Item 4-NHCD Legacy Project PPT final — original pdf
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Legacy Project Aligning the City’s Affordability Period with Housing and Urban Development’s Affordability Period Home Repair Loan Program (HRLP) Purpose The purpose of HRLP is to assist low to moderate income homeowners with home repairs for properties located within the full-purpose corporate city limits of the City of Austin. HRLP provides financial assistance to address substandard housing conditions that exist on a homeowner's property. The Program provides Rehabilitation Loans to bring homes up to building code standards with repairs to the foundation, roof, plumbing, HVAC system, electrical work and other major interior and exterior repairs. 2 Down Payment Assistance Program (DPA) Purpose The purpose of DPA is to increase housing opportunities to qualified low-to- moderate income households by providing the necessary financial gap assistance for eligible down payment and closing costs to purchase a home. The Program is for first time homebuyers. 3 Background Program Structure Housing & Urban Development (HUD) requires a minimum affordability period for housing units supported by federal funds. For all loans in these programs, regardless of funding source, the terms and the affordability period exceed the minimum period set by HUD. If a home is sold before the expiration of the affordability period, the City requires repayment of the loan. HRLP and DPA programs are structured as loans, some of which require repayment at the end of the affordability period. Loans range from $1500 (homebuyer) to $129,000 (reconstruction). Shared Equity is a City imposed requirement, not HUD. 4 Housing and Urban Development (HUD) Affordability Period Home Assistance Per Unit or Buyer Length of Affordability Period Less than $15,000 $15,000 - $40,000 More than $40,000 New construction 5 Years 10 Years 15 Years 20 Years 5 About Shared Equity The 25% Shared Equity portion will become due and payable and be added to the payoff balance if the loan is pre-paid prior to the maturity date. Assistance amount is forgiven at a prorated amount. The 25% Shared Equity provision will expire and be forgiven at the end of the maturity date. The equity owed to the City may be enforced solely out of the net proceeds of sale of the Property. The following is a Shared Equity payoff example: New Appraised Value upon payoff or Sales Price (whichever is less) Minus Initial Appraised Value at Loan Closing Total Shared Equity % of Shared Equity to Owner % of Shared Equity to COA/Program Current Unpaid Principal Balance owed on HRLP Loan Capital Improvement Recapture Credit Borrower’s Cash Contributions 25% Shared Equity to COA/Program Reasonable and Customary Closing Costs paid by the Homeowner Payoff Balance Owed on HRLP Loan (-) 75% 25% (-) (-) (+) (-) = $ 250,000.00 $ - 147,500.00 $ 102,500.00 $ 76,875.00 $ 25,625.00 $ 125,000.00 $ - 0.00 $ - 0.00 $ + 25,625.00 $ - 22,500.00 $ 128,125.00 6 Example: Appreciation Impact of Shared Equity 1,000,000.00 900,000.00 800,000.00 700,000.00 600,000.00 500,000.00 400,000.00 300,000.00 200,000.00 100,000.00 0.00 Original Loan Amount TCAD Appraised Value 2023 7 Example: How appraised values increased from loan closing to 2023 $1,000,000.00 $900,000.00 $800,000.00 $700,000.00 $600,000.00 $500,000.00 $400,000.00 $300,000.00 $200,000.00 $100,000.00 $- TCAD Appraised value at the time of closing TCAD Appraised Value 2023 8 Summary for 30 Active S/E homes based on Council District 63% E / S P L R H e v i t c A 20 18 16 14 12 10 8 6 4 2 0 27% 7% 3% 1 2 3 4 0% 5 0% 6 0% 7 0% 8 0% 9 0% 10 Council District 9 Community Response to the City’s Programs City applied rules that were more restrictive than HUD required Loans/Liens appeared to be predatory in nature Rules applied by the City had unintended consequences 10 Number of Loans Amount of Forgiveness ACQUISITION & DEVELOPMENT - OWNER AQUISITION & DEVELOPMENT - OWNER - SHARED EQUITY DOWN PAYMENT ASSISTANCE 552 $ 2,919,151.96 Liens to be Released Austin Housing Finance Corporation DOWN PAYMENT ASSISTANCE-SHARED EQUITY HOLLY GOOD NEIGHBOR PROGRAM HOMEOWNER REHAB LOAN PROGRAM (400) SINGLE FAMILY LOAN PROGRAM (790) WELCOME HOME PROGRAM (785) DOWN PAYMENT ASSISTANCE DOWN PAYMENT ASSISTANCE-SHARED EQUITY City Of Austin PRINCIPAL REDUCTION SINGLE FAMILY LOAN PROGRAM (790) TOTAL 799 $ 8,913,048.88 20 26 77 2 20 2 4 75 10 4 7 $ 374,375.80 $ 707,894.27 $ 2,739,138.91 $ 65,798.52 $ 1,000,179.27 $ 140,000.00 $ 28,899.73 $ 346,807.42 $ 363,468.00 $ 51,800.00 $ 175,535.00 11 Liens to be Modified AQUISITION & DEVELOPMENT - OWNER - SHARED EQUITY DOWN PAYMENT ASSISTANCE Austin Housing Finance Corporation DOWN PAYMENT ASSISTANCE-SHARED EQUITY HOLLY GOOD NEIGHBOR PROGRAM HOMEOWNER REHAB LOAN PROGRAM (400) HOMEOWNER REHAB PROGRAM - SHARED EQUITY AQUISITION & DEVELOPMENT - OWNER - SHARED EQUITY City Of Austin DOWN PAYMENT ASSISTANCE-SHARED EQUITY HOMEOWNER REHAB LOAN PROGRAM (400) 6 82 75 3 75 30 2 22 1 TOTAL 296 $ 15,283,220.20 Number of Loans Amount of Forgiveness $ 475,800.00 $ 2,747,709.00 $ 2,950,475.76 $ 91,111.25 $ 5,013,026.62 $ 2,945,413.40 $ 183,500.00 $ 820,090.36 $ 56,093.81 12 Next steps We vetted our recommendation with HUD, corporate finance, and Law. Loans that have been released in the past will not be refunded. Those loans were repaid according to the guidelines and terms and conditions of the loans at that time. Approximately 1000 liens have been modified Approximately 800 release of liens are being processed. Release of Liens should be recorded at Travis County in January 2025. 13