Fiscal Note
The proposed resolution modifies a loan made from the Homebuyers Assistance Program in May 2006. The proposed modification would reduce the loan interest rate from 4.75% to 2.75%, modify the loan amortization schedule to 60 years, with a balloon payment due in 15 years. These modifications would reduce the home owner’s monthly payment from $342.25 to $124.86 for 15 years. At the time the balloon payment is due, City staff would work with the home owner to devise a way to draw equity from the property that could be used to repay the remaining loan balance.
The Homebuyer's Assistance program, which began in 1974, provides loans to eligible buyers to finance a portion of the acquisition and rehabilitation cost of an eligible property. These loans are available to owner-occupants/developers of 1-8 unit buildings. Funding is from available fund balances, loan repayments, and program income.
Title
Loan modification for Homebuyers Assistance loan provided in May 2006.
Body
The Community Development Division is seeking approval to modify a May 2006 loan made from its Homebuyers Assistance Program (HBA). A description of the program is included below. The subject loan was made to assist the current owners in purchasing and rehabilitating their first home located at 102 N Second Street. The home owners complied with all program eligibility requirements at the time of purchase, and the ratio of their income to debt service ratio was in line with program standards. The loan was committed in May 2006 at the then current interest rate of 4.75%, and repayment was deferred for ten years. The loan automatically converted to one with installment payments in 2016, with a payment of $342.25 due monthly
Since the loan was made, the household has changed from a three-person household with two adults, to a two-person, female headed household. After reviewing the household’s current financial statements, CDD staff has determined that the required monthly payment of $...
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