Onsite Wastewater Assistance Program (OSWAP)

Onsite Wastewater Assistance Program (OSWAP)

The Onsite Wastewater Assistance Program (OSWAP) offers low-interest loans through participating lenders to rural homeowners for the replacement of inadequate or failing septic systems. According to Iowa law, all septic systems, regardless of when they were installed, must have a secondary wastewater treatment system following the septic tank.

The program is limited to owners of existing homes (not new construction) in unincorporated areas of Iowa not served by a public sewer.

The Iowa Department of Natural Resources (DNR) administers the program in cooperation with County Sanitarians. The Iowa Finance Authority (IFA) acts as the financial agent.

Prior to receiving a loan, the landowner must receive project approval from the County Sanitarian.

IFA deposits funds in an account at the local lending institution in an amount equal to the loan amount. This linked deposit allows the lender to make a loan to an eligible borrower at a low interest rate.

How Does It Work?

Local banks originate the loans in amounts of $2,000 and more with a maximum term of 10 years.
The interest rate charged the borrower will not exceed 3%.
IFA will deposit funds equal to the principal amount of the loan at 0% interest.
The deposit does not guarantee the loan nor is it collateral for the loan. The deposit is only to reduce the interest rate charged to the borrower.
Annually the bank will remit to IFA from the deposit account an amount equal to the principal repayment of the outstanding loan. As a result, the amount in the deposit account will equal the principal outstanding on the loan.
All costs directly related to the repair, rehabilitation or replacement of an onsite treatment system are eligible, including all costs directly related to the design, permitting and construction of the onsite wastewater system. Costs for removal of existing structures, earth moving and any land purchases directly related to proper wastewater treatment are also eligible.
Ineligible costs include additional earthwork, reseeding, replanting and maintenance or monitoring costs.

Application Procedure
Applying for the OSWAP is easy! Simply complete this step-by-step process.

Become a participating lender:

Sign up as a participating lender. Fill out the on-line application and send the Lender Participation Agreement to IFA at 2015 Grand Ave., Des Moines, Iowa 50312. Or fax it to IFA at 515.725.4901.
After receiving the signed Lender Participation Agreement, IFA will activate the lender. The lender may now access the on-line system

Project Application Process:

The borrower works with the local County Sanitarian on the project. For more information on project eligibility or approval, contact Dan Olson at 515.725.0346.

Loan Application Process:

The borrower completes the lender’s normal loan application process.
When the local lender approves the loan, the lender completes the OSWAP on-line application.

Loan Completion:

After the project has been completed, inspected and certified by the County Sanitarian, the OSWAP approval form along with the appropriate invoices are mailed to Dan Olson at DNR or faxed to him at 515.725.0348. DNR will approve the project and loan amount on-line.
After DNR approves the project, IFA approves the loan and the lender receives an e-mail that funds can now be requested.
Lender goes on-line and requests the funds. This involving entering loan details (date of loan, term of loan, lender contact, etc.).
Funds are deposited in the financial institution and the borrower receives his/her loan from the lender.

Annually:

Approximately two weeks before the anniversary date of the loan, IFA will send a notice to the local lender via e-mail reminding the lender that IFA will withdraw from its deposit account an amount approximately equal to the principal that has been repaid.
The amount in the deposit account and the amount of the outstanding principal on the loan will be the same.