NEIGHBORWORKS GREAT FALLS
NEIGHBORWORKS MONTANA
509 1st Avenue South, Great Falls, MT 59401
(406) 761-5861     FAX (406) 216- 3850
  Toll Free (866)587-2244

STATE-HOME Deferred 2nd Mortgage Program

This is a Deferred Loan Program which also has an Appreciation Share Requirement

This program is directed toward low to moderate income families to assist with the down payment and closing costs associated with purchasing a single-family dwelling. The minimum loan amount is $1,000.00 and the maximum is $10,000.00. The 2nd mortgage can be in conjunction with an approved FHA, VA, CONV or RD first mortgage. The housing ratio on the first mortgage must be at least 29% (unless there are exceptional circumstances) and the total ratio should not exceed 41%, unless valid compensating factors are present and approved by NWGF's high ratio approval procedure. The mortgage does not accrue interest or have monthly repayments (until #5 below), but is due and payable under the following conditions:

  1. Cessation of use as borrower(s) sole residence.
  2. The sale, lease, rental or transfer of the property
  3. Death of Borrower(s)
  4. Upon refinance of the 1st mortgage (unless NWGF agrees to subordinate)
  5. Upon repayment of the 1st mortgage, except by a refinance, the STATE HOME Deferred mortgage becomes payable by monthly installments equal to the amount of the Principal & Interest (P&I) payment of the original 1st mortgage.

Equity Share Requirement:

Upon sale, refinance(s) or payoff, the appreciation will be shared between the borrower and NWGF at the ratio of the original NWGF contribution into the deal. For example, if the original purchase price was $100,000 and the NWGF HOME funds were $10,000, then the appreciation sharing ratio will be 10%. NWGF's share will be 10% of the net appreciation. Net appreciation is defined as: sales price, less sales commission, less homeowner-paid improvements (with acceptable documentation) less seller-paid closing costs. In the case of a refinance or payoff where Borrower remains in the home, NWGF will need a copy of an appraisal to determine the appreciation share.

Basic Qualifications:

  1. Homebuyer to be either a first time homebuyer, or single parent with dependent children or have a disabled family member.
  2. Residence to be financed shall be occupied as borrowers principal residence
  3. Maximum Gross Annual Family Income from all sources not to exceed 80% of the area median income for the County the home is located in (see income spreadsheet on website).
  4. NWGF approved Homebuyer education is required (check web site for class providers and schedules)
  5. Borrower must contribute $500.00 of their own funds into the transaction
  6. Family liquid assets cannot exceed $5,000.00 and total family assets not to exceed $70,000.00. (Liquid assets are checking, savings, stocks and bonds; total assets include liquid assets and retirement accounts, personal property, autos etc)
  7. The Maximum First Mortgage Loan Amount is the current FHA single family maximum for the State of Montana. The maximum Sales Price is the FHA single family maximum for the State of Montana.
  8. Properties located in the following counties are currently NOTeligible: Broadwater, Carter, Flathead, Garfield, Jefferson, Lewis and Clark, McCone, Park, and Wheatland. Also this program cannot be used in the Cities of Great Falls, Billings, Missoula (entitlement Cities) or in any other place that has unspent HOME monies for down payment and closing costs assistance.
  9. An Environmental inspection is required on all loans (this will be ordered by NWGF and usually takes 2 weeks to complete).
  10. A Housing Quality Inspection must be performed on each property using HOME funds. This HQS inspection will be ordered by NWGF (this will usually take at least 2 weeks) and any required repairs must be completed prior to closing.
  11. Property cannot have been rented in the last 90 days. If appraisal identifies the property as vacant, then the Seller will have to provide a statement stating that the property has not been rented in the last 90 days. If the appraisal states the property is inhabited by a tenant then this program cannot be used unless the tenant is the prospective buyer.
  12. If property was built before 1978 and any peeling or chipping paint is identified on the HQS inspection or appraisal, then property will not be eligible.
  13. Any repair requirements listed on the appraisal must be completed prior to closing the loan.
  14. Any manufactured homes must be on permanent foundation (FHA foundation requirements apply) and must be larger than a singlewide.
  15. Rehabilitation loans are not eligible under this program. 
  16. Refinances are not eligible.

Loan Fees:
 There will be a $350.00 loan packaging fee payable to NeighborWorks Great Falls, Title Insurance, Recording Fees and closing Fee as charged by the Title Company.  

Reservation Procedure:

  1. Lender will forward a reservation checklist with all applicable documents to the NWGF office in Great Falls. Fully completed VOE’s must be enclosed for all jobs, for all family members 18 and older who will be living in the property. All other sources of income must be documented and included in the reservation packet.
  2. NWGF Loan Processor will check to make sure program guidelines have been met, and will order the environmental checklist. A reservation letter will not be issued until we have examined the appraisal. Disclosures will be mailed to the Borrower along with details of the deferred payment and appreciation share information. Copies will be sent to the Lender and we expect the Lender to make sure that the Borrower is aware of and understands these conditions of the loan.
  3. Please allow at least 3 weeks processing time.

Closing:
NWGF Prepares the closing documents and funds the 2nd mortgage. NWGF will forward documents and check directly to the Title Company. If the full amount of the loan is not needed, the Title Company is to issue a principal reduction to the 2nd mortgage.

** Please check the availability of funds prior to reservation.

2/13/07