7.1. HRSR 01-07-2019 - Laserfiche WebLink

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Loan - to - Value Ratio: The ratio of all loans secured by the property, including the new loan, should not exceed 110% of the property value. Half of the improvement value may be added to the initial property value. (Most of our programs go up to 110% of after improved value. We add ½ of the value of improvement value. We use the Estimated Market Value from the most recent property tax statement, higher of purchase price or appraised value in the past 12 months. We do allow Zillow values in some programs). Income Limit: No maximum income limit. (TBD) Debt - to - Income Ratio: Applicant must have the ability to repay the loan. An applicant who has a debt to income ratio in excess of 50% (this is another common ratio for our city programs) will be ineligible to receive financing. Credit Requirements: 1) All mortgage payments must be current and reflect no 30 day late payments history in the past 12 month period (without reasonable explanation). 2) All real estate taxes must be current. 3) No outstanding judgements or collections. 4) Bankruptcy must have been discharged for at least 18 months prior to loan closing. 5) The redemption period on prior foreclosures must have occurred at least 18 months prior to the loan application date. 6) Generally, no more than two 90-day late payments on credit report in the past year (without reasonable explanation). Any 90 day late requires a documented explanation and reasonable reasons; medical, unemployment, divorce. 7) No defaulted government loans. (This can be adjusted, but is pretty typical) Multiple Loans per Property: More than one loan per property is allowed, however, the outstanding balance(s) cannot exceed the maximum program limit and previous loans have had no late payments.. Eligible Use of Funds: Loans may be used to finance most interior and exterior improvements that improve the basic livability of the property. Garages, decks, porches, retaining walls, skylights, landscaping and fences can be repaired, replaced or built as new construction. Contractors must be properly licensed and permits must be obtained when required. Properties with health and safety hazards or code violations will be given priority. Ineligible Use of Funds: Payment for work initiated prior to the loan being approved and closed, unless due to emergency. Recreation or luxury projects (pools, lawn sprinkler systems, playground equipment, saunas, whirlpools, etc.), furniture, non-permanent appliances (unless part of a full kitchen remodel), and funds for working capital, debt service, homeowner labor or refinancing existing debts are NOT allowed. Bids: Only one estimate is required. All contractors must be properly licensed. Sweat Equity / Homeowner Labor: Work may be performed by property owners on a “sweat equity” basis. Loan funds may be used only for the purchase of materials. Loan funds cannot be used to rent tools/ equipment or compensate for labor. Remodeling Advisor Visit (RAV): The Remodeling Advisor Visit provides rehabilitation and/or remodeling advice upon request of the resident. The intent is to help residents improve their homes by providing technical assistance before and during the bidding and construction process. All home-owners Exhibit A Page 3 Agreement between Elk River HRA and Center for Energy and Environment