City of Philadelphia

Division of Housing and Community Development (DHCD)

Settlement Assistance Grant Program Policies and Procedures

A. Purpose

The City of Philadelphia’s Settlement Grant Program is offered as an incentive for a first-time homebuyer to receive pre-purchase and foreclosure prevention housing counseling from an DHCD-funded housing counselor when purchasing a home for the first time. The City Grant, up to $500 (funding permitted) per Family is available for closing costs assistance only, and awarded on a first come-first served basis to eligible homebuyers. Applicants must complete the full first-time homebuyer counseling offered by an DHCD funded pre-purchase housing counseling agency before signing an agreement of sale. The counseling includes but is not limited to:

 how to purchase a home within your financial means;  how to avoid the dangerous loans;  the rights and responsibilities of homeowners;  credit repair and money management;  Understanding Savings;  finding a home and understanding the agreement of sale;  the mortgage application and purchase process;  home maintenance;  how to prevent foreclosure of the home.

1 B. Eligibility

To qualify for the grant, the applicant must:

 be a first-time homebuyer (one who has never purchased a home);  purchase a property within the City of Philadelphia and occupy the property as the principal residence;  have a Family annual income not exceeding the Section 8 moderate income guidelines of 80% of the area median income;  successfully complete the one-on-one pre-purchase counseling offered by an DHCD funded housing counseling agency before signing an agreement of sale;  qualify for an appropriate mortgage based on reasonable income and credit worthiness standards (38/45 ratios), a common affordable interest rate, and be approved based on client’s verified income (balloon notes, interest only, adjustable rate mortgages, no-doc or stated income loans are not acceptable);

C. Procedures

1. Homebuyers shall:

 make certain all eligibility requirements listed above are met;  before signing an agreement of sale, have successfully completed the first-time homebuyer counseling offered by the DHCD-funded housing counseling agency, and have received their DHCD Pre- qualification Worksheet and the Homebuyer Counseling Certificate;  maintain on-going contact with their housing counselor, allowing no more than a lapse of two months between contacts;  provide the counselor with a copy of the fully executed Agreement of Sale once it is signed by the seller;  when applying for a mortgage, keep within the spending limits of 38% of monthly gross income as the housing ratio, and 45% as the debt to income ratio (providing a higher down payment on the mortgage may keep the ratios within the acceptable range);  provide the housing counselor with: a copy of Loan Estimate, Closing Disclosure form, Notice of Settlement (including tittle’s company Tax ID number)  at closing, ensure that the City Grant of up to $500 is listed on the Closing Disclosure form;  send a copy of the final Closing Disclosure form to the housing counselor after closing.

2 2. Counselors:

It is the intention of DHCD to ensure that the Settlement Assistance Grant check is present at closing. In order to meet this goal, the Housing Counselor shall coordinate the following procedures:

 submit the request for the settlement grant to the assigned DHCD Contract Analyst at least two weeks in advance of the settlement date;  use the standard DHCD Grant Request and Affordability Analysis Forms to request the check.

3. DHCD’s Contract Administration Unit:

DHCD’s Contract Administration Unit shall coordinate the following procedures:

 request for the check preparation to DHCD’s Fiscal Unit. The check will be made payable to the title company.  DHCD will mail the check to the housing counseling agency which made the request.

DHCD will not accept settlement grant requests after closing has taken place.

Revised 7/2016