FREQUENTLY ASKED QUESTIONS

ON USING SUPPORTIVE HOUSING AND HOMELESS PROGRAMS SECTION 8s FOR HOMEOWNERSHIP

• have a Section 8 certificate or voucher issued by SHHP
• have received the rental assistance for one year
• be a participant in good-standing (i.e., has not violated any Section 8 program requirements)
• meet the HUD definition of first time homebuyer (i.e., means the participant has not had ownership interest in a home in the past 3 years).
• Sign a Statement of Homeowner Obligations
• Satisfactorily complete pre-purchase homeowner counseling classes before entering into a sales contract
• provide a cash downpayment of $750 or 5% of assets, whichever is greater
• provide the lender and real estate professionals with all pertinent documentation
• be able to comply with any additional special requirements for homeownership assistance as specified in SHHP’s Section 8 Homeownership Handbook and Administrative Plan.

Owning a home is a big responsibility. It’s important that you understand those responsibilities before you look at being a homebuyer. It is mandatory that you take an approved homeownership counseling course prior to purchasing a home. You should also first clear up any credit problems and save enough money so you can make a downpayment. SHHP has a resource directory and path to homeownership information packet available if you want to read more about the homeownership process.

When you purchase a home there is a lot of paperwork that must be filled out. Some of the paperwork provides SHHP, the lender and real estate professional information they need to make sure you’re able to financially purchase a home. Other paperwork ensures you are treated professionally and are protected. It is very important that what you provide is accurate, complete and submitted quickly. Some of the information you will need to provide: evidence of your eligibility for this program; documentation of income; credit or alternate credit information. Make sure you understand what you are signing. Don’t be afraid to ask the lender, real estate professional and others questions to help you understand the process.

For SHHP’s Section 8 homeownership program you must choose a lender that is working with the Colorado Housing and Finance Authority (CHFA) on this particular program. There are 4 lenders from which you may choose: Citywide Financial (Anne Lovett, 303-365-4055); Commercial Federal (Jennifer Barta 303 202-5328, or US Bank (Norma Andersen 303-331-1088). It is important that you contact the person from the bank who is working on this particular loan product. Others working within the bank may not have any knowledge of this type of program.

In this program, you may choose any real estate professional. However, most professionals will not understand this program unless they receive special training. You can contact the participating mortgage lenders mentioned above and see if they can suggest real estate professionals who are familiar with using Section 8s for homeownership.

You can’t have bad credit! If you do, the homeownership counselor can instruct you on how to clean up your credit record. However, you may have never established a traditional credit record and that’s okay, but the lender needs to know if you pay your bills on time. The lender will review your record of making timely rent, utility and other payments. This is called alternate credit.

You’ll need to make a minimum downpayment of $750 or 5% of your assets, whichever is greater. You’ll also have to pay for an appraisal which may cost $300-$400 and a professional inspection which may be $150. There may be other incidental expenses prior to your purchase as well.

In most cases, your family can help you purchase a home. Assisting with a downpayment or other expenses or co-signing/co-borrowing on the loan might provide help. However, it’s important to understand that under Section 8 regulations, a non-occupying co-borrower cannot own an interest in the home.

No. Under the standard family obligations for use and occupancy for the voucher program, no other person except members of the assisted family may reside in the unit except for a foster child or live-in-aide. The individual or family may not sublease or let the unit under the family obligations.

The amount you are able to pay for a home depends on your total income and resources. The mortgage lender will consider your total income, your Section 8 assistance, and any other assistance you are receiving from a family member or agency. The lender will pre-qualify you for a loan based on income and other financial information. It is important to have this pre-qualification letter before you begin shopping for a home.

Elderly or people with disabilities are exempt by HUD from Section 8 subsidy time limits in this homeownership program. However, the length of time you receive Section 8 is dependent on many factors. Congress must approve funding for Section 8 renewals each year. You must remain eligible for Section 8 assistance. For example, you must be compliant with the rules and regulations and must remain qualified in income requirements.

Yes. You will still need to submit all the paperwork for recertification each year and you will have to continue to conform to all the statements in the Statement of Homebuyer Obligations which you sign prior to purchasing a home. This recertification will be done at the same time CHFA determines your tax escrow payment.

Yes. There are actually two types of inspections that are needed. You will need to hire a professional inspector to inspect the home to identify physical defects and the condition of the major building systems and components. Your housing coordinator will have to make a HUD Housing Quality Standards (HQS) inspection, which is the same inspection made for the tenant-based Section 8 rental assistance program.

This is a complicated question because so much depends on individual circumstances. The HUD Section 8 homeownership draft rule states: "Upon death of a family member who holds, in whole or in part, title to the home or ownership of cooperative membership shares for the home, homeownership assistance may continue pending settlement of the decedent’s estate, notwithstanding transfer of title by operation of law to the decedent’s executor or legal representative, so long as the home is solely occupied by remaining members of the family in accordance with Section 8 regulations."

In other words, questions need to be asked: Is there a will? Are there remaining members of the family? Are there additional owners listed on the deed? Depending on the answers, the home may revert to those remaining members (as defined by Section 8 regulations) of the family who were residing in the home. The home may have to be sold: if no one is able to take title and payments are not made, the home may fall into foreclosure. The bottom line: if the homebuyer dies, the housing coordinator, CHFA and SHHP must be notified immediately by remaining members of the family or the service provider’s housing coordinator.

Yes. You are responsible for all monthly homeownership expenses (for example: homeowner association dues) and for any expenses (for example: a new water heater, structural repairs, etc.) that you may have as a homeowner.

You may be required to attend ongoing homeownership counseling. In your community there are experienced homeownership counselors who can help you save towards repairs and general maintenance of your home or assist you in getting financial advice so you can avoid defaulting on your payments. It’s important to understand that you are responsible for the debt incurred to purchase your home.

You must place your portion of the mortgage payment in a bank that has ACH capability. This allows the lender (CHFA) to withdraw your part of the payment each month electronically. You must ensure the funds are available for transfer to the lender by the first of each month. SHHP will make its portion of the housing payment directly to CHFA.

Yes, however all sales must be approved by SHHP and you may not sell, convey or transfer any interest in the home to any entity or person other than a member of the assisted family residing in the home. Depending on the circumstances, you may be subject to a recapture of SHHP payments if you sell or refinance the loan.

No. A home, as well as a car, is an exempt asset according to Social Security and other federal agencies. These assets do not count against a person receiving other supports.

That depends on whether or not the trailer was ever permanently attached to a foundation. If it was attached, you’re not a first-time homebuyer as lenders consider this a home. If it is not permanently attached, lenders consider it a motor vehicle not a home.

Yes. However the home must meet certain standards and being permanently attached to a foundation is one of them. Lenders will also consider the age and condition of the home.

FREQUENTLY ASKED QUESTIONS. word.

revised 10/00, Last Updated by Daniel R Vachon on Thursday, 3 April, 2003 at 2:45 PM.