Shelby County Down Payment Assistance Program

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Shelby County Down Payment
Assistance Program
NACCED Presentation
September 2011
Shelby County Down Payment
Assistance Program

Created in late 2006 as a revolving loan pool
through a partnership between Shelby County
Government and the State of Tennessee.

Specifically the Department of Housing and the
Tennessee Housing Development Agency (THDA)
Shelby County Down Payment
Assistance Program

The original funding pool came from interest
paid on old bonds issued by Shelby County and
the State in 1990’s.
70% of the pool provided by the State
 30% of the pool provided by Shelby County

Shelby County Down Payment
Assistance Program

In addition to the original pool, fees were
established and collected on permits issued by
Shelby County Code Enforcement.

Funds generated are used to operate the program
and build on the revolving loan fund.
Shelby County Down Payment
Assistance Program

Permit Fees consist of:




$1 for each residential permit issued.
$5 for each commercial permit issued.
$5 for each sign permit issued/renewed.
Average generated per year from fees
$114,300.00
Shelby County Down Payment
Assistance Program

Original available loan pool:
$ 3.3 Million
(in 2006)

Current Available loan pool: $ 2.3 Million
(in 2011)

Total Loans Made:
(2006-2011)
$ 2.3 Million
Type of Assistance Provided

Assistance is in the form of a 5% loan for down
payment and closing costs associated with the purchase
of a home.



Loan amount:
Term:
Monthly Payment:
* for maximum loan.
Up to $ 3,500.00
Up to 10 years/120 months
$ 37.12 for 120 months*
Eligibility Requirements

Unit purchased must be located in Shelby
County and be the primary residence.

Unit may be either existing or a newly
constructed unit

Homebuyer must qualify for a THDA, FHA,
VA, or Conventional Mortgage.
Eligibility Requirements

Homebuyer(s) must invest a minimum of $500
of their own savings for closing.

Homebuyer(s) must attend a homebuyer
counseling class.

The purchase price of the unit must be less than
$200,160.00.
Eligibility Requirements

Ratio for Approval of DPA funds:

Front end: Cannot exceed 33%
(Monthly housing expense/stable income)

Back end: Cannot exceed 43%
(Monthly housing expense + debt/stable income)
Eligibility Requirements

Household Income Levels:

1 to 2 Person Household
Minimum
 Maximum


$ 26,100.00
$ 68,439.00
3 or More person Household
Minimum
 Maximum

$ 26,100.00
$ 78,704.00
Eligibility Requirements

Purchaser must agree to a Deed of Trust Restriction
being recorded on the home at closing.

Purchaser may not at any time lease the property and
such language must be included in all loan documents.

Purchaser must sign to a Promissory Note which also
incorporates all requirements of the loan.
Eligible Closing Costs
1.
2.
3.
4.
5.
6.
7.
8.
Origination Fee (1%)
One repair inspection
One lender inspection
Compliance/Final
Inspection
Engineer’s Certificate
Pest Inspection
Closing/Settlement, Deed
of Trust, Note Preparation
Amortization Schedule
9.
10.
11.
12.
13.
14.
15.
16.
17.
Title Examination
Title Insurance
Credit Report
Survey
Recording
Notary
Attorney’s fee not to
exceed $200
Allowable Pre-pays
Insurance
Resale Provision

All loans contain a resale provision which
requires payoff of the unpaid balance when the
property is:
Sold,
 Transferred, or
 Leased.

Prepayment
Loan balances may be paid off at any time.
There is no penalty for the prepayment of the
DPA loan prior to the maturity date.
Loans By Fiscal Year
# of loans






2006:
2007:
2008:
2009:
2010:
2011:
18
18
39
153
311
153
692
Dollars Loans
$ 57,658
$ 57,020
$ 124,588
$ 505,047
$ 1,018,646
$ 483,447
$ 2,246,406
Average Loan
$ 3,203
$ 3,168
$ 3,195
$ 3,301
$ 3,275
$ 3,160
$ 3,246
Average Tax Rates
(January 1, 2006 – 6/30/2011)
Annual Property Tax Rates:
Shelby County
$4.02 (Memphis) $4.06 (Non-Memphis)
Municipalities*
Memphis
Arlington
Bartlett
Collierville
Germantown
Millington
$3.19
$1.00
$1.49
$1.43
$1.48
$1.23
* Overall Average Municipal Rate: $1.63
Estimated Taxes Generated
(Since January 2006)
Average Mortgage Loan:
$ 94,698.00
Shelby County Taxes:
City/Municipal Taxes:
Total in Shelby County:
$ 1,511,331.36
$ 612,809.20
$ 2,124,140.56
Annual DPA Income Loans & Fees
Monthly
Annually
Average repayments
Average from permit fees
$13,370
$ 9,525
$160,440
$114,300
Total revenue collected*
$ 22,895
$274,740
* Average as of 6/30/2011
Obstacles In Implementing

Household Income Limits

Slow start due to income qualifications.
Originally, the program was set up to mirror income by
household size under the federal guidelines which resulted a
high volume of non-qualifying applicants. (Buyers were
pigeonholed.)
Because no Federal funds are involved, a change to State
household limits resolved this issue by freeing up the
restricted income levels and provided a wider income range.
Obstacles In Implementing

Shelby County’s Finance Department

How to issue/cut Down Payment Checks?
Originally, Finance wanted W-9’s and Vendor numbers for
each Homeowner receiving assistance.
Finally, resolved by agreeing that the lender had to be set
up as a Shelby County vendor and the check was cut to
the closing attorney on behalf of the buyer.
Obstacles In Implementing

Shelby County Finance Department

Time line for issuing checks and method.
County policy required checks to be mailed (no
County employee can handle the check) and
turnaround time was set at 30 days.
Negotiated a system whereby checks could be
walked through in 10 days and picked up and
delivered by a Dept. of Housing staff person.
Obstacles In Implementing

Finding A Loan Servicing Agent:

Selection of a Loan Servicer to handle the loans.
We could not find anyone willing to service such a small
loan portfolio at a reasonable cost. Issued numerous RFPs
This was resolved when a Tallahassee, FL company made
inquiry after seeing the RFP. They ended up securing
licensing through the State of TN and ended up becoming
The successful respondent. Cost of servicing is $8 per loan.
Contacts For More Information
Jim Vazquez, Administrator
[email protected]
901-379-7102
Israel Henry, Finance Manager
[email protected]
901-379-7116
Wanda Chambers, DPA Specialist
901-379-7100
[email protected]
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