HomeMy WebLinkAbout2001-03-27 - AGENDA REPORTS - HOME BUYER REHAB LOAN AGMT (2)CITY OF SANTA CLARITA
AGENDA REPORT
City Manager
Item to be presented
CONSENT CALENDAR
DATE: March 27, 2001
SUBJECT: FIRST-TIME HOME BUYER AND REHABILITATION LOAN
PROGRAM ADMINISTRATOR AGREEMENT
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
City Council approve and authorize the City Manager to execute an agreement with
USE (United States Escrow, Inc.) to provide loan underwriting and construction
management services, subject to City Attorney approval.
The City received a State grant, known as the HOME Program, in the amount of
$420,000, to provide mortgage loans to moderate -income, first-time home buyers. The
primary purpose of the loan is to help first-time home buyers to rehabilitate homes that
have safety and code violations or do not meet neighborhood standards. The State grant
may also be used to help first-time home buyers with down payment assistance.
Additionally, the City has received Federal CDBG (Community Development Block
Grant) funds in the amount of $120,000 to loan to moderate -income homeowners for
rehabilitation only.
As a result of receiving these State and Federal funds, it is necessary for the City to
secure a third party underwriter and construction management firm to administer these
or Proposal) process and recommends
Programs. City staff conducted a RFP (Request f
United States Escrow, Inc. to the City Council for approval. The selection of this firm
will allow the City to begin providing loans to residents, as well as manage the
construction and actual rehabilitation of applicant's homes.
Using the HOME Program, it is the City's goal is to make a minimum of 10 loans in the
first 12 months. In addition, the City expects to make a minimum of three
CDBG-funded rehabilitation loans, using the additional $120,000.
APPROWED Agenda Item: /.2
ADMINISTRATOR AGREEMENT
March 27, 2001— Page 2
An explanation of how these two loan programs work are summarized as follows:
1. An applicant would first obtain the maximum CHFA or FHA loan for which they are
eligible. Working with a mortgage lender, the buyer must qualify and obtain a
30 -year fixed rate CHFA or conventional mortgage.
2. Once the applicant obtains the first mortgage, they request a loan from the City that
cannot be more than $40,000.
3. The applicant will then choose from either the Home Program or CDBG-funded
rehabilitation loan program, depending on the applicant's particular needs.
4. The City, along with United States Escrow, Inc., would initiate the loan process,
which is structured as a 3% deferred second mortgage.
(Note: Under both programs, an eligible applicant cannot have a total income greater
than 80% of the County of Los Angeles median income. For a family of four, this is
$41,700. The HOME program home purchase cap is $208,000. The CDBG
rehabilitation loan -to -value underwriting standard is capped at 80%.)
ALTERNATIVE ACTION
Council may choose not to select United States Escrow, Inc., and ask staff to rebid the
loan underwriting and construction management contract.
Other action as determined by Council.
FISCAL IMPACT
There is no impact to the general fund. The source of the rehabilitation loan funds come
from HUD (Housing and Urban Development) and CDBG dollars. The estimated cost
to CDBG is $120,000 for fiscal year 2000-2001 and $420,000 for fiscal year 2001-2002.
ATTACHMENT
United States Escrow Proposal (Available in City Clerk's Reading File.)
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