REVOLVING LOAN PROGRAM
Program Overview: The Sheridan Neighborhood Organization (SNO) Revolving Loan Program is designed to supplement existing loan programs available from MCDA, MHFA, private lenders and other similar sources. Eligible work shall include repairs and replacement that will:
1. Improve the exterior and/or interior of the property
2. Reduce long-term maintenance and energy costs
3. Improve handicap accessibility
REVOLVING LOAN FUND (Absentee Owner)
1 . Loan Pool Size: Approximately $200,000 of NRP funds for exterior and interior home improvements in the Sheridan neighborhood.
2. Income Limit: There are no annual household income limits for the revolving loan recipients.
3. Interest Rate: 4 % The first loan payments will be delayed up to 90 days from the closing date with no interest charge.
4. Loan Amount: Maximum loan amount is $10,000 per property.
5. Loan Term: Generally, the term of the Revolving loan will be one year per $1,000 borrowed. Thus the term will be flexible depending on the size of the loan. The maximum term will be ten (10) years.
6. Loan Underwriting Cash Flow: A Supplemental Income and Loss Statement, (Federal Income Tax Form 1040, Schedule E) must be submitted and show a positive cash flow on the property to be improved.
7. Debt - to - Income Ratio: Applicants for the Revolving loan must have the ability to repay the loan. Applicants who have a potential "debt-to-income" ratio in excess of 55% will be denied loan financing.
8. Loan - to - Value Ratio: Applicants who have a potential "loan-to-value" ratio in excess of 110% will be denied funding.
9. Eligible Properties: All properties must be located in the Sheridan neighborhood. Properties cannot contain more than 4 units. Properties with a condition of 8, 9 or 1 0 rating by the City of Minneapolis Inspection Department are not eligible to receive funds.
10. Loan Security: All loans will be secured by a mortgage.
OTHER GENERAL CONDITIONS AND PROCEDURES:
1 . Underwriting Decision: Loans will be approved or denied by GMMHC based on a credit report, income verification and other criteria as outlined above. The applicant must be current on, mortgage and property tax payments.
2. Eligible Improvements: Exterior and interior improvements, such as listed below, are permitted.
Painting: siding, garages, trim
Electrical: code compliance, update, and repair
Plumbing: code compliance, update, and repair
Structural and foundation problems
Stucco: repair or replace existing or install new
Siding: repair or replace existing or install new
Doors / Windows: repair or replace existing or install new
Roof: repair or replace existing or install- new
Sidewalks: repair or replace or install new
Garages: repair or replace or install new
Driveways / parking pads: repair, replace or new construction
Retaining walls: repair, replace or new construction
Fences: install, repair or replace fences no higher than 48"
Decks: repair or replace or install new
Porches: repair or replace or install new
Permanent Landscaping: (up to 20 % of the NRP funds): trees, shrubs,
3. Ineligible Improvements: Items which could be considered recreational or luxury projects (swimming pools, hot tubs, Jacuzzis, saunas, playground equipment, new fences), furniture, non-permanent (not built-in) appliances, and funds for working capital, debt service or refinancing existing debts are excluded. GMMHC's decision on eligible improvements is final.
4. Work by Owner: Work can be performed on a “sweat equity" basis. Loan funds cannot be used to compensate for labor, only for materials. GMMHC must determine that the owner has the ability to complete the work within the program time requirement. Materials must be purchased and installed prior to the disbursement of the loan proceeds. Under.unusual circumstances, a partial advance will be provided to the borrower. In either situation, a two-party check will be issued payable to both the borrower and the materials provider. When applicable, a signed city Inspection Department permit must be obtained by the borrower.
5. Rehabilitation Counseling: GMMHC will be available to borrowers to advise them about proposed projects prior to obtaining bids and will be available to review bids for reasonableness. Sheridan Neighborhood Organization will pay for this service to be provided. Two Bids must be obtained for all projects.
6. Loan Costs: SNO will pay, from the NRP allocation, the loan origination fee. Borrowers will pay all filing fees, related closing costs and interest on the loan. Borrowers, if necessary, will be assessed a fee for submitting a late payment and/or a fee if a payment is returned to the servicer for insufficient funds. Borrowers will also pay a fee for the preparation of the Mortgage Satisfaction document - once requested by borrowers.
7. Application Processing: Loan applications will be submitted to GMMHC and processed on a first-come, first-served basis.
8. Contractors / Permits: Contractors contracting for work must be properly licensed by the City of Minneapolis (when required). Permits must be obtained when required by city ordinance.
9. Work Completion: Weather permitting, all work must be completed within 90 days of the loan closing.
10. Total Project Cost: It is the borrower's responsibility to obtain the amount of funds necessary to finance the entire cost of the work. If the final cost exceeds the loan amount, the borrower must obtain the additional funds.
11. Custody of Funds: Loan funds will remain in the custody of the GMMHC until payment for completed work.
12. Disbursement Process:
a. Payment to the contractor (or owner) will be made after completion of the work. An inspection will be performed by the City and/or GMMHC to verify the completion of the work.
b. The following items must be received before the funds can be released:
1.) Final, original invoice from contractor (or materials list from supplier);
2.) Completion certificate(s) signed by the borrower and the contractor;
3.) Copies of all required city permits (also indicating final inspection by City)
4.) Final inspection (verification) by rehabilitation counseling service (if necessary); and
5.) Lien waiver(s).
Items 1. through 4. must be provided to the fiscal agent to begin the preparation of the check(s). Item 5. (Lien waver) must be provided before the funds will be released to the contractors).
13. Sale of Loans: Based upon a written request from SNO, plus written approval from the MCDA, GMMHC will sell these loans on the secondary market and then originate additional loans from the net proceeds of the sale.
The following forms need to be completed to apply for this loan. They are GIF files that you can print out once they have downloaded to your computer. Please contact the Northeast Home Ownership Resource Center at (612) 378-7985 if you are interested in applying for this loan.
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