Bowdoin First-Time Home Buyer Assistance Program

Date: December 2023

In response to the limited availability of affordable homes in the Mid Coast region, the College is pleased to offer a forgivable loan program to assist employees with the purchase of homes in the area. The College has identified two area banks to assist with implementing this housing assistance program, Bath Savings Institution and Kennebec Savings Bank (“Participating Bank(s)”). Both Participating Banks are aware of this Program and will assist in the processing of the loan. In its essence, an eligible employee may secure a loan from one of the Participating Banks as well as obtain a second, potentially forgivable loan from the College, which second loan will be administered by the same Participating Bank. This Program is available for a two-year period for closing dates on or between March 1, 2024, and February 28, 2026. Through this program, the College is striving to make home ownership more affordable for eligible employees.

Eligibility

To be eligible for this benefit, employees must be continuing benefits-eligible faculty in an ongoing, renewable appointment or continuing benefits-eligible staff who (i) are in good standing, as defined below; (ii) have been employed at the College for at least thirty (30) days at time of home closing; (iii) are “first-time home buyers”, as defined below, of a home located within forty (40) miles of the College campus; (iv) regularly work on campus either on a full time basis or in a hybrid role at least two days per week; and (v) qualify for and obtain purchase money mortgage financing for the home, in an amount not less than 50% of the purchase price of the home, from one of the Participating Banks.

The home must be the primary residence for the employee, must remain employee-occupied, and title may only be held in the name of the employee singly or jointly by the employee and the employee’s spouse/domestic partner. Proof of ownership and/or occupancy must be provided to the College upon request. If title is held jointly with the employee’s spouse/domestic partner, the spouse/domestic partner must also be a joint obligor of the Loan. In addition, any other person who is obligated to repay the purchase money mortgage must also be obligated to repay the Loan.

This is a one-time benefit per household.

The following homes qualify:

Single-family residence
Single-family residence with in-law suite (An in-law suite is defined as a separate living area that has shared living space such as a shared method of egress and at least one of the following: a shared kitchen, a shared living room, shared utilities or heating sources).
Townhouse/Condominium
Mobile home, if permanently affixed to land owned by the employee

The following homes do not qualify:

Vacation property
Houseboat
Initial construction
Investment property
Multiple family dwelling or duplex - includes a home with an in-law apartment that has at least one separate method of egress and is otherwise self-contained without a shared bedroom, shared bathroom, shared kitchen or shared living spaces but may or may not have shared utilities.
Multiple family dwelling
Commercial property
Rental property
Recreational vehicle

For the purposes of this Program, a “first-time home buyer” is an employee alone, or an employee together with the employee’s spouse or domestic partner, who has not previously owned a primary residence within forty (40) miles of the College campus within the past five (5) years. If the employee, and/or the employee’s spouse or domestic partner was an owner of a primary residence within forty (40) miles of the College campus during the prior five (5) year period, then the employee is not a “first-time home buyer.”

Benefit

For employees who qualify under this Program and close on a home on or after March 1, 2024 and on or before February 28, 2026, the College will loan, on a secured basis and subject to the terms and conditions of this Program, up to ten (10) percent of the purchase price of the home, not to exceed a maximum of $50,000 (“the “Loan”). The Loan proceeds must be used solely to contribute to the purchase price and/or any closing costs (including points or private mortgage insurance). The Loan proceeds will be payable directly to the payee of the purchase price and/or closing costs, as applicable, and not to the individual employee. The Loan will be granted subject to the terms and conditions of this Program following notice by the employee to the College of approval of a purchase money mortgage for the home by one of the Participating Banks. The College does not participate in any credit decision involving the employee or the Loan.

Loan Terms

The Loan term will be ten (10) years.
The interest rate will be fixed on the long-term Applicable Federal Rate at the time of loan origination. The long-term applicable federal rate can be found at www.irs.gov/applicaple-federale-rates .
The Loan will be fully recourse to the employee and any other person who is obligated to repay the Loan.
It is the intention of the College, provided the conditions described in this Program are met, to forgive the employee’s obligation to make payments of principal and interest.
Principal will be forgiven in equal annual installments (1/10 of the original Loan amount) over the life of the Loan provided the employee remains in a benefits-eligible position at the College and continues to work on either a full-time basis or in a hybrid role on campus as described above.
Interest will be calculated on an annual declining balance basis.
An appraisal of the home, in form satisfactory to the College, is required. The ratio of the combined total of the Loan amount and the purchase money mortgage loan amount to the lower of the purchase price or the appraised value of the property cannot exceed 100 percent. The cost of the appraisal shall be the responsibility of the employee.
At least ten (10) business days prior written notice of the Closing Date for the purchase of the home needs to be given to the College as a condition of receiving the Loan.
In the event of termination of benefits-eligible status with the College, except by reason of death, any remaining outstanding principal and accrued interest must be repaid to the College in accordance with the terms of the Loan agreement.
The Loan will be closed and serviced, including billing, by the applicable Participating Bank.
In the event the home is transferred by the employee before the Loan is fully repaid or forgiven or the home is no longer occupied by the employee as the employee’s primary residence, the remaining outstanding principal and accrued interest must be repaid in full within thirty (30) days of transfer or change in occupancy.
The Loan may not be refinanced during its term but may be pre-paid.
The home must be fully insured at all times, with proof of insurance provided to the College and the College being listed as loss-payee to the extent of the outstanding Loan amount.
Mortgage lending rules impose restrictions should the College make or invest in loans under this Program in an amount aggregating more than $1,000,000 per year. In any year where the aggregate cap is likely to be reached, the College may direct employees to work with a specific Participating Bank in order for the College to remain in compliance with the rules. The Participating Bank and the College have made arrangements for alternative loan assistance as intended by this Program. Employees are advised to inquire about timing and availability of Loans well in advance of the anticipated home closing.

Important Tax Implications

Forgiven principal and interest will be reported as taxable income to the employee on Form W-2. An employee may elect to have extra tax withheld from wages using Form W-4 in order to assist in year-end tax payments related to the Loan.

General Provisions

Loan Agreement. As a condition of receiving a Loan under this Program, the employee and any other person who is to be obligated to repay Loan will be required to enter into a Loan agreement in form satisfactory to the College as well as execute any other documentation deemed necessary by the College or Participating Bank. In addition, at the discretion of the College, the Loan Agreement or a record of the Loan in form satisfactory to the College may be recorded in the applicable Registry of Deeds. The mortgage which secures the Loan will be recorded in the applicable Registry of Deeds.

Voluntary participation. Participation in this Program is completely voluntary. An employee’s decision to elect to participate or not participate will not affect the employee’s employment in any other way.

Relationship to benefit programs. Participation in this Program does not affect eligibility for the College’s benefit plans and programs. Each of these other plans and programs has its own eligibility requirements, and employees must satisfy the requirements then in force for each plan or program to qualify for participation in that plan or program.

Right To Amend. While the Program is in effect, the College reserves the right to amend, modify or change its terms, provided that any changes will not alter the terms of an existing Loan agreement.

Termination of Policy. This Program is subject to periodic review by the College and may be amended or revoked at the College’s discretion provided, however, that a revocation shall not adversely affect those individuals who are already participating in the Program pursuant to the terms of an executed Loan agreement.

Employment Status. Nothing in this Program constitutes a promise of continued employment or limits in any way the right of the employee or the College to terminate employment.

Employee in Good Standing. An employee in good standing is actively employed, not on a leave for any reason, and has not resigned or otherwise ended employment. In addition, the employee cannot have received a performance warning or been placed on a performance improvement plan within the last twelve (12) months. Given the ongoing obligations of faculty while on sabbatical, a faculty member on sabbatical shall be considered to be an employee in good standing.

Unpaid Professional or Educational Leave. Employees who have received this benefit are not eligible to receive an unpaid professional or educational leave until the Loan has been either been forgiven or repaid in full.

Administration of the Program. The senior vice president for finance and administration & treasurer, or his/her designee, shall be responsible for administering this Program (the “Program Administrator”). The Program Administrator shall have sole authority to construe the terms of the Program and any decision of the Program Administrator shall be final. The Program Administrator shall have such other powers as are necessary to discharge his/her duties, including, but not limited to, making rules or regulations to administer this Program, determining all questions concerning eligibility to participate in and receive benefits under this Program, calculating the amount of benefits payable to any person under this Program, and maintaining all records necessary for administering this Program. Any exceptions to this Program must be approved by College’s vice-president of human resources and the College’s senior vice-president for finance and administration.

Additional Information

Employees who may be interested in this benefit should contact Amy Dionne in the Treasurer’s Office. Additional information can be obtained through the Treasurer’s Office, but any employee who is considering this benefit should also seek the advice of their own tax advisor.