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This a repost from a previous blog, but as it can save people so much time and money I am re-blogging the post.

Waterbury Development Corporation (WDC) is administering the City of Waterbury’s Neighborhood Stabilization Program (NSP). The program is designed to stabilize neighborhoods by facilitating the purchase and rehabilitation of foreclosed & vacant (still owned by the foreclosing entity) properties in targeted areas of Waterbury.

This program is available to investors and prospective homebuyers who meet certain income requirements (see chart).

NSP funds are granted as deferred second mortgage loans that do not have to be repaid if the terms of the program are met.

WDC has partnered with Webster Bank for owner occupied purchase financing and the Waterbury Housing Fund (WHF) for investor purchase financing. WDC directly handles the second mortgage program.

The scope of rehab work is managed by WDC. All projects must be put out to bid through the Purchasing Dept. of the city of Waterbury.

NSP funding requires an affordability period. If the property is sold during that period the loan must be repaid or the affordability restrictions must pass to the new owner. If the covenants are breached during the affordability period, the loan must be repaid.

Who Can Apply

1) Prospective home buyers who meet the income criteria and desire to purchase a foreclosed & vacant property, with prior WDC approval, within the target areas in Waterbury.

2) Investors who desire to purchase a foreclosed & vacant property, with prior WDC approval, within the target areas in Waterbury and agree to rent to tenants who meet the income criteria.

Note: Prospective homebuyers and Investors must be free of any outstanding obligations to the City of Waterbury to qualify for NSP funds.

Designated Areas

There are designated areas within the City that would qualify for these funds. On the WDC site, there is a listing of all the streets that qualify in addition to a map. Designated areas within Waterbury have been established using HUD guidelines. Not all of the areas would be considered a blight area.

Property Types

Any type of property is allowed. If the subject property is eight or more units Davis Bacon wages apply to all rehabilitation work. NSP funds cannot directly benefit commercial properties.

Purchase Price

There are no restrictions on the purchase price. However, the sales price must be 15% lower than the appraised as-is value. Purchase financing will be calculated by using a maximum of 30% of the borrower’s income (for owner occupied). A minimum investment of 5% is required. NSP funds may be used for gap and rehab financing.

NSP Funding for Buyers

Funding will be considered in the following fashion:

1. Down payment assistance= $7,500 max
2. Affordability gap= difference between the approved purchase financing and sale price
3. Appraisal Gap= difference between the total project costs and either the appraised value of the property at closing or the actual purchase price.
4. Rehab costs= cost of the scope of work as determined by WDC

Affordability Periods

HUD requires that NSP funds are given with certain periods during which they must be repaid if the property is sold or a default of the terms occurs.

Rehabilitation Process

NSP funds are available to bring properties to code and make them energy efficient. Typical improvements are roofs, windows, siding, heating systems, electrical upgrades and lead abatement (all properties built prior to 1978 will be inspected for lead issues). The buyer will supply their desired improvements, which will be finalized by the WDC for program compliance. Work will be put out to bid and progress payments will be made.

General Procedures

WDC will screen initial inquiries and then forward to the appropriate lender. WDC will work with the buyer for rehab specs. Owner occupied buyers are required to attend home ownership counseling when purchase financing and rehab specs are completed. NSP funds will be disbursed for the purchase at the closing while rehab dollars will be disbursed in stages concurrent with completed work.

To read more about this, follow the link below to see the designated streets and maps.

http://www.wdconline.org/content/100/129/default.aspx

As always, if there’s a question on a property or you need my assistance please fell free to call or email me at edsilva@remax.net