HOUSING AUTHORITY OF THE CITY OF
SECTION 8 HOUSING CHOICE VOUCHER HOMEOWNERSHIP PROGRAM
FREQUENTLY ASKED QUESTIONS
1. What is the Section 8 Housing Choice Voucher
Homeownership Program?
It
is a HUD-funded program wherein an eligible family receives assistance from the
Housing Authority towards the purchase of a home. Before the implementation of the
Homeownership program, an assisted family used its voucher housing assistance
towards renting a unit; now the family can use its voucher assistance towards paying
a mortgage when purchasing a home.
2. What are the eligibility requirements?
There
are HUD requirements which all housing authorities must use. There are also Housing Authority
requirements; HUD allows housing authorities to establish their own
requirements in addition to HUD's mandatory requirements.
HUD
Requirements:
(1). Eligible
for the Section 8 Housing Choice Voucher Program.
(2) First-time
homebuyer requirements.
(3) Minimum
income requirement - annual income not less than federal minimum wage
multiplied by 2,000 hours (except disabled and elderly)
(4) Minimum
employment requirement - one or more adults who will own the home is currently
employed full-time (not less than average 30 hours per week) and has been continuously
employed during the year before homeownership assistance.
(5) No
previous default on a mortgage under the Homeownership Program.
(6) No
family member has ownership interest in a residence.
(7) Mandatory
pre-homeownership and housing counseling.
(8) Family has entered into a Contract of
Housing
Authority Requirements:
(1) Family
has had no family-caused violations of HUD's Housing Quality Standards within
the last one year period.
(2) Family
is not within the initial one year period of a HAP contract.
(3) Family
does not owe money to the HACNLV.
(4) Family
has not committed any serious or repeated violation of a HACNLV-assisted lease
within the past one year period.
3. Do
I have to be a participant in the Housing Authority's Family Self-Sufficiency
(FSS) Program?
No
- but the Housing Authority gives a preference to FSS participants who are
contributing to their escrow accounts, which means that these FSS participants
have the first chance to be offered the
program. However, if there are
not enough FSS participants eligible for the program, the next groups to be
offered the program will be in the following order:
- Other families who are participating in
other self-
sufficiency programs in other federal , state or local
agencies; or state agencies;
- Other families currently participating in
the regular
(Rental)
Section 8 Housing Choice Voucher Program who
have been under the program for at least two years;
-
regular (Rental) Section 8 Housing Choice Voucher
Program.
4. How do I know if I'm ready for
homeownership?
Owning
a home is a big responsibility. It is
important that you understand those responsibilities before you look into being
a homebuyer. It is a HUD requirement
that you take an approved homeownership counseling course prior to purchasing a
home. You should also first clear up any
credit problems and save enough money so you can make a down payment.
5. What kind of paperwork is involved?
A
lot.
First, in order for the Housing Authority to determine your eligibility for the
program, it will be requiring you to complete various eligibility, verification
and other related forms. Secondly,
when you go through the process of locating a home to purchase and of finding
financing, any real estate professionals and lending institution you will be
working with will require various forms for you to fill out. Also, the H/A will need reports on your
progress.
6. How much money, at the minimum, do I have to
come up with?
The
program requires a minimum down payment of three percent (3%) of the purchase
price, one percent (1%) of which must come from your own resources. There are
also closing costs and pro-rated expenses such as document fee, recording fee,
title insurance, pro-rated interest, etc.
The title company which will handle your escrow can help you estimate
these costs.
7. Will the Housing Authority help me with
financing my home?
If
you mean financing by means of a loan or mortgage to purchase your home, NO –
you have to obtain your own financing from a lender. The
Housing Authority will assist you in the purchase by referring you to agencies
and lenders who may have programs that can help you with down payment and
closing cost assistance. But the Housing
Authority will give your homeownership assistance after you purchase your home.
8. Do I have to have good credit?
You
can't have bad credit if you want to buy a home. But if you do, the homeownership counseling
you have to go through may include cleaning up your previous bad credit. Different lenders have different ways of
evaluating your credit.
9. Can my family help me buy the home?
Yes,
your family can assist you with your down payment or other expenses. However, under HUD regulations for this
program, a non-occupying co-borrower cannot own an interest in the home; in
other words, they cannot hold title to the home.
10. Can I have a roommate?
No. Under the standard family obligations for use
and occupancy for the Section 8 Housing Choice Voucher Program, no other person
except members of the assisted family may reside in the unit except for a
foster child or live-in aide.
Furthermore, the family cannot sub-lease the unit.
11. What
realtor or banks can I use to assist me?
You
can use any realtor or lender of your own choosing. The Housing Authority or your homeownership
counselor cannot require you to use a specific realtor or lender. There are many realtors and lenders in town
who have expressed their interest in helping Housing Authority clients.
But
remember: your type of financing must be approved by the Housing Authority.
12. Am I limited as to how much I may pay for a
home?
The
amount you are able to pay for a home depends on your total income and resources, Different lenders
use different methods of qualifying a prospective homebuyer. The lender will pre-qualify you for a loan
based on your income and other financial information regarding your family. It is important that you have this
pre-qualification before you begin shopping for a home.
13. If I am eligible only for a 1-bedroom voucher,
can I buy a 2-bedroom or 3-bedroom house?
Yes, you can buy a house whose bedroom size
is larger than the unit
size that your family qualifies for but the Payment
Standard on which
your homeownership assistance will be based will
be the lower of the
Payment Standard for the family unit size
and the Payment Standard
for the size of the home. In this case, your
Payment Standard will be
based on a 1-bedroom unit not on a 2-bedroom or
3-bedroom unit. In
most cases, a house with more bedrooms will
cost more and therefore,
will have a higher mortgage payment. So since the Housing Authority’s
assistance will be based on a 1-bedroom unit, your
portion of the
mortgage payment will be higher for a larger size
home. If you can
afford a larger house (meaning a lender would
qualify you for a larger
house at a greater mortgage payment), then you
may do so. The
limitation of family portion to 40% of income does not
apply to the
Homeownership Program.
14. Once I have purchased a home under this
program, do I have to be
recertified under Section 8 each year?
Yes. You will still need to be recertified. You still need to submit all the paperwork
required under the regular (Rental) program.
There is a "Statement of Family Obligations" that you will be
required to sign before you begin receiving homeownership assistance and you
will need to comply with those obligations.
15. Does the Housing Authority need to approve
the home I wish to buy?
Yes. You will be required to submit the Purchase
Agreement to the HACNLV. The unit cannot
be an "assisted unit", nor a nursing home or
similar facility, nor a dormitory or public facility. It must already be existing or under
construction at the time of the family's eligibility. It must also be a one-unit property or a
single dwelling unit in a cooperative or condominium. Furthermore, the home will be subject to two
inspections, You
have to arrange for an independent professional inspection and the Housing
Authority will also conduct a Housing Quality Standards (HQS) inspection just
like the HQS inspection under the regular (Rental) program.
16. Is there a deadline for me to locate and buy
a home?
Yes. From the date you are determined eligible for
the program, you have six (6) months to locate a home. After you locate a home, you have ten (10)
working days to obtain financing. From
that same date, you also have ninety (90) days to actually complete the
purchase of the home. So, in total, you
have nine (9) months from the date you are determined eligible to complete the
whole process. After that period, if you
fail to purchase a home, your participation will be terminated. The Housing Authority will then move on to
other interested families and give them an equal chance to qualify and achieve
homeownership.
17. Will I be responsible for other expenses as a
result of purchasing a home?
Yes. You are responsible for all monthly related
homeownership expenses such as association dues, if any. You will also be responsible for repairs such
as water heater repair or replacement, air conditioning repair, plumbing repair
or other repairs as normal homeowners have to incur from time to time.
18. What can I do if I have trouble paying my
mortgage or maintaining my home?
This
is one of the reasons why it is required that you attend ongoing homeownership
counseling as long as you are assisted under this program. You must understand that once you have
purchased your home, you are responsible for the debt incurred in purchasing
it.
19. How do I make my mortgage payments to the
lender?
You
will pay your portion of the mortgage to the lender and the Housing Authority
will send its portion (homeownership assistance) directly to the lender. Or your portion and the Housing Authority’s
portion may be paid to an escrow service who will then
make the entire payment to the lender.
20. What happens if I default on my mortgage or
fail to comply with my family obligations under this program?
Your
homeownership assistance will be terminated.
You will lose your home and you will not be eligible for homeownership
assistance again.
21. How long will the Homeownership Program
assist me?
Fifteen
(15) years if your mortgage is twenty (20) years or longer; ten (10) years in
all other cases. These maximum terms do
not apply to a disabled or elderly family.
22. What happens if my income increases and I
become over-income?
Then
the same rules as in the Rental Program apply.
Your homeownership assistance will be zero but you can remain on the
Homeownership program for six (6) more months.
After that, you will be terminated from the entire Section 8
Program.
23. Can I sell my home?
Yes. However, the program has a
"recapture" requirement if you sell your home during the first 10-year
period. There is a formula for
calculating the amount to be recaptured.
The recaptured amount decreases by 10% each year.
The
program requires that a Notice of Lien be recorded when you purchase your home
and the lien is effective for 10 years.
Therefore, you will not be able to sell your home without satisfying the
lien for the amount that must be recaptured.
24. What
happens to my home if I die?
HUD's
regulation states: "Upon death of a family member who holds, in whole or
in part, title to the home, homeownership assistance may continue pending
settlement of the decedent's estate, notwithstanding transfer of title by
operation of law to the decedent's executor or legal representative as long as
the home is solely occupied by remaining family members in accordance with
Section 982.551(b).
In
other words, questions need to be asked: Is there a will? Are there remaining members of the
family? Are there additional owners
listed on the deed? Depending on the
answers, the home may revert to those remaining members as defined by Section 8
regulations of the family who were residing in the home. The home may have to be sold: if no one is
able to take title and payments are not made, the home may fall into
foreclosure. One thing is important: if
the homeowner dies, the Housing Authority must be notified immediately.
25. Can
I “switch back” to the regular Rental program after I have purchased a home
under this program?
Yes,
but you have to first sell your home; this is if you are voluntarily giving up
your homeownership assistance to go back to rental assistance.
26. What if I failed to pay for my mortgage, can I
go back to the regular Rental program?
If
you defaulted on an FHA-insured mortgage, the Housing Authority is required by
HUD to terminate your homeownership assistance.
If
your home was foreclosed upon, whether it has an FHA or non-FHA
Mortgage,
the Housing Authority will terminate your homeownership assistance.
The
Housing Authority has the discretion on whether to permit you to return to rental
assistance. It will not give you its
permission if you did not cooperate with the mortgage company in getting the
house sold or getting it returned to HUD and did not move out as you should,
which made foreclosure necessary and action had to be taken to evict you from
the home. In this case, you cannot go
back to receiving rental assistance.
27. Do
the rules under the Section 8 Rental program apply to me when I am on
the Homeownership Program?
Basically,
YES. For example, if you fail to appear
or supply the required information for your annual re-examination, or if you or
your family engage in crime and drug-related activities, or if you commit fraud
by not properly declaring your income, etc – the consequences in the Rental
program will still apply to you in the Homeownership program. What would terminate a family’s rental
assistance can also cause termination of homeownership assistance. Unless specified by HUD that a certain
regulation does not apply to the Homeownership Program, Section 8 program rules
will apply to both the Rental and the Homeownership programs.
|
Other
questions may be answered by referring to HUD's regulations contained in 24
CFR Part 982 and/or the Housing Authority's Section 8 Administrative Plan. |