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HomeMy WebLinkAboutItem 7.2 First Time Homebuyer Loan Program CITY CLERK File # D[9l[2R)-[6JO] AGENDA STATEMENT CITY COUNCIL MEETING DATE: March 21, 2006 SUBJECT Proposed First Time Homebuyer Loan Program Report prepared by Julia Abdala, Housing Specialist ATTACHMENTS 1. Resolution approving the First Time Homebuyer Loan Program with Program attached as Exhibit A. 2. City Council and Planning Commission Study Session Staff Report dated December 13, 2005 RECOMMENDATION 1 /lY2. \ 3 Receive the Staff Report; Provide direction on Decision Point 6 of the Components of the draft Program; and Adopt the Resolution approving the draft Program and direct Staff to implement the First Time Homebuyer Program. FINANCIAL STATEMENT: The 2005-2006 Fiscal Year budget includes $500,000 in Affordable Housing Funds to begin providing loans to applicants through a First Time Homebuyer Loan Program. DESCRIPTION The City Council has been interested in the development of a first time home buyer program for several years and has included this program as a high priority in the 2005-2006 Goals and Objectives for the City of Dublin. In September 2005 Staff presented a list of components of a proposed First Time Homebuyer Program ("FTHP") to the City Council. At that meeting, the City Council directed Staff to set the item for a Joint Study Session with the Planning Commission. The Joint Study Session was held on December 13, 2005 At the Joint Study Session, the City Council and Planning Commission discussed the components of a FTHP and gave Staff direction on what the Program should include. The chart below provides a summary of the issues discussed and the direction given at the Joint Study Session. COPIES TO: FTHLP Advisory Group In House Distribution ITEM NO. 7. f) . K:\First time homebuyers\Staff Reports\CCSRFTHB3-21-06.00C Decision Points of FTHP Components from December 13, 2005 City Council and Planning Commission Joint Study Session No. Decision Point (Issues DiScussed At Study Session) Dil"ectiollGiven 1 What is the definition of a first time homebuyer? A first time homebuyer will not have owned a home for 3 years with consideration for displaced homemakers and hardship cases. 2 Should the City provide loans to purchase both Inclusionary Both market-rate and Inclusionary Units and market-rate homes? Units. 3 What should be the maximum amount of a City of Dublin 10% of sale price for market-rate loan? homes and 15% of sale price for Inclusionary Units. 4 Should the City establish a maximum sale price on homes Median home price as defined by that buyers are interested in purchasing with assistance from BEAR published monthly statistics. the City of Dublin Program? 5 Should the City provide loans to households with incomes Provide loans to households with up to 140% of Area Median Income? incomes of up to 140% of the Area Median Income. 6 Should the City provide loans to non-residents as well as Must live or work in Dublin Dublin residents? (Requesting clarification). 7 Should payment of the loans be deferred until sale or Loans repaid on sale of home and refinance ofthe home? each refinance will be reviewed to determine if it would trigger repayment. S Should the provision for repayment of loans include a share Yes, on market rate homes, the in the equity earned for the home? higher of a percentage of equity to be repaid with the principal of the loan, or interest at City investment rate. 9 If the program does not include equity sharing, then should ON INCL. UNITS ONLY - loan the program include interest and what should be the amount principal and interest in the amount of interest that could be charged for a FTHB Loan at of interest that City received from maturity? pooled investments. 10 Should the current City preferences (under the Inclusionary Yes, same preferences that are Ordinance) be used to prioritize who would receive First applicable in the Inclusionary Zoning Time Homebuyer loans? Regulations. 11 Should the City charge an administrative fee for servicing City to review options and amount the City of Dublin FTHB loans? that may be charged. 12 Should the City set a maximum applicant asset amount set Maximum of $250,000 allowed in to Qualify for a City of Dublin FTHB loan? assets. The City Council provided direction on all 12 items above, as the chart indicates. Staff has analyzed the recommendations and is now requesting that the City Council clarify the direction regarding living and working in the City Item 6 provides that Loans will only be granted to households with individuals living or working in the City Item 10, however, provides that Loans should continue providing current Inclusionary preferences, which includes among other things, the fact that an individual lives or works in the City Staff requests direction on the following question: Is living or working in the City a requirement or merely a preference? 2 Draft First Time Homebuyers Program' Based on the direction from the City Council at the Joint Study Session, Staff prepared a draft of the City of Dublin First Time Homebuyers Program (Exhibit A to Attachment I). The Program includes information such as: . Qualifying Criteria; . City Preferences; . Components ofthe Program; . FTHB Education; . Loan Committee Review; . Type of Loan, . Due Diligence on Selected Home; . Disbursement of Loan Check to Escrow Company; and . Loan Documents. The Program provides an outline ofthe procedures and substantive criteria for Staff decisions. Financial Impact: The 2005-2006 Fiscal Year budget includes $500,000 in Affordable Housing Funds to begin providing loans to applicants through a First Time Homebuyer Loan Program. The majority of the funds would be used for loans; however, there are also costs to the Program in addition to what would be provided in principal on the loan. For example, there is a Staff cost for preparing the Program materials, legal documents and marketing. There will also be Staff costs for reviewing application materials and processmg. In addition, in order to protect the City's finances, Staff would be reviewing title reports, property appraisals, termite inspections and any other inspections necessary to help the City make a sound financial decision on loaning money on properties. Staff will initially request these reports and information from the primary lender. If the primary lender will not disclose the documents needed for a City loan, the City will need to obtain these documents separately The cost for these reports and information will be added to the loan provided to the applicant and will be paid back when the loan is paid back. If after obtaining information on property at the City's cost the home purchase does not go forward, the City will need to find a way to recoup that amount spent. Staff recommends that when a home is located, the applicant would be required to provide the City of Dublin with a check for 1% of the down payment required (3% of sale price down payment is required by the program). If the loan does not close, the City would deduct, at cost, the reports and information obtained, and return the remaining money to the applicant. If the loan does close, the I % would be provided to the escrow firm to be included as part ofthe applicant's 3% down payment. Next Steps: Following City Council approval of the draft Program, Staff will begin the next steps. This includes developing the internal City procedures, documents and marketing the Program. Staff anticipates that the Program will be up and running by the end ofthis fiscal year Document Preparation: The City Attorney is presently developing the following documents for use with the program: 3 1) Two sets of Loan Agreements: one for market-rate units which will be paid back with the City's share of the equity, and one for below-market rate Inclusionary Units which will restrict the resale price of the unit and which will be paid back to the City with interest; 2) A Deed of Trust to secure the City of Dublin's interest in the property for which the loan is being made; and, 3) A Promissory Note to serve as a pledge from the applicant of the intent to pay back the City of Dublin loan. Staff will bring the standard legal documents to the City Council for approval prior to implementing the program. Marketing of Program: The marketing ofthe FTHB Program includes: . Brochures on the program will be developed and mailed out to key participants and provided to key locations throughout the City of Dublin; . Brochures and application materials will be available at the Tri Valley Housing Opportunity Center; . City Staff will initiate meetings with members of the lending community and the real estate community to explain the program and how the City of Dublin loan would be used to partner with private lending; and . The City website will publicize the Program and contain a link that can be used to request additional information on the Program including the application packet. Based on discussion with prospective lending partners after the above meetings, Staff will determine whether there will be a need to enter into contracts with various service providers such as Title Companies or Credit Rating firms. Subject to the approval for disclosure from the applicant, the City would be able to use the same information that the primary lender uses to underwrite the private lender's loan and utilize the same documents for City loan review This would include lender credit information, title reports and appraisal services, and termite reports. Conclusion: Staff is requesting that the City Council provide direction on Decision Point 6, then approve the draft First Time Homebuyer Program. Following City Council approval, Staff will finalize the legal documents, and begin to market and implement the Program. It is anticipated that the first loan would be ready to fund prior to the end ofthis fiscal year RECOMMENDATION: Staff recommends that the City Council receive the Staff Report; provide direction on Decision Point 6 of the Components ofthe draft Program; and adopt the Resolution approving the draft Program and direct Staffto implement the First Time Homebuyer Program. 4 ( of :z :z RESOLUTION NO. - 06 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ********* APPROVING THE FIRST TIME HOMEBUYER LOAN PROGRAM WHEREAS, the City of Dublin ("City") seeks to implement a First Time Homebuyer Loan Program ("Program") to provide assistance to households striving to enter the home buying market in the City by offering financial assistance and education; and WHEREAS, the City included this program as a high priority in its 2005-2006 Goals and Objectives; and WHEREAS, at a Joint Study Session on December 13, 2005, the City Council and Planning Commission discussed the components of First Time Homebuyer Loan Programs generally and gave City staff direction on what the City's Program should include; and WHEREAS, the direction of the City Council and the Planning Commission is incorporated in the Program attached as Exhibit A, and WHEREAS, it is anticipated that non-material changes and interpretations may be made to the Program by the City Manager or his or her designee as City staff begins to administer the Program; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby approve the Program attached as Exhibit A and authorizes the City Manager or his or her designee to make non-material changes and interpretations to the same. PASSED, APPROVED AND ADOPTED this_ day of following vote: , 2006, by the AYES. NOES ABSENT ABSTAIN Mayor ATTEST City Clerk K:\First time homebuyers\Staff Reports\CCRESFTHB3~21-06.DOC 7. 2 3/~I/Ob Attachment 1 ,zofJ:? EXHIBIT A 30flP CITY OF DUBLIN FIRST TIME HOME BUYER LOAN PROGRAM Goal of Pro~ram. The goal of the First Time Homebuyer Loan Program is to provide assistance to households striving to enter the home buying market in the City of Dublin by offering financial assistance and education. Definitions "Arel;l Median Income" shall mean the Median Income adjusted by actual household size as published annually by State Department of Housing and Community Development ("HCD") for the County of Alameda, which Median Income levels shall be adjusted concurrently with their publication by HCD "Application Completion Letter" shall mean that letter sent by the City to the applicant ensuring that the applicant's application was complete and the applicant meets the eligibility requirements. "Below-Market Rate Loan" shall mean a loan of up to fifteen percent (15%) of the sales price capped at the monthly median home price as published by Bay East Association of Realtors. "City" shall mean the City of Dublin, California. "Conditional Loan Approval" shall mean that the applicant's loan was complete, the applicant meets eligibility requirements, and the applicant may proceed to locate a home and begin the rest ofthe Loan process. "County" shall mean the County of Alameda, California. "Eligible Household" shall mean a household that meets the eligibility criteria set forth in these policies and procedures. "First Time Homebuyer" shall mean a purchaser who has not owned a home, condominium or mobile home, whether as sole owner, tenant-in-common, joint tenant or other form of ownership within the past three (3) years. The City may consider displaced homemakers or other hardship cases. "Gross Household Income" shall mean all income from all sources from all adult household members derived as provided in the Internal Revenue Code (26 USC Section 61), whether or not exempt from federal income tax. Such income includes, but is not limited to, the following: I Wages and salaries including overtime pay; 2. Compensation for services, including fees, commissions, tips and bonuses; K:\First time homebuyers\Staff Reports\Oublin FTH Program3-21-06.DOC --]-- Lf()t:2~ 3 Net income derived from business; 4 Gains derived from dealings in property; 5 Interest; 6. Rents; 7 Royalties; 8. Dividends; 9 Alimony; 10. Child Support; II Annuities; 12. Income from life insurance and endowment contracts; 13 Pensions; 14 Income from discharge of indebtedness; 15 Partnership distributions; 16. Life insurance survivor benefits; 17 Income from an interest in an estate or trust; 18. Public benefits including but not limited to T ANF, SSI, disability income; and/or 19 When a family has net family assets in excess of$5,000, income shall include the actual amount of income, if any, derived from all ofthe family assets or two percent (2%) of the value of such assets, whichever is greater "HUD" shall mean the United StateS Department of Housing and Urban Development. "Market Rate Loan" shall mean a loan of up to ten percent (10%) of the sales price capped at the monthly median home price as published by Bay East Association of Realtors. "New" shall mean a home not previously occupied. "Loan" shall mean a loan or any other form of financial assistance provided by the City to assist a homeowner to purchase a home, including the Below-Market Rate Loan and the Market Rate Loan. "Program" shall mean the City of Dublin First Time Homebuyer Loan Program, including Market Rate and Below-Market Rate Loans for first time homebuyers. "Public Service Employee" shall mean an employee of any public agency situated within the City Loan Terms: Market Rate Loan. When the property is sold, the City receives not only its original loan but also the greater of: (I) interest in a percentage equal to the average of the City's pooled investments for the previous year; or (2) equity based on the proportion of the City's loan compared to the total cost of the home (for example, if the cost of the home is $450,000 and the loan is $45,000, the percentage would be 10%). The home does not remain an affordable housing unit with a maximum affordable sales price. K:\First time homebuyers\StaffReports\Dublin FTH Program3-21-06.DOC __2__ ~lJr):; Below-Market Rate Loan. When the property is sold, the City has right of first refusal and the property may not be sold beyond a maximum affordable sales price. The City also receives interest on the original loan at a percentage equal to the average ofthe City's pooled investments for the previous year The City does not receive a percentage of the increased equity The Loan is considered a "deferred" loan because no payments are due until the owners sell the home or a default occurs. Defaults include, but are not limited to, the following: failure to occupy the property as one's primary residence; refinancing above the value of the Loan balance; violations of senior deeds of trust; or impermissible transfer. If refinancing of the primary mortgage occurs Staff will determine if this refinancing will require Loan repayment. The Loan may pair up with the following primary loan products: a fixed mortgage of 30 years or longer, some types 5 year fixed and then adjustable rate mortgage (5/1 ARM), some products that offer interest only for a specified time period and then revert to a fixed mortgage of 30 years or longer, or any CaIHF A product. However, others may be considered on a case-by-case basis. The specifics ofthe primary loan products will be reviewed on a case-by-case basis to determine ifthe loan is deemed secure enough to pair up with the City's "silent second." The Loan may also work with layered financing as long as the other loans do not reduce the security of the City's funds. Examples are down payment loans along with primary loans provided by CaIHFA. The maximum Loan amount for which an Eligible Household may qualify does not include the amount the City will front for servicing fees or the cost of any additional due diligence for which the City was required to obtain (i.e. title reports, termite inspection, credit report and appraisal). Such expenses will be added to the debt secured with the Loan.. The Loan shall contain no co-signatories, and only the purchaser's/s name/s may be on the deed. Qualifying Criteria. A household is eligible for a Loan if it meets the following criteria. I First Time Homebuver Meets the definitions of First Time Homebuyer described above. 2. Income: The total Gross Household Income must be no more than 120% of the area median for a Below-Market Rate Loan, and no more than or 140% ofthe area median for Market Rate Loans. The area median is based upon the numbers established armually by HCD, and is adjusted for household size. 3 Assets: The household may have no more than two hundred and fifty thousand dollars ($250,000) of total assets, excluding pensions and federally approved pre-tax savings accounts. 4 Owner OccupancY' Applicants must certify that they will occupy the property as their full-time residence at least ten (10) months each year, and that they will not rent or lease the property K:\First time homebuyers\StaffReports\Dublin FTH Program3-2I H06.DOC __3__ 6 o{;(~ 5 US Citizenship/Legal Residencv: Applicants and all household members must be United States Citizens or have the legal right to reside in the United States. 6. Down Pavrnent: Applicants must be able to provide three percent (3%) ofthe sales price ofthe home as a down payment. Preferences: The Program contains preferences for certain individuals (described below). The preferences are determined when the application is processed for completeness. If the applicant has preference points, the applicant moves ahead of other applications that have yet to receive a letter from Staff confirming a complete application. A household receives preference for a Loan if one of its members meets any of the following criteria: Lives in the City Works in the City Public Service Employee Senior (62 years +) Permanently Disabled Immediate relative of a City resident Demolition or condominium conversion 3 points 3 points I point I point I point I point I point Application Submittal ReQuirements: Avvlication - Review (or Comvletion A completed application packet would contain the following: I Identification. Drivers license, birth certificate, or other form of legal photographic identification for all adult household members; 2. Mortgage Materials: Pre-approval letter with description ofloan type and completed mortgage application. 3 Account Statements: Three (3) most recent months of statements for all accounts, including checking, savings, or other investment accounts owned in part or full by all adult household members. 4 Emplovrnent Income Verification: Verification must specify the amount and type of pay (i.e. wages, overtime wages, commissions, bonuses), frequency of pay, and year-to-date earnings, including check stubs or earning statements showing employee's gross pay per pay period and frequency of pay Due to the unpredictable nature of overtime, commission, and K:\First time homebuverslStaffReports\Dublin FTH Program3-21-D6.00C __4__ 7 of 1:; bonus income, if necessary, these forms of income may be estimated using prior year income history 5 Other Income Verification. For sole proprietors, gross business receipts and three (3) most recent business tax returns, including all schedules and attachments; social security, pensions, public assistance or disability; alimony or child support. 6. Tax Returns: Three (3) most recent income tax returns for all adult household members including all attachments and schedules. 7 applicable. Verification of Divorce or Separation Status: Signed and filed court document, if 8. Authorization to Obtain Credit Reports: Each adult household member shall authorize the City to obtain his or her credit report. Avvlication Processinf! Once an application packet is received by the Staff, the qualifications of the applicant will be evaluated. Staff will determine income, credit score, total debt, and preferential status by reviewing the application material. I Identification: Staff will confirm the identity of each applicant. 2. Mortgage Materials: Staff will confirm that applicant has been pre-approved for a type of primary loan accepted under the Program. 3 Account Statements: Staff will analyze accounts to determine that the household does not have more than $250,000 in assets, excluding pensions and federally approved pre-tax savings accounts. 4 Emplovrnent Income Verification. Staff will analyze most current documentation to establish whether income exceeds 120% or 140% ofthe area median income. 5 Other Income Verification: Staff will analyze most current documentation to establish whether income exceeds 120% or 140% of the area median income. 6. Tax Returns: Staffwill analyze tax returns to determine the assets and income of the applicants, as well as their first time homebuyer status. 7 Verification of Divorce or Separation Status: Staff will review these court documents as necessary to determine how applicant will take legal ownership of the home. 8. Authorization to Obtain Credit Reports: Staff will obtain credit reports to determine that FICA credit score is not below 620 Staff will determine that debt-to-income ratio does not exceed 50%. K:\First time homebuyers\StaffReports\Dublin FTH Program3-2I-06.DOC __5__ 'b€JfJ~ When Staff determines that all the information has been provided, that the application is complete, and the applicant is qualified, Staff shall send a letter to applicant. Receipt of this "application completion letter" ensures that the applicant is conditionally approved and may proceed to locate a home and begin the rest of the Loan process. Staff will then forward an applicant information packet to the Loan Committee. Loan Committee Review After the applicant has received the application completion letter he/she is considered conditionally approved. The applicant's information packets will be delivered to a three (3) person loan approval committee as determined by the City Manager or designee from time to time. Within 5 business days, the members of the loan committee will review the application and, upon a two-thirds vote, confirm or deny the eligibility for a Loan. Locatinf! a Home After the applicant has been determined to be qualified and is conditionally approved, the applicant must then locate a home, place a real estate bid, have the bid accepted by seller, enter into a purchase agreement, and provide the purchase agreement to Staff for review The applicant must also provide a check for 1% of the home price to the City of Dublin. This check will be held until loan closing. If the loan closes Staff will send the check to the escrow company for use as part of the 3% required down payment. If the loan does not close and the City of Dublin has incurred expenses in securing documents needed to qualify the loan (title report, appraisal, termite report, etc.) then the cost of documents secured will be deducted from the 1% provided. The difference from the amount spent, at cost, and the amount provided by the applicant will be returned to the applicant. Due Dilif!ence on Selected Home I Once the applicant has located a home, if it is an existing, previously owned home, the City of Dublin Staff will secure a title report on the property to establish the ownership on the property as well as any clouds or conditions on the title to the property that may merit consideration. 2. The Staff will secure a termite report from the applicant or termite firm to determine that the structure is sound and will work with the Building Division to determine if any of the recommended work must be completed prior to sale to ensure a sonnd structure and to safeguard the City's interest in the property In any case, if termite infestation is found in the report, the seller must comply If any work is determined to be necessary the seller must comply before the City will enter into a loan with an applicant for the property This step is unnecessary on a new home. 3 The Staff will secure an appraisal of the home to assure that the asking price is reasonable. This step is unnecessary on a below-market rate Inclusionary home. K:\First time homebuyers\Staff ReportslDublin FTH ProgramJ-21-06.DOC --6-- 1o-f-J.'l All of the above due diligence documents may be obtained from the primary lender or the City may need to enter into contracts for the various services with private service providers. Disbursement o( Loan Funds to Escrow Comvanv Once the City receives approval from the Loan Committee, the applicant has located a home, and all due diligence on the property is complete, a claim will be made for a check or wire for the total amount to be loaned. The claim will be held until the home enters escrow, at which time the claim will be delivered to the Finance Division for issuance. The loan fnnds will be delivered or wired to the escrow company along with closing instructions. Loan Documents Staffwill draw up a complete set ofloan documents once the home enters escrow Once all due diligence is complete, the buyer will be called into the office to execute the loan and real estate documents, and the executed documents will be delivered to the Escrow Company for closing and recording. Education The applicant must take a HUD or Fannie Mae certified First Time Homebuyer class within six (6) months prior to loan closing. Staff will be able to provide locations to applicants where this requirement may be met. Material Chanl!:es and Interpretations Material changes and interpretations to the Program may be made only by Conncil. Non- material changes and interpretations ofthe Program may be made by the City Manager or his or her designee. K:\First time homebuyers\StaffReports\Dublin FTH Program3-21-06.DOC --7-- CITY CLERK File # DODD-DO /()or,;};) AGENDA STATEMENT JOINT CITY COUNCIL AND PLANING COMMISSION STUDY SESSION MEETING DATE: December 13,2005 SUBJECT: Proposed First Time Homebuyer Loan Program Report Prepared by Julia Abdala, Housing Specialist ATTACHMENTS: I) State Housing and Commnnity Development Department Median Income Limits and Calculations at 120%, 140%, 160% and 180% Percent of Median Income. 2) Grid of First Time Homebuyer Programs in Other Cities 3) Most Common Private Home Loans and Implications for Dublin's First Time Homebuyer Loan Program 4) Summary ofIssues Under Discussion at Study Session 5) Sample of First Mortgages for BMR Units in Dublin RECOMMENDATION: I) Receive the Staff Report 2) Provide direction regarding issues related to the First Time Homebuyer Loan Program 3) Direct Staffto return with a draft of a First Time Homebuyer Loan Program to the City Council FINANCIAL STATEMENT: There is no financial impact in discussing the various features that could be incorporated into a First Time Homebuyer Loan Program. DESCRIPTION: The City Conncil has been interested in the development of a first time homebuyer program for several years. The Housing Element adopted on Jnne 3, 2003 contains a policy that the City should provide opportnnities for first-time homebuyers to purchase homes in Dublin (Policy II). As a result of this policy and the desire of the City Conncil to provide a range of housing opportunities, the City Council's Goals and Objectives for 2005-2006 lists the Implementation of a First Time Homebuyer Loan Program (FTHLP) as a high priority In addition, the City of Dublin budget for 2005-2006 contains $500,000 for COPY TO: FTHLP Advisory Group In-House Distribution Page 1 of 13 Attachment 2 K:\.First time homebuvers\StaffReports\12.13-05 CC.PC Study Session.doc I/f)!'?':;' use in a First Time Homebuyer Loan Program. The Godbe Research Housing Needs Study completed in " July 2005 further validated the need for this type of assistance. This Study, presented to the City Council on August 2, 2005, indicated that residents in Dublin believe that a program that would provide financial assistance for first time homebuyers would be valuable. In order to develop an effective First Time Homebuyer Program, Staff has been researching existing programs and lending opportnnities: . Staff has discussed First Time Homebuyer Programs provided by other cities (Hayward, San Leandro, Walnut Creek, Fremont, Concord, Livermore, Pleasanton and San Jose) with each respective City Staff. . Staff worked with a small group of lending professionals (Bank of America, Diablo Fnnding Group, Irwin Home Equity, and DHI Mortgage) to review and evaluate the various features that may be beneficial to incorporate into a Dublin First Time Homebuyer Loan Program (FTHLP). Also in this group were Housing Staff from the City of Concord and the City of Dublin Housing Consultant, Dan Lopez. A benefit of working with these lending professionals was to ensure that any financial assistance program that the City of Dublin may develop would work well with mortgages being offered in the private sector. As a result of Staff research on existing FTHLP and features that can be incorporated into a program for Dublin, a Staff Report on FTHLP issues was taken to the City Council for review and direction. At the September 20, 2005 City Conncil meeting, the Conncil requested a joint study session with the Planning Commission to better review policy issues involved in developing a First Time Homebuyer Loan Program. At that City Conncil meeting Staff was asked to provide additional information. This information consisted of 1) information on the First Time Homebuyer Loan Programs of various other cities (Attachment 2); 2) description of the various private loan products available today by the lending industry and how these could affect a prospective First Time Homebuyer Loan Program (Attachment 3); 3) examples of how various income households may be able to qualifY or not qualifY for a Dublin First Time Homebuyer Loan (will be demonstrated in Study Session); and, 4) a clear definition of a First Time Homebuyer. Staff has also included a sample of some of the mortgages that buyers of BMR units in Dublin currently secure and the monthly payments that result from these mortgages (Attachment 5). The information requested at the September 20, 2005 City Council meeting is included in this Staff Report and in the attachments as indicated above. Additionally, Staff has prepared and will hand out and work through scenarios that will explain how various households may be able to qualify for a First Time Homebuyer Loan in Dublin and how much assistance would be needed in each case. First Time Homebuyer Program General Background: Due to the high cost of housing throughout the Bay Area, jurisdictions can seldom provide residents with full financing to purchase a residential nnit. Cities with first time homebuyer programs almost always provide only partial financing for a home. This requires the applicant to seek other financing. Private financing is usually the primary financing secured in purchasing residential real estate. If a prospective buyer goes to a bank, mortgage broker, credit union or uses a California Housing Finance Agency (CaIHFA) product, it is the major debt that the homebuyer incurs. Any First Time Homebuyer Program provided by Dublin, of necessity, would provide secondary financing, with the intent to assist in closing the gap between what a buyer could secure in the private Page 2 of 13 market and what amount of financing would be necessary to purchase a home. At the same time, pfifafe ( ), 'J- lenders would not allow a lesser amount of financing from any jurisdiction to place a lien on the title of mortgaged property ahead of the private loan. Due to this industry-wide restriction, the City of Dublin would come in second, or with CalHF A products as low as third or fourth in the chain of title on a mortgaged property. All jurisdictions contacted and all known city programs function by providing a second loan or grant. All the cities contacted have indicated that they have not had many problems with borrowers defaulting on their loans; both private loans and city provided loans. It is important to understand that if Dublin provided a secondary loan and a default on a private loan did occur and should the primary lending institution foreclose on the property, the City of Dublin could lose the amount that was loaned out. The private lending institution would have the ability to foreclose and recuperate their losses, however the same assurance would not exist for the City of Dublin which would be lower in the chain of title for the property. This risk can be reduced somewhat by including an "option to purchase" clause in any loan agreement. The City of Dublin currently has this type of clause in the Resale Agreements in use with the Inclusionary Units. With this option, the City of Dublin would have the option to payoff the first lender, purchase the property and then resell it and recuperate the City's losses. Issues: Staff has developed the following issues for City Council consideration to assist Staff in the development of a First Time Homebuyer Loan Program (FTHLP). I Definition of a First Time Homebuyer 2. The target units for which the City would provide loans. 3 The maximum amount of financing that the City could provide in a First Time Homebuyer loan; 4 Maximum sale price allowed for a home to participate in the Dublin program; 5 The maximum income that would be allowed for applicants for a First Time Homebuyer Loan; 6. Discussion of who would be able to utilize the Dublin First Time Homebuyer Loan; 7 The type ofloan that the City could provide; 8. Possibility of equity sharing on repayment of the FTH loan as opposed to simple repayment of the FTH loan; 9 If any interest should be charged and the amonnt of interest that could be charged for a FTH loan at maturity; 10. City preferences in providing FTH loans to applicants; 11 Charging of an administrative fee for providing the loan and servicing the loan; and 12. Maximum assets that an applicant may own and still qualify for a City of Dublin First Time Homebuyer Loan. Issue No. 1. What should be the definition of a First Time Homebuyer? Background/Rationale: The first item is to identify who is a first time homebuyer? While the obvious answer is a household that has never owned a home, the practical aspects are more complicated. How does one assure that a household has never owned a home before? The most common criteria used to determine a "first time homebuyer" is that the household has not owned nor had any interest in residential real estate for the past Page 3 of 13 three years (see Attachment 2). It is understood that this is quite different from "never owning a hb~;',f :;.).. however, Staff has not been able to locate any method to clearly verifY lack of ownership beyond three years. Discussion/Pros & Cons: Pros: Most private and City agencies, including CaIHFA, use the 3-year rule. Using the "three year rule" as criteria to establish a First Time Homeowner is easily verified by checking the last three year's tax returns, including the tax schedules that allow for a household to claim the interest on a mortgage. Most lenders, including any proposed Dublin program would require three years tax returns to establish income and asset ownership. Cons: None. Staff has not identified any negative consequences at this time. Issue No.2. Should the City of Dublin provide loans for Inclusionary Units as well as market rate housing within the City? Background/Rauonale: Financial assistance may be made available for qualified buyers seeking to purchase Inclusionary Units, both new and Inclusionary Units that become available for resale, as well as market rate homes within the City limits, both used homes and new homes. Discussion/Pros & Cons: Pros: Allowing for fmancing of both market rate and Inclusionary Units would provide the most comprehensive of first time homebuyer loan products. It would also give the interested buyer the most freedom in what type of unit to purchase. Cons: Restricting the financing to only one type of unit, such as existing market rate units, would limit the ability of households to purchase housing in Dublin with assistance from the First Time Homebuyer Loan Program. The City of Dublin does not have a large inventory of used homes available for sale. Limiting financial assistance to these nnits could restrict the number of loans provided through the program. Limiting fmancing to only Inclusionary Units could also limit the number of loans provided through a First Time Homebuyer Loan Program since the number of Inclusionary Units in the City of Dublin is still rather small. Buyers are also more likely to be able to secure private financing for these units since the sale prices are restricted by the City's Affordable Housing Agreements and may, therefore, be less likely to need the City's financial assistance. What is the maximum amount that the City should loan under the FTHLP? Issue No.3. Background/Rauonaw: Reviewing First Time Homebuyer Programs in other cities indicates that when too small an amonnt is provided as a loan by the mnnicipality, the program generates very little activity Page 4 of 13 IL-f 0 f :; () Based on Staffs research, 10% of the sales price appears to provide a sufficient financial participation to make a difference in the ability of lower-income households to purchase a market rate home. If the Conncil were interested in funding loans for Inclusionary Units, 15% would be recommended. Market rate homes are generally more expensive than inclusionary nnits. If the FTHLP were to provide the same amount of a loan (15%) as for the inclusionary nnits, larger loans would be required. For example, 15% ofa home selling at $600,000 would be a City loan of $90,000. Because the City of Dublin does not have fnnding to provide many loans at these high amounts, a lower percentage is suggested for market rate homes than inclusionary units. If the FTHLP were to provide loans of 10%, inventory of existing homes in Dublin is rather limited, so Staff anticipates fewer requests for large loans based on high sale prices. Additionally, since this type of financing would only be available to first time homebuyers, it is anticipated that the majority of activity will be in lower priced homes or condominiums including Inclusionary homes. Discussion/Pros & Cons: Pros' A ten percent loan for market rate homes and 15 % for Inclusionary homes should generate interest and applications in the first year of the program. Cons: If the median sales price in Dublin is currently $785,888 (Bay East Association of Realtors in October, 2005), a 10% loan may be up to $78,588. This is a substantial amonnt of money compared to what is available overall for the program. If many requests come in for loans of this magnitude, the City will not be able to provide many loans with the $500,000 amonnt budgeted in Fiscal Year 2005-2006. Alternatives: At this time Staff does not have any alternatives that would be recommended for consideration by City Council. Issue No.4. Should the maximum home price a buyer may purchase with financing from the City of Dublin be set at the latest median price as established by Bay East Association of Realtors (BEAR)? Background/Rationale: Since the FTHLP is intended for first time homebuyers, it is assumed that the Program is for those buyers starting out in the real estate market and not for buyers interested in purchasing the higher end homes. The homes sold in the City of Dublin have a broad range and can be very expensive. It is therefore suggested that there should be a limit to the prices of homes that could be financed through the City's FTHLP The Bay East Association of Realtors (BEAR) provides monthly median price listings for single- family homes and condominiums for most of the cities in the region on the Internet. BEAR is focused on those cities in the eastern portion of the East Bay The member realtors overwhelmingly work in the Tri Valley Area. The statistics collected by BEAR would be used to establish a top sales price for homes that the City would finance. Using BEAR statistics, the maximum home price would be set at the median. The median price for a home in the City of Dublin in October 2005 (the latest month provided) was $785,888 and the median price for a condominium in the City of Dublin in October 2005 was $552,000. Page 5 ofl3 l!?tltJ.1 Discussion/Pros & Cons: Pros: Setting the maximum sale price at the monthly median amounts as published by BEAR allows the home prices of homes financed to adjust and keep pace with the market rate price of homes in Dublin. This option also provides a standard measurement that is always accessible for Staff to review and obtain for any prospective borrower. Cons: Limiting the price of homes that may be financed through the City of Dublin program may eliminate some interested homebuyers. Alternatives: The City Council may decide to not have a maximum on home prices that may be financed or may suggest some other maximum price. Issue No.5. Should loans be made available to qualifying households with incomes up to 140 % of the County of Alameda median income? Background/Rationale: Current sale prices of homes in the City of Dublin require a household of 4 with 5% down payment to have over 190 % of the area median income (AMI) to be able to afford purchasing a home at the median price. Due to the price of homes, more and more workforce households are being priced out of the market. Many of these workforce households earn above 120 % ofthe area median. This is particularly the case if the household is a two wage earner household. Examples of households that tend to be just above 120 % of the area median income are households with a teacher or police officer as one of the wage earners. Discussion/Pros & Cons: Pros: Staff is suggesting that the FTHLP includes loans that are available to qualifying households with incomes up to 140 % of the area median income. By accommodating this higher income category more workforce households may be served. There is a substantial gap between 120 % of AMI as used by many programs including the City of Dublin Inc1usionary Ordinance, and the 200 % AMI needed to purchase a median priced home in Dublin. Setting the maximum income of a qualifying household up to 140 % of the (AMI) serves to provide assistance to more individuals who are slightly above the "moderate-income category" or 120%, and yet carmot afford to purchase in Dublin. (See Attachment I, State Income Guidelines for 2005). There would still remain a gap in affordability for households with incomes above 140 % of AMI, however, the City of Dublin will need to set the limit at some realistic number, since there is not sufficient financing to assist all households needing financial assistance all the way up to 200 % of AMI. Several programs that Staff researched use 140 % of AMI as a maximum household income, including the Silicon Valley Trust Fund and the Home Source Lease-Purchase Program. Cons: Page 6 of 13 No cons identified at this time. lif of; 7- Alternatives: The City Conncil may choose to limit the household income maximum at a percentage other than 140% AMI. Issue No.6. Should the City of Dublin offer First Time Homebuyer Loans to nonresidents as well as Dublin residents? Background/Rauonak: This issue addresses who should be served by this program; existing Dublin residents or a broader audience including those would desire to live in Dublin, but do not live here currently. Discussion/Pros & Cons: Pros: It is possible that many who would seek housing in Dublin and financing assistance may be employed in Dublin. Assisting these households to move to Dublin may therefore reduce traffic commutes and assist in decreasing congestion on local freeways. Cons: Providing loans to non-residents would broaden the pool of possible borrowers. If many applicants apply, it may be more difficult for Dublin residents to secure a secondary loan from the City of Dublin. Alternatives: The City Council could consider providing FTHLP assistance only to Dublin residents. However, restricting loan funds to Dublin residents could run the risk of not attracting enough qualified candidates for loans. The nniverse of existing residents seeking and qualifYing for this type of City financing may be too small to provide for a successful FTHLP Issue No.7. Should the City of Dublin provide loans with payment deferred until the home is sold or refinanced? Background/Rationale: This issue addresses when a loan should be paid in full. Generally, there are two methods for loaning money: (I) An amortized loan would require that the amount loaned by the City be repaid at some consistent interval, i.e. monthly The City of Dublin does not have the Staff or financial structures in place to receive monthly loan payments from borrowers similar to a banle This would necessitate a log-in system, posting of payments, reminders when payments are late and some method to collect from delinquencies among other tasks. (2) A deferred loan postpones the payment of the loan and requires payment with the full amount due at a later date. Requiring a loan to be due, in full, at some future defined date is commonly referred to as a balloon payment. However, another method of deferring a repayment is to defer the payment until the sale of the property or nntil the property is refinanced. Staff is suggesting that the FTHLP include a deferred loan program with the full payment due at the sale or refinancing ofthe home. Page 7 of 13 if tJ f;L '0 Discussion/Pros & Cons: Pros: Providing deferred loans allows lower-income buyers to take advantage of a loan source that would not require payment as the buyers are struggling to pay back the primary mortgage, as first time homebuyers. Loans deferred until resale also work well with most private loan products because a primary lender will not count a secondary deferred loan in underwriting to establish the amount of financing for which a prospective borrower may qualify Cons: Providing deferred financing takes City fnnds and makes them nnavailable for a longer and uncertain period of time since Staff carmot know when a buyer intends to sell or refinance the home. Alternatives: There are several other alternatives that the City Conncil may consider including: I Amortizing the City of Dublin FTHLP, requiring monthly payments. This requires additional Staff. 2. Forgive the loan after a given amount oftime; or 3. Defer the loan initially for some period of time (such as five years) and then require monthly loan payments to begin. The loan payments would again, require additional Staff. Requiring payments on a First Time Homebuyer Loan replenishes the pool of money allocated for the program more quickly. The money would then be available for other uses to be developed by the City Conncil, or for other first time homebuyers, however would require additional Staff. As an alternative, the City could contract out for loan servicing, if amortized loans were the preferred method of having loans repaid. Contracting out may be cumbersome since some monitoring and supervision is still required of the procured entity Additionally, there are very few agencies that provide this type of activity, limiting both the choice and possibly the quality of work provided by the contractor. Finally, because the City of Dublin does not have a large portfolio of loans nor is it anticipated that the numbers of loans would reach any considerable size, it may be difficult to attract loan-servicing contractors to provide this service for the City of Dublin. Forgiving the loan entirely may eliminate any type of collecting activity on qualifying loans and is usually considered when a municipality is seeking to encourage a specific type of response from borrowers. For example, to encourage long-term residency, the City Conncil might decide to put forward a program that forgave a loan after 15 years. This alternative would reduce the amount of long-term funds that the City would have for housing activities. Issue No.8. Should the City of Dublin First Time Homebuyer loan be repaid with principal and a share in the equity earned on the City financed home? This option relates only to market rate units. Background/Rationale: The terms of the loan could provide for the City of Dublin to share in the equity with the participant in the FTHLP Equity sharing is one method to increase and replenish affordable housing funds for the future. In this Option payback of the loan would include the full principal loaned as well as some amount of the equity the borrower has acquired on the financed property Page 8 of 13 1'3 0 fl.'lc Since the borrower would not have been able to purchase the home without the City of Dublin FTHLP, the City of Dublin could decide that the City should share in the appreciation of the property The percentage of equity that would come to the City when the loan is repaid could be the same ratio as the City loan to the total sales price. For example, on a 10 percent loan, if the original sale price was $500,000 and the City provided a loan of $50,000, then when the loan was paid back, the City would receive $50,000 plus 10 percent of any appreciation on the property financed. To provide greater security to the City's loaned funds, the provision could be that the loan will be repaid with the higher of; the percentage of equity discussed above or the average rate of return the City of Dublin would have earned on the money, if the money were invested. Staff is not recommending as an option to share equity on Inclusionary Units where the buyers received a First Time Homebuyer loan because of the resale agreements these properties have on title. These units appreciate much more slowly and offer less equity to the owners. Discussion/Pros & Cons: Pros: One advantage of equity sharing is that it does not limit the future sale price of the home through a resale agreement. Equity sharing uses the real estate market to give control and opportnnity to the owner. It provides the owner a vehicle to receive the benefit of the appreciation on the property and at the same time allows the City the ability to receive additional affordable housing funds. The City of Dublin has In Lieu fee fnnds, collected from developers to use for affordable housing. However, the In Lieu fees that will be received over time may begin to diminish, as the City gets closer to build out and less land is available for development. Finding new sources to generate affordable housing funds could be useful in the future. Cons: Equity sharing does reduce the amount of equity that a buyer receives for the property that was purchased. If housing values cease to escalate, or homes began depreciating in value, equity sharing does not work well since there is less or no equity to share. Alternatives: The City Council may also consider simply requiring the loan paid back with some amount of interest. Borrowers would probably view paying the loan paid back with some amonnt of interest more favorably since the borrower would be able to keep the equity earned on the property Additionally, if the loan were paid back with some amonnt of interest, rather than sharing equity, the outcome mayor may not provide as much money for the City to use for affordable housing purposes depending on the escalation of housing values Issue No.9 Should the City of Dublin FTHLP require loans received to be paid back in full, including interest in the amount of the average rate of return earned by the City? Background/Rationale: Inclusionary Units are tied to resale restrictions and the equity received by the homeowner selling their unit may be minimal. Requiring repayment of the First Time Homebuyer loan with interest, instead of equity sharing is a practical manner to address the special circumstance of the resale restriction on the pnce. Page 9 of 13 ( cr 0 f ;L'J- Requiring loans on Inclusionary Units to be paid back with interest would return money to the City of Dublin that was loaned along with the interest that the City would have earned if this money had been invested instead of used to provide a FTHLP loan. Discussion/Pros & Cons: Pros: If the City of Dublin were to charge interest on the loan, then the City could be paid back in an amount similar to what the City would have earned if the money had been invested. Cons: Owners of Inclusionary Units will accumulate limited equity on the property they have purchased. This is because the Resale Agreement that would be entered into nnder the City's Inc1usionary Ordinance restricts the price the unit may be sold at for 55 years. If the owners remain in the same unit for longer periods of time more equity may accrue. If the owner moves out within the first few years, however, the equity received may be nonexistent or minimal depending on the sale price that is based on the increase in the Income Limits. If this is the full extent of the equity earned and the owner must pay back a loan along with interest, it is conceivable that the household may be required to pay back more than what will be received on sale of the house and, therefore, leave with less money than they originally invested. Alternatives: The City Council could consider forgiving the loans entirely for Inc1usionary Unit buyers, or allow for loans to be made with 0 percent interest. Both forgiving the loan and making loans with 0 percent interest would alleviate the possibility that an Inclusionary Unit buyer may need to pay more than the loan itself, at resale. However, both forgiving the loan and charging no interest on a loan would result in the City of Dublin receiving money back with less value than when initially loaned or may result in the City receiving no money back, in the case of forgiving the loan. Issue No. 10. Should the City preferences used in the Inclusionary Zoning Ordinance be applied to the First Time Homebuyer Program as well? Background/Rationale: The City of Dublin Inc1usionary Zoning Ordinance sets forth certain preferences for purchasing Inclusionary Units. This option would utilize the same preferences as those established for the Inclusionary Housing Program. These preferences include those who lived and/or work in Dublin, public service employees, including teachers, senior and disabled applicants as well as applicants who do not live in Dublin but have an immediate family member living in Dublin and applicants that must relocate due to demolition of existing housing or of condo conversion of existing housing. The application of this option would result in a ranking system for applications. If an application that was consistent with the preferences were to submit a complete application for the FTHLP and there were others ahead of this household; Staff could move the applicant with City preferences ahead of others waiting for review and approval. Page 10 of 13 Discussion/Pros & Cons: ;:Or;+)"J.- Pros: As noted nnder Issue No.5, if this program assisted non-residents, then it may be more difficult for residents to obtain financing. Allowing for a preference system would address this concern. If Dublin residents applied, the application would be taken next, not in the order received. Cons: Requiring City preferences for the FTHLP would make the administration of the program slightly more complicated, since verification of any claimed preference must be ascertained prior to proceeding with the applicant. Alternatives: Staff did not identify any alternatives other than not choosing this option. Issue No. 11. Should the City of Dublin charge an administrative fee, to be determined, for the administration and servicing ofthese First Time Homebuyer Loans? Backgroun~auonak: The Affordable Housing In lieu fee funds the Housing Division at this time. The purpose of the fee is to assist with the development of affordable housing. While these FTH loans do assist in making housing more affordable, they do not guaranty long-term affordability to a home. At the same time, as mentioned earlier, it is estimated that as the City builds out the amount of in lieu fees collected will diminish. Collecting an administrative fee helps to pay for the services of the Housing Staff to administer this program. Since the FTHLP will allow the buyer of a market rate home to resell at market rates, the buyer may earn appreciation from this purchase. At the same time, this type of program is labor intensive. It requires Staff time to work with applicants. Additionally, the program requires nnderwriting and commnnication with lenders, realtors and escrow companies. A reasonable fee added to the close of sale is a possible way to extend housing dollars. The amount charged would directly relate to the time and effort that is typically required by Housing Staffto process the loan. Discussion/Pros & Cons: Pros: Charging a reasonable administrative fee to service the loan would assist the City of Dublin in recuperating the funds that are spent by the City to administer the program and each loan. The fee could be a reasonable amonnt and collected by the escrow company at close of the loan, along with all the fees of financing and purchasing real estate. Cons: A fee would add a minimal amonnt to the cost of the home. The buyer will need to pay this fee along with mortgage, interest, points and everything else from appraisals to inspection fees. Alternatives: The City Conncil could consider not adding an administrative fee to each loan given. Page 11 of 13 If the City Council determined not to charge this fee, the cost of the house would be slightly ?eds;o f ;1.).- however, the amount would be negligible. This decision would reduce one fee from the purchase of a home. If the administrative fee were not charged Staff would continue to utilize the in lieu fee for Staff time to administer the FTHLP If in lieu fees become insufficient in the future, the General Fnnd would need to be used to maintain and service existing loans, whether or not the program were to continue through future fiscal years. Issue No. 12. What would be the maximum amount in assets that a household may have and still qualify for a First Time Homebuyer Loan? BackgroundlRauonak: Primary lenders usually require a reserve in savings when these agencies nnderwrite loans for applicants. These lenders want to make sure that a borrower has money in the bank to pay for homeowners insurance, property taxes and other housing associated expenses. The amonnts required in reserves vary from around $5,000 to 12 times the mortgage payment depending on the type of loan that is being provided. In discussing an asset cap with lending professionals, City Staff was encouraged to allow borrowers to maintain an amonnt somewhat larger than required reserves in savings. The lenders seemed to be concerned that first time homebuyers may run across nnanticipated expenses and would not be able to cover them without some amonnt in savings. Furthermore, discussion suggested that those assets that carmot be turned into cash without substantial penalty (40IK, IRA) not be included in the asset cap. In addition to the reserve that most lenders require of loan applicants, it may be beneficial to allow borrowers to have some amount of money in savings to cover an nnforeseen emergency In nnderwriting the City of Dublin's FTH loans, Staff would review a number of factors, including wages or actual income of a qualifying household. For example, if an applicant household is a yonng family with two wage earners and this household has assets of $250,000; then Staff would be able to make the determination that some of this money should be used to purchase the home, rather than a City of Dublin loan. On the other hand, if the applicant is a retired person with a pension (income) of $16,000 and has savings of $150,000, then it may be reasonable to assume that this individual lives off of the pension and augments all needs from the savings. This household may be able to qualify These are decisions that are usually made when nnderwriting the loan. Dublin Housing Staff has spoken with Staff from several cities; San Leandro, Hayward, Concord and Walnut Creek and all cities have flexibility in determining the amount of assets that an applicant may posses and still qualify for a loan. With the exception of Concord, none of these cities had a hard and fast asset limit. As an overall cap, Staff would suggest that no household with assets over $250,000 qualify for a City of Dublin First Time Homebuyer loan. As stated, the actual situation may vary on a case-by-case basis and is reviewed and evaluated along with the entire financial status of the household in the underwriting process. Discussion/Pros & Cons: Pros: Allowing for some assets would allow the qualifying household to respond to unanticipated circumstances with the money in savings. If there were an emergency and the borrower had insufficient savings, one option the household may have to explore to secure cash could be to refinance the home loan and take out Page 12 of 13 money. However, the City of Dublin requires the City loan to be paid back when this o~;~s? I d- 7- Refinancing and repaying a loan that could be in the magnitude of $20,000 - $60,000 could cause a substantial burden. Additionally, it may be that the refinancing institution is not able to provide the borrower with sufficient fnnds to resolve the household fiscal emergency and pay back the City This type of scenario would require the City of Dublin to review the applicant's personal situation closely and make a special determination whether the City loan may remain intact with the individual refinancing the first home mortgage and taking out money It may be preferable to allow a cushion for the household for any potential emergency when first evaluating the applicant for a FTH loan rather than later make discretionary determinations regarding repayment at a later date. Cons: Providing loans to applicants with assets up to $250,000 may reduce available loan funding to households with less income. Alternatives: The City Council could consider not allowing borrowers to have any assets above primary lender required reserves when applying for a Dublin FTH loan or could consider allowing qualifying applicants to possess smaller amount of assets. Requiring first time homebuyers to use personal assets if there are any, rather than City funds would stretch the City of Dublin first time homebuyer money further Not allowing applicants to have some assets when applying for a City of Dublin loan could cause the problem in refinancing outlined above. Allowing for a smaller amonnt as an asset cap would require setting the cap at some other arbitrary number since the jurisdictions polled do not have asset caps. RECOMMENDATION: Staff recommends that the City Council and the Planning Commission receive the Staff Report; provide direction regarding the issues related to the First Time Homebuyer Loan Program; and direct Staff to return with a draft of a First Time Homebuyer Loan Program. 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