The HOME IMPROVEMENT LOAN PROGRAM (HILP) is a new program being administered through the Town's Development of Community Development. In order to stimulate the rehabilitation, weatherization and accessibility of the housing stock and to complement local neighborhood revitalization efforts, the Mass Housing Finance Agency has reinstituted the HILP. Under this program, MHFA will be financing home improvement loans for the improvement of one to four family properties throughout the Commonwealth. Funds are very limited so please do not hesitate to inquire about HILP. Half of Town's funds are reserved for elderly homeowners or for households who need to make their homes accessible to a disabled family member.

This booklet is designed to inform you on what you need to do in order to keep the application process moving along. There are many steps involved but don't worry; the program will assist you with these tasks. The first thing you should do is to read the Mass Housing Finance Agency (MHFA) HILP brochure. This brochure informs you about borrower and income eligibility, eligible properties and eligible improvements. After reviewing this, make yourself a list of questions and the program will try to answer them for you. The rest of the process is as follows......

Inspection and Work Write-up

A program representative will inspect your home in order to figure what repairs your home needs in terms of building and/or sanitary code violations. This is a minimum program requirement and any of these "must do" items (i.e., lead paint in a dwelling where a child under the age of 6 resides) will have to be addressed. The program will also make a list of all other "want to" items. Together with the property owner, the program will review all scopes of work to make sure they are eligible and to make sure that the homeowner fully understands what the rehabilitation covers.

The program will then provide the homeowner with a work write-up which addresses all scopes of work to be done to the home. This work write-up is designed to be a full contractural construction agreement where firm prices may be obtained from contractors. The program will provide you with as many blank copies of the write-up as you need. The program will also provide you with an estimate so that you will have an idea on the amount of money that will have to be borrowed.

Labor:

Upon receipt of the complete work write-up, the homeowner must hire a contractor to conduct the work. As stated previously, the program's write-up is designed to act as a complete construction agreement where all a contractor needs to do is to fill out the line item prices for the various scopes of work and to sign and date the cover sheet. If a homeowner approves the prices, all that is required is for the homeowner to accept the contract by signing and dating the cover sheet as well. The selected contractor does not necessarily have to use the program's construction agreement; the contractor's official proposal forms are allowable. The homeowner should make sure though that if a contractor designates his own proposal that it covers all of the desired work.

The homeowner is ultimately responsible to hire the contractor of their choice. The program does not promote any one contracting firm over the other. The program though, will provide you with a list of firms. The program has gathered this list as a means of assisting you in the selection of a contractor. You are not bound to this list. Again, you can hire any party of your choice although you should check customer references, see if they are licensed in their trade, and see if they are properly insured.

Because there will be a time delay between the time you hire your contractor and the time the work actually begins, it is very important that the contractor you hire is aware of this. This delay of time,, which could be as long as one month, could affect your contractor's scheduling times and/or prices. Remember, there will be only one loan closing. Any price increases between the time the contractor is hired and the time the work begins will have to be absorbed by the homeowner. You cannot go back to the program to borrow more money for any cost increases!

Application to Bank:

Once the homeowners have secured all of their construction agreements the program then mails the entire loan application package to the Bank of Boston. The Bank of Boston is the program's participating mortgage lender and they will conduct the entire loan review process. This means that they ultimately verify employment status, credit history, income and expenses. The basic "affordability" criteria which is used is one-half of 75% of gross monthly stable income as the maximum allowable towards all regular "debt.". This debt would also include the HILP loan amount as well. Within one to two weeks, the applicants should receive a formal letter of acceptance. If it is a rejection, the applicants are encouraged to apply again to future rounds of the program. If the loan is approved, a closing is then scheduled.

Loan Closing and Escrow:

Upon receipt of loan approval, a mortgage commitment letter will spell out what the homeowner needs to do next. The homeowner will basically have to send a certified check to the attorney named in the commitment letter. The amount is approximately $150 and this covers the cost of closing. Once the attorney has all the required paperwork prepared,, a closing will take place. It is important to note that all borrowers will have to attend the closing which will take place in Pittsfield.

After the closing, the loan proceeds must be placed in a local bank in the Town of Adams. This account must be a joint account between the program and the homeowner. As the contractors complete their work, payments will be made by the program to the contractor on behalf of the homeowner. All interest income earned on the escrow account will be returned to the homeowner after all work is completed. Again, actual construction work cannot start until the closing and escrow account have been set.

Fees:

As discussed previously and as highlighted in the MHFA HILP brochure, there are only three basic fees that the homeowner must pay for. The first one is for the cost of the closing which again is approximately $150. This amount must be mailed by the borrower directly to the attorney within 30 days of the mortgage commitment letter. The second fee of $150 is the MHFA Agency Fee which will be collected by the lenders. The third fee is the Certifying Agency Fee which is 4% of the improvement need (with a minimum of $200 and a maximum of $600). This fee is collected by the program after the closing. A separate check is prepared for this by the bank.

Before we leave you, an example is provided below on a typical loan amount determination:

The $12,350 is placed in an interest-earning joint account where payments will be made for the improvements. The fee of $150 is payable directly to the MHFA Agency. The $500 is payable to the Town of Adams after closing by separate check.

The Town of Adams encourages you to take advantage of this exciting program. The participants stand to save lots of money while at the same time getting work done that has been put off time and time again. Please contact us. We look forward to hearing from you.