42 U.S.C. § 12852: Assistance for first-time…

Summary

The Trust gives money and loans to help first-time homebuyers buy a house. Help can lower the mortgage interest so the buyer pays no more than 6 percent, pay some or all of downpayment and closing costs, work with mortgages backed by mortgage revenue bonds, make second‑mortgage loans with payments delayed, or fund local revolving loan programs that must be matched by local money and reuse repayments for more loans. First-time homebuyer: someone who has not owned a main home in the last 3 years, with specific exceptions for displaced homemakers, some single parents, or owners of unsafe or non‑permanent units. To get help, buyers must meet income limits, use the home as their main residence, have a mortgage within the insurable amount under the National Housing Act, and use a responsible lender approved by the Trust. Income limits are generally 95 percent of the area median for a family of four (115 percent in high‑cost areas); for mortgage‑revenue‑bond help the limit is 80 percent and the usual denial‑certification is not required. Buyers must put in at least 1 percent of the purchase price to get downpayment aid. Trust aid is secured by a lien that is below the main mortgage, is repaid from sale proceeds without interest, and may be repaid monthly if income rises above limits for any 2‑year period or if the house stops being the buyer’s main home. For bond‑related help, interest buydowns are limited to 2.0%, 1.5%, 1.0%, and 0.5% of the loan in years 1–4, and downpayment help is limited to 2.5% of the loan.

Title 42, §12852

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

(a)In general

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

(1)Interest rate buydowns

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

(2)Downpayment assistance

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)Assistance in connection with mortgage revenue bonds financing

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

(4)Second mortgage assistance

Assistance payments to provide loans (secured by second mortgages) with deferred payment of interest and principal; and

(5)Capitalization of revolving loan funds

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)Eligibility requirements

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

(1)First-time homebuyer

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)Maximum income of homebuyer

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.].

The Board of Directors shall provide for certification of such income for purposes of initial eligibility for assistance payments under this subchapter and shall provide for recertification of homebuyers (and families of homebuyers) so assisted not less than every 2 years thereafter.

(3)Certification

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)Principal residence

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

(5)Maximum mortgage amount

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)Maximum interest rate

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)Responsible mortgagee

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)Minimum downpayment

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)Terms of assistance

(1)Security

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)Repayment upon sale

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)Repayment upon increased income

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)Repayment if property ceases to be principal residence

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)Available assistance

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)Allocation formula

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)Assistance in connection with housing financed with mortgage revenue bonds

(1)Authority

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)Eligibility

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)Limitation of assistance

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

(A)Interest rate buydowns

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)Downpayment assistance

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)Availability

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