§12852 — Title 42 The Public Health and Welfare | U.S. Code

Summary

The Trust must give money to help first-time homebuyers in a few ways: make sure the mortgage interest rate does not go over 6 percent, help with downpayments and closing costs, buy down interest rates as described below, make second‑mortgage loans with payments delayed, and give grants to set up local revolving loan funds that must be matched by local money and reused when repaid. Help can only go to people and loans that meet the rules. A first‑time buyer is someone who has not owned a main home in the past 3 years, or a displaced homemaker, or a single parent, or someone who only owned a mobile or unsafe home. The buyer’s household income in most cases must not be more than 95 percent of the area median (115 percent in high‑cost areas), and the buyer must certify they tried and were denied a market loan because of low income. The house must be a single‑family home or co‑op, be the buyer’s main home, have a mortgage within FHA limits, use a fixed rate under the Trust’s cap, and be held by an approved lender. The buyer must put in at least 1 percent of the purchase price to get downpayment help. The Trust’s aid is secured by a lien that is junior to existing mortgages and is repaid from net sale proceeds without interest; the Board may require repayment if income rises above limits for 2 years or the home stops being the buyer’s main residence. The Trust must divide money among States based on need. Special rules let the Trust provide buydowns and downpayment help for loans tied to certain tax‑favored mortgage bonds; for those, income must be under 80 percent of the area median and buydown and downpayment amounts are limited to specific percentages of the loan principal (2.0%, 1.5%, 1.0%, 0.5% over the first four years for buydowns, and up to 2.5% for downpayment).

Title 42, §12852

The Public Health and Welfare — Source: USLM XML via OLRC

(a)The Trust shall provide assistance payments for first-time homebuyers (including homebuyers buying shares in limited equity cooperatives) in the following manners:

(1)Assistance payments so that the rate of interest payable on the mortgages by the homebuyers does not exceed 6 percent.

(2)Assistance payments to provide amounts for downpayments (including closing costs and other costs payable at the time of closing) on mortgages for such homebuyers.

(3)Interest rate buydowns and downpayment assistance in the manner provided in subsection (e).

(4)Assistance payments to provide loans (secured by second mortgages) with deferred payment of interest and principal; and 11 So in original. The “; and” probably should be a period.

(5)Grants to public organizations or agencies to establish revolving loan funds to provide homeownership assistance to eligible first-time homebuyers consistent with the requirements of this subchapter. Such grants shall be matched by an equal amount of local investment in such revolving loan funds. Any proceeds or repayments from loans made under this paragraph shall be returned to the revolving loan fund established under this paragraph to be used for purposes related to this section.

(b)Assistance payments under this subchapter may be made only to homebuyers and for mortgages meeting the following requirements:

(1)The homebuyer is an individual who—

(A)(and whose spouse) has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property with respect to which assistance payments are made under this subchapter;

(B)is a displaced homemaker who, except for owning a home with his or her spouse or residing in a home owned by the spouse, meets the requirements of subparagraph (A);

(C)is a single parent who, except for owning a home with his or her spouse or residing in a home owned by the spouse while married, meets the requirements of subparagraph (A); or

(D)meets the requirements of subparagraph (A), (B), or (C), except for owning, as a principal residence, a dwelling unit whose structure is—

(i)not permanently affixed to a permanent foundation in accordance with local or other applicable regulations; or

(ii)not in compliance with State, local, or model building codes, or other applicable codes, and cannot be brought into compliance with such codes for less than the cost of constructing a permanent structure.

(2)The aggregate annual income of the homebuyer and the members of the family of the homebuyer residing with the homebuyer, for the 12-month period preceding the date of the application of the homebuyer for assistance under this subchapter, does not exceed—

(A)95 percent of the median income for a family of 4 persons (adjusted by family size) in the applicable metropolitan statistical area (or such other area that the Board of Directors determines for areas outside of metropolitan statistical areas); or

(B)115 percent of such median income (adjusted by family size) in the case of an area that is subject to a high cost area mortgage limit under title II of the National Housing Act [12 U.S.C. 1707 et seq.].

(3)The homebuyer (and spouse, where applicable) shall certify that the homebuyer has made a good faith effort to obtain a market rate mortgage and has been denied because the annual income of the homebuyer and the members of the family of the homebuyer residing with the homebuyer is insufficient.

(4)The property securing the mortgage is a single-family residence or unit in a cooperative and is the principal residence of the homebuyer.

(5)The principal obligation of the mortgage does not exceed the principal amount that could be insured with respect to the property under the National Housing Act [12 U.S.C. 1701 et seq.].

(6)The interest payable on the mortgage is established at a fixed rate that does not exceed a maximum rate of interest established by the Trust taking into consideration prevailing interest rates on similar mortgages.

(7)The mortgage has been made to, and is held by, a mortgagee that is federally insured or that is otherwise approved by the Trust as responsible and able to service the mortgage properly.

(8)For a first-time homebuyer to receive downpayment assistance under subsection (a)(2), the homebuyer shall have paid not less than 1 percent of the cost of acquisition of the property (excluding any mortgage insurance premium paid at the time the mortgage is insured), as such cost is estimated by the Board of Directors.

(c)(1)Assistance payments under this subchapter shall be secured by a lien on the property involved. The lien shall be subordinate to all mortgages existing on the property on the date on which the first assistance payment is made.

(2)Assistance payments under this subchapter shall be repayable from the net proceeds of the sale, without interest, upon the sale of the property for which the assistance payments are made. If the sale results in no net proceeds or the net proceeds are insufficient to repay the amount of the assistance payments in full, the Board of Directors shall release the lien to the extent that the debt secured by the lien remains unpaid.

(3)If the aggregate annual income of the homebuyer (and family of the homebuyer) assisted under this subchapter exceeds the applicable maximum income allowable under subsection (b)(2) for any 2-year period after such assistance is provided, the Board of Directors may provide for the repayment, on a monthly basis, of all or a portion of such assistance payments, based on the amount of assistance provided and the income of the homebuyer (and family of the homebuyer).

(4)If the property for which assistance payments are made ceases to be the principal residence of the first-time homebuyer (or the family of the homebuyer), the Board of Directors may provide for the repayment of all or a portion of the assistance payments.

(5)The Trust may make assistance payments under paragraphs (1) and (2) of subsection (a) with respect to a single mortgage of an eligible homebuyer.

(d)Amounts available in any fiscal year for assistance under this subchapter shall be allocated for homebuyers in each State on the basis of the need of eligible first-time homebuyers in each State for such assistance in comparison with the need of eligible first-time homebuyers for such assistance among all States.

(e)(1)The Trust shall provide assistance for first-time homebuyers in the form of interest rate buydowns and downpayment assistance under this subsection. Such assistance shall be available only with respect to mortgages for the purchase of residences (A) financed with the proceeds of a qualified mortgage bond (as such term is defined in section 143 of title 26), or (B) for which a credit is allowable under section 25 of title 26.

(2)To be eligible for assistance under this subsection, homebuyers and mortgages shall also meet the requirements under subsection (b) of this section, except that—

(A)the certification under subsection (b)(3) shall not be required for assistance under this subsection;

(B)the provisions of subsection (b)(2) shall not apply to assistance under this section; and

(C)the aggregate income of the homebuyer and the members of the family of the homebuyer residing with the homebuyer, for the 12-month period preceding the date of the application of the homebuyer for assistance under this subsection, shall not exceed 80 percent of the median income for a family of 4 persons (as adjusted for family size) in the applicable metropolitan statistical area.

(3)Notwithstanding subsection (a), assistance payments for first-time homebuyers under this subsection shall be provided in the following manners:

(A)Assistance payments to decrease the rate of interest payable on the mortgages by the homebuyers, in an amount not exceeding—

(i)in the first year of the mortgage, 2.0 percent of the total principal obligation of the mortgage;

(ii)in the second year of the mortgage, 1.5 percent of the total principal obligation of the mortgage;

(iii)in the third year of the mortgage, 1.0 percent of the total principal obligation of the mortgage; and

(iv)in the fourth year of the mortgage, 0.5 percent of the total principal obligation of the mortgage.

(B)Assistance payments to provide amounts for downpayments on mortgages by the homebuyers, in an amount not exceeding 2.5 percent of the principal obligation of the mortgage.

(3)The Trust may make assistance payments under subparagraphs (A) and (B) of paragraph (3) with respect to a single mortgage of a homebuyer.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The National Housing Act, referred to in subsec. (b)(2)(B), (5), is act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to chapter 13 (§ 1701 et seq.) of Title 12, Banks and Banking. Title II of the Act is classified principally to subchapter II (§ 1707 et seq.) of chapter 13 of Title 12. For complete classification of this Act to the Code, see section 1701 of Title 12 and Tables.

Amendments

1992—Subsec. (a)(3). Pub. L. 102–550, § 182(c)(2), added par. (3). Subsec. (a)(4), (5). Pub. L. 102–550, § 182(e), added pars. (4) and (5). Subsec. (b)(1)(D). Pub. L. 102–550, § 182(d), added subpar. (D). Subsec. (e). Pub. L. 102–550, § 182(c)(1), added subsec. (e).

§12852 Assistance for first-time homebuyers