The Middlesex County Department
of Housing, Community Development & Social
Services will administer
its American Dream Downpayment Program (ADDP) in accordance
with the following procedures and guidelines. These guidelines are
in effect as of June 1, 2015.
The County will enter into
Agreements each year with one
or more HUD-certified housing counseling agencies to help
administer the program. The agencies
will be responsible for certifying applicants meet all program requirements (including their status as first time homebuyers)
and also providing
The County will use
income limits for the American
Dream Downpayment Program,
which are released by HUD on
The applicant(s) will have to
purchase the housing
unit within the HOME
Consortium jurisdiction, which includes all
County except New Brunswick
and Perth Amboy.
All adult household members must be first time homebuyers under HUD guidelines. This means they could not have
owned a residence for the past three years. For this program
Middlesex County will
consider any residential
property owned within the United States or in
a different country.
Certain exceptions to first time status exist for
single parents and displaced homemakers.
one of the adult applicants must currently reside
Middlesex County and have maintained residency for at
least one year at the time of application.
one of the adult applicants must complete an in-person
homebuyer education class offered by a HUD
approved housing counseling agency.
The applicant(s) must be purchasing
a single-family housing unit. This includes detached single family homes, condominiums,
townhouses, co-ops and duplexes (where
only half is purchased). The purchase of a multi-family home is not
The housing agencies will use
5 (Section 8) Income Definition to determine income
eligibility. The agencies will
be required to
document compliance through
use of the HUD Online
Income Calculator and must submit the supporting source documentation. The income
of all adults (18 and older)
who will be residing
in the purchased housing unit will
counted regardless of whether or not they are on the mortgage
loan or deed. The
only exception is for full-time college
students who are not an
applicant or co-applicant.
The contracted purchase price can
exceed four times the certified household income level as determined by the Part
5 Income Definition. (In cases
of 203K loans the loan amount
will be used instead of purchase
price.) This amount also can’t exceed
of the area median purchase price.
this figure is $304,000.
The County will use
the lower amount in setting an applicant’s maximum allowable purchase level.
10. The applicant(s)
must demonstrate that they
are putting at least 1% of the contract
of sale purchase price towards downpayment and/or
11. Mortgage co-signers who will
be occupying the property
are not permitted.
12. All mortgages must
be fixed rate mortgages.
Applicants that can close a loan
at or below 90% of Loan to Value (LTV) are
ineligible. LTV will be
based on the sales prices.
The County will take into account the applicant’s liquid
assets, seller’s concession
amount, other downpayment assistance
program and any amount “gifted”
towards the purchase. Repair credits
provided by the seller to the buyer are
considered a seller’s concession for closing costs.
14. The amount of ADDP
assistance for each eligible
application will be $5,000
15. To avoid over-enrichment,
a liquid assets test will be applied. Applicants may not have more than $10,000
assets after closing the American
Dream Downpayment Program loan. IRAs, 401Ks and other
tax sheltered retirement accounts will not be considered in calculating liquid
assets. Also, the homebuyer
cannot receive back any funds at
closing, which would
documented on the HUD-1 form.
16. All ADDP
homebuyers will have a five
term of affordability placed on their property, during
which they must remain as owner-occupiers of the property.
If the property
is sold or doesn’t maintain compliance within the five
term, the full amount of ADDP
assistance will have to be
paid back, plus 4
percent simple interest.
After five years, the loan is completely forgiven
and the mortgage discharged.
17. Each applicant
must provide documentation that the dwelling
was built after 1978 or
else document a visual inspection was completed
that indicates no lead
based paint hazards. The County will
not pay for
the cost of any needed lead
based paint inspection. This inspection must
be provided at the time of application.
18. Each property purchased
must meet housing quality standards. The
applicant must provide
a copy of the
home inspection at the time of application.
19. The County’s ADDP
program will only provide downpayment and
closing cost assistance, not rehabilitation
costs. Any rehabilitation costs needed to
bring the property
up to housing quality standards are to be paid for by the
buyer, if the seller is unwilling
to cover the costs.
20. The agencies will
be reimbursed their contracted per
unit fee for each applicant
they provide homebuyer
that is approved by the County for
ADDP funds and closes on a property. Reimbursement will only be
provided after the agency documents:
certificate indicating applicant completed homebuyer education
Agency provided the applicant required one-on-one
ADDP application, including determining if potential
homebuyer meets all
HUD and County program
requirements. This includes, but is not limited to, calculating income
using HUD income calculator,
source documentation, and supplying
all necessary documents
to County for its
21. An applicant can only submit
the application once he/she can provide
a fully executed contract
that is out of
attorney review. The agency
must submit the application to the County approximately seven
to eight weeks prior to the closing
date to allow time for the
County to review
the application and for approval and
authorization of the
issuance of a check at a Freeholders meeting.
22. The check made payable to the buyer’s
account (or title company if so requested) will
on or before the closing date.
check is issued all
of the supporting documentation must be provided to the County. It will be the responsibility of the County to verify the closing takes place
the mortgage documents are recorded. The County will maintain
the original mortgage,
note and agreement in our files.
23. Once the closing has taken
place and the documents are recorded,
the agency may submit
for reimbursement for its services
in accordance with its
contracted amount with the
24. During the term of affordability the homeowner may request a subordination of the County’s mortgage for
refinancing under the following conditions:
New mortgage rate and term will
allow homeowner great housing
A “work-out” plan is being
implemented to reduce the risk of foreclosure
Cash outs, although discouraged,
will be permitted if the homeowner
provides documentation that the combined
loan-to-value ratio is no greater
than 80% of the appraised value of the house.
Documentation for all refinance requests should include:
1003 Loan Application
New lender’s name
Amount of the new mortgage,
mortgage term, and mortgage rate
Copy of the appraisal
required for streamlined refinance with no
A & B form the Title Search
The County may request
additional information before granting
the request. The County is not obligated
to grant a subordination
requests should be submitted at least 6-8 weeks in
advance of scheduled
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