Montgomery County Housing Trust - FAQ-

What are the eligible uses of the Housing Trust?

Eligible uses for the Housing Trust include:

• Property acquisition
• New construction for sale or rent (single & multi-family)
• Rehabilitation of existing housing units for sale or rent (single & multi-family)
• Housing related services (determined on a case-by-case basis)
• Condominiums and cooperatives

Note: Reimbursement for Pre-development Costs directly related to the physical provision of housing units, as detailed in the application and deemed to be reasonable and customary, are eligible.

Who is eligible to apply for financial assistance from the Housing Trust?

Applicants eligible to apply for financial assistance from the Housing Trust include:

• Units of local Government (Housing Trust dollars may be used in any jurisdiction in Montgomery County)
• For-profit developers
• Public Housing Authorities
• Community Housing Development Organizations (CHDOs)
• Non-profit developers, community and neighborhood development corporations
• Housing Service Providers (if service is directly related to the provision or maintenance of affordable housing units)

¨ ¨ Individuals and families are not eligible for direct funding

Are there priorities for the use of Housing Trust financing?

Yes. Although all approved requests must be in accordance with the program guidelines and intent, there are priorities for use, such as the housing and neighborhood needs addressed and the income of households served.

The greatest housing need for funding in priority order is:

• The rehabilitation of owner-occupied housing stock.
• The rehabilitation of rental units.
• New "For Sale" construction for households up to 80% of the area median.
• Homebuyer counseling and other housing related services.
• Transitional housing for the homeless.

A majority of the funds allocated to the Housing Trust shall directly benefit households with incomes below 80% of the area median income (SMSA). No more than 10% of the funds in a given fiscal year shall be allocated to directly benefit households with incomes greater than 80% of the area median and the benefit is identified as part of a larger project that demonstrates community impact or meets other community development objectives. (i.e. downpayment assistance as an incentive for new home sells in part of a physically distressed neighborhood where the majority of the existing residents have incomes below 80%).

Are there priorities for the distribution of the Housing Trust budget?

Yes. Eighty percent (80%) of the annual allocation available for Housing Trust financing shall be set aside to address broad-based programs that meet the highest need priorities (i.e. rehabilitation of owner-occupied housing units).

Twenty percent (20%) of the annual allocation shall be for proposals received on a project-by-project basis (i.e. homebuyer counseling, SRO or transitional housing for the homeless).

In what form will funds from the Housing Trust be distributed?

The Housing Trust is primarily a source of loan funds for gap financing. Loaned funds include construction loans, permanent loans, deferred loans, etc. Grants will be made only to the extent that a project cannot support a loan on the best terms that can be made available. Forgivable loans and combinations of loans and grants will be given preference over 100% grant financing.

The management of the Housing Trust shall have the flexibility to creatively utilize the form of financing that best guarantees the success of the proposed project/program and maximizes leveraging of additional dollars.

How much of a project or program can be funded by the Housing Trust?

Financial support received from the Housing Trust shall constitute no more than 50% of the total project/program cost.

Financial support received from the Housing Trust shall constitute no more than 25% of the total cost of any project or program that benefits households with incomes above 80% of the area median.

Proposals will be reviewed to determine the ability of a project/program to support debt, generate equity, and obtain public funds from other sources. The ability of the Housing Trust to assist all viable projects that need assistance will be maximized by ensuring that each project leverages the most funds available.

What are the general underwriting guidelines for Housing Trust financing?

• A majority of the funds requested from the Housing Trust must directly benefit households with incomes below 80% of the area median
• As a gap-financing source, Housing Trust funds will only be invested in a project to the extent it is reasonably necessary to make the project feasible for affordability and long-term success. The gap is defined as the difference between the cost to complete the project and the maximum amount of funds available from other sources. The role of the Housing Trust is to supplement, not to displace, private sector investment.
• The Housing Trust will make both permanent (long-term) and construction (typically 2 years or less) loans. If an applicant seeks both types of loans, the construction loan amount will typically not exceed the amount of the Housing Trust permanent loan. Construction loans will be made on an interest-only basis during the construction period with amortization to begin at the time that the loan converts to a permanent first-mortgage loan.
• All loans will be fully amortizing over their stated term. The term and amortization will be the shortest possible in light of the financing gap and the ability of the project to serve people with incomes below 80% of the area median. In no case will the term and amortization period exceed 30 years.
• All construction work performed with Housing Trust assistance must comply with all local, state and federal building codes, fair housing, and equal opportunity laws.
• No more than two (2) applications will be processed at any given time for the same project/program sponsor. The administrative capacity of a sponsor will be reviewed at the time of each application is submitted. The Housing Trust staff reserves the right to waive this guideline.
• Prior year assistance for a project/program is no guarantee that subsequent year applications will be approved. A request for additional Housing Trust dollars for a previously approved project must go through the complete review process.
• All project/program applications will be subject to the review process established for the Housing Trust and approved by COUNTY CORP’s Board.

Are there fees associated with receipt of Housing Trust financing?

Yes. Fees payable to the Housing Trust shall equal at least 1.5% of the total amount being financed by the applicant.

• ¼% commitment fee at the time a financing commitment is issued and accepted by the applicant
• ¾% closing fee at the time the financing agreement is closed
• Applicants will incur the charges for attorney fees to prepare and record documents

At the time the financing agreement is closed or upon termination of the financing commitment, the applicant may also be required to pay all of the Housing Trust’s actual costs associated with closing the financing agreement; including but not limited to legal expenses, mortgagee’s title insurance, appraisals, environmental site assessments, engineering, and credit reports, regardless of whether or not a financing agreement is signed. If such reports have been prepared for the first mortgage lender (for a construction or rehabilitation project), they will be accepted by COUNTY CORP on behalf of the Housing Trust if COUNTY CORP is included in the list of parties to whom they have been addressed.

What is the basic process for submission and review of an application?

All applications must undergo a three-step review process before funding will be approved:

1. Review by a team consisting of COUNTY CORP’s President, Vice President of Housing and Finance, representatives from the Montgomery County Housing Advisory Board, and from Montgomery County.
2. Review by the Montgomery County Housing Advisory Board
3. Final review and approval by the COUNTY CORP Housing Committee

The Housing Trust will review applications for completeness upon submittal. Applicants contacted in order to cure any deficiencies or omissions in their application will be allowed a predetermined number of days to make modifications prior to the application being ranked. Applications that are still incomplete at the end of the cure period will be evaluated based upon the information provided. Timeframes set for the submission of missing or incomplete information will generally not exceed 5 business days and may necessitate a project/program being held until the next funding cycle.

How will an applicant know that their project/program has been approved for financing?

All applicants will receive written notice of whether their proposal will be recommended for funding no less than five business days prior to a Housing Advisory Board meeting. Applicants not recommended for funding will also be notified in writing. Any and all appeals to a funding decision must be submitted in writing to the COUNTY CORP Housing Committee.

Upon approval of funding from the Housing Trust by the Housing Committee, applicants will be notified of their awardee status through a Commitment Letter. Awardees must:

• Execute the Commitment Letter within the designated time frame (15-days from date of receipt).

• Execute all required Closing Documents within the designated time frame (not to exceed 12 months). Documents required for closing and the responsibility for preparation, and any related cost will be addressed in the Commitment Letter.

• Initiate project/program within the designated time. Initiation dates will be negotiated between Housing Trust staff and each applicant. Costs incurred by awardees before a Commitment Agreement is fully executed and signed by all parties may not be reimbursed.

Is it possible to lose financing once it is approved?

Yes. Failure to execute an agreement within the established time frame may result in a nullification of the award. Failure to initiate and/or complete a project/program in the approved time frame may result in a nullification of all or a portion of the total award.

Awards will not be held indefinitely, applicants whose awards have been nullified will have to reapply for funding.

The Housing Trust may require all funds expended on a project that is cancelled prior to completion to be repaid.

Can projects be changed after a funding award is approved?

Yes. However, all approved awardees requiring a substantial change in their project description, amount, rate, terms or collateral must provide a written request for change to the Housing Trust c/o COUNTY CORP. All changes must be approved by the Housing Committee. Failure to comply with Change in Circumstance requirements may result in the applicant being denied future participation in the Housing Trust Program.

Projects once reviewed and recommended for approval to the Housing Advisory Board will only be returned to the Housing Advisory Board (step #2 in the review process) if an increase in the level of funding (or other substantial change) is proposed. The Housing Advisory Board will be advised of all projects necessitating minor changes/amendments.

Projects approved for amendments will receive notice of such approval via an amended Commitment Letter.

How are projects evaluated (scored)? 

VIEW HOUSING TRUST EVALUATION FORM

Projects/programs are evaluated (scored) in three categories utilizing a Proposal Evaluation Criteria Form:

1. Project/program purpose
2. Project/program administration
3. Project/program financial feasibility

Are projects/programs receiving Housing Trust financing monitored?

Yes. All projects funded by the Housing Trust will be monitored against measurable criteria. Identification of monitoring criteria is requested as part of the application and confirmed at the time a project is approved for funding.

What are the deadlines for submitting an application for Housing Trust financing?

Applications for financial assistance will be accepted year round; awards will be made no more than 4 times per year. Processing of applications will begin upon receipt and submissions will be acknowledged by letter. Sponsors should allow at least 45 days for application processing.