NeighborWorks Great Falls, Inc.
509 1st Avenue South
Great Falls, MT 59401
(406) 761-5861   FAX (406) 216-3850

CITY OF GREAT FALLS – HOME Deferred 2nd Mortgage for Low & Moderate Income Families

This program is directed toward low and moderate income families to assist with the down payment and closing costs up to $15,000.00 associated with purchasing a single-family dwelling. These funds are intended for those with a demonstrated "need", not just a means to lower their monthly housing payment. Applicants loan files will be reviewed to make sure that the house they are purchasing is not larger than needed for the occupants (for example a single person family may not be able to use these funds if purchasing a 3 bedroom home). Also if a large gift is part of the financing this may cause the funder to prohibit use of the loan funds.
The second mortgage can be in conjunction with an approved FHA, VA or Conventional 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 presented 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 Borrowers
  4. Upon refinance of the 1st mortgage (unless NWGF agrees to subordinate)
  5. Upon repayment of the 1st mortgage, except by a refinance, the City HOME deferred mortgage becomes payable by monthly installments equal to the amount of the Principal & Interest (P&I) payment of the original 1st mortgage.

Appreciation Share Requirement:

Upon sale and /or payoff of the 1st mortgage, there will be a share of appreciation between the Borrower and NWGF. The percentage of the share of appreciation will be at the ratio of the original purchase price divided by the amount of the NWGF deferred mortgage. This ratio will then be applied to the net appreciation, which is defined as the appraised value at time of the payoff of the 1st mortgage, less the original sales price, less any "qualified home improvements" (with acceptable documentation), less closings costs, less the borrowers original investment when property was purchased.

Basic Qualifications:

  1. Homebuyer to be either a first time homebuyer; or single parent with dependent children or disabled family member.
  2. Residence to be financed shall be occupied as the Borrowers principal residence for the life of the loan.
  3. Maximum Gross Annual Family Income from all sources not to exceed 80% of the area median income for Cascade County.
  4. Property must be in the City of Great Falls.
  5. Property cannot have been rented in the last 90 days .
  6. The maximum loan amount is the current FHA single family maximum for City of Great Falls. The maximum sales price is the current FHA single family maximum for City of Great Falls.
  7. The home must have a Home Inspection by a certified home inspector and a copy of this inspection must be provided to NWGF. NWGF will complete an Inspection Checklist which will be provided to the buyer (and Buyers 1st Mortgage Lender and Realtor) which will list mandatory and recommended repairs. All mandatory repairs must be completed prior to closing. We also suggest that the "Recommended" repairs are completed, but if the total is below $400 the Buyer has the choice of accepting the property without recommended repairs being completed. However, the buyer must have the opportunity to renegotiate the purchase price if the recommended deficiencies are not corrected. The buyer must sign an NWGF disclosure stating they fully understand the extent of and the estimated costs to repair the deficiencies.
  8. The funder is also now requiring a HQS (housing quality standards) Inspection to be completed. If the house does not pass this inspection then the required repairs must be completed by the seller prior to loan closing. If the seller will not complete the HQS required repairs then HOME funds cannot be used.
  9. If property was built before 1978 and peeling, scaling or chipping paint is identified on the Home inspection and/or the Appraisal then the property may not be eligible for financing. Repair items must be completed prior to closing, and city permits may be required for some repairs (e.g. electrical, plumbing, gas).
  10. Total family liquid assets not to exceed $5,000.00 and total family assets not to exceed $70,000.00.
  11. Refinances are not eligible.
  12. Borrower must contribute $500.00 of own funds into the transaction.
  13. The buyer must have completed full Homebuyer Education provided by an NWGF approved provider.
  14. There will be a loan packaging fee of $350.00, Title insurance, recording, closing fee, and HQS inspection fee approx $50.00.

Reservation Procedure:

  1. Lender will forward a reservation checklist with all applicable documents to the NWGF office. 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 verified and included in the reservation packet.
  2. Loan Processor will check to make sure program guidelines have been met, and will FAX a confirmation of reservation to Lender.
  3. Please allow 1½ - 2 weeks for processing application.

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 second mortgage.  

5/07