FEDERAL
AGENCY:
HOUSING,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
AUTHORIZATION:
National
Housing Act of 1934, Section 245, Public Law 73-479; Housing and
Community Development Act of 1974, Section 308, Public Law 93-383,
as amended; Housing and Community Development Amendments of 1979,
Section 245(b).
To
facilitate early home ownership for households that expect their
incomes to rise. Program allows homeowners to make smaller monthly
payments initially and to increase their size gradually over time.
TYPES
OF ASSISTANCE:
Guaranteed/Insured Loans.
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USES
AND USE RESTRICTIONS:
HUD
insures lenders against loss on mortgage loans. These mortgage loans
may be used by owner-occupant mortgagors to finance the purchase
of proposed, under construction, or existing single family housing,
and condominiums. Maximum insurable mortgage is the property's sales
price (or appraised value, if less) exclusive of any borrower paid
closing cost multiplied by a percent that is determined by the sales
price or value if less and the average closing cost for the State
or 97 percent of the appraised value and closing costs of the property,
minus all of the deferred interest which would accrue during the
graduated term. This determines the maximum mortgage that FHA will
insure, provided the mortgagor makes a cash investment of at least
3 percent into the property which may include closing costs.
ELIGIBILITY
REQUIREMENTS:
Applicant
Eligibility: All persons intending to occupy
the property are eligible to apply for Section 245(a).
Beneficiary
Eligibility: Individuals/families.
Credentials/Documentation:
Documentation regarding the characteristics of the property and
the qualifications of the applicant are assembled by the mortgagee
and submitted with the application. This program is excluded from
coverage under OMB Circular No. A-87.
APPLICATION
AND AWARD PROCESS:
Pre-application
Coordination: Application conference with the
mortgage lender submitting the application is suggested. This program
is excluded from coverage under OMB Circular No. A-102. This program
is excluded from coverage under E.O. 12372.
Application
Procedure: Applications are submitted for
review and approval or disapproval to the local HUD field office
through a HUD- approved lending institution. This program is excluded
from coverage under OMB Circular No. A-110.
Award
Procedure: See Application Procedure.
Deadlines:
None.
Range
of Approval/Disapproval Time: Varies.
Appeals:
HUD will state the reasons for refusing an application. The applicant
may reapply subject to concurrence of the lender.
Renewals:
Not applicable.
ASSISTANCE
CONSIDERATIONS:
Formula
and Matching Requirements: For most families,
the maximum amount of the loan is the property's sales price (or
appraised value, if less) exclusive of any borrower paid closing
cost multiplied by a percent that is determined by the sales price
or value, if less and the average closing cost for the State. This
determines the maximum mortgage that FHA will insure, provided the
mortgagor makes a cash investment of at least 3 percent into the
property, which may include closing costs. The downpayment is the
difference between the maximum loan amount and the purchase price
of the home. In addition to the downpayment, the purchaser must
pay for all items of prepaid expense. Either a one-time mortgage
insurance premium or a monthly premium is required based on the
program under which a GPM mortgage is insured. The loan origination
charge by the mortgagee varies, but may not exceed one percent of
the total mortgage (minus the mortgage insurance premium, if being
financed). Mortgagors may be charged appraisal and inspection fees
in accordance with fee schedules established by HUD.
Length
and Time Phasing of Assistance: The term of
the mortgage is limited to 30 years.
POST
ASSISTANCE REQUIREMENTS:
Reports:
Defaults in meeting the mortgage terms must be reported. All approved
mortgagees at any time upon request by HUD must furnish a copy of
their latest financial statement.
Audits:
HUD reserves the right to audit the account of the mortgagee to
determine its compliance and conformance with HUD regulations
and standards.
Records:
Mortgagees are required to service and maintain records in accordance
with acceptable mortgage practices of prudent lending institutions
and the HUD regulations.
FINANCIAL
INFORMATION:
Account
Identification: 86-4077-0-3-371.
Obligations:
(Mortgages insured) Reported under program 14.117.
Range
and Average of Financial Assistance:
See Uses
and Use Restrictions.
PROGRAM
ACCOMPLISHMENTS:
In fiscal year 2001, HUD insured 29 loans. The Department estimates
about 20 in 2002.
REGULATIONS,
GUIDELINES, AND LITERATURE:
"Move
in...With A Graduated Payment Mortgage", no charge; "Lending and
Selling With A Graduated Payment Mortgage", no charge; 24 CFR 203.45;
HUD Handbook 4240.2, no charge.
INFORMATION
CONTACTS:
Regional
or Local Office: Persons are encouraged to contact
the Homeownership Center serving their State, or the nearest local
HUD Office. See Catalog Address Appendix IV for a list of Offices.
Headquarters
Office: None.
Web
Site Address: http://www.hud.gov/progdesc/245--dft.cfm
EXAMPLES
OF FUNDED PROJECTS:
Not applicable.
CRITERIA
FOR SELECTING PROPOSALS:
Not applicable.
