In this Issue

Message from Steve Spears, Executive Director

CalHFA is looking forward to autumn.  Not only for a respite from the warm weather and the hum of air conditioners, but because we have so much going on over the next three months, and we're excited to be back in business after something of a hiatus over the last year or so.

Many of you know that things have been extremely challenging for CalHFA and the housing sector as a whole.  Our Finance Division has been working nonstop with credit rating agencies and investors to make sure we maintain liquidity and our credit ratings so that we would be ready to jump back into lending once the bond markets became a little more friendly.

That time is here, home prices are at affordable levels, and thanks to the efforts of our entire staff, we are indeed ready to get back in business.

A big priority has been to introduce, with the assistance of the U.S. Treasury, a new single-family lending initiative so we can start helping first-time homebuyers once again.  I'm proud to announce that our new below-market rate, FHA loan product is on the streets now.

In addition, CalHFA will be taking on a new role, spending the next few months working with servicers, lenders, counseling agencies and others to implement the disbursement of nearly $1.2 billion from the federal government as part of their Hardest-Hit initiative.  This suite of programs has the potential to make real progress toward stabilizing California's housing market, and we're working as fast as we can to get all our processes in place.  This would not have been possible without help from the Obama administration and the U.S. Treasury.

We're also making great strides in multifamily lending, due in large part to our work with funding from the Mental Health Services Act, funded by Proposition 63.  We've profiled, in this edition of Housing Matters, several of the projects we've helped complete.

Finally, we're making some internal changes to improve our efficiency and trim our overhead costs.  Our Loan Servicing division now has its own dedicated space, and we are consolidating the rest of the Sacramento staff into a single building not far from our current location. 

Yes, the fall is going to be filled with activity for CalHFA. New loans, new locations, new products, and new programs are going to keep us extremely busy as we return to our mission of financing affordable rental housing and helping first-time homebuyers.

We wouldn't have it any other way.

L. Steven Spears, Executive Director

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CalHFA Gives First-Time Homebuyers an Attractive Option

CalHFA is pleased to announce a new 30-year mortgage, insured by the Federal Housing Administration.  This is CalHFA's flagship mortgage loan product for getting back in business, and we are excited to offer this program to first-time homebuyers.  In addition, CalHFA has made some improvements to the California Homebuyer's Downpayment Assistance Program, or CHDAP, that make it even more attractive

The CalHFA FHA mortgage is, at first look, simple enough:  a 30-year loan with a fixed rate.  It stands out for two reasons, though.  One, it carries a below-market rate, the result of ongoing bond negotiations between CalHFA and the US Treasury.  Two, when combined with CalHFA's CHDAP or AHPP programs, the rate may drop even lower, currently giving a 0.125% break for CHDAP and 0.25% break for AHPP. 

We've also made some changes to the underwriting and documentation requirements for CHDAP, so its standards conform to the standards of the first mortgage.  CHDAP now only requires a 1% buyer contribution instead of the previous 3%.

CalHFA continues to be dedicated to safe, responsible lending. Our FHA loan requires a 620 credit score, and every borrower must undergo homebuyer counseling.

This FHA loan product represents a new beginning for CalHFA as we move forward after the extremely challenging events of the past few years.  With powerful products like this, CalHFA is poised to open doors for new homebuyers, and fund possibilities for the future once again.

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Help on the Horizon for Struggling Homeowners

CalHFA is getting set to help about 78,000 California homeowners avoid foreclosure using $1.2 billion in federal funds.. California is one of 17 states that have been hit particularly hard by the economy and falling home prices, and qualify for President Obama’s “Hardest-Hit” fund.
Foreclosure prevention is a new role for CalHFA. The Obama administration asked state housing finance agencies to step up and help with keeping homebuyers in their home.  Although CalHFA cannot directly fund these programs, it will be very involved in the distribution and administration of the funds through a nonprofit organization, the CalHFA Mortgage Assistance Corporation. California is calling its program “Keep Your Home California.”
The Keep Your Home California umbrella contains four different programs that can sometimes be layered for a total benefit cap per household of $50,000.

The Unemployment Mortgage Assistance Program aims to help homeowners who have experienced involuntary job loss. CalHFA will provide temporary financial assistance in the form of a mortgage payment subsidy of varying size and term to unemployed homeowners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems. These funds could provide up to six months of benefits with a monthly benefit of up to $3,000 or 100% of the existing total monthly mortgage, whichever is less.

The Mortgage Reinstatement Assistance Program can assist homeowners who have fallen behind on their mortgage payments. CalHFA will provide limited financial assistance in the form of funds to reinstate mortgage loans that are in arrears, to prevent potential foreclosures. These funds will provide benefits of up to $15,000 per household or 50% of the past due amount, whichever is less

The Principal Reduction Program will assist homeowners who have severe negative equity. CalHFA will provide capital on a matching basis with participating financial institutions to reduce outstanding principal balances of qualifying borrowers with negative equity. Principal balances will be reduced to market levels needed to prevent avoidable foreclosures and promote sustainable homeownership. The principal reduction program should most likely be a prelude to loan modification.

A fourth program offers transition assistance for families who decide that they are unable to financially afford a home and need assistance transitioning to other housing. The Transition Assistance Program will be used in conjunction with a short sale or deed-in-lieu. 

In addition to the above programs, there is $32 million set aside as an Innovation Fund, for local entities who come up with creative solutions to the mortgage and foreclosure crisis in California.

All programs have basic requirements for eligibility, and all programs require home loan counseling.  CalHFA is looking forward to working with the U.S. Treasury to begin disbursement of funds in November.  In the meantime, you can find full details and eligibility requirements at

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Mental Health Services Act Loans Help Those who Need it Most

California's Mental Health Services Act (MHSA), passed in 2004 through Proposition 63, provides hundreds of millions of dollars to support county mental health services. The Act also fills the important role of setting goals for and monitoring the progress of children, transition-age youth, adults, seniors, and families. 

One of the sections of the Act addresses the need for affordable housing for mentally ill people and their families. CalHFA is responsible for making loans to facilitate construction and rehabilitation of this type of housing; so far, eight projects have been completed using MHSA funding, and another seventeen are underway.  Here's a look at some of these projects.

Sunflower Gardens

Sunflower Gardens

Sunflower Gardens, an 18-unit permanent supportive housing complex located in Salinas, has 15 units dedicated for MHSA target population adults. While celebrating its grand opening on June 18, it was announced that Sunflower Gardens earned a Platinum Rating award for LEED (Leadership in Energy and Environmental Design) certification by the U.S. Green Building Council for energy efficiencies

Project Completed: June 2010

Belovida Senior Housing

Belovida Senior Housing

This 28-unit complex provides permanent supportive housing for seniors in San Jose.  The development includes three units set aside for MHSA target population seniors.  The residents and clients will have use of the on-site community room that provides social activities, meals, rehabilitation services and meeting space for additional supportive services.

Project Completed: October 2009

Daniel's Village

Daniel's Village

Daniel's Place, founded in 1998, is a support center for young adults suffering from mental illness and their families.  The Village Motel was a vacant eight-unit motel in Santa Monica.  CalHFA provided funds to transform it into Daniel's Village, an offshoot of Daniel's place, which provides seven units of permanent, supportive housing for homeless, transition age youth (ages 18-25) with mental illness.  The motel was converted into seven single apartments, featuring private bathrooms and kitchenettes, and one 1-bedroom apartment for the resident manager.  

Project Completed: July 2009

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Loan Servicing's New Building

Earlier this year, CalHFA's Loan Servicing division relocated to new office space in West Sacramento.  Servicing had outgrown their old offices in downtown Sacramento, and was operating in extremely cramped quarters that were limiting their ability to upgrade systems and keep up with new technology.  In addition, our lease was expiring and we were able to find better space for less money.

The new space provides more room, better facilities and more convenient communication between staff members. It also makes it simpler for borrowers who choose to walk in and make their payment in person, as parking in downtown Sacramento could sometimes be an extremely trying proposition. 

CalHFA's main office will also be relocating in October, as we consolidate our existing staff into contiguous space and keep our overhead costs down.  Despite the slowdown in the housing market, we're happy to say we try to stay on the move!

Loan Servicing's New Building

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