The New Neighbors Program is designed to provide

Homebuyers who wish to

is less. This
and provides an

Start Date August 1, 1996

First-time and Non First-time

:inH
• A Non First-time:
may nave nau an ownersmp interest in msir principal.
within the past three years, but no longer owns or <
property at this time. Please refer to MSHA's !
rroceaurai Lruiae tor complete engiointy

Citv

3 or more 554,460
1-2 persons S45.36Q
3 or more S52.920
1-2 persons S55,680
3 or more
Net Worth
The borrower's net worth cannot exceed 550,000.

occupy the property as

60 days of closing. In the case of 2-4
is required to

: Low and Moderate income Borrowers

apply to MSHA's. the
the cities' portion of each New Neighbor loan.
. to income ratios are 33% mortgage debt and 38%
total debt. U^hen underwriting, 75% of the rental income can be
from the housing debt (PITI).

: is required since both mortgages will have

: ratio of less than 70%.

1
 Citv 81-100% 101-120% 121-140%
$0-31,120 S31,121-38,900 S3E,901-46,680 546,681-54,460
S0-30,240 $30,241-37,800 $37,801-45,360 $45,361-52,920
$0-37,120 $37,121-46,400 £46,401-55,680 $55,681-64,960

S750

two, three
in HUD's Targe
by local

to HUD's 203K

Use No than 10% of the of the

or busine
from the

Properties acquired and rehabbed must meet HUD's

Quality Standards and all:
Rehabilitation must begin within 60 days after closing and be
L61 " " " '
Unacceptable Unacceptable improvements would include any unnecessary
Repairs cosmetic repairs, luxury items or purchase of fixtures which are not
permanently affixed to the property. Adding units is not allowed
under this program.

Purchase The total purchase price and cost of repairs/improvements must be

Price at or below the following purchase price limits;
Limits
Citv j Unit 2 Unit 3 Unit 4 Unit
Bangor S 94,000 SI05,000 S 128,000 SI48,000
Lewiston $ 94,000 $105,000 $128,000 £148,000
Portland S124,000 S139,000 S!69,G00 $196,000

Financing Borrowers will be obtaining two (possibly three) mortgages to

which separate payments will be made. Both mortgages will be
processed by the same lender. These may be written as shared first
lien mortgages or individual first, second and possibly third
mortgages.

Interest MSHA's current interest rate at the time of application will apply
Rate to the first mortgage. Faimie^Maers Mandatory 60 day rate, plus a"
25 bp margin will apply to the second mortgage. Interest rates will
be locked in as of the date of application.,

Term(s) Both mortgages will amortize over a 30 year term.

Loan The first mortgage will allow for 60% of the purchase price plus
Amount(s) rehab cost or after rehab fair market value, whichever is less. The
second mortgage will apply to the remaining 40% of the purchase
price plus rehab cost or after rehab fair market value, whichever b
less. Rehabilitation costs cannot exceed 40% of the total project
plus $15s000.

Points Three seller points will be charged on MSHA's 60% of the total
loan amount. If a portion of MSHA's 60% includes rehab, the
borrower will pay three points on the improvement part of the loan.
The lender may charge up to three seller points on their 40% of the
total loan amount that is not rehab.

The first mortgage is secured by a first lien position. The lender^

SecuVity mortgage is secured by either a* shared first lien position lor a
second mortgage.

MSHA's A portion of the MSHA mortgage amount (up to $15,000 for

Purchase materials and contracted labor or $5,000 for materials only) can be
Plus used to cover the cost of rehabilitation. The minimum loan amount
Improvement is $500. The combined purchase price and improvement amounts

3
4
App. uthorization to with the
3ender(s).

2. The Com nits a rehab

r v r k a / i t o K n f f n *
of the building for a
specialist to conduct a which will be added to the
rough estimate of rehab
preliminary application,
-i.TT .-I -. • .-• n .-•• r

3. The local CD Office will determine preliminary eligibility of the

borrower for the program m general as we!! as eligibility for the
City's financial participation. Once this is complete, the applicant
is forwarded to a participating lender, selected through rotation.

4. The lender begins the with the borrower,

Once the lender verifies that the borrower eets all of the
eligibility requirements, the applicant will to the local CD
Office for a more

5. The local CD Office (rehab specialist) will prepare detailed

specifications and cost estimate. An;
contingency will be built into each project i
He/she will assist the borrower in obtaining bids for:
and then forward the rehab information to the lender as part of the

6. The lender then orders the and provides the appraise

with the rehab specifications. The report muj
• value.

7. The will verify the with local CD Office,

the application process and finalize approval of both

8, The lender schedules the loan closing with the borrower and
local CD Office (if necessary). Rehabilitation contracts with
* are signed prior to closing. An Intercreditor
: be recorded as an addendum to each Mortgage
and Rider. Once the closing takes place, the rehab escrow is set up
and MSHA's loan package is forwarded to MSHA for review and
; to the regular Home Purchase Program:

Rehab The portion of the loan proceeds attributable to the

Escrow be held in a account for
too City
the rehab escrow account will be set-up within and by
the lender. For borrowers with City the:
: will be set-up within and by the City.

5
3. Funds will be < ana maae payaoie to
both the borrower and the i

4. Funds will be
obtained from the

Within 60 days
60 days after the end of
to ins

The
Authority

6
2. A copy of the recertification of value statement from the

3- A copy of the Borrower Certification and Escrow Agreement (if

4. A copy of the recorded Mortgage with MSHA's Rider.

5. A completed Affordability Analysis Worksheet - see/use
Attachment D.

(Note: All MSHA lenders may participate in the New Neishbors

Program.)

Portland Mark Adelson 874-8733

Bill Tracy 756-8089
Mary Davis 874-8698 EXHIBIT
UKlPPG
Lewiston Jim Andrews 784-2951
Ken St. Amand 784-5560

T.J. Martzsal 945-4400