Connecticut Administrative Code › Title 8 - Zoning, Planning, Housing, Economic and Community Development › 169w - Urban Homesteading Loan Fund › Urban Homesteading Program › Section 8-169w-6 - Use of funds

Current through July 10, 2024
(a)
Loan Procedures
Funds will be provided to eligible organizations to aid these organizations in providing loans to urban homesteaders for the purchase and rehabilitation of or construction on urban homestead property.
(1) Underwriting Criteria
The Commissioner may authorize loans made by urban homesteading agencies to eligible urban homesteaders. In determining eligible homesteaders, not more than 38% of gross monthly income should be applied to all mortgages, taxes, homeowners insurance and all countable obligations. Countable obligations will include all installment debts and credit union loans for over 8 months from date of closing in addition to court ordered child support payments. Five percent (5%) of all monthly short term debt or revolving credit shall be counted. All credit reports should be current at time of application. Written explanations for previous poor credit and/or bankruptcies must be included with the loan application.
(2) Interest Rate
Interest rates will be determined by the Commissioner based on the homesteader's income, the amount needed to rehabilitate or construct on the eligible property, and the potential rental income derived from the rehabilitated or constructed property, with the goal of keeping housing related expenses at or below the percentage of the borrower's gross monthly income as specified in Section 8-169w-6(a) (1) of these regulations. The commissioner shall collect interest on each loan extended under this section at a rate to be determined in accordance with subsection (t) of Section 3-20 of the Connecticut General Statutes.
(3) Eligible Costs
Loans shall be made from the Urban Homesteading Fund for the purchase, rehabilitation of or construction on eligible urban homesteading properties. Eligible costs included in the loan are those acquisition, rehabilitation or construction costs determined eligible and approved by the Commissioner. Eligible costs may also include: appraisal fees; building permits; costs of processing and settling the loan; architectural, engineering or related professional services if required to bring the structures up to code standards and construction costs. The cost of general property improvements may be included in the loan if they are:
(A) necessary to put the property in a generally good and readily maintainable condition;
(B) they do not exceed 20% of the total cost of rehabilitation; and
(C) the minimum improvements required to meet code standards are satisfied first. A portion of the Urban Homesteading fund may be used by the Commisioner for necessary costs of administering this program.
(4) Appraisals
Appraisals shall be made on the after-rehabilitation or completed value of the property. Total indebtedness of the property shall not exceed 97% of the after-rehabilitated or constructed value.
(5) Terms of Loan
The Commissioner may make interim loans, and/or permanent loans from the fund. The term of the interim loan shall not exceed one year. However, in the event that it is determined and can be demonstrated by the recipient organization that the best interests of the project will be served by extending this one year period, such an extension may be requested by the recipient organization, and may be granted by the Commissioner. The term of the permanent loan shall not exceed twenty years, unless it can be demonstrated by the recipient organization that the best interests of the project will be served by a term of no more than thirty years, subject to approval of the Commissioner.
(6) Security Requirements
All loans made by the Commissioner from the Urban Homestead Fund shall be secured by a first or second mortgage on the urban homesteading property which will be held by the Commissioner of Housing. A third mortgage may be granted by the Commissioner by special request and upon his approval.
(7) Default and Remedy Provisions
In the event of default, the Commissioner may foreclose on the property or take any steps necessary to protect the financial interest of the State.