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LI <br /> 5 <br /> Proposed Guidelines for Existing Townhome Second Mortgage Program <br /> 1. OCHC/HOME Consortium would offer 20% second mortgages up to $15,000 for <br /> 5 buyers to purchase townhomes in Orange County. The 20% second mortgage <br /> would allow the first mortgages to be 80% of the purchase price and allow <br /> financing without private mortgage insurance, a reduced cost to the buyer. <br /> 2. Maximum purchase price of the townhomes is $91,500 for existing, $94,000 for <br /> new. However, first mortgage must be no more than 80% of purchase price and <br /> equity must make up the difference. For example, if the borrower contributes $500 <br /> and OCHC/HOME contributes $15,000, the maximum purchase price would be <br /> $77,500. ($15,500 = 20% of $77,500) The borrower must still qualify for a first <br /> mortgage of $62,000. <br /> 3. Borrower income limited to 80% of the area median by family size. $37,200 for <br /> family of four; $34,248 for family of three; $28,760 for family of two; 26,080 for <br /> family of one. <br /> 4. Minimum downpayment $500. Borrower will also be required to pay certain pre- <br /> paid expenses and may be required to pay other closing costs, based on <br /> availability of funds. OCHC/HOME may contribute to closing costs if funds are <br /> available, at the discretion of OCHC. <br /> 5. Loan terms would follow HOME guidelines. No interest would accrue and no <br /> payments would be made until sale or refinancing. HOME requires equity be <br /> shared if necessary to make home affordable to next borrower. <br /> 6. Eligible families must complete OCHC homebuyer education program, a 5-week <br /> training program for first-time buyers, plus at least one individual counseling <br /> session with an OCHC representative. <br /> F <br /> 7. Underwriting and pre-qualification by OCHC; selected borrowers must then qualify <br /> for a first mortgage at a private financial institution. <br /> 8. Pre-applications will be taken until a specific deadline; applications will be screened <br /> for pre-qualification; pre-qualified applicants (and three to five back-up applicants) <br /> will be randomly selected for program. After selected applicants complete <br /> homebuyer education program, each applicant will receive a certificate for the <br /> amount of the second mortgage and then will have 90 days to find a townhome <br /> and execute a purchase agreement. They must file a first mortgage application <br /> within 10 days of execution of purchase agreement, and close within 90 days of <br /> the same date. <br /> 9. All homes must be inspected prior to purchase and the inspections report i. <br /> submitted to OCHC. OCHC will also review the Homeowners' Association to make <br /> sure the townhome development is run efficiently. OCHC reserves the right to <br /> reject any property that has Housing Code violations or an inadequate <br /> Homeowners' Association. <br /> DRAFT <br /> 1 <br />