3.

d.

Recording Fee. The cost of recording the mortgage shall be paid by the borrower, and shall be deducted from the loan proceeds at final loan settlement.

Costs Includable in a Housing Rehabilitation Loan.

a.

b.

General. A housing rehabilitation loan may be used to finance
the cost of rehabilitation work needed to bring the property
into compliance with the requirements of the City of Madison
Minimum Housing and Property Maintenance Code and other applicable
property rehabilitation standards. The term "other applicable
property rehabilitation standards" means the standards contained
in other local codes and ordinances pertaining to housing
construction, and to use, occupancy and maintenance of residential
properties, as they specifically apply to the property being
rehabilitated with the assistance of a housing rehabilitation
loan. After rehabilitation, the property must comply with the
property rehabilitation standards which are applicable to that
property.

A housing rehabilitation loan may also be used to finance the
cost of rehabilitation work needed to put the property into sound
and readily maintainable condition with all necessary facilities
in good working order, whether or not such work is required by
the property rehabilitation standards applicable to that property.
However, all applicable property rehabilitation standards must be
fully met before a housing rehabilitation loan is used for
rehabilitation work not required by the applicable property
rehabilitation standards.

Includable Costs. The following costs are includable in a housing rehabilitation loan:

(1) Rehabilitation work needed to bring the property into compliance with the requirements of the City of Madison Minimum Housing and Property Maintenance Code and other applicable local codes and ordinances.

(2) If funds are available after required rehabilitation work items are provided for within the approved loan amount, additional rehabilitation work may be included to the extent necessary to put the property into sound and readily maintainable condition, including, but not necessarily limited, to the following:

(a) The rehabilitation, removal or replacement of
elements of the dwelling structure, including
basic equipment, and of other improvements to
the property such as garages, fences, steps,
walkways and driveways. The term "basic
equipment" includes such items as heating
furnace, hot water tank, electrical and sanitary
fixtures, and kitchen stove and refrigerator,
but does not include other appliances.

4.

(3) In general, conversion of a property so as to change either its use or the number of dwelling units may be provided for in a housing rehabilitation loan only if conversion is necessary to meet applicable local codes and ordinances, or to eliminate a nonconforming use.

(4) In cases where an applicant employs a private designer to prepare plans and drawings for the rehabilitation of his property, the cost of the design services

(5)

may be included in the rehabilitation work to be financed by the housing rehabilitation loan.

A housing rehabilitation loan may provide for the cost of title reports and recording fees.

Costs Not Includable.

Except as otherwise provided in Section 3 above, a housing rehabilitation loan shall not provide for:

a.

b.

C.

New construction, substantial reconstruction, expansion of the
size of a structure, or the finishing of unfinished spaces such as
an attic or basement.

Materials, fixtures, equipment or landscaping of a type or quality which exceeds that customarily used in properties of the same general type as the property to be rehabilitated.

Appliances.

d. Purchase, installation or repair of furnishings.

CHAPTER 5 PROCESSING OF A HOUSING REHABILITATION LOAN

This chapter sets forth the policies and procedures to be followed in preparing, processing and approving an application for a housing rehabilitation loan, and for cancelling a loan application or an approved loan under the Housing Rehabilitation Services Program.

1. Loan Initiation. Information concerning the Housing Rehabilitation Services Program will be made available to prospective applicants through neighborhood meetings, written informational statements, referrals from other public and private agencies actively involved in providing or assisting in the provision of housing for people of low and moderate income, and through the housing counseling services program being carried out by the Department of Housing and Community Development. Prospective applicants will be encouraged to contact appropriate Departmental staff to determine whether the assistance available through the Housing Rehabilitation Services Program meets their specific needs.

An appointment for an interview with the Rehabilitation Loan Officer will be made for each prospective applicant who indicates an interest in making use of the available financial and technical resources of the Housing Rehabilitation Services Program. During the initial interview with the prospective applicant, the Rehabilitation Loan Officer will explain the Housing Rehabilitation Services Program to the prospective applicant and furnish the prospective applicant with a written informational statement concerning the requirements for a housing rehabilitation loan. The prospective applicant will be requested to sign a Preliminary Loan Application and an Authorization to Process; after obtaining the prospective applicant's signature on these documents, the Rehabilitation Loan Officer will initiate the preliminary steps involved in the preparation of a formal housing rehabilitation loan application on behalf of the prospective applicant.

2. Preparation of Application for Housing Rehabilitation Loan.

a.

b.

Credit Verification and Title Report. After the initial interview
has been held, the Rehabilitation Loan Officer will order the
title report referred to in Section 2 of Chapter 4, and verify the
information provided by the applicant regarding credit, mortgage
balance, mortgage payments, taxes, insurance, employment, and
other income and/or assets.

Property Appraisal. Concurrently with the activities related to
credit verification, the Rehabilitation Division staff will either
prepare, or have prepared, an "as-is" appraisal of the property
for which the housing rehabilitation loan is sought. The as-is
value of the property is defined as the highest price which the
property will bring if exposed for sale in the open market,
allowing a reasonable time to find a purchaser who buys with
knowledge of all the uses to which the property is adapted and
for which it is capable of being used. The value sought pre-
supposes all cash to the seller, with the purchaser financing the
transaction by the most advantageous means and terms generally
available throughout the entire City.

c.

Property Inspection.

Concurrently with the preparation of the
as-is appraisal, the Rehabilitation Loan Officer will arrange
for an initial inspection of the property to be made by the
Area Housing Cc ie Enforcement Officer and the Rehabilitation
Supervisor, and the preparation of the inspection report referred
to in Chapter 6, Section 1 of this Handbook.

d. Preparation of Preliminary Work Write-Up and Cost Estimate. On the basis of the inspection report referred to above, the Rehabilitation Division staff will prepare a preliminary work write-up and cost estimate of the rehabilitation work needed to be done on the property, for discussion with the applicant at the feasibility meeting. (See also Chapter 6, Section 2 of this Handbook.)

3. Feasibility Meeting.

4.

After the preliminary steps referred to above have been completed, the Rehabilitation Division staff will schedule a feasibility meeting with the applicant. The following information is required before the feasibility meeting is held:

a.

b.

C.

title report, credit verification and supporting documents;

preliminary work write-up and cost estimate;

building deficiencies report (completed by the Building Inspection
Division);

d. preliminary evaluation of the applicant's ability to repay the
indicated loan amount; and

e.

preliminary determination of eligibility of the applicant and
the property for a housing rehabilitation loan; if both the
applicant and the property are eligible for a housing rehabilitation
loan, a determination is made of the loan amount to be recommended
to the Housing Finance Committee.

At the feasibility meeting, the loan application will be discussed in detail with the applicant and the rehabilitation work and the costs will be fully explained. If any title defects or impairments exist which must be corrected, the applicant will be advised of the necessary corrective actions to be taken. When final agreement has been reached between the applicant and the Rehabilitation Division staff that no alternatives or further additions are needed in the work write-up, the applicant will be requested to indicate acceptance by signing the work write-up, making formal application for a housing rehabilitation loan and paying the loan application fee.

Preparation of Plans and Specifications; Bidding of Work. After the feasibility meeting has been held and the applicant has made formal application for a housing rehabilitation loan, the plans and specifications for the agreed-upon rehabilitation work will be prepared for the bidding process. Upon completion of the plans and specifications, the Rehabilitation Division staff will initiate the bidding procedures specified in Chapter 8, Section 4

5.

6.

7.

8.

of this Handbook. Upon receipt of bids from interested contractors, the
Rehabilitation Division staff will open and review the bids received,
and forward the results of the bidding to the applicant for acceptance
and final approval. If none of the bids received is acceptable to the
applicant, the applicant may authorize the Rehabilitation Division staff
to negotiate a rehabilitation work proposal acceptable to the applicant.
Preparation of Contract for Rehabilitation Work. Upon receipt of a
contractor's bid acceptable to the applicant, or, in the event no
acceptable bids have been received, upon completion of negotiation of a
proposal acceptable to the applicant, the Rehabilitation Division staff
will prepare the contract for the rehabilitation work, determine whether
the contractor has been pre-qualified by the Board of Public Works as an
eligible contractor, and, if the contractor has been so pre-qualified,
have the contract signed by the contractor.

Presentation of Application for Formal Approval. After the contract for
the rehabilitation work has been signed by the contractor, the Rehabilitation
Division staff will complete preparation of the housing rehabilitation loan
application for presentation to the Housing Finance Committee. The staff
member(s) of the Department of Housing and Community Development responsible
for pre-review of the application for accuracy, technical content, and
general underwriting standards, will complete such pre-review, prepare the
Departmental Letter of Recommendation and make the necessary arrangements
for the Housing Finance Committee to meet for the purpose of considering
and taking action on the application.

Housing Finance Committee Action. After all application preparation activities have been completed, the housing rehabilitation loan application will be presented to the Housing Finance Committee for approval or rejection.

a.

b.

If the application is approved by the Housing Finance Committee, the applicant will be notified of the Committee's approval, and the application will be returned to the Rehabilitation Loan Officer for loan settlement. (See Chapter 7 of this Handbook for a detailed discussion of loan settlement procedures.)

If the application is rejected by the Housing Finance Committee,
the application fee will be refunded and the applicant will be
notified of the basis for rejection, after which the Building
Inspection Division and Rehabilitation Division staff will
jointly initiate necessary follow-up action, for example,
through provision of technical assistance, financial counseling,
investigation of possibility of voluntary assistance, etc.

Loan Settlement. For housing rehabilitation loan applications approved by the Housing Finance Committee, the Rehabilitation Loan Officer will establish a date for loan settlement and prepare all necessary loan documents for signature by the applicant. The loan settlement will be completed on the established date, at which time the borrower will sign all necessary loan documents, including the Order to Proceed, pending rescission by the borrower