Housing Matters Newsletter
Summer 2014, Volume 23
New Leadership for CalHFA
It is with a combination of sadness and anticipation that I write my last Executive Director’s letter for CalHFA’s Housing Matters. On Friday, August 8, I will be sworn in as Director of the California Department of Housing and Community Development; Tia Boatman Patterson will be sworn in as CalHFA’s new Executive Director.
Tia has a long and distinguished career history in affordable housing, having served as both General and Agency Counsel for the Sacramento Housing and Redevelopment Agency, in addition to having been a CalHFA Board Member since 2012. I’m very much looking forward to working closely with Tia as we continue the collaboration between our two departments.
Speaking of collaboration, I’m thrilled that the voters of California gave us an opportunity, via passage of Proposition 41, to work with both HCD and CalVet to help house veterans. This represents a sea change in how veterans’ changing needs will be served in California. Our first stakeholder group meeting has already convened, and there are several more coming up around the state.
There will still be some Cappio influence at CalHFA, as I will now have a voting seat on the CalHFA Board. I will also be helping Tia transition into her new role, and offering her all the assistance she requests.
The past three years have been immensely rewarding and humbling for me. Thank you to all of our business partners for teaching me and to all the people who have taken advantage of our products and programs; without your help and good faith, CalHFA would not be where we are today.
All the best,
Loan Officer Martha Morales Helps Make Dreams Come True
For the past 22 years, Martha Morales has been doing what she is passionate about —making the dream of owning a home a reality for families in California.
Working for Guild Mortgage Company, Morales covers the counties of Solano, Alameda, San Joaquin, Contra Costa, and Stanislaus.
When asked how it feels to help people get the keys to their new home, she replied: “It is the most amazing feeling, it is very emotionally fulfilling to help families become homeowners,” Morales said.
Morales uses CalHFA lending products for her clients, including the CalPLUS mortgage loan.
“What I enjoy about using CalHFA products is the 100% financing, layering, and the requirements needed to apply are simple,” she added.
Morales is passionate about educating families on lending products before they apply for a mortgage and or lending products.
With a busy work schedule and family household to run, she still makes time to help educate families in her community. Morales also presents workshops and speaks on financial literacy and lending products.
“When people attend workshops and get educated, they are able to have the power to successfully budget their money and save for the future,” she added.
Due to the language barrier for the Spanish speaking communities in areas she serves, Morales does everything in her power to provide them the information they need.
“I don’t want them to fear the products just because they don’t understand English,” she says.
Morales conducts workshops and presentations to better deliver the benefits of CalHFA’s lending products and create consumer awareness in the Spanish speaking communities.
“I am in the business of changing lives,” Morales says. “When the consumer has the education they need to buy a home, dreams become a reality for them.”
We have recently expanded our stable of mortgage loan products, and are excited to get the word out. As the markets have improved in the wake of the Great Recession, new financing models have emerged that enable Housing Finance Agencies to once again be competitive with the private market. We look forward to using some of these new models to help more Californians buy a home with a loan they can afford.
The most important thing about our new products is that they maintain the same high underwriting and qualification standards as our existing products. Every homebuyer must undergo a CalHFA homebuyer education course—which includes a section on overall financial literacy—and our minimum credit score continues to be 640.
Our first new product is the flip side of the CalPLUS FHA. The CalPLUS Conventional is the only 97% loan in California; like its FHA counterpart, it comes with built in down payment assistance with the Zero Interest Program. If you’d care for a slightly lower interest rate and don’t need the down payment assistance, the CalHFA Conventional can help you out with that, too.
We’re also very excited about the CalEEM + Grant loan, coming around just in time for summer. The Energy Efficient Mortgage, or EEM, is an FHA-insured loan that rolls some costs of upgrading your home’s energy efficiency into the financing of the first mortgage loan. The grant, however, is what makes this one tick: CalHFA will grant an additional 4% of the purchase price so you can do some serious upgrades—solar panels? A/C?—instead of the small stuff.
Of course, in addition to our new products, we also have opened our offerings up to new clients. Check out the next article to learn more!
Not Just for First Time Homebuyers Any Longer!
For almost 40 years, we have focused on serving a certain segment of the housing market: those people who are looking to purchase their first home. June of this year brought an expanded focus, as we opened our offerings to low to moderate income homebuyers, whether it was their first purchase or not.
Before we get into why, a little history first. The vast majority of CalHFA’s first mortgage loans have historically been funded through the sale of Housing Revenue Bonds. These bonds were enabled by the federal government, which deemed homeownership a big enough priority that it allowed state Housing Finance Agencies (HFAs) to sell these bonds on Wall Street tax-free. That is, when buyers sold the bonds for a profit, that profit was not subject to taxes. Hence, bond buyers were willing to accept a lower rate of return on the bonds.
Once HFAs received the money from the sale of these bonds, they used the proceeds to finance mortgages. The payments from the mortgages were then used to pay back the interest on the bonds. Since the bond buyers had accepted a low interest rate, the HFAs were able to pass on a lower interest rate to the homebuyers. The big restriction was that the bonds were only tax-free if their proceeds were used to finance first-time homebuyers. And that’s the way it went until the Great Recession.
Bond markets froze up in the late 2000s, which meant HFAs couldn’t find buyers for Housing Revenue Bonds, and were forced to turn to different lending models. One of these sources is called a TBA model (for various semi-arcane reasons), and that is the model that CalHFA has adopted. The TBA model does not use tax-free bonds, so after some discussion, our board decided to remove the first-time homebuyer requirement for CalHFA first mortgages.
This means you can move up a bit if you’re in a starter home. It also means you can downsize if the kids have left home and you’re looking for less lawn to mow and fewer carpets to vacuum. You do have to sell your existing house—the owner-occupancy requirement still applies—but it opens things up and lets more people take advantage of our competitive interest rates and CalPLUS’s Zero Interest Program for down payment.
We’re very excited about serving more Californians; please contact us or an approved lender if you’re interested!
Proposition 41 Gives Veterans New Housing Possibilities
For the past six months, a team of state staff from CalHFA and the Departments of Housing and Community Development, and Veterans Affairs have planned for the passage of the Veterans Housing and Homeless Prevention (VHHP) Program. The team started working on the program design shortly after the original bill (AB 639), proposed by Assembly Speaker Perez and signed by Governor Brown on October 10, 2013 (Chapter 727, Statutes 2013), placed the item – now known as Proposition 41, on the June ballot. With the overwhelming approval of Proposition 41 by California voters on June 3, the interagency team is poised to jump right in and officially begin the program design and implementation. A joint press release, issued June 11th, shows the work the team has already completed on program design over the last several months and includes dates for an initial round of stakeholder meetings in the coming months.
So what has this team been working on? A lot of time has been invested in researching veteran needs and interviewing key policy stakeholders – including federal government partners (HUD, VA and the United States Interagency Council on Homelessness), researchers, veteran-specific service providers and developers with experience in serving the needs of veterans. In total, the team interviewed approximately 25 stakeholders. They’ve learned a lot. For example, did you know…
- On any given night roughly 16,000 veterans in California have no place to call home.
- Veterans are overrepresented in the State’s homeless population – veterans overall account for 5% of CA’s population but represented 12.63% of the State’s homeless population in 2012.
- Veterans also have higher rates of chronic homelessness.
- Veterans overall are less likely to be lower-income, but lower-income veterans are more likely to become homeless than non-veterans in the same income bracket.
- The number of female veterans will likely increase to approximately 18% of the total veteran population by 2040.
- The largest percentage of homeless veterans served between the Vietnam and Gulf wars and have a non-service connected pension disability.
- Approximately 15-20% of veterans are not eligible for U.S. Veteran Administration resources or services.
All of the valuable information collected will be used to build our VHHP Program design. The team is working on a draft program framework identifying the eligible project types, population targeting as well as project selection and supportive service plan criteria to use in the program’s initial round of stakeholder meetings scheduled for mid-July.
We at CalHFA and HCD are perfectly placed to help acquire, construct, and renovate multifamily supportive housing for veterans. Proposition 41 gives us the resources. Working with CalVet and HCD gives us a strong team. And, veterans across California give us the motivation to create a program to help them get the housing help they need.
You can read more about the VHHP Program on its dedicated web page. This program is going to make a huge difference in thousands of lives, and our work with other state agencies and partners across California is going to make it all possible.
California’s drought is continuing with no end in sight. The more you know about the impacts and consequences of the drought, the better equipped you’ll be to pitch in and do your part. There are several sites with information; one of the best is saveourh2o.org. Please take a moment to check it out; every gallon makes a difference.