstrates that the County is not investing anymore HOME funds, alone or in combination with other funds, than is necessary to provide quality, affordable, and financially viable housing for at least the duration of the HOME affordability period. The Final HOME Rule applies to all HOME-funded projects on or after August 23, 2013.
The County anticipates undertaking Rental Development, First-Time Homebuyer, and Homeownership Rehab/Reconstruction Projects.
When a CHDO is carrying out either rental or homeownership projects, the County will incorporate into each layering review a formal determination as to how the CHDO is meeting the HOME CHDO definitions as an owner, developer or sponsor of affordable housing per §24 CFR Part 300(a)(b) and (c) as part of the project. The County will also document the CHDOs overall capacity relevant to the role it is undertaking in the proposed project. The assessment and documentation will be done each time HOME CHDO funds are invested into a project as part of the CHDO certification requirement under the Final Home Rule. The CHDO Certification will be included in each project file prior to the investment of HOME CHDO funding.
HUD Citation: §24 CFR Part 92.250(a) and (b)
The County’s HOME Program Policy requires that a project underwriting analysis be completed, with appropriate supporting documentation, prior to formally committing HOME funds to a project. The underwriting must include the following elements:
For any projects that involve HOME-assisted homeownership, the underwriting must include the following elements:
$316,000, a two unit – 383,000, three unit - $474,000, four unit.
As part of the underwriting of each project, an evaluation of the homebuyer must be done to include the following:
Responsible Lending
The Atlantic County HOME Program Policy requires that private mortgages obtained by homebuyers are sustainable loans with fair terms and conditions as defined by HUD. No predatory loans are permitted or loans that would threaten the sustainability of homeownership, such as adjustable rate mortgage, interest-only loans, loans with negative amortization, or balloon payment loans. The County of Atlantic uses the “Qualified Mortgage Standards” (QM) developed by the Consumer Financial Protection Bureau. QM Standards include the following elements:
The homebuyer HOME files must provide evidence of the following:
Ineligible forms of homeownership include: contracts for deed, installment contracts, and land sales contractors or other contracts that fail to provide equity to the homebuyer, per 24 CFR Part 92.2.
First mortgage products used in conjunction with HOME funds should meet the following guidelines:
Minimum FICO |
Qualifying Ratios |
Compensating Factors and Requirements for Cash |
500-600 |
31/43 |
Minimal Payment Shock |
601-670 |
37/47 |
Minimal Payment Shock
mortgage payment |
671-739 |
40/40 |
Minimal Payment Shock
payment |
740-799 |
40/47 |
Minimal Payment Shock |
800-850 |
40/56 |
$500 Cash Reserves after closing |
For purposes of qualifying Borrower for a first mortgage, credit worthiness criteria shall be as established by the primary mortgage lender.
These standards also apply to stand-alone, direct homebuyer assistance for the purchase of owner-occupied housing with HOME funds.
In order to subordinate the original loan agreement to the first-lien holder, the following conditions must be met:
Loan Estimator (LE) of Closing Costs - This document may be supplied by the realtor or the lender. Regardless who supplies it, remember it is only an estimate and is usually high. The lender’s LE is more reliable than the realtor’s. It will contain all estimated closing costs, but MAY NOT contain the down payment. That must be added to ACIA’s calculations. Usually, the LE will also contain the applicant’s PITI. If it does not, remember to obtain that information from the lender. Things to remember and make adjustments for:
Check the estimated principal and interest payment with number sited on the Mortgage Commitment. Check the estimated taxes with the amount listed on the appraisal.
Additional Closing Costs Not Found on the LE - Occasionally, clients will have to pay for items not included in the LE total, and you will need to be aware of them to accurately calculate the client’s total need for assistance.
One legitimate expense added to the closing costs at the settlement table are fees associated with the purchase of a condo. There is usually a capital contribution, a process fee, and prepaid condo fees of 1 to 3 months. This information is made available from the Condo Association, in writing. This can be obtained through the client’s efforts, the realtor’s efforts or your own. The amount must be added to the total closing costs and the information made part of the client’s file.
Home inspection costs are POC and do not usually appear on the LE. Payment for this service will reduce that client’s savings.
Saving - Funds Available - Although the applicant should be using as much of their savings as possible, it is not the County’s intention to wipe them out completely. Use good judgment when determining just how much of their savings is available and allow for moving expenses and padding for extra closing costs. It is important to check with the lender to determine if there are any reserves required by them. If so, leave the applicant an appropriate amount. Of course, this is only a concern when an applicant has a real savings account!
Gifts - The applicant may be getting a gift from a family member to help them meet the total required down payment and closing costs. Be sure to ASK about any other assistance they may be getting and obtain a copy of the gift letter the lender requires. This should be added to the file.
Seller’s Assistance - Often in regular real estate deals, the seller will provide assistance to the buyer. This amount can be found in the contract of sale and needs to be considered as funds available when determining the amount of assistance needed.
Contract of Sale - The contract contains important information needed for the application. It is the interviewer’s responsibility to scrutinize the document for all pertinent information. The following can be found:
Appraisal - The appraisal is used to verify the address, lot and block number taken from the contract of sale, verify real estate taxes and verify that the value does not exceed the HUD 203(b) cap of $209,000.00 for pre-existing properties or $250,000.00 for new properties.
Mortgage Commitment - This document verifies that the lender is willing to lend money for the purchase. Use it to verify the amount borrowed, the interest rate, monthly principal and interest payment and other conditions. In FHA mortgages, this document will help to identify the exact amount of down payment.
Inspection Reports and/or Certification - The following reports or certifications are either required by local regulation, state regulation or federal regulation. The information will be obtained and handled as indicated below.
Lead Based Paint - While the law does not require that sellers remove lead based paint from the house prior to sale, it does require that each contract of sale contain language, or have an addendum, that does the following:
Smoke Detector Certificate - At minimum, all townships, by New Jersey State Law, require a Smoke Detector Certification Inspection. The cost is usually paid for by the seller, and a copy can be obtained through the seller’s realtor. Occasionally, the Contract of Sale will indicate that the buyer obtain and pay for same. Either way, a copy is required.
Certification of Occupancy or Certification of Continued Occupancy - Some townships require that every house sold must be inspected by their appropriate office, and a certificate issued for a legal sale. It is usually the seller’s responsibility to pay for and obtain the certificate. Usually, the seller’s realtor will make the arrangements and a copy for our files can be obtained through them. However, occasionally a Contract of Sale may indicate the buyer is responsible for same. Either way, a copy is required.
Since both C of O’s and Smoke Detector Certificates are usually ordered at the last minute, it is appropriate to forward the request for a check to the County without having the Certificates. It must be obtained before closing.
Declaration Page and Insurance Policy - The Mortgage prepared for the HOME Program requires that the property be insured and the Atlantic County Improvement Authority be named as second loss payee or second mortgagee for the term of the note and mortgage ( years). This makes it possible for the County to recapture their investment in the event of a disaster that may occur within the term of the note and mortgage. The Declaration Page can be faxed, emailed or hand-delivered, but it must have the appropriate language citing the County as second loss payee or mortgagee. The buyer, realtor and Insurance Company needs to know that the County needs an original policy.
Documentation Letter (Attachment IV) - This form is prepared at the end of the interview on the day the application is taken. It is designed to identify the missing items and again stress the need for prompt attention to getting to ACIA staff. It also clearly outlines the amount of time required to get a check from the County for closing. The interviewer signs it to document that they have received it. The original is given to the applicant and a copy is kept for the file. Often providing a copy to the Realtor will help move things along.
Letter to Lender (Attachment V) - At some point during mortgage processing, the lender will want verification from ACIA as to just how much assistance will be provided. The Certificate of Approval (Attachment VII) can be used for this purpose if the amount of assistance has been calculated. If not, the n a letter indicating just what the applicant has qualified for up to this point, and indicating that he/she/they are entitled will suffice. (See the sample letter Attachment V.)
The Certificate of Approval (Attachment VII) - This certification is prepared by ACIA staff when all documents have been collected and closing is pending. The certificate is signed by the Director of Community Development after review of the file. Responsibility for providing the check at closing is that of ACIA staff. Careful coordination with ACIA and the realtor is needed to ensure that ACIA has funds for the scheduled closing.
HOME Program Resale Guidelines (Attachment VI) - This document stats the amount of assistance and outlines all the terms and conditions of the HOME Program. It is prepared by ACIA staff for signing at closing. The original is for the ACIA file and the applicant is given a copy at closing.
Promissory Note (Attachment IX) - The Mortgage Note (and Mortgage) is prepared by ACIA staff. It is essentially the promise to repay the assistance and lists the requirements and reasons for default. The original is kept for the County records and a copy is given to the applicant at closing.
Mortgage (Attachment X) - The Mortgage is prepared in the same manner as the Mortgage Note and accompanies same. It is essentially the legal instrument by which the conditions listed in the Mortgage Note are made legally enforceable. It is recorded by the Closing Agent as a second mortgage. A copy is given to the applicant and a copy is retained for the County’s files. After recording, the original Mortgage Note will be mailed directly to the ACIA.
Note: ACIA staff must obtain a copy of the legal description from the closing agent, either prior to closing or at closing, to attach to the Mortgage for recording.
Step 1 - Once all supporting documents are gathered, the Certificate of Approval (Attachment VII) is completed by ACIA staff and signed. It is forwarded to the Director of Community Development, along with a copy of the first page of the completed application. (All information at the bottom of the page should be completed indicating that the ACIA has these documents.) This alerts the Director to request funds from HUD and request a check through their normal process.
The ACIA staff should always alert applicants that it may take as long as three (3) weeks to obtain a check, and the request cannot be made until ALL documents are received. (The request can be sent without the Certificate of Occupancy or Smoke Detector Certificate. However, the staff must make certain to obtain same before closing, or at closing.)
Step 2 - The Request for Draw-Down Form (Attachment VIII) is completed and given to the Director of Community Development, preferably three (3) weeks in advance of a closing. He/she will draw down the monies to the
County and request a check from the ACIA’s Senior Accountant.
The ACIA staff person will be responsible for recording data to determine how much grant money for assistance has been disbursed, how much remains available and any other information used for tracking of each applicant. The tracking form will be maintained by the ACIA staff person responsible for this program. Information must be kept up-to-date and available for reporting to funding sources. The ACIA staff person will be responsible
for any other type of report that the Office of Community Development should require.
LIST OF DOCUMENTS AND FILE NAMES
Attachment I HOME Assistance Application
Attachment II Informational Flyer
Attachment III HUD Income Guidelines
Attachment IV Documentation Letter
Attachment V Letter to Lender
Attachment VI HOME Resale Guidelines
Attachment VII Certificate of Approval
Attachment VIII Request for Draw-Down
Attachment IX Mortgage (Promissory) Note
Attachment X Mortgage
Attachment XI Invoice for Overnight Expense
Attachment XII Instruction Letter to Closing Agency
Do You Qualify For The Down Payment & Closing Cost Assistance Program?
To qualify you must:
Is there an application fee? There is no fee; however, no application will be taken without verification of satisfactory completion of ACIA’s Mortgage Readiness Initiative.
How will ACIA determine household size, income and affordable eligibility? ACIA will collect the following documents at the time the application is submitted to determine the aforementioned:
How will ACIA determine how much assistance to provide? The Down Payment & Closing Cost Assistance Program will provide only the amount needed. The ACIA will collect the following documents to determine the approximate amount of down payment and closing costs needed at closing.
How will ACIA determine property eligibility? ACIA will need a copy of the appraisal.
Will ACIA disburse a check at the time of application? No. ACIA must first request the funds from the Atlantic County Treasurer.
How long will it take to get funds from Atlantic County and have a check ready? At least three (3) weeks, once the request is made. *The request cannot be made until ACIA receives all documents.
Are there any other documents needed to request or release a check? Yes. A mortgage commitment, a copy of the home owner’s insurance policy listing Atlantic County Office of Community Development as the second mortgage/loss payee, and a copy of Certification of Occupancy, if new construction, or required by municipality, or Smoke Detector Certification, as required by New Jersey State Law.
When will the Mortgage Note and Mortgage be executed? At Closing.
HUD approved Home Buyers Counseling and Education Program :
Applicants must complete a HUD approved home buyers counseling and education program approved by the Atlantic County Improvement Authority, through either:
Money Management International 1.888.845.5669
Consumer Credit Counseling
Consumer Credit & Budget Counseling 1.888.738.8233
Kevin Burns, Loan Specialist
Atlantic County Improvement Authority
Telephone: (609) 343-2390
Email: Burns_Kevin@aclink.org