"Mt. Laurel Housing" is the term frequently used in New Jersey to describe for-sale housing affordable to low and moderate income households. This article seeks to provide some basic information on East Brunswick's program.

Attached at the end is a page with information on East Brunswick's low-income rental program.

1. What qualifies you as a low or moderate income household?

A low income household is a household with income less than 50% of the median income (with adjustments for household size). A moderate income household is a household with income between 50% and 80% of median income (with adjustments for household size).

Table 1 list low and moderate income ceilings (maximums) for Middles, Somerset and Hunterdon Counties.

The numbers in this chart will be effective until such time as HUD releases new median income statistics. Historically, HUD has released new income guidelines in February.

2. What is included in income?

Income includes, but is not limited to, documents wages, salaries, tips, commissions, alimony, regularly scheduled overtime, pensions, social security, unemployment compensation, AFDC, verified regular child support, disability, net income from business or real estate, and income from assets such as savings, CDs, money market, mutual funds, stocks and bonds and imputed income from non-income producing assets such as equity in real estate.

When evaluating an applicant's income, the income at the time of interview and certification prevails. However, income histories are required to substantiate that current income figures are really representative.

3. What is the definition of "affordable" and what does that translate to in terms of sale prices?

A for-sale unit is considered to be affordable if the total monthly payments for mortgage, property taxes, insurance and homeowner's association fees does not exceed 28% of eligible monthly gross income calculated by family size.

Table 3 illustrates typical sales prices. (please note: the sale prices vary based on the age/ condition of the unit and mortgage interest rates available at time of initial sale.)

4. How are sale prices set?

Affordability controls are placed on these units for 30 years.

New Units: When new units are built and marketed by a developer, prices are set based on a formula that takes into consideration certain assumptions about household size, down-payment, property taxes, mortgage interest rates and homeowner association fees.
Resale Units: When units are resold, maximum allowable resale prices are based on the original sales price adjusted by increase in income guidelines. However, as in the general real estate market, buyers may negotiate. The ultimate resale price is what a willing seller and willing buyer agree on but may not exceed the calculated allowable resale price.
Sellers may ask for reimbursement of cost for central air conditioning to be included in the resale price. Other improvements may enhance the unit and may encourage buyers to offer a price close to the maximum permitted value. Owners cannot receive extra money for built in changes.

Appliances may be sold to buyers at reasonable prices.

5. Where are the "Mt. Laurel" units located in East Brunswick?

The following developments include sale units:

* Stackflats are commonly referred to as "condominiums". However, the term "condominiom" describes a form of ownership. Stackflats are one-floor units with other unit(s) above and/or below them.

6. Will every low/ moderate income family be able to buy a "Mt. Laurel" unit?

The demand for these low and moderate income units in East Brunswick dramatically exceeds the supply.

Supply and demand notwithstanding, however, there are other realities which come to bear.

East Brunswick's prior Affordable Housing Ordinance, complying without prior court order, required developers to make these units affordable, with 10% down payment, to people in the top 10% of the income category. Our current Fair Share ordinance, complying with East Brunswick's certification by the Council on Affordable Housing (COAH), assumes a 5% down payment. Households whose incomes fall below that "targeted income" must be able to put down even greater down payments in order to bring the monthly carrying costs within the "affordable" range for them. (See Section 8: "How much will I need for a down payment?")

In addition to down payment costs there are closing costs (i.e. attorney's fees, realty transfer fees, escrow deposit, mortgage application fee, deed and mortgage recording, etc.), which, when buying a mortgaged property, may run $2,500 to $4,000 "+" or "-".

Because of the above, homeownership may still not be a reality for every low or moderate income household. Families whose incomes fall between the income ceiling for their household size and the "targeted (90%) income" for units of 1, 2, or 3 bedrooms are the best candidates as purchasers of "Mt. Laurel" units.

7. How much will I need for a down payment?

The down payment is the difference between the purchase price of a property and the mortgage amount you qualify for. It varies based on the income of the buyer and the price of the property. The higher your income, the bigger the mortgage you qualify for and/or the smaller the down payment. The lower your income, the smaller the mortgage you qualify for and the larger the down payment. However, minimum down payment is at least 3%.

8. What if I don't have enough money for required down payment and closing costs?

Applicants may address this problem by applying to participate in a program called "The First-Time Homebuyers Club". Participants commit to attending a series of informational meetings on purchasing and maintaining a home. At the same time, the participants and a trained counselor establish a savings plan based on the participant's income and expenses. If the participant completes the program and saves the amount to which they committed, they will get a grant for three times the amount they saved (e.g. If a participant saves $1,000, they will be given a grant of $3,000, for a total of $4,000).

This program is administered by The Housing Coalition of Central Jersey, (732)249-9700, and is funded by local lenders who are members of the Federal Home Loan Bank of New York.

9. Occupancy Standard

Minimum and maximum occupancy standards included in the East Brunswick Affordable Housing Agency's Rules and Regulations are intended to meet two objectives:

• Prevent deterioration of the units which could occur if they are over-occupied.
• Prevent waste of space and bedrooms by selling units to households in which there would be less than one occupant per bedroom.

The occupancy standards are as follows:

10. What happens if my household becomes larger or smaller after I've taken occupancy?

Provided East Brunswick's Minimum Property Standards for occupancy are not exceeded, changes in household size subsequent to initial occupancy will impact your right to remain in that unit.

11. What happens if my household income increase after I've taken occupancy?

If you purchase an Affordable Housing Unit, changes in your income will have no impact on your ownership after purchase. (Under East Brunswick's affordable rental program, your income must be recertified each year.)

12. What do the 30-year controls mean to a buyer in terms of his investment in one of these units?

This purchase may not provide an opportunity to make as much money on real estate as other market-rate housing in the past. However, buyers of these units will be able to own their own homes at a price which is affordable to them, reap any tax benefits that are attached to homeownership, and have an opportunity to build equity which may be used to purchase market-rate property at some future time. Resale price restrictions are designed to enable the seller of a "Mt.Laurel" unit to receive in current dollars the equivalent of the price that he/she paid for his/her unit when he/she purchased it.

13. Is there a minimum time I have to own a unit before I can sell it?

Buying a home involves closing costs and moving costs. If property is bought and sold over a short period of time, an owner may not be fully reimbursed for those costs. It is anticipated that most buyers will be investing in these units intending to remain owners for several years, however, there is no minimum term for ownership.

14.  How does one go about applying for a "Mt. Laurel" unit"

An application form is available at www.housingquest.com or by calling Piazza & Associates at 609-786-1100 or the East Brunswick Department of Planning & Engineering at 732-390-6870.  East Brunswick has cotracted with Piazza & Associates to handle the sale and resale of its affordatle units.  They also handle affordable units in several municipalities in New Jersey. This information is also available on the website.

15. How long will I have to wait until a unit becomes available to me?

That is dependant on two things: new units being built by developers (see Section 17 below) and the rate at which units are put on the market for resale. That is a function of the following:

• There are fewer low-income units than moderate-income units
• Low-income owners tend to stay in place longer than moderate-income owners.
• Families in 3-bedroom units tend to stay in place longer than families in small units, and
• A majority of the units in East Brunswick are 2-bedroom units.
• Thus, 2-bedroom moderate-income units are most available; 3-bedroom low income units are least available.

16. What developers are currently building/ selling new units?

None.

17. Where do I get a mortgage?

When buying new units, the developer usually provides a mortgage package. However, buyers are free to apply for mortgages from other lenders. There are lenders who have special programs for affordable housing with interest rates lower than standard mortgages. They may also have lower downpayment requirements and more liberal dept-to-income ratios. List of these lenders should be available from AHMS, the Housing Coalition of Central Jersey, and/or the NJ Housing & Mortgage Finance Agency (1-800-NJHOUSE).

Note: This article provides only basic information on the subject of Mt. Laurel housing. Those who need additional information should contact Linda Rubenstein, Housing Specialist, in East Brunswick's Department of Planning & Engineering (732)390-6870.