~ Single Family Update
~ S&P Upgrade
~ Housing in California: A Short History
~ Tips on Saving Water
~ Board Meeting Notice
To quote James Taylor, I've seen fire and I've seen rain. Far too much of the former, and not nearly enough of the latter. Although the message is being sent out through almost every medium, I'm going to add my voice to the choir: we all need to save water.
We're walking the walk: CalHFA will be a part of the Governor's recent $687 million proposal to deal with the drought. About $10 million in funds from the California Natural Disaster Assistance Program will be used to help those whose housing situations have been affected by the drought, mostly agricultural workers who have no employment due to anticipated smaller crops. This will be in addition to about $11 million in federal funds administered by the Department of Housing & Community Development that will be redirected toward drought relief. Details on the disbursement of funds are still being worked out, and I'm confident we'll do as much as we possibly can.
I'm pleased with our re-entry into the first mortgage market, as our CalPLUS loan continues to grow. We have spent the past few years focusing on our down payment assistance programs as the housing market realigned itself, and are busily working our way back into loan officers' hearts as a destination for the whole package. An important note here is that the Extra Credit Teacher program is not just for teachers; it can help almost any worker at a high-priority school.
Our Multifamily division is also very busy, as our Preservation program keeps working to maintain the stock of affordable apartment buildings and other multifamily developments in California. Also under Multifamily's watch, the Mental Health Services Act Housing Program has helped build more than 3,000 housing units to help house residents at risk of being homeless. I'm very proud of our work with the people who need our help the most.
Our collaboration with the Department of Housing & Community Development continues to bear fruit, as we find more ways to streamline operations and integrate various functions of the two Departments. The transitions have been mostly smooth, and the executive teams are each working on Strategic Plans to chart a course forward.
Leading CalHFA continues to be a very enjoyable challenge, and I welcome your comments and ideas. I'll leave you with this: I've seen sunny days that I thought would never end; in the meantime, perhaps consider xeriscaping.
Until the next Housing Matters,
California is edging out of the Great Recession, and we at CalHFA are making sure we're ready for when demand returns to the housing market. We are doing so with great excitement as well as a well-honed degree of thoughtfulness. Although there is uncertainty in the markets right now, what we are clear about is CalHFA's ability and capacity to design programs that meet Californian's needs and that provide new tools that can be adapted as market conditions change.
We have five current products for first-time homebuyers, are close to completing a sixth one and are working to introduce more as soon as we can. Here's a quick guide to what we are doing to help this small but vital piece of the California housing puzzle.
The CalPLUS loan is gaining steam as more people realize how this unique combination of first mortgage and down payment assistance can make the difference between ownership and renting. CalPLUS includes the Zero Interest Program, a deferred-payment down payment assistance loan that carries a zero-percent interest rate. When you pay off your first loan, you pay off the principal of ZIP, and not a penny more.
A parallel to CalPLUS is our FHA Loan Program. This first mortgage loan is more appropriate for people who may have less need of the bundled down payment assistance of ZIP. Nonetheless, homebuyers can still use our CHDAP and ECTP programs, which are explained below.
The California Homebuyer's Downpayment Assistance Program can be used with any approved first mortgage. It gives a homebuyer up to 3% of the value of the first loan in deferred-payment assistance.
We also finance the Extra Credit Teacher Program, which offers up to $7,500 in down payment assistance in low-cost areas of California, and up to $15,000 in high cost. Best of all, if you work in a high-priority school for three years, the interest on the loan is forgiven. In addition, we just lowered the interest rate on ECTP.
Finally, we provide access to Mortgage Credit Certificates, which can significantly reduce the amount of taxes you owe on your end-of-year return.
There's no doubt that the many mortgage options available can be intimidating, so we recommend you contact our network of Preferred Loan Officers. These professionals are well-versed in CalHFA programs, and have experience with first-time homebuyers. They can guide you through the process, and help get you on the road to homeownership. Getting started is just a click away!
We are also working on an Energy Efficient Mortgage, a conventional mortgage product, and other programs that will give more options to first-time homebuyers. Please keep an eye on CalHFA.ca.gov for all the latest news.
CalHFA was very happy to learn in February that Standard & Poor's rating agency had upgraded its rating of an important CalHFA bond indenture by two notches, from BBB to A-. Later in the month, Moody's Investor Services changed its outlook from negative to positive on those bonds, while affirming its existing rating. These ratings upgrades are the result of excellent risk management and investment work by our Finance Division team, particularly in light of the continued volatile capital and bond markets.
As a general rule, the higher and more stable the rating, the more competitive our bonds are in the market place and thus the more competitive we can be in passing that value on to first time home buyers.
Much of CalHFA's historical work has been predicated on the Agency's ability to sell housing revenue bonds on the open market. The revenue from these bonds, whose earnings accumulate tax-free, is then used to finance mortgages for first-time homebuyers at competitive interest rates. For the past several years, however, the ratings of CalHFA bonds (and of housing finance bonds across the country) have been very low.
These low ratings have meant that investors would have demanded a premium interest rate in order to purchase the bonds; if CalHFA had to pay a high rate to investors, the rate it charged to first-time homebuyers would have to be even higher. Instead of offering products that were not competitive in the marketplace and not beneficial to Californians, CalHFA chose not to issue bonds during the recent financial downturn.
With this upgrade in ratings, however, the Agency hopes that CalHFA's bonds become more attractive to investors, and that once again a bond-based first mortgage product will make financial sense. In the meantime, we will continue to offer reliable loans that help California homebuyers find their first home.
The State of California has two primary organizations devoted to Housing: The California Housing Finance Agency and the Department of Housing & Community Development. CalVets has a housing arm, and the State Treasurer's Office has housing tax credit authority through the Tax Credit Allocation Committee and the California Debt Limit Allocation Committee. As CalHFA approaches its 40th Anniversary next year, we thought it might be interesting to take a look at how California has been involved in housing the state's residents.
California's history of state governmental involvement in housing dates back more than 100 years, to 1909. In that year, the Legislature enacted the State Tenement Housing Act, which authorized local building officials to enforce minimum sanitation and safety standards in the state's urban tenements. Soon after this, in 1913, Hiram Johnson signed the first labor camp sanitation act, and directed the recently-created Commission of Immigration and Housing to investigate the Hop Riots in Wheatland. The Commission concluded that the riots were caused by poor housing and sanitary conditions in the Durst Ranch labor camps, and assumed responsibility for inspecting labor camps and fixing unsatisfactory conditions.
The Commission evolved over the next fifty years, and eventually was dissolved in 1981, to reduce redundancy with the Department of Housing and Community Development, which had been created in 1965. In these years, the state's role in housing expanded to include regulation of standards in auto camps, trailer camps and mobilehome parks. The state also took on the tasks of developing and enforcing minimum construction regulations for all types of housing, and providing technical assistance, advice and research to citizens, industry and government entities.
The year 1975 saw the passage of the Housing and Home Finance Act, which created the California Housing Finance Agency as the state's affordable housing bank. This new Department was self-funded, using the sale of home mortgage revenue bonds to help Californians buy their first homes with a mortgage they could afford. The number of programs administered by CalHFA has waxed and waned with the overall housing market; CalHFA currently offers two first mortgage programs and three down payment assistance programs for first-time homebuyers.
The last twenty years have seen further evolution of HCD, as the Department administered billions of dollars in state and federal funds for affordable housing programs. The passage of Proposition 46 in 2002 and Proposition 1C in 2006 authorized $4.6 billion in bond issues, the revenues from which have been used for dozens of loan, grant and tax credit financing programs. The vast majority of these funds have been expended as of December 2013. All in all, HCD has accomplished a remarkable amount of work distributing these funds in a relatively short time frame. More importantly, these funds have resulted in the construction of tens of thousands of new affordable housing units across the state.
In addition to assisting with the distribution of bond funds, CalHFA also works extensively with HCD in the multifamily arena, as both departments work to increase the supply of affordable housing stock in California, while preserving the existing supply. Both CalHFA's and HCD's Asset Management divisions look after hundreds of existing buildings, ensuring they meet adequate living standards.
Governor Edmund G. Brown Jr.'s Reorganization Plan has directed these two departments to cooperate to the extent possible, given existing statutory and financial constraints. The Legislative and Marketing/Communications functions have each combined under a single Deputy Director, and the two departments are working together to find more efficiencies to better serve the people of California. Other areas of focus during the next year will be asset management and financial assistance.
With the next edition of the Statewide Housing Plan on the horizon in 2015, this is an exciting time for housing in California, and we're looking forward to making good things happen.
There are many ways to save water during our drought. Here are ten of the easiest.
- Water your lawn only when it needs it. Step on your grass. If it springs back, when you lift your foot, it doesn't need water. So set your sprinklers for more days in between watering. Saves 750-1,500 gallons per month. Better yet, especially in times of drought, water with a hose. And best of all, convert your lawn to native plants.
- Fix leaky faucets and plumbing joints. Saves 20 gallons per day for every leak stopped.
- Don't run the hose while washing your car. Use a bucket of water and a quick hose rinse at the end. Saves 150 gallons each time. For a two-car family that's up to 1,200 gallons a month.
- Install water-saving shower heads or flow restrictors. Saves 500 to 800 gallons per month.
- Run only full loads in the washing machine and dishwasher. Saves 300 to 800 gallons per month.
- Shorten your showers. Even a one or two minute reduction can save up to 700 gallons per month.
- Use a broom instead of a hose to clean driveways and sidewalks. Saves 150 gallons or more each time. At once a week, that's more than 600 gallons a month.
- Don't use your toilet as an ashtray or wastebasket. Saves 400 to 600 gallons per month.
- Capture tap water. While you wait for hot water to come down the pipes, catch the flow in a watering can to use later on house plants or your garden. Saves 200 to 300 gallons per month.
- Don't water the sidewalks, driveway or gutter. Adjust your sprinklers so that water lands on your lawn or garden where it belongs--and only there. Saves 500 gallons per month
Courtesy of Mono Lake Commission
CalHFA's next Board Meeting will be on May 13. The meeting will tentatively be held at the CalPERS Headquarters 400 Q Street, Sacramento, CA. All are welcome to attend; you can find the agenda on the CalHFA website.