Date: 9/2/2010
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Chapter 24

(Revised and Approved by Housing Authority Resolution 03-03, on 03/04/03)

Section 8 Homeownership Action Plan
[24 CFR Part 982, Subpart M]

INTRODUCTION

The Section 8 Homeownership Program (HOP) allows recipients of Section 8 Housing Choice Voucher rental assistance the option to purchase a home and use the Section 8 Housing Assistance Payment (HAP) towards mortgage payments and other allowable housing costs. The total number of Section 8 Homeownership Vouchers issued will be limited to no more than ten percent (10%) of the total number of Section 8 Vouchers administered by the Vallejo Housing Authority (VHA). The Section 8 Homeownership Program will be targeted to participants in the VHA Family Self Sufficiency (FSS) Program, although families not participating in FSS may apply if they meet the additional criteria under Section A below.

Applicants for the Section 8 Homeownership Program must meet all HUD requirements for Section 8 Homeownership in addition to eligibility criteria established by the VHA. Admission of applicants to the Section 8 Homeownership Program is at the discretion of the VHA.

The VHA will not offer the single downpayment assistance program.

A. ELIGIBILITY REQUIREMENTS

The Section 8 Homeownership Program (HOP) is targeted to participants and graduates of the Family Self Sufficiency (FSS) Program. The FSS participation requirement will be waived for elderly or disabled families that otherwise qualify for HOP. Applicants must meet the following criteria to be considered for the VHA HOP:

Applicant must be a first time homebuyer.
1. No member of the household may have any interest or ownership in a residence during the three years before applying for homeownership assistance or at the commencement of participation in HOP.
2. Single parents or displaced homemakers (as those terms are defined in 12 U.S.C. 12713) who owned a home while married or resided in a home owned by a spouse also qualify as first time homebuyers.
3. Families with a disabled family member may request approval for a waiver of the first time homebuyer requirement if required as a reasonable accommodation for a disability.
Minimum income requirements.
Calculation of income-eligibility for the Section 8 Homeownership Program for the purpose of determining income-eligibility for admission to the program will be conducted under the guidelines for Section 8 rental assistance as noted in this Administrative Plan.
1. The head of household, spouse or other adult member(s) of the household that will hold title to the home must have a combined annual gross income of not less than the very-low income limit adjusted for the family size (30% of Median Family Income) as determined by HUD.
2. A family that does not meet this requirement, but does meet all other HOP requirements, may request a waiver provided the family can demonstrate that:
- Head of household, spouse or other adult member(s) of the household that will hold title to the home have a combined annual gross income of not less than the Federal minimum wage multiplied by 2,000 hours and;
- Family is able to secure a mortgage and that the total housing cost to the family will not exceed fifty-percent (50%) of the familyÕs total gross monthly income.
1. Welfare assistance may not be included in the minimum gross annual income above, except for elderly or disabled families. Welfare assistance includes payments from Temporary Assistance for Needy Families (TANF), Supplementary Security Income (SSI) that is subject to an income eligibility test, food stamps, general assistance (GA); or other welfare assistance as specified by HUD.
Minimum employment requirements.
1. One or more adult members of the household that will hold title to the home must be currently employed and working not less than an average of 30 hours per week and has been continuously employed for one year prior to application to HOP.
2. Employment requirements do not apply to elderly or disabled families that otherwise qualify for HOP.
3. A family with a member with disabilities may request an exemption from the work requirements if needed as a reasonable accommodation for the disabled family member.
Minimum downpayment requirements.
1. The family must demonstrate the ability to provide a minimum of three percent (3%) downpayment on the home.
2. At least one percent (1%) of this downpayment must come from the familyÕs personal resources.
3. FSS graduates may use FSS escrow towards this requirement. Families with an Individual Development Account (IDA) or an Individual Development Empowerment Account (IDEA) through the VHA or other agency may count these funds towards the minimum downpayment.
Preferences for admission to HOP.
1. First preference will be given to applicants who are successful graduates of the FSS Program. Elderly or disabled families that otherwise qualify for HOP will also receive first preference.
2. Second preference will be given to applicants who have not graduated from the FSS Program, but otherwise qualify for HOP and can demonstrate the ability to secure a mortgage for the purchase of an eligible unit under the Section 8 HOP guidelines.
Other requirements.
1. The family must have completed an initial Section 8 lease term and completed the familyÕs first annual recertification in the Section 8 Housing Choice Voucher Program.
2. The family must verify that no family member has previously defaulted on a mortgage assisted under the Section 8 Homeownership.
3. The head of household and any other adult members that will hold title to the home must successfully complete a homeownership and housing counseling program approved in advance by the VHA.
4. The head of household and any other adult members that will hold title to the home must complete a housekeeping and home maintenance course approved in advance by the VHA prior to or within one year of the home purchase.
5. Family members may not owe any debt to the VHA or another housing authority.
6. The family must maintain a good tenant standing with its landlord and the VHA. This includes, but is not limited to:
- In compliance with HUD Family Obligations under the Section 8 Program,
- Adhering to the requirements of the lease agreement;
- No outstanding debts to the landlord or to any utility company;
- Passing the most recent Housing Quality Standards (HQS) inspection with no significant tenant-caused failure items.

B. ELIGIBLE UNITS

Section 8 Homeownership assistance may be used to purchase units within the jurisdiction of the VHA that are under construction or already existing at the time the VHA issues a Homeownership Voucher to the eligible family.

Unit types.
The following unit types may be purchased using the Section 8 Homeownership Program:
- One unit property (single-family residence)
- A single dwelling unit in a cooperative, condominium or planned use development
- A manufactured home with a permanent foundation, if the family has the right to occupy the home site for a period of at least thirty (30) years
Section 8 Housing Quality Standards.
The unit must be inspected by the VHA and satisfy the Housing Quality Standards (HQS) for the Section 8 Program before HOP assistance can begin.
Independent inspection.
The unit must be inspected by a certified independent inspector designated and paid by the family, and pre-approved by the VHA. This inspection must cover, at a minimum, all major building systems and components including:
- Foundation and structure
- Housing interior and exterior
- Roofing
- Plumbing
- Electrical systems
- Heating systems
The VHA must receive and approve a copy of the inspection report before HOP assistance will commence. The VHA may disapprove a unit for assistance under HOP because of information obtained through the inspection report, even if the unit passes the HQS inspection.
Other requirements for eligible units.
The seller of the home may not be on the HUD list of debarred and suspended contractors, or subject to a limited denial of participation under 24 CFR 24.

C. ISSUANCE OF VOUCHER

Once approved for participation in the Section 8 HOP, the family will be issued a HOP Voucher subject to the following requirements.

The VHA will issue the family a Homeownership Voucher for a period of 180 days.
The VHA may require families unable to locate a suitable unit during the term of the Voucher to wait for a period of one year to re-apply for HOP.
The VHA may grant an extension due to extenuating circumstances. Extensions will be granted at the discretion of the VHA.
The family must report its progress towards locating and purchasing a unit if requested by the VHA.
If the family is unable to locate an acceptable unit for purchase during the term of the HOP Voucher, the VHA may, at its discretion, issue the family a Voucher for rental assistance.
If the family submits a contract of sale to the VHA that is not approved due to reasons other than the familyÕs lack of compliance, the VHA will add back the number of days to the Voucher that it took to review the contract (known as ÒtollingÓ days).

D. CONTRACT OF SALE (SALES AGREEMENT)

The family must submit a copy of the sales agreement to the VHA. The family must enter into a sales agreement before HOP assistance may commence. The sales agreement must include the following:

Specify the price and other terms of sale by the seller to the purchaser.
Provide that the purchaser will arrange for a pre-purchase inspection of the unit by an independent inspector selected by the purchaser.
Provide that the purchaser is not obligated to purchase the unit unless the inspection is satisfactory to the purchaser.
Provide that the purchaser is not obligated to pay for any necessary repairs.
Contain a certification from the VHA that the seller has not been debarred, suspended or subject to a limited denial of participation under 24 CFR 24.
Escrow must close within a reasonable amount of time after submission of the sales agreement.
The sale price of the home must be affordable to the family, as determined by the VHA. The price shall be considered affordable if the monthly homeownership expenses payable by the family, as defined in Section F(8), do not exceed fifty-percent (50%) of the familyÕs total monthly gross income.

E. FINANCING OF PURCHASE AND AFFORDABILITY REQUIREMENTS

The family must allow the VHA to review the terms of the mortgage secured to purchase the property before close of escrow. The VHA may disapprove proposed financing, refinancing or other debt if the VHA determines that the debt is unaffordable to the family or if the VHA determines that the lender or the loan terms do not meet VHA or HUD qualifications. The family must locate and qualify for a mortgage that meets the following requirements:

The mortgage must be determined to be affordable by the VHA. The VHA may take into account child care, unreimbursed medical expenses, homeownership expenses, and other family expenses as determined by the VHA to determine affordability of the familyÕs share of the housing costs. Homeownership expenses will be calculated as indicated in paragraph F.8 of this section. The familyÕs portion of the monthly homeownership expenses may not exceed fifty-percent (50%) of the familyÕs total monthly gross income.
Short-term first mortgages with a large final Òballoon paymentÓ will not be allowed.
Adjustable mortgages with an interest rate that adjusts more than five percent (5%) over the life of the loan, more than one percent (1%) in any one year, or adjusts more often than once per year will not be allowed.
The VHA will consider seller financed mortgages on a case-by-case basis.
The family may not obtain private first mortgage financing from a family member or any other private source.
The mortgage must be provided, insured, or guaranteed by the state or Federal government and comply with secondary mortgage market underwriting standards; or the mortgage must comply with generally accepted private sector underwriting standards.

F. CALCULATION OF HOMEOWNERSHIP ASSISTANCE PAYMENT

Calculation of income-eligibility for the Section 8 Homeownership Program for the purpose of determining income-eligibility for admission to the program, for determination of the familyÕs total tenant payment, or for determining the amount of the Homeownership Assistance Payment (HAP); will be conducted under the guidelines for Section 8 rental assistance as noted in this Administrative Plan, except as noted otherwise in this paragraph.

Occupancy of home.
The HAP will only be paid while the family resides in the home. If the family moves out of the home, the VHA will discontinue payment of the HAP commencing with the month after the family moves out.
1. Amount of monthly homeownership assistance payment. While the family is residing in the home, the VHA shall pay a monthly homeownership assistance payment on behalf of the family that is equal to the lower of the payment standard minus the total tenant payment; or the family's monthly homeownership expenses minus the total tenant payment.
2. Initial Payment Standard. The initial payment standard for a family is the lower of the payment standard for the family unit size (Voucher size); or the payment standard for the size of the home.
3. Payment Standard for subsequent reexaminations. Reexaminations (interims and annual reexaminations) will use a Payment Standard that is the greater of the payment standard (as determined in accordance with the initial payment standard at the commencement of homeownership assistance; or the Payment Standard in effect at the time of the reexamination as determined using the requirements of Section F(1)(b) of this action plan. At no time will the VHA use a Payment Standard less than the initial Payment Standard to determine the HAP.
4. The VHA will use the same Payment Standard schedule, Payment Standard amounts, and Subsidy Standards for the HOP as for the rental voucher program.
5. Exception rent areas. If the home is located in an exception payment standard area, the PHA must use the appropriate payment standard for the exception payment standard area.
6. Affordability of housing costs. Total monthly homeownership expenses payable by the family, as defined in paragraph 8 below, must be less than fifty-percent (50%) of the familyÕs total gross monthly income.
7. Homeownership expenses. The VHA will use the following expenses to determine the total homeownership expense for calculation of the HAP:
  - Principal and interest on initial mortgage debt, any refinancing of such debt, and any mortgage insurance premium incurred to finance purchase of the home.
  - Real estate taxes and public assessments on the home.
  - HomeownerÕs insurance.
  - Life insurance to the amount of the mortgage.
  - Allowance for maintenance expenses as determined by the VHA.
  - Allowance for costs of major repairs and replacements as determined by the VHA.
  - Utility allowance for the home as determined by the VHA.
8. Principal and interest on mortgage debt incurred to finance costs for major repairs, replacements or improvements for the home. If a member of the family is a person with disabilities, such debt may include debt incurred by the family to finance costs needed to make the home accessible for such person, if the VHA has determined that allowance of such costs as homeownership expenses is needed as a reasonable accommodation for the disabled family member.
Cooperative and Condominiums

For cooperative members only (owners of condos) the following cooperative charges will also be used towards the homeownership expense:

Charges included in the cooperative occupancy agreement including payment for real estate taxes and public assessments on the home;
Principal and interest on initial debt incurred to finance purchase of cooperative membership shares and any refinancing of such;
Cooperative or condominium operating charges or maintenance fees assessed by the condominium or cooperative homeowner association.

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HAP payment to lender.  
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1. The family must establish an account at a financial institution dedicated to the payment to the lender unless other payment arrangements are required by the lender. The account will be set up to electronically transfer the total mortgage payment to the lender monthly. The family will be responsible for paying its portion of the payment, if any, directly to the account in time for the electronic transfer each month.
2. The VHA will pay the HAP directly to the account established by the family. If the assistance payment exceeds the amount due to the lender, the excess will be paid directly to the family.
3. The VHA will provide the lender with notice of the amount of the HAP and amount of the familyÕs portion of the total homeownership expenses prior to close of escrow.
4. Procedure for termination of homeownership assistance.
  The family shall be entitled to the same termination notice and informal hearing procedures set forth in this Administrative Plan for participants in the Section 8 rental assistance program.
5. Automatic termination of HAP.
  Homeownership assistance for a family terminates automatically 180 calendar days after the last HAP paid on behalf of the family. The VHA has the discretion to grant relief from this requirement in those cases where automatic termination would result in extreme hardship for the family.

G. MAXIMUM TERM OF HOMEOWNERSHIP ASSISTANCE

The time limits below apply to all family members having an ownership interest in the unit during the time that homeownership payments are made; and, the spouse of any member of the household who has an ownership interest in the unit during the time that homeownership payments are made.

All families, including families that become elderly during the term of the homeownership assistance are subject to the following maximum terms:

Initial mortgage term of twenty (20) years or longer. The maximum term of homeownership assistance will be fifteen (15) years.
Initial mortgage term of less than twenty (20) years. The maximum term of homeownership assistance will be ten (10) years.

If, during the course of homeownership assistance, the family ceases to qualify as elderly or disabled, the maximum term as defined in Section G (2) will become applicable from the date homeownership assistance commenced. The VHA will provide a family at least six (6) months of homeownership assistance after the maximum term becomes applicable provided the family is otherwise eligible to receive homeownership assistance.

The initial maximum term limit applies if the family receives assistance for more than one home purchase, even if received from another housing authority.

H. POST-PURCHASE COUNSELING

The VHA may require the family to attend post-purchase counseling at any time during the term of the homeownership assistance. Counseling topics may include:

Financial Planning
Housing Keeping
Property Maintenance
Budgeting

I. RIGHT OF FIRST REFUSAL

The family must execute documentation giving the VHA, or its designee, the right of first refusal in the event the family decided to sell the home. This document shall be in effect during the term of the HAP

J. INSURANCE REQUIREMENTS

The VHA may require the head of household to purchase and maintain a life insurance policy that will cover the amount of the mortgage.

The VHA may require the family to include the VHA as additional insured on the homeownerÕs insurance policy.

K. PORTABILITY

Families issued a homeownership voucher may exercise portability to purchase a unit in the jurisdiction of another housing authority.

1. Incoming portable families.
1. may purchase a unit within the jurisdiction of the VHA, provided the VHA is accepting new homeownership families at the time of the purchase.
2. must be under rental assistance one year prior to application for Section 8 Homeownership.
3. must meet the education and counseling requirements of the VHA
Outgoing portable families.
1. may purchase a unit within the receiving jurisdiction, provided they are accepting new homeownership families at the time of the purchase.
2. must meet the education and counseling requirements of the receiving jurisdiction.

L. MOVES WITH CONTINUED TENANT-BASED ASSISTANCE

A family receiving VHA homeownership assistance may purchase and move to a new unit with continued assistance.

1. Purchase of a new unit.
A family receiving homeownership assistance may purchase and move to a new unit with continued assistance, provided the family fulfills all requirements of the HOP at the time of the purchase of the new unit. The following applies to a family purchasing a new unit under the HOP:
1. The family will not be eligible to move with continued assistance for a period of one year after the initial purchase.
2. The VHA may, at its discretion, require the family to complete a new housing counseling program or receive additional counseling prior to close of escrow.
3. The requirement that the family must be a first time homebuyer is not applicable.
4. The VHA may deny permission to move with continued assistance in the case of lack of funding or if the VHA has denied or terminated assistance to the family under section N below.

Sale of original HOP unit and return to tenant-based rental assistance.
The VHA may, at its discretion, allow a family to return to tenant-based rental assistance. The following applies to a family returning to tenant-based rental assistance:
1. The VHA may deny permission to move with continued assistance in the case of lack of funding or if the VHA has denied or terminated assistance to the family as defined under Section N of this action plan.
2. The VHA will not commence continued tenant-based assistance for occupancy of a rental unit so long as any family member owns any title or other interest in the home previously assisted through the HOP.
3. If the family has defaulted on a VHA insured mortgage, the family must demonstrate that it has conveyed title to the home to HUD or its designee, as required by HUD; and that the family moved from the home within the period established or approved by HUD.
4. If the family has defaulted on a mortgage that is not VHA-insured, the family must demonstrate that it has conveyed title to the home to the lender, to the VHA or its designee, as may be permitted or required by the lender; and that the family moved from the home within the period established or approved by the lender and the VHA.

M. DENIAL OR TERMINATION OF ASSISTANCE

The VHA shall terminate homeownership assistance for the family in accordance with the requirements of this section. The VHA, at its discretion, may allow the family to return to tenant-based rental assistance under conditions in Section L(2).

Failure to comply with Vallejo Housing Authority Section 8 Homeownership Program requirements.
Failure to comply with any HUD Family Obligations.
The family defaults on the mortgage.

N. WAIVER OR MODIFICATION OF HOMEOWNERSHIP POLICIES

The Housing Manager shall have the discretion to waive or modify any provision of the Section 8 Homeownership Program policy not governed by statute or regulation for good cause or to comply with changes in HUD regulations or directives.

555 Santa Clara Street, Vallejo, California 94590