HomeMy WebLinkAboutR56- Economic Development ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: RONALD E. WINKLER SUBJECT: MORTGAGE ASSISTANCE
Development Director CHANGES PROGRAM(MAP)PROPOSAL
0 RIGINAL DATE: September 30, 1998
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Synopsis of Previous Commission/Council/Committee Action(s):
On September 28, 1998,the Redevelopment Committee recommended that this item be forwarded to the
Community Development Commission for approval.
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Recommended Motion(s):
(Community Development Commission)
MOTION A: That the Community Development Commission authorize the modification of the Mortgage
Assistance Program guidelines to allow the Executive Director the authority to approve up to 20%
in mortgage assistance when extenuating circumstances require.
MOTION B: That the Community Development Commission authorize the reimbursement of up to$18,000 to
Alvarez and Associates for costs associated with rehabilitation of four properties formerly owned
by Housing Solutions,Inc.
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Contact Person(s): Ronald E. Winkler/ Phone: 5081
Project Area(s): N/A Ward(s): Two(2)
Supporting Data Attached:El Staff Report❑ Resolution(s) ❑ Agreement(s)/Contract(s) ❑ Map(s) ❑ Ltr/Memo
FUNDING REQUIREMENTS: Amount: $ 18,000 Source: HOME Funds
Budget Authority: Requested
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SIGNATURE: *end r <rd
GAR AN OSDEL, E ecutive Director RONALD E INKLER, Director
Ecofiomic Developme Agency Development
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Commission/Council Notes:
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REW:lag:10-19-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 10/05/1998
Agenda Item Number: —f 0
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ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Mortgage Assistance Program (MAP) Proposed Changes
Backjaround
At its meeting of July 7, 1997, the Community Development Commission authorized a number of
changes to the subject program in order to improve lending criteria and more effectively stretch
dollars loaned under the program. Further, the changes were intended to promote revitalization of
neighborhoods where the Agency was sponsoring revitalization through the Acquisition,
Rehabilitation and Resale (ARR)Program or Acquisition, Development and Resale (ADR)Program.
As you know, Mortgage Assistance Program loans are used to provide down payment assistance
to buyers of existing units as well as those improved or developed under the ARR or ADR Programs.
AP Loan Iombuyer Coritributi4n usehc�ld"°Iruine .Area '
10% of Sales Price** Min. $500 60%below Target Area
7% of Sales Price Min. $500 60% - 120% Target Area
4% of Sales Price Min. 3% of Sales Price 80% - 120% Non-Target Area
*This level of assistance was made available to only the ARR Program and ADR Program or any
Infill New Construction.
Another change to the MAP Program loan was a restriction that Agency loans only accompany fixed
rate first trust deed private loans versus adjustable rate mortgages. This was done because of
concern that buyers would not be able to keep up with increases in their monthly payments.
Recent experience with the ARR and ADR Programs indicate there are circumstances where
additional down payment assistance is required to facilitate purchase by owner occupants. Two
pending sales by Alvarez and Associates illustrate this point.
You will recall Alvarez and Associates purchased seven properties in bulk from HUD on Arizona
Street for rehabilitation and sale to owner occupants. This effort was to serve as a pilot to
demonstrate the ability to change the character of an entire block through the ARR Program. To
date, all properties have been rehabilitated and only two remain to be sold. Buyers have been
identified and purchase loan commitments obtained. However, the buyers require additional down
payment assistance to complete the purchase. Further, several of our other ARR contractors have
experienced similar problems.
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REW:1ag:10-19-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 10/05/1998
Agenda Item Number:
1o/57gt
Economic Development Agency Staff Report
Mortgage Assistance Program (MAP)
September 28, 1998
Page Number-2-
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For example, Housing Solutions, Inc., another of our ARR Contractors currently holds four
(4) homes purchased from HUD and rehabilitated for sale to qualified buyers. Loans for
purchase and rehabilitation costs totaling $250,000 are secured by Agency guarantees. To
date, after working with five (5) different real estate brokerage companies, Housing
Solutions has been unable to sell the homes. As a result, the four(4) properties have gone
through several cycles of vandalism and repair. The loans are due and the lenders involved
are preparing to exercise claims under the Agency guarantees.
Alvarez and Associates have agreed to take over the homes from Housing Solutions,
complete repairs and sell. In reviewing the situation, however, they feel additional down
payment assistance beyond that normally provided by the Agency will be necessary to
quickly sell the units. Further, approximately $13,000 to $18,000 must be spent to repair
vandalism on the units.
For the above reason, the Redevelopment Committee recommends the Community
Development Commission authorize a change in policy. Specifically, it is recommended
that authorization be given to staff to provide up to 20% down payment assistance when
extenuating circumstance require such assistance. This would be limited to only buyers for
ARR/ADR properties in revitalization areas designated by HUD. Further, individual
transactions would be subject to review and approval of the Agency's Executive Director.
Every attempt would be made to limit the number of properties assisted in this manner.
Finally, the Committee recommends the Executive Director be authorized to reimburse
Alvarez and Associates up to $18,000 for rehabilitation costs associated with repair of the
four (4) homes noted above.
t,
RONALD E WINKLER, Director
Development Department
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REW:lag:10-19-03.cdc COMMISSION MEETING AGENDA
MEETING DATE: 10/05/1998 J
Agenda Item Number: `D
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