Valley CDC First Time Homebuyer Community Hous
Valley CDC First Time Homebuyer Community Housing Project
??
Please provide information about protecting long-term affordability. Will there
be an affordability restriction on the homes and/or will there be a CPA loan
repayment program?
??
What is the reason for the precipitous drop in the recapture rate within the first
year?
??
Will the CPC receive reports for the $26,161 of eight months of staff time spent
on administering the loans? In terms of enhancing non-profit capacity, is the main
benefit the funding that would pay staff costs (45% of program director’s time)?
??
Please demonstrate the likeliness of Valley CDC successfully leveraging state &
private funding for this project.
??
Please provide a list of preferences/requirements Valley CDC will provide to
homebuyers applying to the subsidy program sponsored by CPA funds (in-town
location, non-new construction, energy star house, etc)?
??
The benefit of the program is most significant for the 5 households who will
receive the mortgage subsidies, but other families will benefit from the counseling
provided under this program. Can Valley CDC estimate how many other
households will benefit?
??
Is the proposed requirement that recipients demonstrate that they either live or
work in Northampton prior to receiving this subsidy consistent with State
requirements around resident selection for homebuyer units? Can the requirement
be revised to provide a recipient selection process that better addresses fair
housing concerns? Alternatively, can you demonstrate that the outreach and
implementation of the homebuyer program addresses fair housing concerns,
through the track record of who the program has served and through aggressive
fair marketing practices?
??
What would the impact of deferral of this request to another round have?
??
What is the benefit of a family affording a home at $249,400 vs. one at $199,860?
Does the $50,000 down payment allow a family to buy a home to begin with, or
does it simply allow them to buy a larger home than they could without the
subsidy?
1.) Affordability:
We are proposing a 30-year deferred payment loan. So, any
participating fthbs, who sold before the end of 30 years, would pay back a portion
of the loan. The $50,000 in CPA funds would be forgiven at a rate of
$1,666/year. We believe that even with $50,000 in CPA funds, households at or
below 80% of median income will be buying homes that need some immediate
repair. The on-going costs of home maintenance are also high and given that it’s
highly unlikely that any of the buyers will use the funds to buy new construction,
deed riders could serve as disincentives to keeping the homes in good repair.
Home maintenance costs have gone up dramatically over the last few years due to
sharp increases in prices for building materials. As utility costs have also risen
sharply during the same period, we believe that deed riders could result in shabby
affordable homes.
2.) Recapture schedule:
Year 2 of the recapture schedule should read $48,333, etc.
The mortgage, promissory note and recapture schedule are sample documents for
the committee’s review. Hilltown CDC shared these documents with us. If the
committee agrees to the 30-year deferred payment loan as the anti-speculation
mechanism, Valley CDC will complete the recapture schedule and pass all the
related documents to the City’s municipal counsel for review.
3.) Reporting:
Yes, Valley CDC will provide a final report to the CPC showing
staff time and other program expenses. Our non-profit capacity will also be
enhanced by providing Valley CDC with an opportunity to counsel the additional
fthb counseling clients who will call or drop in response to the Mortgage Subsidy
marketing.
4.) Alternative funding:
None that we know of…City of Northampton CDBG
funds were once again significantly reduced for FY09.
5.) Requirements:
??
First Time Homebuyer
??
Primary Residence
??
Live or work in Northampton
??
Less than $75,000 in assets (excluding retirement)
??
Preferably SoftSecond, MassHousing, NACA, FHA or Fannie Mae
MyCommunity mortgage – other prime mortgages will be considered
??
Accepted offer to purchase to reserve funds
??
Home must be inspected by state-certified home inspector & home
inspection must generally be satisfactory unless homeowner is buying
with MassHousing’s Purchase & Rehab Loan
??
Home must be in Northampton
??
Below 80% of HUD area median income
6.) Other beneficiaries:
During the last 5 years, the program has individually
counseled between 52 and 59 households per year. If we are funded, we’ll be
broadly marketing the program. We expect to see some of the previously
counseled fthbs come back in to inquire about the MSP. There could be an
additional 20 households who inquire about the MSP, who have never called
Valley CDC and would not call for the FTHB Program without the MSP.
7.) Local preference:
Although we don’t anticipate that the MSP units will be
counted under LIP (Local Initiative Program), we are keeping in mind the LIP
guidelines for local preferences. We intend to affirmatively market the program
to local minority communities within Northampton. Valley CDC has a successful
track record of marketing to minority communities and attracting minority
counseling clients and minority applicants for both affordable units and down
payment assistance programs.
8.) Defer request:
Interest rates have remained relatively low in historical terms.
It’s not certain that the fed can continue to hold rates down for many more years.
We are also in the midst of a market downturn, which has put more stock on the
housing market and created a bit of a buyer’s market. Northampton prices have
decreased in the past year, but only slightly.
9.) Impact:
$249,400 doesn’t generally buy a large home in Northampton. We hope
it will allow the homebuyers below 80% of median to buy homes in decent repair.
It will also allow homebuyers who might have otherwise bought condominiums
to be able to buy single family homes, which are usually more desirable to fthbs.
It will allow some families to consider spending less than $249,400 and have a
lower mortgage payment. We expect the homebuyers to will try to spend less, as
well as get “more house”.