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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