Homebuyer & Rehabilitation Strategy questions

HOME BUYER STRATEGY TOPICS
Question:
A lender is requiring a purchase assistance applicant to have a family member co-sign on the first mortgage loan. The co-signer is simply doing this to aid the applicant; he will not live in the home being purchased. Is this a permitted practice? Should I count the co-signer as a household member, count his income, and have him sign the SHIP mortgage?
Answer:
There is nothing in the SHIP statute or rule that prohibits co-signers. It is not uncommon for SHIP-assisted buyers to have co-signers. Co-signers are not household members, so their income will not be counted in household income when determining income eligibility. There is one exception: the co-signer’s income must be counted if he or she is the spouse of the applicant. In all other cases, you should document that the co-signer maintains a separate residence. Another important issue must be considered. Check who owns the home once it is purchased. Naturally, the co-signer’s name and signature will be included on the first mortgage, since the co-signer is assuring the first mortgage provider that he or she will assume mortgage payments if the applicant fails to stay current on the mortgage. However, the co-signer should not be included on the title to the house. Ownership of the house must be fully in the SHIP applicant’s name.

Question:
May we provide our down payment assistance on a construction-perm loan?
Answer:
Yes. If you do provide the assistance at the construction loan closing, which is before the unit is built, you cannot count funds as expended until the unit is finished and occupied.

Question:
I have a question about first-time homebuyer status. We have a divorced applicant who still co-owns a home with her ex-husband, even though she doesn't live in it. The divorce decree gives the home to the ex-husband, but her name is still on the mortgage and loan note. She is applying to the SHIP program for down payment assistance. Can we consider her a first-time homebuyer, and should we give her assistance with purchasing a new home?
Answer:
The SHIP Statute and Rule do not define "first-time homebuyer" and this is not a fundamental requirement of the SHIP program. The local government has the flexibility to establish a first-time buyer policy and a definition must then be created locally. Many communities with such a policy include displaced homemakers and divorced persons in their local definition. If you decide to consider a person in this situation for assistance as a first-time homebuyer, remember that if the balance of the first home is shown as a debt on her credit report, she may be responsible for the balance if something happens which prevents the ex-husband from repaying the loan amount of the first mortgage. This may result in an increase of her debt ratio and place her in a potentially dangerous situation for default on her current mortgage if she does not have enough income to cover both the original mortgage note and the mortgage amount of her current residence. Lenders consider each applicant on a case by case basis, and as a general rule, if the first mortgage lender is willing to provide financing, then SHIP assistance should be considered favorably.

Question:
I met another SHIP administrator who has used the “safe harbor limits” provided by the U.S. Department of Treasury to set a $220,000 maximum sales price or value limit for her community. How can a SHIP jurisdiction justify setting such a high price? It is just not affordable.
Answer:
In recent years, many communities have increased the maximum sales price or value
limit for their SHIP programs. Your question illustrates a common misconception of the maximum
limit, which is not intended to represent an “affordable” home value. Instead, it indicates the house sales price at and below which SHIP eligible homebuyers may find an adequate supply of homes to purchase.

First, some background information is needed. The SHIP Statute requires jurisdictions to set an upper limit on the value of a home that will be considered “eligible housing” for purposes of SHIP
assistance. This requirement is outlined in section 420.9075 (4)(c) of the SHIP Statute: “The sales price or value of new or existing eligible housing may not exceed 90 percent of the average area purchase price in the statistical area in which the eligible housing is located.” The SHIP
Rule further addresses this topic in section 67-37.007 (4)(d) 6: “The local government at its discretion may set the sales price or value below the 90 percent benchmark. The maximum area purchase price used must be that established by the U.S. Department of Treasury or that calculated in accordance with Section 420.9075(4)(c), F.S.”, which states that the “average area
purchase price may be that calculated for any 12-month period beginning not earlier than the fourth calendar year prior to the year in which the award occurs.” A SHIP jurisdiction, therefore, has the flexibility to justify its maximum purchase price or value based on one of three sources: A local study of sales price levels in the past 12 months, Florida Housing’s bond study—which reports recent price levels for Florida’s metropolitan statistical areas, or the U.S. Department of
Treasury’s data, called the “safe harbor limits.” If a SHIP jurisdiction needs a copy of either of the latter two studies, they can request them from the Coalition by calling (850) 878-4219.

A community’s maximum sales price or value should be set at a realistic level to represent the sales price at which there are an adequate number of homes to buy. Affordable housing professionals do not have the power to control the sales price of homes—housing prices are established by the interaction of buyers and sellers in the open market. For the most part, we rely on the private sector to build the single family houses that low-income buyers will purchase with assistance. There must be an adequate supply of homes for these buyers to purchase, and
so the actual price of available homes for sale must be considered when setting the maximum sales price or value. As housing prices rise, communities must increase their maximum sales prices. If they do not raise this price to keep up with the market, SHIP eligible buyers will not
be able to find any homes to purchase. The market is not producing houses at a price
that SHIP eligible buyers can afford. This is why the SHIP subsidy is needed. It is the combination of a buyer’s first mortgage money and this subsidy that makes the equation of home purchase truly affordable. As housing prices continue to outpace the annual increase in household incomes, it will take larger levels of subsidy to keep this equation affordable. Call the Florida Housing Coalition for additional assistance on considering the level at which to set your community’s maximum sales price or value.


Question:
Housing sales prices are on the rise, and our jurisdiction needs to increase its maximum purchase price. When will Florida Housing Finance Corporation release another bond study with average sales prices for my area that I can use to justify an increase to our maximum purchase price?
Answer:
Regardless of when Florida Housing next issues another sales price study, a study is not absolutely required to justify an increase to your jurisdiction’s purchase price. In the past several years, the U.S. Department of Treasury has regularly issued updated versions of its “safe harbor limits”. These are the figures referenced in section 67-37.007 (4)(d) 6 of the SHIP Rule, which states “the maximum area purchase price used must be that established by the United States Department of Treasury.” The SHIP Statute requires jurisdictions to set an upper limit on the value of a home that will be considered “eligible housing” for purposes of SHIP assistance. This requirement is outlined in section 420.9075 (4)(c) of the SHIP Statute:
“The sales price or value of new or existing eligible housing may not exceed 90 percent of the average area purchase price in the statistical area in which the eligible housing is located…. The average area purchase price may be that calculated for any 12-month period beginning not earlier than the fourth calendar year prior to the year in which the award occurs”.
A SHIP jurisdiction, therefore, has the flexibility to justify its maximum purchase price or value based on one of three sources: a local study of sales price levels in the past 12 months, Florida Housing’s bond study—which reports recent price levels for Florida’s metropolitan statistical areas, or the U.S. Department of Treasury’s safe harbor limits. If a county or city opts to pay for a local average home price study, Florida Housing must approve the methodology for this study. To obtain a copy of the most recent safe harbor limits, call the Coalition at 1 (800) 677-4548. Set your community’s maximum sales price or value at a realistic level that represents the sales price at which there are an adequate number of homes to buy. If this sales price is set too low, a SHIP homebuyer may be unable to locate a home in the local housing market. When housing prices rise or fall, communities must adjust their maximum sales prices accordingly.
Caution your commission, staff and applicants against the belief that your maximum sales price or value represents the local price tag for an “affordable house.” On the contrary, this price level is unaffordable—the price simply indicates the current value of modest homes in the local market. Several housing markets in Florida are not producing houses at a price that SHIP eligible buyers can afford—this is why they need SHIP subsidy. It is the combination of a buyer’s first mortgage money and this subsidy that makes the equation of home purchase truly affordable.



Question:
SHIP’s definition of “affordable”is confusing to me. Does it state that housing costs must be less than 30 percent of the homebuyer’s monthly income?
Answer:
The answer to this question is no, and it reveals a lesson about a central concept defined in the
SHIP Statute. The definition of “affordable” is in the definition section of the SHIP Statute. It means that “monthly rents or monthly mortgage payments including taxes and insurance do not
exceed 30 percent of that amount which represents the percentage of the median annual gross income for the households as indicated in subsection (19), subsection (20), or subsection (28).” This definition makes reference to the 19th, 20th and 28th definitions in the SHIP Statute, which respectively address the definitions of a low-income, a moderate-income and a very low-income household. Each definition cites a percentage—80 percent in the case of low-income, for example—that represents the maximum percentage of the area median income that a household can earn and still qualify to be in that income category. Now reconsider the definition of “affordable.” When addressing a low income household, for example, affordable means that housing costs do not exceed 30 percent of that amount which represents 80 percent of area median income. This definition is similar but distinct from another way that housing professionals commonly talk about affordable. We commonly talk about devoting up to 30 percent of a household’s income to housing costs. We might, for example, discuss the mortgage payment of
a low-income family earning 60 percent of the area median income. If we know that 60 percent of the monthly area median income is $1500, we would calculate that monthly housing cost of no more than about $450 is affordable for the family under consideration. Using the SHIP definition of affordable, however, we would conclude that an even higher housing cost is consistent with the definition in the statute. Considering the income of the same family, the SHIP definition would conclude that a housing cost of up to $600 is affordable. Although the household in this example has income equivalent to 60 percent of the area median income, SHIP’s definition of affordable housing for a low-income family means that housing costs do not exceed 30 percent of that amount which represents 80 percent of area median income. In this example, 80 percent of the monthly area median income is $2,000 and 30 percent of this income is $600.

Question:
Follow-up question: I understand what you are saying. In fact, SHIP’s definition of
“affordable” continues on with an additional sentence that notes that “it is not the intent to limit an individual household’s ability to devote more than 30 percent of its income for housing.” How does this second half of the definition relate to what you are saying above about affordability?
Answer:
The final part of the definition notes that “housing for which a household devotes more than 30
percent of its income shall be deemed affordable if the first institutional mortgage lender is satisfied that the household can afford mortgage payments in excess of the 30 percent benchmark.” This brings up the other important lesson in the definition. It indicates that a SHIP administrator may rely on the guidance of a mortgage officer who concludes that a specific buyer can afford monthly payments that are higher than 30 percent. After all, lenders are in the business of assessing risk on the loans they offer. It is conceivable that a lender could approve a mortgage payment representing 32 percent, 34 percent or maybe 36 percent of a buyer’s monthly income; some buyers can demonstrate that they have consistently and successfully made high rent payments for years. They can now do the same with a mortgage. SHIP staff must also assess risk, however. There is risk involved with simply relying on a first mortgage lender to tell you what is a truly affordable payment. When the Florida Legislature modified the SHIP definition of affordable in 1994, there were few examples of lenders engaging in “predatory practices.” It seemed more reasonable to solely rely on a lender’s assessment of risk. In recent years, we
are increasingly faced with lenders who provide unfavorable lending terms and conditions that can set up a buyer to fail. To protect the interests of SHIP-assisted homebuyers, a growing number of SHIP administrators have worked with their most active lenders to establish local “lenders guidelines.” These guidelines define the terms of what would locally be considered an acceptable first mortgage for a SHIP-assisted buyer. The lenders guidelines in most communities set an upper limit for the front-end ratio, the percentage of monthly income devoted to a mortgage payment. Guidelines may also set an upper limit for the mortgage interest rate and for the closing fees associated with the loan. In this way, lenders guidelines provide the protection needed to ensure that SHIP buyers do not over-commit themselves to mortgage payments. The guidelines supplement SHIP’s definition of affordability to avoid the need for SHIP administrators to rely on the assessment of lenders in each individual case. Now consider the SHIP definition of “affordable” as a whole. What implications do these lessons about this definition have for our work? On the positive side, housing administrators may have more flexibility than they may have originally thought to help applicants purchase houses. On the other hand, the definition could possibly set up homebuyers to fail by allowing them to take on unaffordable high mortgage payments. SHIP administrators reduce the risk of foreclosure by working with the buyer and the lender to discuss the reality of what maximum mortgage payment is affordable for each buyer. If desired, a local SHIP jurisdiction can add language to its local housing assistance plan stating the percentage of each specific household’s monthly income that housing costs cannot exceed. In addition, lenders guidelines can provide the formal written guidance that establishes the true definition of affordability for a specific community. The Coalition can provide you with additional direction on how to address this issue in your SHIP program.



Question:
Does the SHIP Rule prohibit providing assistance to a person who is obtaining a first mortgage from an individual rather than through a lending institution?
Answer:
No, the SHIP Rule does not expressly require that the lender be institutional in nature, and allows for this lending arrangement, known as "Purchase Money Mortgages." In a traditional lending situation the lender or first mortgage holder has the responsibility of ensuring that the applicant has the ability to pay the monthly payments on the mortgage, as well as numerous other responsibilities, including arranging for insurance, termite inspections, surveys and doc stamps, and ensuring clear title. As you know, assuring that a low-income homebuyer can afford a monthly payment is critical to a successful affordable housing program. Without a mortgage lender in the process, however, the local jurisdiction's SHIP administrator will need to take on the above responsibilities in order to protect the low income borrower, as well as evaluate the borrower's income, assets, and ability to pay prior to approving the loan for the second mortgage for the down payment assistance. These could prove to be burdensome tasks for a busy SHIP administrator who must, in addition to the above, verify and certify that the applicant is income-eligible to receive assistance. As stated in the SHIP act, the Legislature intends for the SHIP program to provide the maximum flexibility to local governments to determine the use of funds for housing programs, while ensuring accountability for the efficient use of public resources and guaranteeing that benefits are provided to those in need. In the spirit of the law, the Florida Housing Finance Agency Staff suggest that good, common-sense business practices be employed when awarding funds and managing your program. Should a local jurisdiction decide that "Purchase Money Mortgages" are a viable alternative to the more traditional approach, a system needs to be developed and maintained to enable the jurisdiction to take on the additional responsibilities outlined above.

Question:
May a person who currently owns a mobile home but is requesting assistance to replace the mobile home be counted as a first-time homebuyer?
Answer:
The SHIP Rule does not define first-time homebuyer, but leaves that definition up to each local jurisdiction. The Federal Mortgage Revenue Bond program defines a first-time homebuyer as someone who has not owned a home for the last three years. This definition can be used as a guide. Several programs also include displaced homemakers as eligible first time buyers. The HOME program defines a displaced homemaker as an adult that has not worked full time, full year in the labor force for a number of years, but has, during such years, worked primarily without renumeration to care for the home and family, and who is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment. Many communities have targeted mobile homes for replacement, and allow assistance to mobile home owners under their definition of first-time homebuyer.

Question:
Do I pay documentary stamps and intangible taxes on my SHIP second mortgage when I assist a home buyer?
Answer:
Documentary stamps must be paid on SHIP second mortgages. However, intangible taxes do not have to be paid on SHIP second mortgages. The statutory basis for this is outlined in Chapters 199 and 201, F.S. Section 199.183 (1), F.S., addresses the intangible tax. It states that "intangible personal property owned by this state or any of its political subdivisions or municipalities shall be exempt from taxation under this chapter." Regarding SHIP transactions, conversations with the Florida Department of Revenue have confirmed that SHIP funds are the property of the state's municipalities and are considered to be "intangible personal property" discussed in this statute. Therefore, SHIP second (or third) mortgages are exempt from intangible taxation. Section 201.08 (1), F.S., addresses the documentary stamp tax. The State requires that all notes or mortgages be subject to this tax and that the Florida Legislature must explicitly state if a certain type of transaction is exempt from the tax. The Legislature has not provided an exemption for SHIP transactions.

Question Regarding CLT Purchase: Every time we assist a homebuyer with purchase assistance, we confirm that the sales price of the purchased unit does not exceed our community’s maximum purchase price. Our community is now one of several Florida communities beginning to build housing using the Community Land Trust (CLT) model. When checking the maximum purchase price, it does not seem fair to include the value of land for a CLT house, since the buyer does not purchase the land. That is one of the fundamental methods that CLTs use to keep home prices affordable. Do I count land value when confirming that the sales price of a CLT house does not exceed our community’s maximum purchase price?
Answer:
No, you do not count the value of land in the purchase price of a community land trust unit. The answer to this question may be found in the SHIP Rule. Section 67-37.005 addresses the details of the Local Housing Assistance Plan. Subsection (5) outlines the information to be provided for each use of SHIP funds, including the maximum purchase price or value of a unit that may be considered eligible housing. This value “can be lower but may not exceed 90 percent of median area purchase price established by the U.S. Treasury Department, or as required by Section 420.9075(5)(c), F.S.” This area of the SHIP Rule was expanded in 2006 to address the topic of community land trusts. Subsection (5)(d) now states, “for community land trust purposes the value of the land is not included in the purchase price.”



REHABILITATION TOPICS
Question:
A rehabilitation applicant has a masonry house that was originally a mobile home. The unit's roof and walls have been built around the mobile home, and more rooms have been added outside the mobile home perimeter. Is this considered eligible housing for the SHIP program?
Answer:
According to the Codes and Standards office at the Florida Department of Community Affairs, the house in question does not meet Chapter 553 standards since it does not comply with plumbing, electrical, venting and structural code requirements. As of 2009, a newer mobile home is considered eligible housing for SHIP assistance. Addressing the needs of the home in question is an eligible SHIP activity, so long as the unit was manufactured in 1994 or after. This house will undoubtedly require significant rehabilitation. Consider if the expense involved might justify providing a replacement house as an alternative. For more information to determine if a house meets Chapter 553 standards, contact the DCA Codes and Standards office at (850) 487-1824.

Question:
An applicant has requested rehabilitation assistance for a duplex. The applicant’s daughter lives in the other half of the duplex and she pays rent. There is one legal description for the duplex and only one insurance policy. The daughter’s name does not appear on the deed. Can I provide assistance to this unit?
Answer:
Yes, you can provide rehabilitation assistance, but several conditions must be met. First, the daughter’s half of the duplex is considered a rental unit—even though she does not pay rent—since the applicant does not reside in that portion of the duplex. In order to provide rehabilitation assistance, your Local Housing Assistance Plan (LHAP) must include a rental rehabilitation strategy. Any repairs to the rental portion of the duplex must be attributed to the rental rehabilitation strategy. Moreover, the rental unit is subject to all the requirements for using SHIP funds with rental housing, as outlined in Section 420.9074, subsections 3(e) and 4(f). Specifically, the rental unit must be “reserved for (a SHIP income) eligible persons for 15 years or the term of the assistance, whichever period is longer.” Also, if the rehabilitation loan is more than $3000, the rental unit must be annually monitored to determine tenant income eligibility and to ensure that the rent is at an affordable level. Other requirements must also be met. The value of the home cannot exceed the value limit listed in your LHAP. Also, the rent that the daughter pays must be included in the applicant’s household income when determining income eligibility.

Question:
At what point in the process of rehabilitating a house should I place a security instrument on the homeowner's property?
Answer:
As a best business practice, secure the property prior to starting rehabilitation. This is the same practice that a home improvement contractor would follow. It prohibits the home owner from selling his or her house while construction is in process without resolving the debt incurred using public funds. Before your contractor starts repairs, have the home owner sign a security agreement for the amount of the contractor's bid. To be fair to the home owner and to be mindful of careful spending of public funds, always file an updated security instrument when the final cost of repairs is actually less than initially anticipated. In some instances, however, change orders will increase the final cost of the rehabilitation. You can choose to file an updated security instrument that accurately records the larger repair amount, especially if the additional amount is several hundred dollars or more. You can, however, choose to simply leave the original security instrument in place and provide the extra SHIP funds in the form of a grant. Note that this is a different policy than those of federal programs like CDBG or HOME, which require the security instrument to accurately document specific final cost of repairs.

Question:
A rehabilitation applicant has asked if the SHIP program can purchase a washer and dryer for her home. Is this an eligible expense, and have other SHIP jurisdictions used their funds in this manner?
Answer:
Ultimately, SHIP funds must be used to provide eligible housing for eligible persons. Section 67-37.002(12) of the SHIP Rule states that “rehabilitation means repairs or improvements which are needed for safe or sanitary habitation, correction of substantial code violations, or the creation of additional living space. Local plans may more specifically define local rehabilitation standards.” This definition justifies the purchase of refrigerators and stoves, which are often considered necessary for safe and sanitary habitation. Washers and dryers, however, do not pass this same standard of justification. The Coalition is not aware of any SHIP jurisdiction that purchases washers and dryers with SHIP funds as part of its rehabilitation strategy, although some use their funds to purchase refrigerators and stoves.


Question:
Does the State require that all SHIP-assisted units carry hazard insurance? Should we require it? What if the homeowner can't afford it?
Answer:
No. The State does not require that all units assisted with SHIP funds be covered under an insurance policy and it is not uncommon for very low and low income persons not to have insurance on their home. It is probably a good idea to require that the homeowner who receives substantial rehabilitation assistance to carry hazard insurance, at a minimum. This will cover the cost of potential loss due to fire or other disasters, and will help protect the jurisdiction's investment in the unit. But this approach is not without its administrative burdens. Consider potential difficulties enforcing a provision requiring that insurance be maintained on repaired homes. A mortgage would have to be filed with a standard hazard insurance clause, insuring that the mortgagor (the SHIP program) will be notified if insurance ever lapses. Also, the SHIP program would need to have a remedy available if the owner fails to maintain the insurance. SHIP funds may be used to purchase hazard insurance, although you must arrange to pay for the coverage upfront in a lump sum; some jurisdictions have successfully purchased up to three years of insurance upfront. This allowed them to file a SHIP lien, complete assistance to the repaired unit, and close the file.

The decision to make insurance a requirement of rehab eligibility should be weighed against the amount of SHIP subsidy, the additional administrative burden in maintaining that the policy does not lapse. Consider the homeowner's need to maintain the unit as affordable, and also the cost of insurance if SHIP funds are used to purchase it as a last resort.

Question:
Is construction management which is outsourced considered a project soft cost?
Answer:
Yes, construction management activities, including work write-ups, inspections, and contractor oversight are all related to project delivery, and are considered to be soft costs. Soft costs can be paid with program funds rather than tapping into the very limited SHIP administrative funds. There is one notable exception of this policy: if a feasibility test results in a "no-go" decision, then the construction management costs for that unit cannot be paid from program funds, because there is no work performed on the unit. It must instead be charged to administrative funds.
Here is a soft cost example: an owner-occupied rehabilitation job is estimated to cost $20,000 in materials and labor. Your construction management company charges you $500 to manage the project, perform the work write-ups and inspections, and provide contractor oversight. The total amount of the job is now $20,500.
If you have a maximum per unit cap of $20,000, then you must reduce the amount of work to be done by $500, so that the total job cost is $20,000. If for some reason this is not feasible, then the construction management fee of $500 must be paid from the administrative portion of your SHIP funds. As an alternative, you may get the approval of the local governing body on a case by case basis to exceed the maximum per unit amount. Documentation of this approval must be retained in the individual applicant file.

Question:
What are the requirements for lead based paint abatement on a SHIP assisted unit?
Answer:
SHIP assisted units must meet Chapter 553 F.S. Building Construction Standards, which does not require lead based paint abatement. However, if the unit will also be assisted with SHIP in conjunction with any federal housing dollars, then lead based paint requirements apply. If the local jurisdiction has adopted local building construction standards which require abatement of lead-based paint in its Local Housing Assistance Plan, then staff must conduct lead-based paint abatement procedures on the SHIP units.

Question:
What are the rules regarding rehabilitation of a unit located in a flood zone?
Answer:
If the cost of the rehabilitation is greater than 50 percent of the value of the home, excluding the land, then the home must be elevated so that it is above the 100 year base flood level. This is federal law in conjunction with the National Flood Insurance Program administered by the Federal Emergency Management Agency. In the velocity zone, the cost of the repairs made to the home is required to be tracked on a cumulative basis over five years. If the cost of the rehabilitation over this five year period is greater than 50 percent of the cost of the home, excluding the land, then the home must be elevated. This is state law. SHIP administrators should be aware of these, and any other local codes which govern construction-related practices within their communities. However, the responsibility for implementing these laws and practices ultimately falls to local building department officials.

Question:
Is the installation of central air conditioning an eligible SHIP rehabilitation expense?
Answer:
Yes. In most parts of Florida air conditioning is a necessity for the health and safety of the occupants living in the units. Previous experience with housing programs that do not allow for the installation of air conditioning has shown that people will find a way to cool their home. This often means the purchase of very old, very inefficient window units. These window air conditioners can greatly increase a family's monthly utility bills, drastically reducing a family's ability to meet their other monthly bills.

Question:
When we rehabilitated a house, we were unprepared for the number of change orders that have come up. Now, in order to complete the repair work, the cost will exceed the maximum per unit amount set in the local Housing Assistance Plan. How can we proceed?
Answer:
You may exceed the maximum per unit amount, with approval from the local governing body, on a case-by-case basis. However, if this occurs frequently, you may need to either evaluate the completeness and accuracy of the initial work write-up or update your local housing assistance plan to raise your per unit maximum award. In some communities, it is a common practice to build a contingency amount into each work write-up to address these situations.

Question:
We have an elderly couple who have applied for rehabilitation assistance. Their home is a life estate. Is this considered owner-occupied?
Answer:
Generally yes. It is common for elderly persons to place their property in trust as a means of providing for their children after they are gone. Local governments can decide how they want to define ownership. In some communities, the local government has decided to tightly define ownership and in many cases will not provide assistance to a home if the deed is held in another family member's name, or if there are judgments against the owner, such as those in favor of the local government for payment of back taxes. While this may seem like a prudent and wise use of public funds, these types of policies do little to address the furtherance of overall community improvement through affordable housing activities, not to mention that the households which are denied assistance in these instances may have no choice but to continue to live in substandard units.