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B. Purchase Assistance with or without Rehabilitation Loans Code 1, 2 <br />a. Summary of Strategy: SHIP funds will be awarded for downpayment and closing <br />costs as well as principal reduction to households to purchase a newly constructed or <br />existing home. A newly constructed home must have received a certificate of <br />occupancy within the last twelve months. An existing home must be in need of <br />rehabilitation. <br />Prospective homebuyers must qualify as a First Time Homebuyer under the HUD <br />definition: An individual who has had no ownership in a principal residence during <br />the 3 -year period ending on the date of purchase of the property. This includes a <br />spouse (if either meets the above test, they are considered first-time homebuyers). A <br />single parent who has only owned with a former spouse while married. An <br />individual who is a displaced homemaker and has only owned with a spouse. An <br />individual who has only owned a principal residence not permanently affixed to a <br />permanent foundation in accordance with applicable regulations. An individual who <br />has only owned a property that was not in compliance with state, local or model <br />building codes and which cannot be brought into compliance for less than the cost <br />of constructing a permanent structure. <br />b. Fiscal Years Covered: 2018-2019, 2019-2020, and 2020-2021 <br />c. Income Categories to be served: Very -low, low and moderate <br />d. Maximum award: Very Low: $20,000 <br />Low $15,000 <br />Moderate $10,000 <br />e. Terms: <br />Deferred Payment Loan (DPL): Funds will be awarded as a deferred <br />payment loan secured by a recorded subordinate mortgage and note. <br />2. Interest Rate: 3% Simple Annual Interest. <br />3. Years in Loan term: 20 years. <br />4. Forgiveness: The entire loan amount and interest accumulated will be <br />forgiven after 20 years of occupancy. <br />5. Repayment: Not required as long as the loan is in good standing. <br />Default: The loan will be determined to be in default if any of the following <br />occurs during the 20 year loan term: sale, transfer, or conveyance of <br />property; conversion to a rental property; loss of homestead exemption <br />status; failure to occupy the home as primary residence or refinancing with <br />cash out. If any of these occur, the outstanding balance will be due and <br />payable. <br />In cases where the qualifying homeowner(s) die(s) during the loan term, the <br />loan may be assumed by a SHIP eligible heir who will occupy the home as a <br />- 9 - <br />F:\Community Development\SHIP\LHAP\2018-2021 LHAP\2018-2021 LHAP - final submittal.doc <br />18 <br />