Section 504 Loans and Grants Presented by William Kenney Single Family Housing Program Director Section 504 Loans and Grants Leveraging Funding for Single-Family Rehabilitation and Weatherization

Single Family Housing Repair Loans & Grants What does this program do? Provide funds to elderly and very-low-income homeowners to remove health and safety hazards, perform necessary repairs, improve or modernize a home, make homes accessible for people with disabilities, or make homes more energy efficient so these very-low-income families use less of their income on utility bills

Single Family Housing Repair Loans & Grants Who may apply for this program? To qualify, you must: Be the homeowner and occupy the house Be unable to obtain affordable credit elsewhere Have a family income below 50 percent of the area median income For grants, be age 62 or older and not be able to repay a repair loan

Single Family Housing Repair Loans & Grants Who may apply for this program? To qualify, you must: Be the homeowner and occupy the house Be unable to obtain affordable credit elsewhere Have a family income below 50 percent of the area median income (income limits can be found at https://www.rd.usda.gov/nc ) For grants, be age 62 or older and not be able to repay a repair loan

Single Family Housing Repair Loans & Grants **Designation of eligible and ineligible areas are available at: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do What is an Eligible Area?

Single Family Housing Repair Loans & Grants How may funds be used? Loans may be used to repair, improve or modernize homes or remove health and safety hazards Grants must be used to remove health and safety hazards How much money can I get? Maximum loan is $20,000 Maximum grant is $7,500 Loans and grants can be combined for up to $27,500 in assistance

Single Family Housing Repair Loans & Grants What are the terms of the loan or grant? Loans can be repaid over 20 years Loan interest rate is fixed at 1% Full title service is required for loans of $7,500 or more Grants have a lifetime limit of $7,500 Grants must be repaid if the property is sold in less than 3 years If applicants can repay part, but not all of the costs, applicants may be offered a loan and grant combination Is there a deadline to apply? Home loans are available year round as long as funding is available Home loan applications are processed in the order they are received

Single Family Housing Repair Loans & Grants Leveraging Opportunities: Agency funds may be supplemented by funds from a variety of sources. One of the challenges is to understand the implications for the applicant and the Agency of the requirements that may be imposed by these sources. When a loan is leveraged, each lender enters into a separate financial agreement with the applicant. The combined resources that are provided enable the applicant to make necessary repairs. “Lender,” refers to an organization that provides long term, amortized loans for housing, including private lenders, State and local governments, and nonprofit organizations. The Agency encourages grant funding when it is available. However, a grant provider is not considered a “lender.”

Single Family Housing Repair Loans & Grants Leveraging funds: Although there are many variations in the specifics, the subsidized funds that can supplement Agency funds will generally come in one of the following forms: Grants without long-term restrictions. Some grants are provided with no restrictions, as long as the applicant is eligible and the funds will be used for an eligible purpose. Forgivable loans. Some sources provide funds that require repayment only if the home buyer fails to comply with program requirements or restrictions. For example, a funding source may provide funds for rehabilitation that need not be repaid if the home buyer remains in the property for a specified period of time. The funds are generally provided as a loan to permit the funding agency to record the circumstances under which repayment is required. Deferred payment loans. Deferred payment loans may be used to provide funds that are repaid only upon transfer of the property or as a balloon payment at the end of a specified period. These funding arrangements often include a provision for the funding source to share any appreciation that occurs with the home buyer.

Single Family Housing Repair Loans & Grants Approaches to Leveraging: Develop an leveraging strategy that will encourage and facilitate the use of leveraging program funds. (Lack of Available funds) Outreach: Identify lenders who are active in the State and provide information about the Agency's loan programs and how leveraging arrangements might work. Identify the sources of loan and grant funds that may be available from State and local governments, and nonprofit sources. Applicant Education: Briefing materials that explain the leveraging concept and why leveraging funds may be advantageous. Some applicants may need guidance and assistance in identifying and contacting appropriate non-Agency funding sources.

Single Family Housing Repair Loans & Grants Section 504 Loan Application Packaging: Public and private nonprofit organizations that are tax exempt under the Internal Revenue Permissible Packaging Fee: Up to $500 For Section 504 Loans Only!!!!! Application Process: Upon receipt of a packaged loan application, the Agency will process the application in accordance with program guidance. The Agency will inform the loan application packager when critical processing activities have occurred

William Kenney Director, Single Family Housing Program United States Department of Agriculture Rural Development 4405 Bland Road, Suite 266 Raleigh, NC  27609 Phone: 919-873-2051 william.kenney@nc.usda.gov