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SECTION 8 - RENTAL ASSISTANCE PROGRAM
The Section 8 Rental Assistance Program serves approximately 23,000 Oklahomans with financial assistance in renting a home or apartment. It is a major housing program both in our state and in our nation. The program is funded through HUD, and it comes to Oklahoma through the various public housing agencies. There are 104 public housing agencies in Oklahoma of which 24 have a Section 8 Rental Assistance Program. If you live in rural Oklahoma or in a town which does not have a Section 8 Program, you may apply for Section 8 Rental Assistance through the Oklahoma Housing Finance Agency (OHFA).
A family must be low income to qualify for Section 8 rental assistance. The rule of thumb is that a family must be under 80 percent of the median family income for you locality. Qualified individuals and families apply for Section 8. If no vouchers are currently available, they go onto a waiting list, which is frequently the reality. People with disabilities and homeless individuals are given preference in some public housing agencies by being moved up on the waiting list according to date and time. Ask if there is a preference and identify yourself as a person with a disability if you choose to claim a preference. When your name reaches the top of the application waiting list, you will be notified by mail of the date and time of your personal interview. Whether you qualify for the program will be determined through the personal interview. At this interview you will be asked to provide proper identification including Social Security Card for each member of your family six years of age or older and a Driver’s License.
After a successful interview, you will be issued a Section 8 Rental Assistance Voucher which permits you to rent an apartment or house from any landlord who has property which is Section 8 approved. The size of your voucher will be determined by your income and the number of persons in your family. Many rental units in your community will be Section 8 approved. You may ask the landlord if you are in doubt.
Section 8 Rental Assistance allows you a freedom to select the housing unit which most corresponds to your needs and desires from the available listings which are Section 8 approved. Choice is the feature of the program which is not available in other public housing programs. With this freedom comes a responsibility. As a Section 8 tenant, you are expected to pay your rent on time. You are expected to keep utilities on at all times to protect the property. If neighbors complain about you for a valid reason, you risk losing your Section 8 voucher. If you or any other adult living in your home is involved in drug or criminal activity, your voucher will be revoked. It is your responsibility to assure that no unauthorized individuals live in the Section 8 property which you rent. These are the family obligations of the Section 8 Rental Assistance Program.
The Section 8 Rental Assistance Program is a cooperation among three parties—the renter, the landlord, and the public housing agency. The public housing agency agrees to pay their part of the rent to the landlord at the beginning of each month. They agree to be an intermediary between you and your landlord. They will assist you in understanding the Landlord/Tenant Act and laws which protect your rights. In some circumstances, the public housing agency may make referrals to other social service agencies. The landlord agrees to abide by the contract they have signed with the public housing agency. The landlord also is expected to maintain repairs of the property. Properties are inspected annually by public housing. Landlords have 30 days to remedy deficiencies. Landlords may receive a stop payment on housing rent money or even loss of their Section 8 contract if they are not in compliance with an inspection.
So how much will your rent be under Section 8? This depends on your income and the number of persons in your household. There is a cap on the size of your voucher. If you choose a property which is considerably less than the cap, Section 8 may only charge you 30 percent of your income. If you choose a property which is the maximum which your cap permits, you may pay up to 40 percent of your income as your share of your rental payments. Your share of your rental payments may range anywhere from 30 percent to 40 percent of your adjusted income minus utility payments.
The complaint procedure is an important element of any government program. Most government programs have some procedure for a consumer to register a complaint. In the Section 8 Rental Assistance Program you will be assigned a case manager. Your case manager is the first person with whom to share your concern. Your case manager will in turn have a supervisor who should have access to your information and be able to assist you. You may also request an internal hearing officer review your concern. If your Section 8 Voucher has been revoked, you have 10 days to request an informal hearing. After your concern has been heard, the hearing officer will make a ruling within five days.
There are internal complaint procedures. HUD provides money to the public housing agency. You may register a complaint with HUD if you choose. You may also register a complaint with the Oklahoma Human Rights Commission (OHRC). When making your complaint it is advisable to attempt to resolve your issue at the lowest level and to allow time for response. If you still feel your issues have not been resolved, advance to the next level. Be willing to listen as well as to share your concern. If you do not understand something, ask for the policy which applies to your situation. Policy governs how programs are administered.
HUD has certain requirements of the public housing agency which remain constant throughout all agencies nationally regarding how the Section 8 Rental Assistance Program is to be administered. There may be small variations from one agency to another and from one state to another. The maximum family income to qualify for Section 8 assistance varies from one locale to another. Each multi-county area within the state of Oklahoma probably has a different median income. The rule of thumb is that to be eligible for Section 8 one has to have 80 percent or less of the median family income of the area.
Remember that the lease between the landlord and the tenant is between them. As a tenant, you still have to comply with the terms of your lease. If you are being evicted from your housing unit or are threatened to be evicted, you need to discuss this with your case manager in the public housing agency. An eviction from your landlord under some circumstances can result in the loss of your Section 8 Voucher. Timely communication is very important among all parties involved including tenants, landlords, and housing administrators. Communicate with your case manager if another individual enters your home to live, or if your income changes. Withholding information which impacts your eligibility for the program could result in losing your assistance.
If you’ve had a problem with any federally subsidized housing program, clear this up before applying for Section 8. Section 8 receives information about criminal and drug activity on families which utilize their program. You may endanger your financial assistance from the program through not upholding your part of the family obligations. A 9-digit number is being created which would coordinate information nationally about recipients of various government programs including public housing, TANF, and Social Security. When this system is in place, it will be easier for administrators of public programs to track the activities of their consumers. In Oklahoma public housing agencies are allowed to access wage information about residents.
The Section 8 Rental Assistance Program is a program which allows people which would have had great difficulty in securing adequate housing for themselves the opportunity to live in a satisfactory environment. Cooperation from all parties is essential to the smooth flow of services. It is important to have as much knowledge as possible about any government program in order to successfully advocate for yourself as you utilize services.
SECTION 8 – HOME OWNERSHIP
As mentioned before in the Section 8 program, both the Rental Subsidy Program and now the Home Ownership Program is intended for low-income, elderly, and the disabled population. There are eligibility requirements which many people with disabilities will easily meet but some will not. Since 2000 the Section 8 Rental Subsidy Program which has become well known also offers the option of home ownership and mortgage subsidy which is an option never before possible for this population.
Section 8 Home Ownership Program
In order to meet standards of Section 8 Home Ownership, you must first have proven yourself in the Section 8 Rental Subsidy program, that is, you must have demonstrated a history of good faith in meeting your obligations as a renter. Do you pay your rent on time? Do you care for the property at which you live? Do you cooperate with your landlord and with Section 8 authorities who work with you?
For those who are disabled but not elderly, to qualify for Section 8 Home Ownership, you must first be a participant in the Family Self-Sufficiency Program (FSS) as a renter under Section 8. The FSS Program is designed to help housing assistance recipients become independent of state and federal assistance. As a participant’s earned income increases and their rent increases, an amount equal to the increase in rent is placed in an escrow account for them. If the family completes the program, all the money in escrow will be theirs after five years. Escrow may be withdrawn early to cover home ownership expenses.
To be eligible for the Section 8 Home Ownership Program, the family must be a first-time home buyer. First-time home buyer is defined as someone who has not owned a home in the last three years. A displaced homemaker who owned a home while married also meets this requirement. The family must have made at least $10,300 earned income per year having worked full time for at least one year, or if the family is elderly or disabled, must have earned at least $6,540 income per year. Benefits may count toward the annual income of elderly or disabled families.
The family must agree to attend HUD approved homeownership counseling prior to homeownership assistance. Consumer Credit Counseling Services will provide this counseling. Local Consumer Credit Counseling Services or Community Action Agencies will train successful applicants in at least eight hours of homebuyer education after any client credit issues have been resolved. It is only after these requirements have been met that a Section 8 Homeownership Voucher will be issued.
A family will have six months to locate and purchase a home after they receive their voucher. They are required to report progress every 90 days to their local public housing authority or to the state Oklahoma Housing Finance Authority (ODCA) depending upon who has issued their voucher . There are 103 public housing authorities operating in Oklahoma, some of which have a Section 8 program. The Oklahoma Housing Finance Authority covers all of Oklahoma for citizens who do not have a program available locally.
The family choice must be an existing one-unit property or a single dwelling in a cooperative or condominium. The family’s choice must be inspected and approved by the authority issuing the voucher. Before mortgage subsidy assistance actually begins, an HQS one-time inspection must be done. In addition, an independent inspection must be done by an FHA approved inspector selected by the family. The family enters a contract of sale with the seller which specifies the public housing authority is authorized to do the HQS inspection and that the seller is responsible for repairs recommended. The contract must also have a clause that the public housing authority is to receive a copy.
Families must secure their own financing, but neither balloon payment mortgages nor loans with variable interest rates are allowed. Seller financing is an option. The public housing authority retains the right to disapprove financing arrangements if they feel the family’s choice is unaffordable. Families may use grant funds for down payment and closing but must pay at least 1 percent from personal resources.
For families who are not elderly or disabled, public housing authority provide mortgage assistance for a maximum of 15 years on a 20-year or longer mortgage or for a maximum of 10 years for a mortgage less than 20 years. For a family which is either elderly or disabled, at the time of qualifying, there is no maximum time of assistance. The monthly portion of the mortgage payment which is the family’s responsibility is the lower of either 30 percent of the family’s monthly adjusted income or the family’s monthly homeownership expenses minus the Total Tenant Payment (TTP). The public housing authority will be responsible for the rest of the mortgage payment.
The qualifying family must reside in the home being financed. They must agree to attend ongoing homeownership counseling. They must comply with the terms of their mortgage, and they must supply required information to the housing authority. The family also has the responsibility to notify the housing authority before moving from the property purchased or to notify the housing authority if they are in default on their mortgage. Mortgage assistance may be terminated anytime because of violent or drug-related crimes committed by any family member, violation of participant obligations, or foreclosure of the property.
Family responsibilities are ongoing for the life of the mortgage assistance. Close cooperation is necessary with authorities at the public housing authority. The public housing authority also provides something to the family seeking assistance. They provide a knowledge base about housing that the family may not have had if they have not owned a home previously. They insure training on home ownership which the family might not have sought on their own and which assists in successfully becoming and remaining a home owner. They protect the potential home owner from mortgage agreements which may not be in the best interest of the home buyer. Another program available in a pilot project among some Community Action agencies in Oklahoma is the Affordable Home Ownership Opportunities for People with Disabilities (AHOOPD).
AFFORDABLE HOME OWNERSHIP OPPORTUNITIES FOR PEOPLE WITH DISABILITIES (AHOOPD)
The AHOOPD program works directly with people and families with disabilities to make affordable home ownership a reality. AHOOPD is being piloted in five of the regional Community Action agencies and is hoping to expand their participating agencies to twelve in 2004.
As of this writing, Community Action agencies in Jay, Enid, Lawton, Hugo, and Altus have funds for AHOOPD. AHOOPD can assist people in determining if they can buy a home. They can link the person with programs for people with limited incomes. They can educate the person on underwriting guidelines to let them know what home can be reasonably afforded. Keep in mind that qualifying for a particular loan and maintaining the home after purchase is still the applicant’s responsibility. Three things which typically get in the way of a person wanting to purchase a home are:
1. The person does not believe he can get a loan.
2. The person does not have the down payment.
3. The person has a poor credit rating.
When a person contacts the nearest Community Action Agency regarding the AHOOPD program, they will be applying for their special loan program to build a new home, to purchase an existing home, or to modify their present home. The housing staff at the local Community Action Agency will have knowledge of housing programs across Oklahoma. They will work with an applicant to get their needs met regardless of what agency partnerships need to be made to do the job. They will provide the applicant with homebuyer education to help them make the best decision in purchasing the right home.
If a person has Social Security income, this may be tax free. If it is tax free, this income will need to be grossed upwards in consideration of income to debt ratio in qualifying for a loan. Poor credit is by far the biggest problem in qualifying for a loan. Community Action may assist an applicant in developing a Debt Repayment Plan which sometimes can stop the high finance charges on unpaid debt. The bank which is considering the loan wants an applicant to demonstrate a consistent pattern of payment of obligations before they agree to make a housing loan. An applicant must be able to make regular payments. The applicant should set goals for themselves. Community Action and the bank will work with the applicant to meet those goals.
AHOOPD has been a program of Community Action since the fall of 2001. They have assisted 23 persons with disabilities in Oklahoma to purchase their own home. Even if your local Community Action Agency is not one of those presently piloting the AHOOPD program, work with their housing staff anyway. There are 21 agencies in Oklahoma. Contact the Oklahoma Association of Community Action Agencies at (405) 524-4124 or you may go to www.okacaa.org for information on their website.
OKLAHOMA HOME OF YOUR OWN
Oklahoma Home of Your Own (HOYO) is a private, non-profit corporation which is actually administered through the Oklahoma Association of Community Action agencies in Oklahoma City. HOYO seeks grant monies to fund outreach and advocacy projects. They also develop pilot housing programs to make home ownership a possibility for people with disabilities. HOYO trains other housing entities in disability awareness and working with people with disabilities. Oklahoma Home of Your Own provides no direct services to individuals with disabilities who are seeking to own their own home. If you would like more information about HOYO, contact either the Executive Director of the Association of Community Action Agencies or the Coordinator of Homebuyer Education at (405) 524-4124.
COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS (CHDO’S)
Community Housing Development Organizations are private nonprofit, tax-exempt organizations that have among their purposes the provision of affordable housing on a local level. For the individual or family seeking housing, CHDO’s are a good place to go. CHDO’s also frequently offer housing rehabilitation to make a home more accessible for the person with disabilities. The Oklahoma Housing Finance Agency in Oklahoma City certifies 21 CHDO’s across Oklahoma. The Oklahoma City, Tulsa, and Lawton Public Housing Authorities in turn certify nine more CHDO’s in their respective areas.
Big Five Community Action Association
1502 N 1st, Durant, OK 74702
Serving Bryan, Carter, Coal, Love and Pontotoc Counties
Central Oklahoma Community Action
801 Chapel Street
Norman, OK 73071
Community Action Agency of Oklahoma City and Oklahoma/Canadian Counties
319 SW 25th Street, Oklahoma City 73109
Serving Oklahoma and Canadian Counties
Community Action Resource & Development
P.O. Box 947, Claremore 74018
Serving Mayes, Rogers, Nowata, Wagoner and Washington Counties
Community Action Development Corporation
105 S. Main Street, Frederick 73542
Serving Beckham, Cotton, Jefferson, Kiowa, Roger Mills, Tillman and Washita Counties
Community Action Project of Tulsa County
4606 S Barnett, Ste 100 Tulsa, OK 74146
Serving Tulsa County
Community Development Support Association
2615 E. Randolph, Enid 73701
Serving Garfield and Grant Counties
Cookson Hills Community Action Foundation
212 S. Water, Tahlequah 74465
Serving Adair, Cherokee and Sequoyah Counties
Deep Fork Community Action Foundation
P.O. Box 670, Okmulgee 74447
Serving McIntosh, Hughes, Okfuskee and Okmulgee Counties
Delta Community Action Foundation
308 SW 2nd, Lindsey, OK 73052
Fax (405 527.6538
Serving Garvin, McClain and Stephens Counties
Great Plains Improvement Foundation
2 SE Lee, Lawton 73502
Serving Comanche County
Ki Bois Community Action Association
200 SE “A” St, Stigler, OK 74462
Serving Haskell, Latimer, Leflore and Pittsburg Counties
Little Dixie Community Action Association
209 N 4th, Hugo, OK 74743
Serving Choctaw, McCurtain and Pushmataha Counties
Muskogee County Community Action Foundation
1313 N. Main Street, Muskogee 74401
Serving Muskogee County
Native American Housing Services, Inc.
112 N Main, McCloud, OK 74851-8169
Serving Oklahoma, Cleveland, Pottawatomie, Canadian, Grady, Lincoln, Logan, Payne, Custer, Caddo and Osage Counties
Neighborhood Housing Services
P.O. Box 60327, Oklahoma City 73146
Serving Oklahoma County
Northeast Oklahoma Community Action Agency
856 E Melton, Ste C, Jay, OK 74346
Serving Craig, Delaware and Ottawa Counties
117 E. 1st Street, Watonga 73772
Serving Alfalfa, Beaver, Blaine, Cimarron, Custer, Dewey, Ellis, Harper, Kingfisher, Major, Texas, Woods and Woodward Counties
Oklahoma Rural Opportunities Development Corporation (ORO)
308 S.W. 25th Street, Oklahoma City 73109
Southwest Oklahoma Community Action
900 S. Carver Road, Altus 73522
Serving Greer, Harmon and Jackson Counties
United Community Action Program
501 6th Street, Pawnee 74058
Serving Creek, Kay, Noble, Osage and Pawnee Counties
Washita Valley Community Action Council
205 W. Chickasha Avenue, Chickasha 73023
Serving Grady and Caddo Counties
Greater Oklahoma City Urban League
3017 N. Martin L King Ave, OKC 73111-3321
Jefferson Park Neighbors Association
200 N.W. 24th Street, Oklahoma City 73103
Latino Community Development Agency
420 S.W. 10th Street, Oklahoma City 73109
Northeast Home Ownership Consortium
2020 N.E. 4th Street, Oklahoma City 73117
Oklahoma City Northeast, Inc.
1500 N.E. 4th Street, Oklahoma City 73117
South Oklahoma City Council of Neighborhoods
2200 S.E. 59th Street, Oklahoma City 73129
Habitat for Humanity
1006 SW E Ave, Lawton 73501
Housing Partners of Tulsa
415 E. Independence, Tulsa 74106
HABITAT FOR HUMANITY
What is Habitat for Humanity?
Habitat for Humanity is a comprehensive housing program created in 1976 by Millard Fuller in Americus, Georgia. There are presently over 2,000 Habitats worldwide with twenty affiliates in Oklahoma. The Central Oklahoma Habitat for Humanity in Oklahoma City is the largest Habitat in the state in terms of new home construction followed by the Tulsa affiliate. Habitat affiliates work in their local areas and as a rule does not go out of their area. Many parts of Oklahoma do not have an affiliate.
Many Habitat affiliates will only do new construction. Some will do renovation of existing construction. The process begins by requesting an application and completing it. The Oklahoma City Habitat processes 700 applications each year. Of those 700 applications, 40 are approved. Habitat for Humanity serves as a builder, a social service organization and as a mortgage company all rolled into one. This is something which is unique about Habitat in housing programs. They are a full-service organization involved in multiple facets of housing. Another unique aspect about Habitat for Humanity is that they charge 0 percent interest on the money they loan.
Habitat considers several things in approving a prospective applicant. There is a minimum income which varies from one affiliate to another. Minimum income also varies according to family size. That figure is $16,000 for a single person in Oklahoma City. There is a maximum income which an individual or family may earn. That income also depends upon which Habitat is involved and how many persons are in the family. The Oklahoma City Habitat has a maximum qualifying annual income of $43,000 for a family of four.
Habitat will do a background check on prospective applicants to assure they have no criminal record, particularly in the recent past. They will check credit history to assure the applicant is financially able to make house payments and maintain the property after purchase. Information on the applicant’s history of utility payments and rental payments will affect the selection process. Generally, the application should be processed within 60 days. Those who are not selected will receive valuable information on how to improve their status. Habitat may refer an applicant who is not selected to Consumer Credit Counseling or suggest ways to cut monthly expenses so that home ownership could become a possibility. They will have the option of re-applying in the future.
The successful applicant for Habitat for Humanity will be expected to provide a certain number of hours of “sweat equity”; that is, the person will be expected to physically contribute time and effort in the construction of the home. If the person has a disability and is not able to physically contribute on the construction site, that person will still be expected to work at another location such as answering phones in the Habitat office. The individual or family makes a real contribution and join their efforts with others to achieve home ownership.
Habitat for Humanity programs vary from one affiliate to another, but the Oklahoma City Habitat sets home mortgage payments at 20 percent of gross family income. Family incomes vary, house costs vary, and mortgage payments will also vary. As stated earlier, applicants are not expected to pay interest on the repayment of their loan. The 20 percent mortgage payment includes set aside monies for taxes and insurance and for home maintenance. Habitat wants their clients to be prepared for an emergency. Habitat also expects their clients to be able to pay off their mortgage within 30 years. A higher family income will make available a larger floor plan with more amenities.
The Habitat Home
Some Habitat homes have siding on all outside walls, and others use a combination of siding and brick. Different Habitat programs will offer different floor plans. There will be some choice but not unlimited choice. The client needs to be able to pay back their loan within 30 years using a mortgage payment of 20 percent of their gross family income. The client will also need to select a floor plan which will fit the lot that has been chosen.
Clients may purchase their own lot as long as it is already served by utilities. The lot must also be within a housing area which permits Habitat homes. Habitat cannot build in every neighborhood due to zoning restrictions. If the client does not already have a satisfactory lot, they may choose one that the local Habitat already owns.
Some Habitats actually have building staff who build homes. Habitats that have this staff frequently contract work on the parts of the home which require licensed professionals. There are also volunteers who help to build Habitat homes. Sometimes a church will take on a project to build a certain home. A typical Habitat home may take three to four months to build. From the time of the original application to the time when a client closes on their home may take up to a year.
Habitat serves single people, single parents with children, and other family types. All must meet Habitat’s eligibility guidelines. Habitat for Humanity accepts no federal monies. It is a private, non-profit organization which thrives on the support of individuals, businesses, and foundations.
HABITATS FOR HUMANITY IN OKLAHOMA
RURAL DEVELOPMENT OF THE U.S. DEPARTMENT OF AGRICULTURE
The USDA’s main office is in Stillwater at 1-800-522-2819, with ten local offices, each serving a multi-county area. Many people do not think of the USDA as being in the housing business. While it is true they are involved in many things which have nothing to do with housing, they are involved in housing in Oklahoma and indirectly involved in housing for people with disabilities. The Rural Development Department (RDD) has housing programs available in any municipality with a population of 20,000 or less across the state. They can serve in a metropolitan area in a municipality of 10,000 or less. This includes the majority of Oklahoma.
The housing programs that the RDD offers are divided into Single-Family housing programs and Multi-Family programs. Individual persons with a disability and their families will probably have more direct dealings with the single-family program. They may have indirect dealings with the multi-family program through the property management company of an apartment complex in which they live. A chart provided by the USDA Rural Development office in Stillwater describing rural housing programs is shown on page 185-186.
Single-Family Housing Program
The single-family housing program can be used to both repair and enhance an existing home or to build a new home. The repair and enhancement of an existing home roughly corresponds to the 504 loan/grant program, and the construction of a new home or purchase of an existing home can be financed through the 502 rural housing loan program.
To qualify for the 504 loan/grant program, the applicant must be a person or family with a low income (80 percent or less of the median family income in their county). Keep in mind that this eligible income varies from one county to another. Washington or Texas County, which have high incomes, would allow a greater income to be eligible for their low-interest loan than counties in areas of the state which have lower median incomes. At the time of this printing, an income of less than $15,000 for a household of two or an income of less than $12,000 for a household of one would qualify for the low-interest loan program.
The program offers an interest rate of 1 percent with twenty years to pay back the loan. That amounts approximately to $23 per month payment for twenty years for a $5,000 loan. It is about $4.60 per month for the twenty years for each $1,000 of debt incurred. This money can be used for any project. A person may make a bathroom fully accessible, add a ramp or widen doorways. A person may even add on a new room to accommodate a person with disabilities moving to the family home.
If an applicant is age 62 or older and qualifies for the 504 program but does not qualify for the loan, they may be eligible for a grant of up to $7,500. The grant is to be used to remove health and safety hazards in the home. Home accessibility would fit into this category.
The 502 rural housing loan program is to help low-income individuals buy an existing home or build. This loan is based on the prevailing rate of interest. In some cases payments can be kept down by qualifying people with a higher percentage of income to debt ratio. People with a lower income compared to their county average may also have the prevailing rate of interest lowered to as low as 1 percent. This rate will periodically be reviewed to assure continued qualification.
In any program where a person becomes eligible through income, they should notify the agency of any new income immediately. The same is true if a person has a reduction in income for any reason. Payments can be adjusted either up or down based on the new income level. If RDD finds unreported income, they may ask the loan applicant to pay a higher rate beginning at the time they began receiving the higher income. Report income changes immediately to avoid any penalty.
RDD will work to leverage other housing program monies. They are aware of other housing programs which may benefit their applicants, and they will refer to these agencies as appropriate. When calling the USDA, ask to speak with a Community Development Manager. They are trained to make housing loans. As in any loan program, the applicant must demonstrate the capacity to incur debt. Income verification will be done as well as credit checks. The USDA acts as a lender. It is the responsibility of the applicant to:
Multi-Family Housing Program
The Multi-Family program offers money for developers to build apartments in all areas of Oklahoma which can be served by USDA/RDD. This program usually deals with business entities rather than individuals. However, individuals and families live in these apartments and sign a lease with a management company. Since a particular set of apartments may have been financed through RDD and it is a federal agency, the management company must abide by certain federal standards.
Since 1982, the federal law has insisted that all common areas in an apartment complex such as the office, the laundry, and public walkways be accessible to persons with disabilities. Apartments built after 1992, are required to have 5 percent of the units totally accessible, 2% for hearing or visual impairments. Handicap parking is also required to the office for visitors and accessibility for tenants. When an older complex is remodeled that is federally funded or assisted at the 75% level, they should create the accessible units. A sign on the premises should tell the renter if U.S.D.A. monies have contributed to the construction of the complex. A renter may ask their manager if there are questions. If the complex was built through USDA funds and the renter feels that the complex is inaccessible, they may call the nearest USDA/RDD office to make a complaint.
Tenants may ask their manager to make changes in their particular apartment such as installing a roll-in shower or lowering a countertop in a kitchen to accommodate the individual with disabilities. It is the responsibility of the tenant and the management company to discuss what is needed and who will be responsible for paying for the architectural modifications. The management company may make the changes, or they may ask the tenant to make the changes and be responsible to put the apartment back the way it was when the tenant vacates. If the property was financed with USDA/RDD monies, the tenant may contact the Stillwater office at one of the Field Offices requesting assistance in resolving an issue.
In Oklahoma, over 300 apartment complexes have been financed through RDD. Of the 8,200 units involved, 5,500 occupants have rental assistance. Tenants apply for tenant certification for rental assistance through USDA. With rental assistance, tenants do not pay over 30 percent of their adjusted family income towards rent and utilities.
If you have questions about any housing programs which the USDA/RDD offers, you may call 1-800-522-3819 and ask to speak with the Director of the Single-Family program or the Director of the Multi-Family Program. You may also search their website at http://www.rurdev.usda.gov/ to locate local offices and contact persons. Local offices are in Enid, Woodward, Chandler, Muskogee, Vinita, Cordell, Duncan, Ada, Antlers, and McAlester.
OKLAHOMA HOUSING FINANCE AGENCY (OHFA)
The OHFA is one of the major players working in the housing field in the state of Oklahoma. They work with many different types of groups including: individuals and families, developers, non-profit housing organizations, local governments and special programs designed to meet the needs of special groups such as people who are homeless or people living with disabilities. In the majority of situations, OHFA will be working with public or private entities channeling their funds into other organizations which provide housing directly to the public. They do, however, deal with individuals and families directly.
OHFA works directly with low-income individuals and families offering rental assistance and, in some cases, mortgage assistance. Section 8 vouchers are available through OHFA statewide. They are also available through local public housing agencies which have a Section 8 Program. (See sections of this chapter dealing with Section 8 Rental and Mortgage assistance for more information.) If an applicant is either disabled or homeless, they will receive a preference. Individuals or families must be below 30 percent of the county median income to qualify. Vouchers are issued which allow the applicants to rent from any landlord that has a contract with OHFA or the issuing housing authority. Depending on the individual’s or family’s income levels, OHFA can assist in paying monthly rental payments. Individuals or families must demonstrate a good rental history in the Section 8 Rental Assistance Program before they may become eligible for the Section 8 Mortgage Assistance Program.
Mortgage assistance works very similarly to rental assistance except that an individual or family actually owns the home. In the 18 months this program has been operating in OHFA, they have put 31 individuals and families into their own home. (This is as of the writing of this publication.) Section 8 is a popular program with far more applications than vouchers available for those qualified. Applicants are warned to be prepared for a waiting list. OHFA reserves the right to temporarily stop applications.
The OHFA Advantage Program (housing loans)
OHFA works with participating lenders statewide to provide 30-year, fixed-rate low-interest home loans through their OHFA Advantage Program. Several loan products are offered under OHFA Advantage including 1st Four, Market Best, Future Foundation, and Home Plus. The most popular of these loan products is the 1st Four which offers a down payment and closing costs in addition to a below-market interest rate. For questions about the OHFA Advantage, contact the Single Family Program Supervisor at (405) 419-8243.
To participate in the OHFA Advantage Program:
To get a listing of all participating lenders in the OHFA Advantage Program, call 1-800-256-1489, ext. 207 or visit their website at www.ohfa.org. OHFA’s Advantage Program housing loans may be available to the consumer at one of the Community Housing Development Organizations (CHDO’s) in Oklahoma. See the section earlier in this chapter for a list of CHDO’s.
FANNIE MAE, THE HOME CHOICE LOAN PRODUCT
Fannie Mae is a private, shareholder-owned company that works to make sure mortgage money is available for people in communities across America. Fannie Mae does not loan money directly to borrowers but instead works through participating local lenders. One mission of Fannie Mae, as chartered by the U.S. Congress, is to increase the affordability of homeownership to low, moderate, and middle-income Americans. One way to do this is through their Home Choice loan product which specifically serves people with disabilities.
Home Choice is a loan product offered by Fannie Mae specifically for people with disabilities. The successful applicant is required to have at least $500 of their own monies to put into purchasing an existing home, purchasing the construction of a new home, or purchasing rehabilitation of a home. (Rehabilitation includes architectural modifications such as widening doorways or making a bathroom accessible.) Applicants are also asked to have at least two months of mortgage payments in savings. Home Choice is one loan product covered here to help people rent or own their homes.
It offers flexibility in debt to income ratio and lower down payments to make it possible for people with disabilities who may have lower incomes and/or higher debts, to still qualify for a home loan. This loan also looks upon non-taxable income, such as some Social Security income, as 25 percent higher gross income because it is totally available income. A Social Security check of $800 per month under this system would actually be considered as an income of $1,000 in calculating the income to debt ratio. Principal features of the Home Choice Loan which contrast to a conventional loan are:
Debt to income is simply the amount of applicant monthly income which is consumed in payments for credit card, auto loan, or other things. A conventional loan generally will insist that monthly debt payments not be over 36 percent of a person’s income. The Home Choice loan allows that figure to be 50 percent.
Most loans do not cover the full value of the house the applicant is attempting to buy or the housing rehabilitation which the applicant is seeking. The loan to value percentage with a Home Choice loan is 97 percent that is, the loan will cover almost all of the value of the home and/or the repairs to the home.
It is possible to receive assistance in a down payment or other costs through a gift from a family member, a friend, or even an employer. For instance, if an adult child did not have the cash for home closing costs, that money could be gifted by a parent. Also, a private, non-profit organization could gift an applicant money to meet expenses such as down payment or appraisal fees.
The Home Choice loan product has a 3 percent down payment. This contrasts to 5 percent on a conventional mortgage. Home Choice requires the successful applicant to have at least $500 of their own funds to meet expenses including down payment, appraisal fees, credit checks, and closing costs. Again, this is lower than a conventional mortgage.
Credit Problems are the most common problem that an applicant has when applying for a Home Choice loan is bad credit. Loan officers will attempt to work with the applicant. If the applicant does not have any credit, many times the loan officer will be able to establish credit by looking at rental history and history of paying utility bills. If credit is unacceptable, it may be recommended that the applicant check with Consumer Credit Counseling to find ways to improve credit before re-applying for a loan. If a person has declared bankruptcy, they may apply for a Home Choice loan four years afterwards and after they have re-established good credit. A person may not be eligible for a loan right now, but could be at a future date.
Available Lenders in Oklahoma for Home Choice
First Mortgage Company in Oklahoma City offers Fannie Mae Home Choice loans and Fannie Mae home rehabilitation or repair loans. Contact their loan officer who specializes in the Home Choice product for more information at 1-800-924-0788. In the metropolitan area an applicant may call (405) 842-8090. Chase in Oklahoma also does Home Choice loans. Call 1-800-800-5626 for an automated message selecting the “loan” option. A loan officer will take an application over the telephone. The loan officer will explain what supporting information will be required to process the application.
FEDERAL HOUSING ADMINISTRATION (FHA) LOANS
The Federal Housing Administration offers a variety of mortgage insurance to help people with disabilities get the kind of loans they need under the most favorable circumstances. FHA loans originate in the U.S. Department of Housing and Urban Development (HUD). FHA mortgage insurance programs help low and moderate-income families become homeowners by lowering some of the costs of their mortgage loans. FHA mortgage insurance encourages lenders to make loans to otherwise creditworthy borrowers and projects that might not be able to meet conventional underwriting requirements. FHA does this by protecting the lender against loan default on mortgages for properties that meet certain minimum requirements. FHA mortgage insurance in its various forms can be used for manufactured homes, single-family and multifamily properties, and some health-related facilities. FHA mortgage insurance is not a loan itself; rather, it is FHA’s insurance of a loan from another source. This insurance permits another lending institution to offer the best loan features available because the loan is guaranteed by the FHA.
FHA Section 203(b) Loan Insurance
The Section 203(b) is the centerpiece of FHA’s single-family insurance programs. It is one of the most popular models, and most community lenders will be familiar with and able to offer it to prospective homebuyers. Here are some of the features of this mortgage insurance which permit your local community lender to make you a better deal:
Because FHA allows borrowers to finance approximately 97 percent of the value of their home, down payments may be reduced from the conventional 10 percent to as low as 3 percent. With most conventional loans, the buyer must pay at the time of the purchase closing costs equivalent to 2–3 percent of the price of the home. This program allows the borrower to finance many of these charges and reduce the up-front costs. FHA also imposes limits on some of the fees that lenders may charge in making a loan for the benefit of the borrower. Finally, limits are set on what may be insured to gear the market towards those less able to pay.
FHA-approved lending institutions such as banks, mortgage companies, and savings and loan associations can make insured Section 203(b) loans. Anyone intending to use the mortgaged property as their primary residence is eligible to apply.
FHA Section 203(k) Mortgage Insurance
The Section 203(k) mortgage insurance enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage. Normally the borrower would finance the two actions separately. As in the case of the Section 203(b) mortgage insurance, this mortgage insurance permits borrowers to qualify for conventional loans on affordable terms when they might not have qualified otherwise. This mortgage insurance might permit a loan for property in a disadvantaged neighborhood where mortgages were hard to get.
A portion of the loan proceeds is used to pay the seller or to refinance an existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation of the home is completed. Home repair funds must be at least $5,000, and the total value of the property must still fall within the FHA mortgage limits for the area. FHA approved lending institutions only are able to write this mortgage insurance.
To be able to purchase a home and at the same time rehabilitate that home is a prime feature of this insurance. Rehabilitation may include:
Other FHA Mortgage Insurance Products
FHA mortgage insurance offers a wide variety of products to meet the needs of individual borrowers. FHA Title I offers loan insurance to purchase a manufactured home. FHA Section 234(c) offers loan insurance to purchase a condominium. FHA Section 251 insures home purchase loans with adjustable rate mortgages. All these products are designed to meet varying needs. Ask your local community lender about FHA mortgage insurance. If the lender is FHA approved, they will have all the information they need to qualify you.
The next section of this chapter is on modifying and repairing existing housing. This is one of the most common concerns of callers at the Office of Disability Concerns.
VETERANS AFFAIRS (VA) GUARANTEED HOME LOANS
These loans are often made without any down payment and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. If the lender is approved for automatic processing, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application.
1. Apply for a Certificate of Eligibility.
A veteran who doesn't have a certificate can obtain one easily by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits and submitting it to one of the eligibility centers with copies of your most recent military discharge or separation papers covering active military duty since September 16, 1940, which show active duty dates and type of military discharge.
2. Decide on a home the buyer wants to buy and sign a purchase agreement
3. Order an appraisal from VA. Usually this is done by the lender. Most VA regional offices offer a "speed-up" telephone appraisal system. Call the local VA office for details.
4. Apply to a mortgage lender for the loan. While the appraisal is being done, the lender can be gathering credit and income information. If the lender is authorized by VA to do automatic processing, upon receipt of the VA or Lender Appraisal Processing Program (LAPP) appraised value determination, the loan can be approved and closed without waiting for VA's review of the credit application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which will notify the lender of its decision.
5. Close the loan.
More than 29 million veterans and service personnel are eligible for VA financing. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement.
Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans. The most important consideration is there is no down payment required in most cases. Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, loans generally may not exceed $240,000. There is flexibility of negotiating interest rates with the lender. There is no monthly mortgage insurance premium to pay. There is a limitation on buyer's closing costs and an appraisal which informs the buyer of property value. Thirty year loans with a choice of repayment plans are offered: Traditional Fixed Payment (constant principal and interest; increases or decreases may be expected in property taxes and homeowner's insurance coverage); Graduated Payment Mortgage (GPM) (low initial payments which gradually rise to a level payment starting in the sixth year); and, in some areas, Growing Equity Mortgages (GEM)’s (gradually increasing payments with all of the increase applied to principal, resulting in an early payoff of the loan). For most loans on new houses, construction is inspected at appropriate stages to ensure compliance with the approved plans, and a 1-year warranty is required from the builder that the house is built in conformity with the approved plans and specifications. In those cases where the builder provides an acceptable 10-year warranty plan, only a final inspection may be required. In some cases, veterans may assume a mortgage subject to VA approval of the assumer's credit. A veteran has the right to prepay the loan without penalty. VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties.
A VA loan can be used to buy a home, townhouse or condominium unit in a VA-approved project, to build a home, to simultaneously purchase and improve a home; to improve a home by installing energy-related features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA. These features may be added with the purchase of an existing dwelling or by refinancing a home owned and occupied by the veteran. A loan can be increased up to $3,000 based on documented costs or up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs. A refinancing loan may not exceed 90 percent of the appraised value plus the costs of the improvements. Check with a lender or VA for details to: refinance an existing home loan up to 90 percent of the VA-established reasonable value, refinance an existing VA loan to reduce the interest rate, or buy a manufactured home and/or lot.
Veterans who served on active duty and were discharged under conditions other than dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days' service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days' active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years.
Persian Gulf Conflict. Basically, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible. VA regional office personnel may assist with eligibility questions.
Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed six years of service and have been honorably discharged or have completed six years of service and are still serving may be eligible. The expanded eligibility for Reserves and National Guard individuals expired September 30, 2003. Contact the local VA office to find out what is needed to establish eligibility. Reservists will pay a slightly higher funding fee than regular veterans. (See paragraph entitled "Costs of Obtaining a VA Loan").
The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for HUD/FHA and conventional loans. The mortgage lender verifies the applicant's income and assets, and obtains a credit report to see that other obligations are being paid on time. If all is well and the appraised value of the property is enough to cover the loan needed, the lender, in most instances, can then close the loan under VA's automatic procedure. Only about ten percent of VA loan applications have to be submitted to a VA office for approval before closing.
To obtain a VA loan, the law requires that:
· The applicant must be an eligible veteran who has available entitlement.
· The loan must be for an eligible purpose.
· The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.
· The veteran must be a satisfactory credit risk.
· The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.
An experienced mortgage lender will be able to discuss specific income and other qualifying requirements.
A basic funding fee of 2 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.
A funding fee of 2.75 percent must be paid by all eligible Reserve/National Guard individuals. A down payment of 5 percent or more will reduce the fee to 2.25 percent and a 10 percent down payment will reduce it to 2.0 percent. The funding fee for loans to refinance an existing VA home loan with a new VA home loan to lower the existing interest rate is 0.5 percent.
Veterans who are using entitlement for a second or subsequent time who do not make a down payment of at least 5 percent are charged a funding fee of 3 percent.
NOTE: For all VA home loans, the funding fee may be paid in cash or it may be included in the loan.
Other Closing Costs
Reasonable closing costs may be charged by the lender. These costs may not be included in the loan. The following items may be paid by the veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also throughout the nation because of differing local laws and customs.
No commissions, brokerage fees or "buyer broker" fees may be charged to the veteran buyer.
Veterans seeking more detailed information concerning the VA home loan program may request VA Pamphlet 26-4, VA-Guaranteed Home Loans for Veterans, or VA Pamphlet 26-6, To the Home-Buying Veteran, from the nearest VA office or at www.homeloans.va.gov Loan Guaranty personnel at that office will answer specific questions and provide any other assistance they can. For the nearest local VA office contact: Veterans Affairs, Regional Office, 125 S. Main, Muskogee, OK 74401, 1-800-827-1000.
Adapted by Office of Disability Concerns from www.homeloans.va.gov
HOUSING LOANS (ASSISTANCE FROM OKLAHOMA ABLE-TECH)
Oklahoma ABLE-Tech (1-888-885-5588) is a federally-funded project whose purpose is to increase access to assistive technology (AT) for people of all ages and all disabilities. ABLE-Tech is located in Stillwater at the Seretean Wellness Center on Oklahoma State University’s campus. ABLE-Tech is one of 26 AT projects that have been awarded federal funds to operate an alternative financial program (AFP) for individuals with disabilities to purchase needed assistive technology. Loans can be used to make architectural modifications to an existing home so that the home will be more accessible to the occupant. Loans cannot be used to purchase an existing home or to build a new home under this program.
Tips Before Seeking a Loan
These things should be considered by the applicant before seeking a loan:
The Loan Process
It is the responsibility of a home owner is to get bids from a minimum of two contractors for the architectural modifications and then call the Stillwater BancFirst (1-800-446-9401). Ask for an application for their Alternative Financing Program. When this application is completed, send it in. BancFirst will process the loan application for the low-interest loan to do the architectural modifications. They will be looking at the applicant’s credit report and everything having to do with their ability to repay the loan. Within two working days they will respond to the application. Their interest rate is currently 5 percent above the Wall Street Prime rate.
If BancFirst denies the loan, they will ask the applicant if they are willing for them to send the loan information to the OKAT for further study. OKAT will ask that the applicant provide them further information on their ability to repay the loan. OKAT has the ability to guarantee the original loan application to BancFirst. They will process the applicant’s information within five working days and tell them if they are willing to guarantee the loan. People from Oklahoma ABLE-Tech will also work with the applicant to provide information and referral on other programs which could loan the money to get the housing modifications needed. Oklahoma ABLE-Tech may refer the applicant to Consumer Credit Counseling if they feel they need assistance in this way.
If OKAT agrees to guarantee the loan, BancFirst of Stillwater will provide the money for the home modifications. They will in no circumstance issue a check directly to the applicant. They will issue a check to the contractor.
Examples of Architectural Modifications
Architectural modifications are modifications to a home that make it more accessible. One of the simplest and most common types of architectural modifications is the construction of a ramp onto an existing home which would permit a person using a wheelchair entrance into that home. One of the areas of a home which typically needs the most modifications is the bathroom. In the bathroom, the person with disabilities may need a roll-in shower with a fold-down seat which permits him or her to shower without getting into a bathtub. The person may need a raised commode with hand rails to facilitate the use of the commode for a person with disabilities. The person may need a non-skid surface applied to the bathroom floor to make that room safer. An architectural modification to the home is anything which makes that home more accessible to the person with disabilities.