HomeOwnership
For an in-depth look at the Section 8 Housing Choice Voucher Homeownership Program, see the excellent Guidebook, by Clicking Here.
Below is an Overview of LTRAP’s popular Homeownership Program – known locally as ‘HomeRun’™.
- General Provisions
- Amount of Assistance
- LTRAP Administrative Fees
- Family Eligibility Requirements
- Terminationof Section 8 Homeownership Assistance
- Waiver or Modification of Homeownership Policies
- Family Participation Requirements
- Continued Participation of Section 8 Voucher Program
- Appendix
1. GENERAL PROVISIONS.
The Section 8 homeownership Program (“HomeRun™”) of the Lakewood Township Residential Assistance Program (“LTRAP”) permits eligible participants in the Section 8 Housing Choice Voucher Program, including participants with portable vouchers, the option of purchasing a home with their Section 8 assistance rather than renting.
Eligible applicants for the Section 8 homeownership program may not owe LTRAP or any other Housing Agency an outstanding debt, and must meet the eligibility criteria set forth below. Section 8 homeownership assistance may be used to purchase the following type of homes: new or existing single-family, condominiums, townhomes, cooperatives, or manufactured homes. Two-Family homes are not eligible.
LTRAP also will permit portability of Section 8 homeownership assistance to another Housing Agency (HA), provided the receiving HA operates a Section 8 homeownership program for which the Section 8 homeownership applicant qualifies or authorizes LTRAP to administer the homeownership assistance in their jurisdiction.
2. FAMILY ELIGIBILITY REQUIREMENTS.
Participation in the Section 8 homeownership program is voluntary. Each Section 8 homeownership participant must meet the general requirements for admission to the Section 8 Housing Choice Voucher Program as set forth in LTRAP’s Administrative Plan. Such Section 8 family also must be “eligible” to participate in the HomeRun™ homeownership program. The additional eligibility requirements for participation in LTRAP’s Section 8 homeownership program include that the family must:
(A) not have owned a home in the past three years or have a member who is a person with disabilities;
(B) with the exception of elderly and disabled households, meet a minimum income requirement without counting income from “welfare assistance” sources;
(C) with the exception of elderly and disabled households, meet the requisite employment criteria;
(D) have fully repaid any outstanding debt owed to LTRAP or any other HA;
(E) not defaulted on a mortgage securing debt to purchase a home under the homeownership option; and
(F) not have any member who has a present ownership interest in a residence at the commencement of homeownership assistance.
A. First-Time Homeowner.
Each Section 8 family, except families with a disabled member, must be a first-time homeowner. A “first-time homeowner” means that no member of the household has had an ownership interest in any residence during the three years preceding commencement of homeownership assistance. However, a single parent or displaced homemaker who, while married, owned a home with a spouse (or resided in a home owned by a spouse) is considered a “first-time homeowner” for purposes of the Section 8 homeownership option; and the right to purchase title to a residence under a lease-purchase agreement is not considered an “ownership interest.” A member of a cooperative (as defined in § 982.4) also qualifies as a “first time homeowner”.
B. Minimum Income Requirement.
(1) Amount of Income.
At the time the family begins receiving homeownership assistance, the head of household, spouse, and/or other adult household members who will own the home, must have a gross annual income at least equal to the prevailing federal minimum hourly wage multiplied by 2000 hours.
(2) Exclusion of Welfare Assistance Income.
With the exception of elderly and disabled families, LTRAP will disregard any “welfare assistance” income in determining whether the family meets the minimum income requirement. Welfare assistance includes assistance from Temporary Assistance for Needy Families (“TANF”); Supplemental Security Income (“SSI”) that is subject to an income eligibility test; food stamps; general assistance; or other welfare assistance specified by HUD. The disregard of welfare assistance income under this section affects the determination of minimum monthly income in determining initial qualification for the homeownership program. It does not affect the determination of income-eligibility for admission to the Section 8 housing choice voucher program, calculation of the family’s total tenant payment, or calculation of the amount of homeownership assistance payments.
C. Employment History.
With the exception of disabled and elderly households, each family must demonstrate that one or more adult members of the family who will own the home at commencement of homeownership assistance is employed full-time (an average of 30 hours per week) and has been so continuously employed for one year prior to execution of the sales agreement. In order to reasonably accommodate a family’s participation in the program, LTRAP will exempt families that include a person with disabilities from this requirement. LTRAP’s Executive Director may also consider whether and to what extent an employment interruption is considered permissible in satisfying the employment requirement. The Executive Director may also consider successive employment during the one-year period and self-employment in a business.
D. Repayment of Any Housing Agency Debts.
Participants in the Section 8 Housing Choice Voucher program shall be ineligible for participation in the Section 8 homeownership program in the event any debt or portion of a debt remains owed to LTRAP or any other Housing Agency. Nothing in this provision will preclude Section 8 participants that have fully repaid such debt(s) from participating in the Section 8 homeownership program.
E. Additional Eligibility Factors.
(1) Elderly and Disabled Households.
Elderly and disabled families are exempt from the employment requirements set forth in Section 2. C. above. In the case of an elderly or disabled family, LTRAP will consider income from all sources, including welfare assistance in evaluating whether the household meets the minimum income required to purchase a home through the Section 8 homeownership program.
(2) Prior Mortgage Defaults.
If a head of household, spouse, or other adult household member who will execute the contract of sale, mortgage and loan documents has previously defaulted on a mortgage obtained through the Section 8 homeownership program, the family will be ineligible to participate in the homeownership program.
3. FAMILY PARTICIPATION REQUIREMENTS.
Once a family is determined to be eligible to participate in the homeownership program, it must comply with the following additional requirements:
(A) complete a homeownership counseling program approved by LTRAP prior to commencement of homeownership assistance;
(B) within a specified time, locate the home it proposes to purchase;
(C) submit a sales agreement containing specific components to LTRAP for approval;
(D) allow LTRAP to inspect the proposed home to assure that the dwelling meets appropriate housing quality standards;
(E) obtain an independent inspection covering major building systems;
(F) obtain LTRAP approval of the proposed mortgage (which must comply with generally accepted mortgage underwriting requirements);
(G) enter into a written agreement with LTRAP to comply with all of the family’s obligations under the Section 8 program.
A. Homeownership Counseling Program.
A family’s participation in the homeownership program is conditioned on the family attending and successfully completing a homeownership and housing counseling program provided or approved by LTRAP prior to commencement of homeownership assistance. The homeownership and counseling program will cover home maintenance; budgeting and money management; fair housing; credit counseling; predatory lending issues; negotiating purchase price; securing mortgage financing; RESPA obligations; finding a home; and the advantages of purchasing and locating homes in areas that do not have a high concentration of low-income families.
The counseling agency providing the counseling program shall either be approved by HUD, or the program shall be consistent with the homeownership counseling provided under HUD’s Housing Counseling program. LTRAP may require families to participate in a LTRAP-approved homeownership counseling program on a continuing basis.
B. Locating and Purchasing a Home.
(1) Locating A Home.
Upon approval for the Section 8 homeownership program, a family shall have one hundred twenty (120) days to locate a home to purchase. A home shall be considered located if the family submits a proposed sales agreement with the requisite components to LTRAP. For good cause, LTRAP may extend a Section 8 family’s time to locate the home for additional thirty (30) day increments. During a Section 8 participant’s search for a home to purchase, their Section 8 rental assistance shall continue pursuant to the Administrative Plan. If a Section 8 participant family is unable to locate a home within the time approved by LTRAP, their Section 8 rental assistance through the Section 8 housing choice voucher program shall continue.
(2) Type of Home.
A family approved for Section 8 homeownership assistance may purchase the following type of homes within LTRAP’s jurisdiction: a new or existing home, a single-family home, a condominium, a townhome, a cooperative, or a manufactured home to be situated on a privately owned lot or on a leased pad in a mobile home park. The home must be already existing or under construction at the time LTRAP determines the family eligible for homeownership assistance [to purchase the unit (§ 982.628(a)(2).]. The family also may purchase a home in another jurisdiction, provided the Housing Agency in the receiving jurisdiction operates a Section 8 homeownership program for which the Section 8 homeownership applicant qualifies or authorizes LTRAP to administer the homeownership assistance in their jurisdiction. In the former case, a family’s participation in the Section 8 homeownership program will be subject to the Section 8 homeownership program and policies of the receiving jurisdiction.
(3) Purchasing a Home.
Once a home is located and a sales agreement approved by LTRAP is signed by the family, the family shall have up to three (3) months, or such other time as is approved by LTRAP’s Executive Director or set forth in the LTRAP-approved sales agreement, to purchase the home.
(4) Failure to Complete Purchase.
If a Section 8 participant is unable to purchase the home within the maximum time permitted by LTRAP, LTRAP shall continue the family’s participation in the Section 8 housing choice voucher program. If a Section 8 applicant fails to purchase a home within the maximum time permitted by LTRAP, but desires to participate in the Section 8 Program as an assisted renter, the family will be offered a Housing Choice Voucher.
(5) Lease-Purchase
Families may enter into lease-purchase agreements while receiving Section 8 rental assistance. All requirements of the Housing Choice Voucher Program apply to lease-purchase agreements, except that families are permitted to pay an extra amount out-of-pocket to the owner for purchase related expenses– a “homeownership premium.” Any “homeownership premium,” defined as an increment of value attributable to the value of the lease-purchase right or agreement, is excluded from LTRAP’s rent reasonableness determination and subsidy calculation, and must be absorbed by the family. When a lease-purchase participant family is ready to exercise their option, they must notify the homeownership Counselor at LTRAP and apply for the homeownership option. If determined eligible for homeownership assistance, the family may be admitted to the homeownership program and must meet all the requirements of these policies.
C. Sales Agreement.
Prior to execution of the offer to purchase or sales agreement, the financing terms must be provided by the family to LTRAP for approval. The sales agreement must provide for inspection by LTRAP and the independent inspection referred to in Section 3(E) and must state that the purchaser is not obligated to purchase unless such inspections are satisfactory to LTRAP. The contract also must provide that the purchaser is not obligated to pay for any necessary repairs without approval by LTRAP. The sales agreement must provide that the purchaser is not obligated to purchase if the mortgage financing terms are not approved by LTRAP pursuant to Section 3(F). The sales agreement must also contain a seller certification that the seller is not debarred, suspended, or subject to a limited denial of participation under 24 CFR part 24.
D. Independent Initial Inspection Conducted.
To assure the home complies with the housing quality standards of the Section 8 program, homeownership assistance payments may not commence until LTRAP first inspects the home. An independent inspection of existing homes covering major building systems also must be completed by a professional selected by the family and approved by LTRAP. LTRAP will not pay for the independent inspection. The independent inspection report must be provided to LTRAP. LTRAP may disapprove the unit due to information contained in the report or for failure to meet federal housing quality standards.
E. Financing Requirements.
The proposed financing terms must be submitted to and approved by LTRAP prior to close of escrow. LTRAP shall determine the affordability of the family’s proposed financing, utilizing generally accepted underwriting guidelines. In making such determination, LTRAP may take into account other family expenses, including but not limited to child care, unreimbursed medical expenses, education and training expenses and the like. Certain types of financing, including but not limited to, balloon payment mortgages, unless convertible to a variable rate mortgage, are prohibited and will not be approved by LTRAP. Seller-financing mortgages shall be considered by LTRAP on a case by case basis. If a mortgage is not FHA-insured, LTRAP will require the lender to comply with generally accepted mortgage underwriting standards consistent with those of HUD/ FHA, Ginnie Mae, Fannie Mae, Freddie Mac, New Jersey Housing & Mortgage Finance Agency (NJHMFA), USDA Rural Housing Services, the Federal Home Loan Bank, or other private lending institution.
F. Compliance With Family Obligations.
A family must agree, in writing, to comply with all family obligations under the Section 8 program and LTRAP’s homeownership policies. These obligations include
(1) attending ongoing homeownership counseling, if required by LTRAP; (2) complying with the mortgage terms; (3) not selling or transferring the home to anyone other than a member of the assisted family who resides in the home while receiving homeownership assistance; (4) not refinancing or adding debt secured by the home without prior approval by LTRAP; (5) not obtaining or maintaining a concurrent ownership interest in another residence while receiving homeownership assistance; and (6) supplying all required information to LTRAP, including but not limited to annual verification of household income, notice of change in homeownership expenses, notice of move-out, and notice of mortgage default. LTRAP’s homeownership Family Obligation policies are set forth in Appendix A hereto.
G. Compliance Lien
Upon purchase of a home, the family must execute documentation as required by HUD and LTRAP, consistent with State and local law, securing LTRAP’s right to recapture the homeownership assistance in accordance with Section 5. C. below. The lien securing the recapture of homeownership subsidy may be subordinated to a refinanced mortgage. [Note: Moving to another home in the same PHA jurisdiction, as well as buying another home in another PHA jurisdiction, is permitted with continued use of homeownership assistance. See §§ 982.636 & 637.]
4. AMOUNT OF ASSISTANCE.
The amount of the monthly assistance payment will be based on three factors: the voucher payment standard for which the family is eligible; the monthly homeownership expense; and the family’s household income. LTRAP will pay the lower of either the payment standard minus the total family contribution (“TFC”) or the family’s monthly homeownership expenses minus the TFC. The Section 8 family will pay the difference.
A. Determining the Payment Standard.
The voucher payment standard is the fixed amount the LTRAP annually establishes as the “fair market” rent for a unit of a particular size located within the LTRAP jurisdiction. In the homeownership program, the initial payment standard will be the lower of either
(1) the payment standard for which the family is eligible based on family size; or (2) the payment standard which is applicable to the size of the home the family decides to purchase. The payment standard for subsequent years will be based on the higher of: (1) the payment standard in effect at commencement of the homeownership assistance; or (2) the payment standard in effect at the most recent regular reexamination of the family’s income and size. The initial payment standard, for purposes of this comparison, shall not be adjusted even if there is a subsequent decrease in family size. LTRAP will request HUD approval of a higher payment standard, up to 120% of the published Fair Market Rent limit, where warranted as a reasonable accommodation for a family that includes a person with disabilities.
B. Determining the Monthly homeownership Expense.
Monthly homeownership expense includes all of the following: principal and interest on the initial mortgage and any mortgage insurance premium (MIP) incurred to finance the purchase and any refinancing of such debt; real estate taxes and public assessments; homeowner’s insurance; maintenance expenses per LTRAP allowance; costs of major repairs and replacements per LTRAP allowance (replacement reserves); utility allowance per LTRAP’s schedule of utility allowances; principal and interest on mortgage debt incurred to finance major repairs, replacements or improvements for the home including changes needed to make the home accessible; and homeowner association dues, fees or regular charges assessed, if any. homeownership expenses for a cooperative member may only include LTRAP approved amounts for the cooperative charge under 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 debt; home insurance; the allowances for maintenance expenses, major repairs and replacements and utilities; and principal and interest on debt incurred to finance major repairs, replacements, or improvements, including changes needed to make the home accessible.
C. Determining the Total Family Contribution
The TFC is that portion of the homeownership expense that the family must pay. It is generally 30% percent of the family’s adjusted income, plus any gap between the payment standard and the actual housing cost. All family income (including public assistance), will be counted to determine the family’s adjusted monthly income for purposes of determining the amount of assistance.
D. Payment to Family or Lender.
LTRAP will provide the lender with notice of the amount of the housing assistance payment prior to close of escrow and will pay LTRAP’s contribution towards the family’s homeowner expense directly to the family, unless otherwise required by the lender, or requested by the family. The family will be responsible to submit the entire mortgage payment to the lender unless the lender requires direct payment of LTRAP’s contribution.
5. TERMINATION OF SECTION 8 HOMEOWNERSHIP ASSISTANCE.
A. Grounds for Termination of Homeownership Assistance
(1) Failure to Comply with Family Obligations under Section 8 Program or LTRAP’s homeownership policies.
A family’s homeownership assistance may be terminated if the family fails to comply with its obligations under the Section 8 program, LTRAP homeownership policies, or if the family defaults on the mortgage. If required, the family must attend and complete ongoing homeownership and housing counseling classes. The family must comply with the terms of any mortgage incurred to purchase and/or refinance the home. The family must provide LTRAP with written notice of any sale or transfer of any interest in the home; any plan to move out of the home prior to the move; the family’s household income and homeownership expenses on an annual basis; any notice of mortgage default received by the family; and any other notices which may be required pursuant to LTRAP homeownership policies. Except as otherwise provided in this Section, the family may not convey or transfer the home to any entity or person other than a member of the assisted family, while receiving homeownership assistance.
(2) Occupancy of Home.
Homeownership assistance will only be provided while the family resides in the home. If the family moves out of the home, LTRAP will not continue homeownership assistance commencing with the month after the family moves out. Neither the family nor the lender is obligated to reimburse the LTRAP for homeownership assistance paid for the month the family moves out.
(3) Changes in Income Eligibility.
A family’s homeownership assistance may be changed in the month following annual recertification of the household income, but participation in the Section 8 homeownership program shall continue until such time as the assistance payment amounts to $0 for a period of six (6) consecutive months.
(4) Maximum Term of Homeownership Assistance.
Notwithstanding the provisions of Section 5(A), subparagraphs 1 through 3, except for disabled and elderly families, a family may receive Section 8 homeownership assistance for not longer than ten (10) years from the date of close of escrow unless the initial mortgage incurred to finance purchase of the home has a term that is 20 years or longer, in which case the maximum term is 15 years. Families that qualify as elderly at the commencement of homeownership assistance are not subject to a maximum term limitation. Families that qualify as disabled families at the commencement of homeownership assistance or at any time during the provision of homeownership assistance are not subject to a maximum term limitation. If a disabled family or elderly family ceases to qualify as disabled or elderly, the appropriate maximum term becomes applicable from the date homeownership assistance commenced; provided, however, that such family shall be eligible for at least six additional months of homeownership assistance after the maximum term becomes applicable. The time limit applies to any member of the household who has an ownership interest in the unit during any time that homeownership payments are made, or is a spouse of any member of the household who has an ownership interest.
B. Procedure for Termination of Homeownership Assistance.
A participant in the Section 8 homeownership program shall be entitled to the same termination notice and informal hearing procedures as set forth in the Administrative Plan of the LTRAP for the Section 8 housing choice voucher program.
C. Recapture of Homeownership Assistance
In certain circumstances the homeownership assistance provided to the family is subject to total or partial recapture upon the sale or refinancing of the home. Sales proceeds that are used by the family to purchase a new home with Section 8 homeownership assistance are not subject to recapture. Further, a family may refinance to take advantage of better terms without any recapture penalty, provided that no proceeds are realized (“cash-out”). Only “cash-out” proceeds from refinancing and sales proceeds not used to purchase a new home with Section 8 assistance less those amounts provided for in §982.640 are subject to recapture. Further, the amount of homeownership assistance subject to recapture shall automatically be reduced in annual increments of 10% beginning one year from the purchase date. At the end of 10 years the amount of homeownership assistance subject to recapture will be zero.
6. CONTINUED PARTICIPATION IN SECTION 8 HOUSING CHOICE VOUCHER PROGRAM.
A. Default on FHA-Insured Mortgage.
If the family defaults on an FHA-insured mortgage, LTRAP may permit the family to move with continued Section 8 housing choice rental assistance if the family demonstrates that it has (a) conveyed title to the home to HUD or its designee, as required by HUD; and (b) moved from the home within the period established or approved by HUD.
B. Default on non-FHA-Insured Mortgage.
If the family defaults on a mortgage that is not FHA-insured, LTRAP may permit the family to move with continued Section 8 Housing choice voucher rental assistance if the family demonstrates that it has (a) conveyed title to the home to the lender, to LTRAP or to its designee, as may be permitted or required by the lender; and (b) moved from the home within the period established or approved by the lender and/or LTRAP.
7. LTRAP ADMINISTRATIVE FEE.
For each month that homeownership assistance is paid by LTRAP on behalf of the family, LTRAP shall be paid the ongoing administrative fee described in 24 C.F.R. §982.152(b).
8. WAIVER OR MODIFICATION OF homeownership POLICIES.
The Executive Director of LTRAP shall have the discretion to waive or modify any provision of the Section 8 homeownership program or policies not governed by statute or regulation for good cause or to comply with changes in HUD regulations or directives.
9.APPENDIX A: SECTION 8 HOMEOWNERSHIP OBLIGATIONS
This form is to be signed by the home buyer(s) in the presence of the Lakewood Township Residential Assistance Program’s (LTRAP) homeownership Program Coordinator. The Coordinator will explain any and all clauses which you, the home buyer(s), may not understand. The following paragraphs describe your responsibilities under the Section 8 homeownership Program. If you or members of your household do not meet these responsibilities, through your actions or your failure to act, you may be terminated from the Section 8 homeownership Program.
1. Family Obligations:
You must comply with all Family Obligations of the Section 8 Housing Choice Voucher Program, excepting only the prohibition against owning or having an interest in the unit. Family Obligations §§ 82.551(c),(d),(e),(f),(g) and (j) do not apply to the Section 8 Homeownership Program.
2. Housing Counseling:
All participating family members (i.e. those signing the purchase offer and loan documents) must satisfactorily complete a LTRAP provided or approved counseling program prior to commencement of homeownership assistance. LTRAP may require any or all participating family members to attend additional housing counseling classes as a condition of continued assistance.
3. Purchase Contract:
You must include contract conditions in any Offer to Purchase that give LTRAP a reasonable time (a) to inspect the home for compliance with HUD’s Housing Quality Standards; (b) to review and approve a professional home inspection report obtained by you from a LTRAP approved inspector; and (c) approve the terms of your proposed financing. Advise your Realtor of these requirements.
4. Mortgage Obligations:
You must comply with the terms of any mortgage incurred in the purchase of the property and must notify LTRAP’s homeownership Program Counselor within five (5) days of receipt of any late payment or default notice.
5. Occupancy:
You must occupy the unit as your principal residence. You may not transfer, sell, or assign any interest in the property without LTRAP’s prior written consent. You may not rent or lease any part of the premises without LTRAP’s prior written consent. You mustnotify LTRAP in writing at least 30 days prior to moving out of the house for a period of 30 days or longer or prior to any sale, transfer, assignment, lease or other form of alienation of the assisted property.
6. Maintenance:
You must maintain the property in a decent, safe and sanitary manner. You must allow LTRAP to inspect the property within one-week of a demand by LTRAP to conduct an inspection. You must correct any notice of deficiency issued by LTRAP within the time limit specified in the notice. If you fail to adequately maintain the property, LTRAP may divert the maintenance and replacement reserves portions of the homeownership Assistance Payment to an escrow account to be used to pay for reasonable and necessary maintenance expenses.
7. Annual Re-examination:
You must annually provide LTRAP with current information regarding family income and composition in a format required by LTRAP.
8. Refinancing:
You must notify LTRAP in writing of any proposal to refinance the original purchase mortgage or of any proposal to encumber the property with secondary financing and obtain LTRAP’s written approval of such financing prior to executing any loan documents.
9. Default:
In the event of a default on your mortgage obligation, you must cooperate with LTRAP and the lender to minimize any loss to the lender in order to maintain your eligibility to continue as a participant in the Section 8 Housing Choice Voucher Program.
By signing below, I attest that I have read and understood my obligations as a participant in the Section 8 homeownership Program and I agree to abide by these responsibilities. I understand that LTRAP may terminate my homeownership assistance if I violate any of these obligations, but that I may request an informal review of any proposed notice of termination prior to it becoming effective.
For Questions & Answers on the Voucher Homeownership Program, please click here.
