HOUSING ISSUES 


State and County Assistance in Delaware

For Renters:

      There are five housing authorities in Delaware.  The cities of Wilmington, Dover and Newark each have their own and New Castle County Housing Authority covers the county outside Newark and Wilmington and Delaware State Housing Authority covers Kent and Sussex Counties outside the city of Dover.  The agencies’ contact information is as follows:

Delaware State Housing Authority
18 The Green
Dover, DE. 19901
Phone: (302) 739-4263
Fax: (302) 739-6122
http://www.destatehousing.com/index.php

Dover Housing Authority
76 Stevenson Drive
Dover, DE. 19901-4021
Phone: (302) 678-1965
Fax: (302) 678-1971
http://www.doverhousingauthority.org/

New Castle County
87 Read’s Way
Government Center for New Castle County
New Castle, DE. 19720-9720
Phone: (302) 395-5600
Fax: (302) 395-5592
 http://de-newcastlecounty.civicplus.com/456/Community-Development-Housing

Newark Housing Authority
313 E Main Street
Newark, DE. 19711-7152
Phone: (302) 366-0826
Fax: (302) 366-8212
www.newarkhousingauthority.net

Wilmington Housing Authority
400 Walnut Street
Wilmington, DE. 19801-9801
Phone: (302) 429-6736
Fax: (302) 429-6815
http://www.whadelaware.org/

 

      The Delaware State Housing Authority publishes an annual guide that lists agencies that provide emergency shelter, emergency assistance with fuel bills, home repairs or weatherization or mortgage payments.  It also lists the affordable rental properties throughout the State.  The guide is available on the internet at: http://www.destatehousing.com/Renters/rental_directory.pdf. 
In addition to public housing owned by the various authorities, "Choice Vouchers" (formerly Section 8) and On-site Section 8 for some new construction, there are also rental properties that have received tax credits and offer lower income individuals more affordable rentals.  The requirements to rent tax-subsidized housing vary from property to property. All tax-subsidized housing throughout the state is listed in the directory.


For Homeowners

      When an elderly or low-income homeowner needs funds, whether to avoid a foreclosure or for renovations or repairs, there are a number of programs available.  Delaware has an Emergency Mortgage Assistance Program administered by the Delaware State Housing Authority to help low-income homeowners avoid foreclosure by loaning the homeowner funds to bring mortgage payments up to date in exchange for a second or third mortgage.  Income limits for qualification are $91,080 in New Castle County and $84,065 in Kent and Sussex Counties as of 2013 but are subject to change annually. For more information go to: http://www.destatehousing.com/HomeOwnership/hb_demap.php

       Also, due to the inordinate number of foreclosure proceedings being brought, the Delaware Superior Court instituted a mediation procedure effective September, 2009 that was revised in 2012 and again in 2013.  All residential homeowners faced with foreclosure of their primary residence can participate in the residential foreclosure mediation program.  It is recommended that the homeowners meet with a housing counselor to work out a proposal for presentation to the mortgage company in mediation.  The mortgage company is not required to agree to the terms. But, it is expected that the mediation program will result in many loan renegotiations and many homeowners retaining ownership of their homes.  A notice of the mediation program must accompany the foreclosure notice and the homeowner must then act in accordance with the notice to initiate the mediation process.  Further information is available on the internet at:  http://delawarehomeownerrelief.com

      Various housing authorities may also offer grants for home repairs or weatherization.  These programs may require no pay back of the funds made available to the low-income homeowner, but there are frequently long waiting lists.  Some housing authorities may offer to take a second or even third lien on a home at a low interest rate to permit home renovation to make a home handicap accessible or to make needed home repairs. 


Home Equity Conversion Mortgage (HECM)
(Commonly referred to as a “Reverse Mortgage”)

How is a Reverse Mortgage different than a Conventional Mortgage?

        The Reverse Mortgage or a HECM Loan is a federally insured mortgage that was put in place by Congress specifically to allow senior homeowners over the age of 62 to borrow monies using their equity in their primary residence as collateral without using credit scores or income as qualifiers. The Reverse Mortgage allows individual(s) to borrow monies without requiring a monthly payment since the future payback will be  required only when the borrower(s) die, sell the home or the home ceases to be their primary residence. The Reverse Mortgage was specifically designed to allow our Seniors to tap into the built up equity in their home in order to supplement cash flow during their retirement years.

       A clearer way to explain the Reverse Mortgage Product is to first outline the mechanics of standard conventional loans (whether the loan is a conventional mortgage, a home equity line of credit or a business loan) and then contrast the Reverse Mortgage to these standard types of loans. 

        In a regular mortgage/loan, a borrower qualifies for the mortgage/loan after the lender looks at their Income and past payback history (credit ccores) to determine if the borrower can pay back the loan by means of a monthly payment. The monthly payment is based on the length of time that the parties agree the loan will be outstanding. This payback period could be 5, 10, 15 years or up to 30 years. The monthly payment amount includes both a repayment of principal and interest. The principal is the amount of monies that the lender lent to the Borrower and the interest is the amount of monies that the lender needs to make a profit.

       In a Reverse Mortgage, the borrower is not required to make a monthly payment yet the lender still needs to earn interest on the monies they lent to the borrower. The interest that the bank needs to earn is added onto the amount owed to the bank so the outstanding balance goes up monthly by the amount of interest the bank earns. The interest owed but not paid is referred to as “accrued interest”.  The principal and the accrued interest will be paid back to the lender when the last borrower dies, the home is sold or the home ceases to be a borrower's primary residence.

       In essence, the only thing that the bank/lender wants in either a conventional loan or a Reverse Mortgage is the principal that they lent the borrower plus interest.
The Four (4) NEVERS of a Reverse Mortgage

How to I Qualify for a Reverse Mortgage?

How Much Can I Borrow?

        The amount that can be borrowed with a Reverse Mortgage is determined by HUD regulations. The Reverse Mortgage will allow you to borrow an amount referred to as the "Principal Limit," which is determined by applying a percentage  to the home's appraised value. The percentage will be between 50% and 65% based on the age of the youngest borrower (the older you are the higher the percentage made available)..  How much then can actually be borrowed will depend on the value of the property as determined by an independent FHA appraiser, the current interest rate and the age of the borrower(s). Note:  While it is possible to elect a fixed interest rate, the fixed interest rate option has some complex limitations that are not discussed here.  In this discussion we are assuming that the borrower has elected the more common adjustable rate of interest.] Effective in 2013, HUD limits the amount that a homeowner can draw down or borrow during the first year of a Reverse Mortgage to 60% of the Principal Limit.  One year later, the borrower can draw down the remainder of the Principal Limit in one of the ways discussed below.   If more than 60% of the Principal Limit must be drawn down in the first year to pay off liens on the property and to make any required repairs, then the borrower is allowed to draw down enough to pay off the mandatory liens, make any needed repairs, pay any closing costs and an additional amount up to 10% of the Principal Limit.

         When the amount drawn down in the first year exceeds 60% of the Principal Limit, the premium for the HUD insurance will be significantly higher, as discussed in the following example.

EXAMPLE:  Borrower, age 62, which is the minimum age, owns a property that is appraised at $200,000.  Assume that 50% of the value or $100,000 might be the Principal Limit for the 62 year old borrower.  To qualify for the one-half of a percent (0.5%) HUD insurance premium, the borrower cannot take down more than 60% of the $100,000 or $60,000 in year one.  The lender's origination fee, closing costs and the one-half of one percent(0.5%) insurance would further reduce the amount he could borrow in year one If the costs totaled $6,000, in our hypothetical, the amount that the homeowner could actually borrow or draw down in year one would be $54,000.  In year two the remaining $40,000 of the Principal Limit would become available. In addition, if the homeowner borrowed less than $54,000, any unused portion of the first year's draw-down limit will be added to the amount available in the 2nd year and continue to be available until borrowed or drawn down using one of the methods discussed below. 

          If more than $54,000 were needed in year one to pay off other leans against the house and to make necessary repairs, then, the HUD insurance premium would be two and one-half percent (2.5%) of the appraised value, increasing the costs by an  additional 2% of the appraised value or in this instance $4,000.  In year one, the borrower could draw down an amount equal to all mandatory obligations plus an amount of cash equal to ten percent (10%) of the Principal Limit (in this instance 10% of $100,000 or $10,000).  If the liens were $65,000, the HUD insurance increase would increase closing costs from $6,000 to $10,000 so that the allowed withdrawal would be $75,000.  Borrower could also take down ten percent (10%) of the Principal Limit for an additional $10,000 making the draw-down in year one $85,000.  In year 2, the remainder of the Principal Limit ($15,000) would be available.

The borrower can take the allowed amount of the Principal limit in any of the following ways:

         A Line of Credit that remains unused will increase over time at the same rate that funds drawn down or borrowed will be accruing interest.
          Money drawn down under a Reverse Mortgage is not considered income, is not taxable and will not affect Social Security benefits or Medicare.


What are the Costs Associated with a Reverse Mortgage?

The costs associated with a reserve mortgage are as follows:

1)  The following costs can vary from lender to lender and as discussed above reduce the amount that can be borrowed:

2)  The monthly service fee may also vary from lender to lender and is added to the balance due to the lender over the life of the reverse mortgage.  Currently industry practice is not to charge a monthly service fee.

3)  As discussed above, the FHA/HUD Mortgage Insurance fee protects the lender, the borrower and the borrower's heirs if the outstanding balance on the loan exceeds the value of the property at the end of the loan. The FHA/HUD Insurance Fee is a set fee of one-half of a percent (0.5 %) of the appraised value if 60% or less of the Principal Limit is drawn down in the first year but two and a half percent (2.5%) of the appraised value if the draw down exceeds 60%. In our example, the insurance fee is either $1,000 (0.5%) or $5,000 (2.5%)

4)       The rate at which interest will accrue on the loan and add to the balance due may vary also from lender to lender.

          All rates, fees, interest rates and principal amounts received are regulated by HUD
_______________
The Elder Law Section thanks Mr. William Bagnell of M & T Bank for his invaluable assistance in preparing this explanation of reverse mortgages.


Landlord/Tenant Law

          The Delaware Residential Landlord Tenant Code was revised in July 2004.  The new Code applies to all leases signed after July 17, 1996.  The new Code may apply to a renewal or extension of any pre-July 1996 rental agreement if both the landlord and the tenant agree that it is applicable.  Otherwise, the prior Landlord Tenant Code shall apply to renewals and extensions of pre-July 1996 leases.

          To obtain a summary of the Landlord Tenant Code or to ask a general question about the Code, you may contact the Consumer Protection Unit of the Attorney General’s Office (New Castle County:  577-8600; Kent and Sussex Counties:  800-220-5424).  When you call, you should specify whether the pre-July 1996 or post-July 1996 Landlord Tenant Code applies.  The specific provisions outlined below apply to the new Code.

         There is a special provision in the Code which allows a tenant to terminate his or her rental agreement early if the tenant is accepted for admission into a senior citizen facility, a group facility or retirement home.  A tenant may also terminate early if the tenant is accepted for admission into subsidized private or public housing, if illness forces the tenant to move on a permanent basis, or if the tenant dies.  Even if a tenant terminates early, a minimum of 30 days notice is required and the 30 days begins to run on the first day of the month following notice.

      If you live in senior citizen housing which is subsidized with federal funds, you may have additional rights available to you as a tenant.  You should receive a copy of the rules covering your rights and responsibilities when you sign your lease.
In general, it is a good idea to communicate with your landlord in writing rather than orally.  Complaints about the condition of your rental unit should be put in writing, as well as any communication regarding termination of your lease.  Be sure to keep copies of all lease provisions and correspondence.

Mobile Homes

           Mobile home rentals are governed by Delaware’s Manufactured Home Owners and Community Owners Act, which took effect on August 23, 2003.  To obtain a copy of the act you may contact the Consumer Protection Unit of the Attorney General’s Office as described above.

          Anyone offering a mobile home or lot in a mobile home park for rent must provide a written rental agreement.  Before the tenant signs the agreement or occupies the premises, the landlord must deliver to the tenant a copy of the rules or regulations and fee schedule of the mobile home community, a copy of the Manufactured Home Owners and Community Owners Act, and a copy of the rental agreement which contains specifics such as the term of the lease, the services to be provided, the amount of rent, and the options for termination and renewal.   

         If only the lot is rented, the rental term may be for one year, a lesser period as the tenant may request, or a longer period as mutually agreed upon by the parties.  Upon expiration the rental agreement is automatically renewed for the same term as the original agreement, subject to a modification of the rent amount, unless:

           Upon expiration of the initial term, the rental agreement shall convert to or continue on a month-to-month basis, subject to modification of the rent amount, unless: (A) Either party delivers written notice at least 60 days prior to expiration of the term under the rental agreement or (B) a shorter or longer term is agreed upon by the parties.

Property Tax Exemptions

           People 65 and over (and in some cases, younger disabled persons) may be entitled to partial or total exemption from property taxes.  Eligibility may depend on income, but Social Security and Tier II Railroad Retirement benefits are not counted.  The amount of the exemption depends on the assessed value of the property.  To qualify, you must use the property as your principal residence.
The income threshold, amount of exemption and date of application vary by city and county.  To find out eligibility requirements and how to apply for an exemption,  if you live in New Castle County call 395-5520  ; if you live in Kent County call 744-2401; and if you live in Sussex County call 855-7824.  In addition, if you live in Wilmington or another city, you also may be eligible for an exemption from city property tax.  To find out eligibility requirements and how to apply for an exemption in Wilmington, call 571-4320. Call your local tax office for information for other cities.  You may need to periodically renew your exemption application.  If you are a Wilmington resident, the application must be renewed every three years.  You will find applications and other helpful information by clicking on the links below.

           If you are eligible for a tax exemption, but own your property with someone who is not eligible, you will receive a partial exemption.  If you have lifetime rights to use the property, you may be entitled to a full exemption. Unmarried co-owners of property should each check the eligibility requirements. However, no more than one full credit may be taken per property.

         You may also qualify for a sewer tax reduction, but not many jurisdictions have this benefit. For example, in New Castle County, if you qualify for a senior property tax exemption, you should qualify for a sewer tax reduction. You may also receive some money toward the cost of a sewer lateral cleanout.

         A credit on the School tax of 50% of the school tax line item, not to exceed $500 is available for Seniors 65 years of age before July 1.  Seniors of all income levels quality for this credit; however,  you must also have been domiciled in Delaware at least 3 consecutive years. See the instructions in the link below.  For New Castle County call 323-2600; For Kent County 744-2341; and for Sussex County 855-7824.


New Castle County

http://www.nccde.org/DocumentCenter/View/233  --  NCC Application for real estate exemption

http://www.nccde.org/DocumentCenter/Home/View/240 -- NCC FAQ – Senior & Disability Exemptions

Kent County-
http://www.co.kent.de.us/media/762250/application-for-exemption-from-property-taxes.pdf  -- Application for Exemption from Property Tax

http://www.co.kent.de.us/media/694336/ElderlyDisabilityFormFY2013.pdf  -- Kent County Elderly/Disability Tax Exemption Application   #1

http://www.co.kent.de.us/media/9014/PropertyTaxExemption.pdf   -- Kent County Elderly/Disability Tax Exemption Application printout   #2

Sussex County
http://www.sussexcountyde.gov/tax-assistance-programs   -- Tax Assistance programs

City  of Wilmington
http://www.ci.wilmington.de.us/docs/201/App_Affidavit_Property_Tax_Exemption.pdf   - Application for Property Tax Exemption for Citizens Over 65 years of age and/or Disabled

http://www.ci.wilmington.de.us/docs/349/Property_Tax_Seniors_PRINT.pdf  -- Seniors 65+ property tax exemption program printout

Senior School tax credit, all three countiesPlease note phone numbers for each County at top of form.
http://finance.delaware.gov/publications/proptax/ssptc_app.pdf