University of Delaware
Faculty Handbook

J.  FINANCIAL ASSISTANCE PLANS FOR RESIDENTIAL PURCHASES
 

1. Mortgage Loans

 The Trustees of the University have made available a sum of money for the financing of residential mortgages to assist in recruiting and relocating highly qualified faculty and professionals by obtaining appropriate housing within the vicinity of the University. This program has been replaced by the Home Purchase Assistance Program for those qualified faculty and professional members whose hiring date is after June 30, 1998. All full-time faculty and professionals required to relocate, by reason of their employment with the University, are eligible to make application for mortgage loans immediately upon employment. All other full-time faculty and professionals are eligible after two years of employment. Some of the provisions of the program are as follows:
1. The mortgage rate of interest will be contingent upon the source of funds available at the time a mortgage is approved.
    
2. The term of the mortgage will not exceed 30 years.
    
3. The mortgage may be up to 90% of the appraised value of the property or 90% of the purchase price, whichever is less and may not exceed 3.25 the applicant's contract salary for a residence purchased in Delaware and 3.0 times the applicant's contract salary for a residence purchased outside of the State.
    
4. Eligible faculty and professionals may receive only one University mortgage during their employment with the University. The program is not designed to provide funds for renovation or for refinancing property currently owned by an eligible member.
    
5. The property on which a University mortgage is secured is to be the primary residence of the eligible employee, except that:
    
   1. In the event of a legal separation or divorce of an eligible employee holding a University mortgage, and his/her minor children continue to occupy the mortgage property as their primary residence, if payments are made in a timely manner, the University mortgage may continue until maturity, or until the faculty/professional ceases to be an employee. When the faculty/professional ceases to be an employee, or when minor children no longer occupy the mortgaged property as their primary residence, or when the last minor child of the eligible employee reaches eighteen years of age, the mortgage is to be repaid within 180 days.
       
   2. In the event of the total disability of an eligible member holding a University mortgage, and he/she has been employed by the University for ten or more years, the University mortgage may continue until maturity, if payments are made in a timely manner and if the mortgaged property continues to be the primary residence of the employee. When the mortgaged property no longer is the primary residence of the eligible employee, the mortgage is to be repaid within 180 days.
       
   3. In the event of the death of an eligible employee holding a University mortgage and his/her spouse and/or minor children continue to occupy the mortgaged property as their primary residence, the University mortgage may continue until maturity, if payments are made in a timely manner. When the spouse and/or minor children no longer occupy the mortgaged property as their primary residence, or the spouse remarries, the mortgage is to be repaid within 180 days.
       
6. In the event of the retirement of an eligible employee holding a University mortgage, and if he/she meets the age and service requirements for University retirement benefits, the University mortgage may continue until maturity, if payments are made in a timely manner, and if the mortgaged property continues to be the primary residence of the eligible employee. When the mortgaged property no longer is the primary residence of the eligible employee, the mortgage is to be repaid within 180 days.
    
7. Except as described under 5. and 6. above, if a mortgage holder ceases to be a full-time employee of the University, or no longer occupies the mortgaged property as a primary residence, the options on settlement of the mortgage are as follows:
    
   1. if less than five years of service, the mortgage must be satisfied within 90 days from date of change in employment status or date eligible employee no longer occupies property as primary residence;
       
   2. if more than five years of service and
       
      1. termination is involuntary, the mortgage must be satisfied within 90 days from date of separation or within one year of notice of termination or change in employment status, whichever is greater;
          
      2. termination or change in employment status is voluntary, the mortgage must be satisfied within 180 days from date of separation or change in employment status;
          
      3. eligible employee no longer occupies property as primary residence, the mortgage must be satisfied within 180 days from date eligible employee no longer occupies property as primary residence.
          
8. If the mortgagor ceases to be eligible for a mortgage and does not satisfy the mortgage under the options stated under 7. above, the interest rate on the University mortgage may be increased to the maximum rate of interest then lawful in the State of Delaware, or other appropriate action may be taken by the University including and without being limited to foreclosure and transfer of the deed.
    
9. Mortgages considered jumbo mortgages by the bank community, currently defined as $252,700 and above and adjustable periodically, will be charged an interest rate of 0.4% above the normal rate.
    
For further details and information, contact the Office of the Treasurer at 831-8964. (rev. 9/94;  3/98;  2/99; 3/00)

2.  Neighborhood Mortgage Assistance Program
    

   The University of Delaware will make available funds for mortgage assistance to eligible employees who choose to purchase homes in specific targeted neighborhoods within the City of Newark. The program's primary purpose is to assist in stabilization of traditional family neighborhoods as described below.

   All full-time employees are eligible to make application for mortgage assistance immediately upon employment.

   The University will make a $5,000 cash loan at settlement to be forgiven at the rate of $1,000 for each full year the eligible employee maintains the house as his/her primary residence, with the stipulation that the purchaser must remain an eligible employee for two years from the date of settlement. Because the loan will be forgiven provided the employee retains his/her eligibility, employee will realize taxable income of $1,000 per year for five years and will be liable for income and wage taxes thereon.

   PROGRAM PROVISIONS

   1. Any first mortgage must be granted by a banking institution or other firm regularly in the business of lending for home purchases and performing credit reviews. The University's loan will be secured by a second mortgage on the house.
   2. Except as provided for in Provision 3 below, the borrower must remain an employee of the University for two years from the date of the settlement or repay the remaining unforgiven loan balance even if continuing to reside in the house.
   3. In the event of the retirement, total disability or involuntary separation from employment for other than just cause, the loan may continue until forgiven if the mortgaged property continues to be the primary residence of the former employee.
   4. The property must be the primary residence of the eligible employee, except that:
      • In the event of a legal separation or divorce of an eligible employee holding a University loan, if his/her spouse and/or minor children continue to occupy the mortgaged property as their primary residence, the University loan may continue until forgiven.
      • In the event of the death of an eligible employee holding a University loan, and his/her spouse and/or minor children continue to occupy the mortgaged property as their primary residence, the University loan may continue until forgiven.
      • In the event of sabbatical leave, home may be rented for up to one year to single occupant or family.
   5. Interest shall accrue at the rate of 8% per annum, beginning 30 days from the date an employee leaves the University's employ within two years or ceases to use the property as his or her primary residence (or the primary residence of his or her spouse) within five years.
   6. No more than $5,000 shall be made available per home purchase, regardless of the number of eligible employees planning to reside in the home.
   7. An employee may participate in the program one time only.
   8. As a condition of the loan, home owner agrees to grant the University the first opportunity to purchase property.
   9. Eligibility for this program does not affect eligibility for any other program the University may offer regarding primary residence purchases. See the Mortgage Loans policy and the Home Purchase Assistance Program.
   10. The University of Delaware reserves the right to alter the terms and target neighborhoods as deemed appropriate to the goals of the program or to terminate the program at any time.
   11. The $5,000 loan will be provided at settlement by check made out as instructed by lender (mortgage provider). Funds may be applied to down payment and/or settlement costs.
       NOTE: Area banks may offer additional programs that may provide additional favorable terms to employees. Employees seeking a mortgage may wish to contact local banks for further information.
       Properties included in the Neighborhood Mortgage Assistance Program:
       East Park Place Area
        

       East Park Place Courtney Street Ashley Road Kells Avenue

       Wollaston Avenue Waterworks Lane Manuel Street Academy Street

   Properties on the streets listed below bounded by the east side of Haines Street to west side of S. Chapel bordered on the north by E. Cleveland and the south by Chambers Street.
    

   Haines Street Chambers Street Benny Street Lovett Avenue Continental Avenue East Delaware Avenue

   Chapel Street Choate Street Linden Street Center Street New Street East Cleveland Avenue

   Cleveland Avenue Area
   East Cleveland Avenue from North College to Chapel Street, Prospect Avenue and Wilbur Street.
    
   For additional information, contact the Treasurer's Office (831-8964).  (Policy approved, Office of the Treasurer, 1997)

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3. Home Purchase Assistance Program
    

    The Board of Trustees has established a new program to replace the University's current mortgage program for faculty and professional staff hired after June 30, 1998. In so doing, it continues to assist in the recruitment and retention of faculty and administrators. This new program, called the Home Purchase Assistance (HPA) program, provides a one-time $5,000 payment to be paid at settlement on the purchase of a primary residence. Key elements of the HPA program are set forth below:

   Effective July 1, 1998, all full-time faculty and professionals hired after June 30, 1998 may receive home purchase assistance in the form of a one-time $5,000 payment to be paid at settlement on the purchase of a primary residence within reasonable commuting distance of work location.
    

   • Full-time faculty and professional staff hired before July 1, 1998, who have not used the University mortgage program, will have the option of using the existing University mortgage program or the new HPA program, effective immediately.
   •  The HPA supplemental cash payment will be taxable income to the employee in the year paid and federal and state taxes will be withheld as appropriate. The law requires federal (27.5 percent) and state (5 percent) income taxes be withheld irrespective of an employee's actual tax bracket. FICA/FICM tax of 7.65 percent must also be withheld unless the FICA threshold has been reached. The net cash available to employees will be $2,992.50. (Rev. 9/01)
   • If an employee itemizes deductions on his or her income tax return, mortgage points paid generally are deductible, and the employee can adjust withholding tax from regular salary to reflect estimated tax liability. Employees are encouraged to consult a tax advisor to determine the tax treatment appropriate to their individual circumstances.
   • No more than $5,000 shall be made available per home purchase, regardless of the number of eligible employees owning and residing in the home.
   • Full-time faculty and professional staff electing the HPA program may also take advantage of the Neighborhood Mortgage Assistance Program if he/she meets that program's qualification criteria.
   • Detailed administrative procedures are available with HPA application forms in the University Treasurer's Office (831-8964).
      
    (Policy approved, Board of Trustees, 12/97)