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California Department of Housing and Community Development Deputy Director Chris Westlake - Division of Financial Assist

Best Practices for the Neighborhood Stabilization Program October 7, 2008. California Department of Housing and Community Development Deputy Director Chris Westlake - Division of Financial Assistance. Why Housing is Important Housing is a basic element of a successful and equitable society:.

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California Department of Housing and Community Development Deputy Director Chris Westlake - Division of Financial Assist

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  1. Best Practices for the Neighborhood Stabilization Program October 7, 2008 California Department of Housing and Community Development Deputy Director Chris Westlake - Division of Financial Assistance

  2. Why Housing is ImportantHousing is a basic element of a successful and equitable society: • Contributes $273 billion per year to economy. • Generates 960,000 jobs. • Accounts for approximately 11% of all economic activity in the state. • Housing industry is the first largest industry group in the state, when all economic multipliers are considered. Source: Sacramento Regional Research Institute: The Economic Benefits of Housing in California, June 2006

  3. Collaboration • Regulation & Legislation • Education • Stimulus

  4. COLLABORATION: • Interdepartmental Task Force: In early 2007, Governor Schwarzenegger’s Interdepartmental Task Force on Non-traditional Mortgages was formed to ensure a comprehensive and coordinated approach to the issue raised by these loans. • Agreements with loan providers: On November 20, 2007 Governor Schwarzenegger announced the first in the nation agreement with loan servicers to streamline the modification of loans to freeze interest rates for some at-risk borrowers.. • Local roundtables: Governor Schwarzenegger and his staff have traveled throughout the state to meet with local government and stakeholders to discuss the different challenges they are facing in their regions and the various sources of help available. • National collaboration: Governor Schwarzenegger and staff have met with many national leaders to share successes and to strategizes.

  5. REGULATION & LEGISLATION: • Issued new regulations to protect borrowers: The Departments of Real Estate and Corporations issued strict new regulations requiring lenders to consider a borrower’s ability to repay at the full interest rate and to closely scrutinize risk features.  • Legislation increasing protections: In 2007 Governor Schwarzenegger signed three bills to increase protections for Californians who own or plan to purchase homes and to expand affordable housing. • SB 223 . • SB 385 • AB 929 • Legislation addressing foreclosures: In 2008 Governor Schwarzenegger signed SB 1137 that requires lenders to attempt to contact borrowers before they file a notice of default to explore options to foreclosure. This new law also authorizes fines against lenders if they fail to maintain foreclosed properties and requires them to give any renters in the properties 60 days notice prior to eviction. • Letters to congressional leadership: Governor Schwarzenegger wrote several letters urging Congress to increase funding for counseling and to raise FHA and GSE mortgage loan limits as accomplished in the Housing and Economic Recovery Act of 2008.

  6. EDUCATION: • $1.16 million in grant funds: In September of 2007 the Housing and Community Development Department made $1.16 million in Community Development Block Grant Funds available for counties and cities to use for consumer mortgage counseling. • $8 million federal mortgage counseling grant was received by the California Housing Finance Agency in partnership with the Rural Community Assistance Corporation (RCAC) and with the California Reinvestment Coalition (CRC) to help California homeowners avoid foreclosures.  • $1.2 million public awareness campaign: Governor Schwarzenegger launched a $1.2 million public awareness campaign to educate home owners about ways they can avoid foreclosures including a series of foreclosure prevention town hall workshops in the hardest hit areas around California.

  7. STIMULUS: • $5.6 million from the Federal Government to help mortgage and banking industry workers laid off as a result of the subprime crisis make career transitions to high-demand jobs in other industries. • $1.06 billion in Proposition 46 and 1C funds: Since July 19, 2007, $1.06 billion in bond awards have been announced to help more than 23,000 California families rent or purchase affordable housing. • $72 million in federal HOME Investment Partnerships Program funds:  On January 30, 2008 awards totaling more than $72 million in federal HOME Investment Partnerships Program funds were announced.  Funds will be used to provide assistance to first-time homebuyers, reduce the number of bank owned homes and increase the number of rental properties. • $200+ million CalHFA Community Stabilization Home Loan Program (discussed below) will help first time home buyers purchase foreclosed properties below market.

  8. California New Housing Permits 1967 - 2007New Housing Permits Below Annual Average Need SOURCES: CAR; Construction Industry Research Board; CSHP

  9. First Time Home Buyers Housing Affordability IndexSecond Quarter 2007 - 2008 Percentage of first time homebuyer (FTHB) households able to afford a median-priced detached home FTHB California Q2 2008 Median Home Price: $329,120 Source: California Association of REALTORS® (C.A.R.), First-Time Buyer Housing Affordability Index; Graphic representation by HCD.

  10. # OF CLOSED SALES OF CALIFORNIA SINGLE FAMILY RESIDENCES (Per CA Assoc. of Realtors) Median price dips below $500K Median price $409,240 Median price $350,760 “Significant price declines are spurring home sales to bargain hunters and first-time buyers at the middle- and low-end of the market, especially in areas with a concentration of distressed properties.” – CAR April 2008

  11. Proposition 1C is the $2.85 Billion affordable housing bond component of the Strategic Growth Plan

  12. Prop 1C Programs • Building Equity and Growth in Neighborhoods Program (BEGIN) - $125 Million • CalHome Self Help Program - $10 Million • CalHome Program - $290 Million • Joe Serna, Jr. Farmworker Housing Grant Program - $135 million • California Homebuyers Downpayment Assistance Program - $100 Million • Residential Development Loan Program - $100 Million • Multifamily Housing Program - $345 Million • Supportive Housing - $195 Million • Homeless Youth - $50 million • Emergency Housing Assistance Program – Capital Development (EHAPCD) - $50 Million • Transit-Oriented Development - $300 Million • Infill Incentives Grant Program - $850 million • Affordable Housing Innovation Program - $100 million • Housing-Related Parks - $200 million

  13. BEGIN • Funds released since May 21, 2007 • $73 Million • Awarded 22 projects $28.5 Million • Applicant must be the city or county (entity that can offer regulatory relief) • Project specific downpayment assistance • Max. 20% of the sales price • Assistance to low or moderate income households (up to 120% of area median)

  14. CalHome Program • Enables low and very-low income households to become or remain homeowners (<80% of area median) • Grants to local public agencies and nonprofit developers to assist individual households through 30 year deferred payment loans • Payable on sale or transfer, cease to be owner-occupied or at maturity

  15. CalHome Program • HCD has funded: • Total Awards: $133,845,575 • Projects Funded: 158 • Units Produced: 3,208 • HCD issued Project NOFA for $20 million April 2008, OTC.

  16. Joe Serna, Jr. Farmworker Housing Grant Program • Finance new construction, rehabilitation and acquisition of owner-occupied (and rental) units for agricultural workers. To the greatest extent possible, assisted units are to occupied by lower-income agricultural households. • HCD has issued two NOFAs for $17.5 million for construction or rehabilitation of ownership housing for farmworkers. • Total Awards: $11.9 million • Projects Funded: 14 • Units resulting: 488

  17. CalHFA Community Stabilization Home Loan Program A special program designed to help first-time homebuyers purchase homes in communities hardest hit by the foreclosure crisis

  18. PROGRAM DESCRIPTION AND BENEFITS • 30 Year Conventional Fixed Rate for term of loan at 5.5% • Maximum LTV 100% • Maximum CLTV 103% • Owner occupied • Purchase transactions only • Special sales price for participating seller properties • Specific counties and/or ZIP codes • Lower Mortgage Insurance Premiums • Free unemployment insurance for loans above 80% LTV

  19. BORROWER ELIGIBILITY • Must be a first time home-buyer • US Citizen, permanent resident alien or qualified alien • Occupy the property as principal residence • Borrower’s income cannot exceed CalHFA’s limits • Meet credit and loan requirements of CalHFA • Must complete Homebuyer Education Counseling Screen Number

  20. PROPERTY ELIGIBILITY • Property must be selected REO from Participating Financial Institution • Fannie Mae, CitiMortgage Inc. and its affiliates, HomEq Servicing or Wells Fargo Premiere Asset Services • Must meet repair, inspection and health codes* • Loan amount is the lesser of CalHFA’s sales price limit or Fannie Mae loan limits • Property must be vacant • Existing single family residence • Manufactured housing is NOT eligible

  21. PROPERTY LOCATIONS

  22. Next Steps • Develop information website • Developing Action Plan • Stakeholder meetings • Ongoing discussions with Entitlements and National Organizations

  23. For More Information Department of Housing and Community Development www.hcd.ca.gov (916) 322-1560

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