Title
Approve loan documents for the County of Monterey’s First Time Homebuyer Program.
Body
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Approve loan documents for the County of Monterey’s First Time Homebuyer Program
SUMMARY:
In 2011, the County was notified that it was awarded an $800,000 HOME grant to fund First Time Home Buyer (FTHB) loans. The attached loan documents are necessary to properly document and secure the FTHB loans made with grant funds.
DISCUSSION:
Over the last twenty years, the County has received grants from the State Housing and Community Development Department (HCD) to provide FTHB loans to income-qualified households. FTHB loans assist households in unincorporated areas of the County to purchase a home by reducing the amount of the first mortgage and/or the equity downpayment. FTHB loans can be extended to any household earning less than 80% of Area Median Income (AMI). The loan terms are for 30-years at 3% interest and all payments are deferred for the term of the loan. By deferring repayment of the FTHB loan, the household’s monthly debt service requirements remain low which helps them to qualify for a first mortgage.
All FTHB loans must be properly documented to ensure that the County’s HOME assets are protected and that the County remains in compliance with grant requirements. The loan documents consist of a Loan Agreement, Deed of Trust, Promissory Note, and a Buyer’s Occupancy and Financing Restrictions Agreement. The County uses the latter document to ensure that the unit is occupied by the Buyer during the term of the loan. This Agreement also limits refinancing of the first mortgage to lowering the interest rate; no cash out is allowed. Finally, under the terms of the Agreement, the note is due upon sale.
OTHER AGENCY INVOLVEMENT:
County Counsel has reviewed and approved the recommended loan documents as to form.
FINANCING:
There is no impact on the General Fund. All FTHB loans and loan repaym...
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