HomeMy WebLinkAbout2015-08-24 15-289 ORDERCOUNCIL ACTION
Item No. 15-289
Date: August 24, 2015
Item/Subject: Order, Modifying Down Payment and Closing Cost Assistance Programs
Responsible Department: Communityand Economic Development
Commentary: This order will authorize the City to modify the down payment and closing cost
assistance programs for persons utilizing Community Development Block Grant Funds. The programs, as
originally designed, provide up to $3,000 in closing cost assistance or $5,000 in down payment
assistance for individuals or families at or below 80% of Area Median Income (AMI) for a term of five (5)
years requiring a promissory note and mortgage deed that would be discharged after the recipient
remained in the home for five years. Down payment assistance is also available to anyone (regardless of
income) in the Neighborhood Revitalization Strategy Area to promote single family homeownership in
this targeted area.
In implementing the program, it was discovered that the mortgage deed provision presented a problem
for financing programs such as VA loans. Not wanting to create a problem for home buyers, City Staff
recommends removal of the five year mortgage deed provision, essentially converting the program to a
grant. This item was reviewed and recommended for approval by the Business & Economic Development
Committee at its August 18, 2015 meeting.
/s/ Tanya Emery
Department Head
Manager's Comments:
0,i4
City Manager
Associated Information:
Budget Approval:
Legal Approval:
Introduced for
Passage
First Reading
Referral
Ajll-ix
Finance Director
Solicitor
Page of
Assigned to Councilor Baldacci
CI`T`Y OF BANGOR
15-289
AUGUST 24, 2015
(TITLE.) ORDER, Modifying Down Payment and Closing Cost Assistance
Programs
WHEREAS, a program to assist homeownership and sustain and promote single family home
ownership in Bangor currently exists; and
WHEREAS, the program provides up to $5,000 in down payment assistance or $3,000 in
closing cost assistance for individuals or families at or below 80% of Area Median
Income; and
WHEREAS, the program provides up to $5,000 in down payment assistance for individuals or
families of any income in the designated Neighborhood Revitalization Strategy
Area; and
WHEREAS, funding for the program comes from the City's Community Development Block
Grant Program; and
WHEREAS, the original design of the program required a five (5) year agreement and a
Mortgage Deed filed at the Penobscot County Registry of Deeds to secure a
Promissory Note. However, it was discovered that the mortgage deed provision
presented a problem for financing such as VA loans; and
WHEREAS, this problem prevents the goal of the program, which is to encourage
homeownership, from being achieved, leading staff to recommend that the
mortgage deed provision be removed:
BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF BANGOR, THAT
The City Manager is hereby authorized to modify the Down Payment and Closing Cost
Assistance Programs to remove the mortgage deed provision.
IN CITY COUNCIL
AUGUST 24, 2015
PASSED
CITY CLERK