Renew.
                Rebuild.
                        Revitalize.

Renovate & Repair Program

Features & Guidelines ~ Eligibility ~ Property Guidelines ~ Frequently Asked Questions ~ Pre-Application

 

Loan Features and Guidelines

Eligible Loan Uses

The proceeds of the R&R loan are to be used only to finance eligible improvements as specified below. Such improvements shall not have commenced prior to the date of the credit application with the exception of emergency financing as specified below. Eligible improvements include those to:

  1. Improve the basic livability or energy efficiency of the property. These improvements must be permanent general improvements which shall include additions, alterations, renovations, or repairs upon or in connection with existing structures which materially preserve or improve the basic livability, safety, utility, and/or accessibility of the property.
  2. Comply with applicable state, county, or municipal health, safety, building, fire prevention, and housing maintenance codes or other public standards applicable to housing. Also eligible is the connection to public water and/or sewer facilities, and the repair, improvement or installation of code-compliant septic or well systems. 1 However, bringing the entire home up to code is not a requirement of the program.
  3. Remediate or remove lead-based paint (not required but is a permissible use). The program is not subject to the federal lead-based paint requirements for pre-1978 housing; however, if an applicant wishes to use the funds for remediation or removal, they may. All loans for homes built prior to 1978 will require at a minimum a signed Lead-Based Paint disclosure. (Pending Environmental Protection Agency regulations may require a more restrictive approach to lead-based paint remediation in the future.)
  4. Repair items of an emergency nature. The rehabilitation must be necessitated by extraordinary circumstances relating to damage to the property beyond the control of the applicant such as failure of the plumbing, heating, electrical system, or defects in the roof or foundation system or the presence of conditions in or on the property that have been determined to cause an elevated blood lead level of a resident. These situations supersede normal processing procedures. In these cases, the borrower may be reimbursed for work already begun or completed if the applicable repairs were made within 30 days of the pre-application with the LPA. The borrower must provide an invoice, proof of any and all payments made, as well as all related estimates and contracts for the work. (See Chapter Five for further details on the process involved for emergency repairs.)

1 Borrowers needing to repair or replace individual on-lot sewage disposal systems should investigate the PENNVEST loan, offered through PHFA. It has a lower interest rate than the R & R.

Ineligible Loan Uses

Ineligible improvements include, but are not limited to:

  1. Luxury or purely cosmetic items or those used primarily for recreation or entertainment such as gazebos, hot tubs, pools, new fireplaces, landscaping, additional garages beyond one, underground sprinkler systems, etc. Any questionable items must be pre-approved using the form provided by PHFA.
  2. Improvements which are not a permanent fixture to the property such as appliances and furniture, although large appliances specific to a kitchen or laundry room remodel may be financed. These are limited during a kitchen remodel to the refrigerator, stove (ok to finance a built-in microwave but not freestanding), and dishwasher, and in a laundry room remodel or relocation, the washer and dryer.
  3. Repairs to or construction of outbuildings, sheds, utility buildings, barns, shops, silos, greenhouses, etc.
  4. Improvements to the portion of the buildings or real estate owned by the association in a cooperative or condominium community.
  5. Improvements to a recreational home or a home which is not used by the borrower as a permanent, principal residence.
  6. Conversion of a recreational home to a year-round permanent residence.
  7. Costs associated with a project that will not be completed, e.g. the shelling-in of a room addition or the roughing-in of plumbing.
  8. Improvements that began before the credit application approval, except for emergency repairs as specifically referenced in these guidelines.
  9. New construction or expansion of an area used or to be used in a trade or business.
  10. Playground equipment.
  11. Labor costs paid to any applicant or resident. (Borrowers qualified and licensed, if applicable, as a contractor or in a skilled trade profession may perform work for which they are qualified, but they may only receive financing for the cost of materials.)
  12. The refinancing of existing loans.
  13. Payment of current or past due property taxes.

General Loan Guidelines

In order to be eligible for funding by PHFA, a loan must be originated in accordance with the following requirements.

  1. Loans must be originated according to the terms of the Invitation to Participate, the Participation Agreement, and the guidelines as specified by PHFA.
  2. Loans shall be fully amortized over 10, 15 or 20 years.
  3. Maximum loan amount is $35,000. The minimum loan amount is $2,500.
  4. Current interest rates are published on PHFA’s Web site www.phfa.org. The rate will be locked in by the LPA at the time of loan reservation.
  5. The mortgage for the R&R loan is recorded as a lien against the property. It must be recorded in first, second, or third lien position (unless a written exception is provided by the Agency).
  6. All owners must sign the Mortgage.
  7. Each Note must be executed by the homeowner(s) responsible for the debt.
  8. The Note shall bear the simple annual interest rate as indicated on the Pre-Closing Approval/Cancellation form.
  9. Interest shall accrue from the first payment due date.
  10. The first payment on the loan shall generally be the first day of the second month following closing. Subsequent payments shall be required monthly.
  11. In accordance with the provisions of the Note, loans must be paid in full upon the sale or transfer of any borrower’s interest in the property.
  12. Loans may not be assumed by third parties.
  13. There are no penalties in the event of an early payoff.
  14. All borrowers will be charged a Satisfaction Recording fee, when they pay off their R & R loan. As of September 2006 this fee is estimated at $30-100 depending on where in Pennsylvania the borrower lives.
  15. The Mortgage and Note are to be executed on the forms provided by PHFA.
  16. Requests for exceptions to these guidelines must be submitted in writing using a form provided by PHFA along with any relevant supporting documentation to renovateandrepair@phfa.org or by fax to 717-780-3872. If the exception request pertains to credit issues the complete credit report must be provided in addition to any other relevant supporting documentation.

Loan Origination Costs:
The following costs and fees are all considered Loan Origination Costs.

  • Credit Reports with Credit Scores
  • Title/Lien Search
  • Appraisal or PHFA-approved Valuation Determination
  • Flood Determination
  • Recording Cost
  • Program Participation Fee
  • Document Preparation Fee
  • Inspection Fees
  • Assignment Fee

Borrowers will always pay for their own credit reports which must include credit scores. [When they pay off their loan, borrowers will also pay the Satisfaction Recording fee.]

PHFA will pay for Title/Lien Search, Appraisal/Valuation Determination, Flood Determination, and Recording Costs on behalf of borrowers whose Household Adjusted Gross Income is at 50% of, or below, the figure in their county. (For the city of Erie, 50% of the R&R Income Limit is $45,000.)
Borrowers with a household adjusted gross income over $45,000 will pay their own Title/Lien Search, Appraisal/Valuation Determination, Flood Determination, and Recording Cost. They may pay these costs and fees with a certified check or money order at the loan closing OR may finance them in the R&R loan. [If borrowers are not prepared to pay these fees with a certified check, money order or cash at the closing they must finance the fees. LPAs should not accept personal checks.]

When the R & R is done in conjunction with a home purchase, the Title/Lien Search, Appraisal/Valuation Determination, Flood Determination, and Recording Cost(s) will be borne by the borrower. PHFA will pay the Program Participation, Document Preparation, Inspection, and Assignment Fees on behalf of all borrowers.

 

917 State Street, Erie, Pennsylvania 16501 Phone: 814-453-4505; Fax: 814-454-6984