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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”.