NSP Home Buyer Overview
The Neighborhood Stabilization Program (NSP) is a program funded by the U.S. Department of Housing and Urban Development (HUD) through the Housing and Economic Recovery Act (HERA) of 2008. In Oregon, the program is being administered by the Oregon Department of Housing and Community Services (OHCS) which is utilizing Washington County as one of its Subgrantees. The program is designed to provide financing mechanisms to assist homebuyers in purchasing foreclosed-upon residential properties in targeted areas of Washington County for the purposes of stabilizing property values in the neighborhood.
Subordinate Mortgage Financing
In Washington County, the Office of Community Development will provide “soft” second mortgage assistance of up to $50,000 to income-eligible homebuyers to purchase bank-owned foreclosed properties (more commonly known as Real Estate Owned or REOs) in targeted areas undergoing foreclosures or are at high risk of foreclosures. Below is a list of maps of these targeted areas in Washington County:
The State of Oregon also provides a Google-based link to the targeted NSP areas that enables the user to zoom into particular addresses within the areas at: http://o.hcs.state.or.us/reser/NSP/googlemaps/5plus_3perplus.html
The assistance can include down payment, closing costs, pre-paids and first mortgage reduction. Depending on the physical quality of the property, the assistance can also include rehabilitation provided that the total assistance remains at or below $50,000. The home must remain the borrower’s primary residence and cannot be used at any time as a rental property.
Lender Underwriting Guidelines
OHCS outlines the terms and conditions of this second mortgage assistance to eligible homebuyers in its Lender Underwriting Guidelines. Click here to view the underwriting guidelines. It is highly recommended that all homebuyers review these guidelines prior to application.
These “soft” second mortgages will be subordinated to the first mortgage from the homebuyer’s primary lender. The first mortgage must be a 30-year term loan and can only have a fixed interest rate. No refinances, Adjustable Rate Mortgages (ARMs), Interest-Only, Hybrids, Combo or Second (2nd) mortgages with variable interest rates, or sub-prime loans will be allowed in conjunction with this program. Maximum debt-to-income ratio cannot exceed 45%.
The rate will be 0% due upon sale, transfer of title or refinance of the first mortgage. Upon the sale of the property, the original loan amount is due along with a portion of any appreciation realized on the property. The equity due to the lender diminishes from 50% before the first year after the anniversary of closing to 0% on or after the fifth anniversary of closing on the property.
Purchase Price Discount Requirement
The program also requires that any purchase of a foreclosed-upon home or residential property must be at a minimum one percent (1%) discount from the current market-appraised value of the property. The current market-appraised value must come from an appraisal completed within sixty (60) days prior to a final offer being made and must be done by a licensed appraiser consistent with the Uniform Standards of Professional Appraisal Practice.
Income Eligibility Requirement
The homebuyer eligibility requirements for the program are income restrictions for households that do not exceed 120% of the area median income (AMI). In this program, 120% AMI is deemed “middle-income” by HUD.
Click here to see the FY2009 NSP Income Limits for Washington County
Housing Counseling Requirement
There is a requirement that all homebuyers receive and complete at least eight hours of homebuyer counseling from a HUD-approved housing counseling agency before obtaining a mortgage loan. This homebuyer counseling can include the ABCs of Homebuying, Homebuying 101 and other approved introduction courses. The two HUD-approved housing counseling agencies in Washington County include Portland Housing Center and Open Door Counseling Center. They serve as Regional Housing Centers for the area.
For more information on the Neighborhood Stabilization Program or to consult the Oregon Housing and Community Services department’s website on the program click here.
How to Apply
Due to the limited availability of funds and the need to commit all NSP funds by Sept. 19, 2010, NSP funds to homebuyers will be made on a first come, first serve basis.
To begin the process in accessing these funds for a soft second mortgage, please first download, review, complete, sign and submit the attached NSP Homebuyer Loan Application and NSP Homebuyer Program Financial Records Disclosure, which enables the Office of Community Development a right or access to financial records held by the financial institution in connection with the consideration or administration of the Washington County Neighborhood Stabilization Program. These forms are to be submitted to the Office of Community Development, Attn: Ben Sturtz, NSP Coordinator at (503) 846-2882.
NSP Homebuyer Loan Application
Financial Records Disclosure
At the same time, please review the attached Required Document Checklist for the NSP Homebuyer Program.
Required Document Checklist for the NSP Homebuyer Program
Click here to download forms provided by homebuyer to the Office of Community Development
Before a Fund Reservation Letter can be provided to the homebuyer confirming they can receive NSP funds at closing, all materials need to be provided by the homebuyer and their realtor/lender. Once these materials are provided, Office of Community Development staff will perform all necessary property inspections and review the homebuyer’s loan information from their primary lender to qualify their first mortgage. The homebuyer will receive their Fund Reservation Letter in the mail confirming they are qualified to receive NSP funds. They are to sign and return this letter to: The Office of Community Development 328 W. Main Street, MS# 7, Hillsboro, OR 97123
