Section 265.39.6. Application requirements.

To be considered for HOME assistance, an application shall meet the following threshold criteria.

       39.6(1) The application shall propose a housing activity consistent with the HOME fund purpose and eligibility requirements and the state consolidated plan.

       39.6(2) The application shall document the applicant’s capacity to administer the proposed activity. Such documentation may include evidence of successful administration of prior housing activities. IFA reserves sole discretion to deny funding to an applicant that has failed to comply with federal or state requirements in the administration of a previous project funded by the state of Iowa or that failed to comply with federal requirements in the administration of a previous project funded in any other state. Documentation of the ability of the applicant to provide technical services and the availability of certified lead professionals and contractors either trained in safe work practices or certified as abatement contractors may also be required as applicable to the HOME fund activity.

       39.6(3) The application shall provide evidence of the need for the proposed activity, the potential impact of the proposed activity, the feasibility of the proposed activity, and the impact of additional housing resources on the existing related housing market.

       39.6(4) The application shall demonstrate local support for the proposed activity.

       39.6(5) The application shall show that a need for HOME assistance exists after all other financial resources have been identified and secured for the proposed activity.

       39.6(6) The application shall include HOME certification that the applicant will comply with all applicable state and federal laws and regulations.

       39.6(7) Maximum per-unit subsidy amount, subsidy layering, and underwriting review. The following shall apply to all applications:

        a.           The total amount of HOME funds awarded on a per-unit basis may not exceed the per-unit dollar limitations established under Section 221(d)(3)(ii) of the National Housing Act (12 U.S.C. 17151(d)(3)(ii)) for nonprofit elevator-type projects that apply to the area in which the housing is located.

        b.           IFA shall evaluate the project in accordance with subsidy layering guidelines adopted by HUD for this purpose.

        c.           The total amount of HOME funds awarded on a per-unit basis cannot exceed the pro rata or fair share of the total project costs when compared to a similar unit in a rental activity.

        d.           IFA shall conduct an underwriting review of the project.

       39.6(8) An application for a homebuyer assistance activity must indicate that recipients will require the beneficiaries of the applicant’s homebuyer assistance activity to use a principal mortgage loan product that meets the following criteria:

        a.           With the exception of Habitat for Humanity principal mortgage loan products, the principal mortgage loan must be the only repayable loan in all individual homebuyer assistance projects.

        b.           The HOME assistance must be recorded in second lien position to the principal mortgage loan, if one exists. Recipients of HOME homebuyer assistance must maintain their assistance security agreements in the above-stated recording position throughout the applicable period of affordability and will not be allowed to subordinate the required recording position to any other form of assistance, such as home equity loans. A homebuyer search is required, and any collection/unpaid obligation that would become a judgment or any judgments must be paid in full prior to closing.

        c.           Any mortgage lending entity’s principal mortgage loan products may be used provided they meet all of the following minimum requirements:

       (1)             The loan must be a fully amortizing, fixed-rate loan with rate not to exceed Fannie Mae 90-day yield + 0.125% or VA-published interest rate at par;

       (2)             No less than a 15-year, fully amortized, fixed-rate mortgage shall be used; and

       (3)             No adjustable rate mortgages or balloon payment types of mortgages will be allowed.

       39.6(9) An application for a homebuyer assistance activity must stipulate that homebuyer assistance is for first-time homebuyers or qualified veterans only and that the assisted unit will remain as the assisted homebuyer’s principal residence throughout the required period of affordability, which must be verified annually by the subrecipient. If the assisted homebuyer fails to maintain the home as the principal residence during the period of affordability, then all HOME funds associated with that address must be repaid to IFA.

       39.6(10) An application for a homebuyer assistance activity must include a system for:

        a.           Annual verification that all assisted units are insured for at least the full value of the assisted unit;

        b.           Underwriting review of the potential homebuyer;

        c.           Housing counseling to homebuyers; and

        d.           Application of IFA policies and procedures regarding homebuyer assistance activities.

[ARC 8963B, IAB 7/28/10, effective 7/8/10; ARC 9284B, IAB 12/15/10, effective 1/19/11; ARC 9764B, IAB 10/5/11, effective 11/9/11; ARC 0500C, IAB 12/12/12, effective 11/19/12; ARC 1140C, IAB 10/30/13, effective 12/4/13]