HomeMy WebLinkAbout2000-07-11 - AGENDA REPORTS - HOME OWNERSHIP LEASE FINANCING (2)CITY OF SANTA CLARITA
AGENDA REPORT
City Manager
Item to be presented by: Dennis Lugnens
CONSENT CALENDAR
DATE: July 11, 2000
SUBJECT: HOME OWNERSHIP LEASE PURCHASE FINANCING
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
The City Council direct staff to investigate the benefits of the City becoming a
member of either or both the California Communities Housing and Finance Agency
and the California Cities Home Ownership Authority, and report back at their
regular City Council meeting of August 22, 2000.
The investment banking firm, Chilton & Associates, has approached the City to
participate in a home ownership program that would provide home ownership
opportunities through a 38 -month -to -purchase plan.
Under this program, the authority of which the City would need to be a member,
obtains a 97% loan, pays the 3% down payment, and up to 4.5% of the closing costs.
A lease -purchaser leases the home, and after the lease period, assumes the loan for
the remaining 26 years and 10 months. When title is transferred between the
Authority and the homeowner, the program grant's closing costs and the 3% down
payment become a second mortgage. The current mortgage rate is 7.4 percent.
Lease -purchase would be evaluated on traditional underwriting principals.
Maximum income thresholds ($72,940) could be eligible to first lease a home and
then purchase the same home up to a purchase price of $262,700. The lessor and
potential homeowner would be required to pay a fee equaling 1% of the purchase
price.
The City currently participates in a similar program called FreshRate, offered
through the Independent Cities Finance Authority, ICFA. This is a no down
payment 101% financing program that uses eligibility standards close to those
referenced above.
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HOME OWNERSHIP LEASE PURCHASE FINANCING
July 11, 2000 — Page 2
ALTERNATIVE ACTION
Direct staff not to investigate further into the Home Ownership Lease Purchase
Financing Program.
FISCAL IMPACT
Like the FreshRate program, the Home Ownership Lease Purchase Financing
Program has no direct cost impact to the City. The City's participation is required in
order that FHA loans may be used.
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