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County Administrator's Report 12. 14.

BCC Regular Meeting

Technical/Public Service Consent

Meeting Date:	07/18/2019
Issue: Authorization to Sign Commitment Letters for Down Payment Assistance Programs
From:	TONYA GREEN
Department:	Neighborhood & Human Svcs
CAO Approval:

RECOMMENDATION:

Recommendation Concerning Authorization to Sign Commitment Letters for Down Payment Assistance Programs - Tonya Green, Neighborhood & Human Services Department Director

That the Board authorize the Neighborhood Enterprise Division Manager or Neighborhood & Human Services Department Director to sign commitment letters for buyers receiving down payment assistance through the HOME Investment Partnerships Act (HOME) or State Housing Initiatives Partnership (SHIP) Programs to satisfy FHA lending requirements.

BACKGROUND:

On April 18, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 19-06 (ML 19-06-Exhibit I) to clarify documentation needed from governmental entities that are providing down payment assistance to buyers receiving FHA insured mortgages. Buyers using FHA loans must contribute a minimum required investment (MRI) of 3.5% of the home's purchase price, but FHA does allow this MRI to come from down payment assistance programs provided by government entities. Escambia County, jointly with the City of Pensacola, provides down payment and closing cost assistance for income eligible homebuyers through federal HOME and/or state SHIP funding and holds second mortgages on these loan amounts provided to help homebuyers purchase an affordable home. Approximately 100 homebuyers per year are assisted through these homebuyer programs, with the majority of buyers using a FHA loan.

Authorization for the provided commitment letter (Exhibit II) to be signed by the Neighborhood Enterprise Division Manager or Neighborhood & Human Services Department Director will allow for a commitment letter to be provided to the homebuyer and first mortgage lender in a timely fashion as needed for each homebuyer's loan application for the primary lender and meet the updated commitment letter requirements outlined in ML 19-06. The commitment letter contains information certifying the amount of secondary financing to be provided, that the funds belong to the County HOME or SHIP programs, that the property being purchased is located in Escambia County, and that provision of the assistance is not contingent on some future transfer of the mortgage.

BUDGETARY IMPACT:

Funds for the SHIP program are budgeted in Fund 120 and funds for the HOME program are budgeted in Fund 147. Since the majority of buyers using the SHIP or HOME down payment/closing cost programs utilize FHA insured primary mortgages, an updated commitment letter must be provided so County down payment funds can be utilized.The commitment letter will be used for FHA case numbers assigned on or after July 23, 2019, as specified in Mortgagee Letter 2019-07.

LEGAL CONSIDERATIONS/SIGN-OFF:

The County Attorney's office has reviewed this Recommendation. Stephen West, Senior Assistant County Attorney, is providing a separate legal opinion letter also required to be provided to lenders by ML 19-06.

PERSONNEL:

N/A

POLICY/REQUIREMENT FOR BOARD ACTION:

ML 19-06 requests a commitment letter "signed by an authorized government official." The Board must authorize who should sign the mortgage commitment letters.

IMPLEMENTATION/COORDINATION:

Neighborhood Enterprise Division (NED) staff will continue to implement homebuyer programs in coordination with City of Pensacola Housing staff.

Attachments
Ex I HUD ML 19-06 & ML 19-07
Ex II DPA Commitment Letter