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Allen Realty, Inc.

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Baltimore, Maryland 21244


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Highlights of the


First Time Home Buyers

Settlement Expense Loan Program

The primary purpose of the Settlement Expense Loan Program (SELP) program is to encourage first time homebuyers to consider home ownership in existing residential communities in Harford County. The program is administered by the Harford County Housing Agency. Homebuyers’ workshops and individual counseling are offered to potential homeowners. Settlement expense loans up to $4,000 are available to families whose income is at or below 80% of area median, adjusted for household size.


Household Size









Income Limit










1. Completes Home Buyer Education Curriculum: Workshop(s) & Counseling Conference with a Harford County designated HUD certified Counseling Agency (Home Partnership, Inc. or Harford County Housing Agency [HCHA]. BEFORE SIGNING A REAL ESTATE CONTRACT.

2. Meets Income Eligibility: 80% of area median, adjusted for household size.

3. First time home buyer (cannot have previously owned a dwelling within the last 3 years). Exceptions are granted for divorce, death of spouse or owner of substandard housing.

4. Qualifies for a fixed rate mortgage with a Participating Lender.*

5. Post purchase liquid assets cannot exceed 12% of gross annual household income.

6. Resident of Harford County or employed in Harford County continuously for a 1-year period prior to the submission of the application. (Exceptions may be granted for PATH applicants.)

7. Must be principal residence.

* Please see Referral List.


1. Existing dwelling that is owner occupied, occupied by buyer, or vacant. New construction is excluded.**

2. Dwelling types: Single family detached, semi-detached, townhouse, condominium apartment.

3. Passed a home inspection for Federal Housing Quality Standards (HQS) using a designated County inspection firm which certifies that the dwelling is free from hazardous defects and meets basic standards for livability. All noted deficiencies must be corrected and re-inspected prior to SELP Loan approval. Inspection fee can be financed in SELP loan.

4. Sales price cannot exceed 95% of median purchase price for this area (203B limited).


1. SELP Loan Amount: Minimum $1,000, Maximum $4,000

2. Buyer’s minimum cash contribution: 5% of gross annual household income.

3. The loan will accrue interest of 5%, in the first year only.

4. Loan principal and accrued interest are repayable upon the earlier to occur of sale, transfer, refinance, default on primary loan, or discontinuance of borrower occupancy in the home.

Note: Official SELP PROGRAM GUIDELINES & PROCEDURES adopted by the Harford County Housing Agency take precedence and clarify the details of the information presented here.

** Exceptions may be granted for non-profit developers.

Harford County Housing Agency

15 South Main Street - Suite 106, Bel Air, Maryland 21014

410-638-3045/410-879-3136; Fax: 410-893-9816



Settlement Expense Loan Program for

First Time Home Buyers


Information For Realtors



The Harford County Settlement Expense Program (SELP) is designed for low and moderate income first time home buyers who have been unable to accumulate the necessary funds for down payment and closing costs associated with home purchase. The goals of the program are to create informed buyers and successful home owners - individuals and families prepared to take on the responsibilities of ownership, and able to meet all of their obligations on a sustained basis.

Below are detailed some suggestions and information to help a SELF-assisted real estate transaction move smoothly through the process. It is important to understand the components of the County program, as it differs from other settlement loan programs.

1. To be eligible for the County SELP loan the buyer must make SELP loan application before signing a real estate contract. Refer potential SELP-assisted home buyers to an education workshop and for individual counseling before showing properties to them. It will make your job easier, and the clients more knowledgeable about the process.

The Harford County Housing Agency and Harford County Housing, Inc. (a nonprofit organization) provide these services and assist the first time home buyer throughout the purchase process. The Counselors with these programs should be your first point of inquiry if you have a question or problem related to SELP. See the Referral List for contract information.

2. When working with a SELP borrower, write the contract for at least 60 days. The contract must include a specific addendum which covers the home inspection requirements of the SELP program, and clarifies responsibilities of the parties.

Given the extra steps to obtain this additional financing (see below), a seventy-five-day contract would be preferable. However, the transaction can be completed in sixty days with everyone’s cooperation. The County has a sample addendum available for your guidance.

3. Educate the parties (buyer and seller) about the home inspection, and the required certification for Housing Quality Standards ("HQS").

Harford County

Housing Agency

First Time Home Buyers

Settlement Expense Loan Program




The purpose of the Harford County Settlement Expense Loan Program is to promote home ownership in the County. The program will provide education regarding the home buying process, counseling to prepare buyers for the responsibilities of ownership, and will engage in home ownership promotion activities.

In addition, the Harford County Settlement Expense Loan Program (SELP) provides direct financial assistance up to $4,000 to qualified, low and moderate-income first time homebuyers in Harford County to help with settlement expenses associated with home purchase. The loan will be evidenced by a second mortgage, repayment of which is deferred until such time as the property is resold, transferred, refinanced, or the buyer discontinues occupancy of it as a principal residence.

The program is administered through the Harford County Housing Agency.


1. Income Limits - Eligibility is determined on the basis of anticipated annual household income on the day of closing, adjusted for household size. That income may not exceed 80% of the Harford County statistical area median income as published by the U.S. Department of Housing and Urban Development (HUD).

Limits as of March 2000, are as follows:
































2. Income must be calculated by adding all income from household members over 18 years of age. The income of full-time students is exempted with documentation of school enrollment. Child care expenses provided by a bonafide child care provider may be deducted form gross household income with appropriate documentation specified by HUD.

3. The borrower must be a resident of Harford County or employed in Harford County continuously for a one-year period immediately prior to submission of the SELP application.

4. The borrower must be a homebuyer who meets the mortgage loan requirements of a participating lender. A participating lender is a bank or mortgage bank that has applied to the County to process SELP loans and has received such authorization. Participating Lenders have entered into an agreement to abide by the SELP Program Guidelines and Procedures.

5. The borrower’s post purchase assets (excluding IRAs, 401(k)s and similar penalty for early withdrawal retirement accounts) may not exceed 12% of the annual household income as adjusted by allowable Home Investment Partnerships (HOME) Program exemptions (i.e., documented child care expenses and income of full-time students). Assets are determined in conformance with HOME regulations and program guidelines.

6. The borrower must complete to the satisfaction of the housing counseling agency, a homebuyer education program, which includes a minimum of one homebuyers’ workshop or one individual counseling session. Application for a SELP Loan cannot occur until this requirement has been met.

7. The borrower may not have owned a home in the past 3 years (prior to closing date of loan). An exception will be made for persons who became divorced or widowed during the three year period and for owners of manufactured or substandard housing.

8. The borrower may not own any other residential property.

9. A prospective applicant may not enter into a contract to purchase a home prior to fulfilling the program’s counseling requirements.


1. The property being purchased must be an existing single-family detached or semi-detached dwelling, townhouse, or condominium apartment. New construction is excluded. Exceptions may be granted for non-profit developers.

2. To avoid involuntary displacement of occupants, at the time of contract, the property being purchased must be vacant, occupied by the seller, or occupied by the buyer in the transaction. The seller will be required to sign an Affidavit of Voluntary Sale at closing so certifying.

3. The purchase price of the home cannot exceed the appraised value.

4. the property must be located within Harford County.

5. Within 60 days of closing, the property must be occupied as the primary residence of the borrower.

6. The property must be inspected for Federal Housing Quality Standards (HQS), as confirmed by a County-designated inspector or inspection service. All noted HQS deficiencies must be corrected and verified by re-inspection before SELP approval will be given.

7. The property must be covered by flood insurance, if applicable, as confirmed by Federal Emergency Management Agency (FEMA) Maps.


1. The first mortgage loan obtained by the purchaser must be a fixed rate, fixed term loan.

2. The maximum direct SELP Loan is $4,000; the minimum is $1,000. This loan amount may include up to $245 for the home inspection fee.

3. The minimum borrower cash contribution for down payment and closing costs is 5% of the annual household income (as adjusted), or an amount greater when required by the first mortgage lender. These must be documented borrowers’ funds, not a gift or loan.

4. The SELP loan shall be recovered as a second secured mortgage on the property, when permitted by first mortgagee. The borrower will sign a Promissory Note.

5. The homebuyer may prepay the loan in whole or part at any time, with no penalty.

6. the loan will accrue interest of 5% in the first year, but no interest will accrue thereafter. Loan principal and accrued interest are repayable upon the earlier to occur of sale, transfer, refinance**, default on the primary loan, or discontinuance of borrower occupancy.

**Exceptions may be granted for refinancing for the purpose of rate reduction with no equity out.


The following fees and expenses are eligible, in amounts acceptable to the Housing Counseling Agency and Harford County.

1. Fees or premiums for title examination and title insurance.

2. Reasonable fees for preparation of a deed, loan documents and settlement statement.

3. Prepaid of property taxes, hazard insurance, flood insurance, mortgage insurance, HOA or condominium fees and ground rent.

4. Notary fees.

5. Transfer and recordation taxes and fees.

6. Loan discount points, and origination fees.

7. Down payment, beyond the required minimum cash contribution specified.

8. Termite inspection fee.

9. Location Survey.

10. Property inspection for HQS up to $245.

11. Appraisal fee and credit report.

12. Other required settlement expenses.

Any excess SELP funds may be applied to the first mortgage.

Harford County

Settlement Expense Loan Program (SELP)




This Addendum _______ is made and entered into this _______ day of_____________________, 200___ and is made a part of the Contract dated ___________________ ___________________________ between _____________________________________________, Buyer(s) and _____________________________________________________ (Sellers) to purchase and sell the property known as: _____________________________________________________


NOW, THEREFORE, it is mutually agreed that the following provisions are added to, and made a part of the above referenced Contract:

1. This Contract is expressly contingent upon Buyer’s receipt of approval for a loan from the Baltimore County Settlement Expense Loan Program (SELP) in an amount which will not exceed $4,000.

2. Buyer and Seller acknowledge that such SELP approval will not be granted unless the property meets Federal Housing Quality Standards (HQS), as certified to Baltimore County by a home inspection firm pre-qualified by the County to conduct such inspections and to issue such certifications. Seller agrees to have all utilities on for the home inspection, and further agrees to pay a fee for reinspection if utilities are not on at the time of the inspection.

3. In the event violations of the Federal Housing Quality Standards (HQS) are identified in the property by inspection, Buyer and Seller will receive a written list of such deficiencies from the home inspection firm. All items must be corrected, and correction verified before Buyer can obtain final SELP approval.

4. Buyer and Seller understand that Buyer may not waive the requirement to repair Housing Quality Standards deficiencies in order to accept the property in "as is" condition, nor may funds be escrowed for post-closing repairs.

5. The ________________ agrees to pay the cost to repair all HQS deficiencies provided the cost of said repairs does not exceed $______________. If the cost should exceed the sum heretofore specified, then the _____________________ at his/her/their option, and upon written notice to the other party, may terminate the Contract.

6. Buyer and Seller acknowledge that all repairs must be satisfactorily completed, and verified by reinspection, seven (7) days prior to scheduled settlement. The cost of additional reinspection caused by incomplete or improperly completed repairs will be paid by the _____________________.

7. Any certifications obtained stipulating that itemized HQS deficiencies do not require repair, must be provided by licensed contractors, and such certifications must include a one year warranty to the Buyer against such defect and a commitment to make necessary repairs at the contractor’s sole expense. Non-specific certifications or those without warranties are not acceptable, and are not required to be accepted by the home inspection firm or the County as evidence of HQS compliance. [Buyer understands that post-closing compliance with contractor warranties cannot be guaranteed by either the home inspection firm or the County. In the event of such noncompliance, the Buyer would have to seek whatever legal remedies might be available.]

All other terms and conditions of this Contract shall remain in full force and effect.


Date: _______________ ____________________________________, Buyer

Date: _______________ ____________________________________, Buyer

Date: _______________ ____________________________________, Buyer

Date: _______________ ____________________________________, Buyer

All parties are encouraged to seek competent legal advice before signing this document which will be legally binding once executed.

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