Agenda Report
Fullerton City Council
MEETING DATE: August 1, 2023
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: sunayana thomas, director of community and economic development PREPARED BY: sunayana thomas, director of community and economic development nOEMI VERHELST HOUSING PROGRAMS ASSISTANT
SUBJECT: HOUSING LOAN COMMITTEE DECISION FOR A DEFERRED HOME IMPROVEMENT LOAN APPEAL
SUMMARY
The City denied an applicant request for a Deferred Home Improvement Loan. The applicant appealed the staff decision to the Housing Loan Committee, who denied the appeal. The applicant has now appealed the Housing Loan Committee decision to City Council.
RECOMMENDATION
Adopt one of the following resolutions:
RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, DENYING AN APPEAL AND UPHOLDING THE HOUSING LOAN COMMITTEE’S DENIAL OF A DEFERRED HOME IMPROVEMENT LOAN or
RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, APPROVING AN APPEAL AND REVERSING THE HOUSING LOAN COMMITTEE’S DENIAL OF A DEFERRED HOME IMPROVEMENT LOAN
CITY MANAGER REMARKS
The loan was disapproved based on not meeting the requirements of our policy due to having multiple liens and having assets that exceed the policy.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
Community Development Block Grant (CDBG) funds pay all costs associated with rehabilitation, review, selection, permitting and inspections and some charge to the homeowner through the Deferred Loan. The Home Improvement Loans deferred for 15 years at 0% interest. Holding third place on a lien does not guarantee the loan will be paid back should a homeowner default on their mortgage.
DISCUSSION
The City offers Deferred Home Improvement Loans to Fullerton residents and property owners who meet program income criteria. The program assists very-low, low- and moderate-income residents who cannot afford to keep up their homes on their own. Applicants must have sufficient equity in their homes to qualify for loans and maximum property values apply. Deferred loans are due upon sale or transfer of the home. The assets of families cannot exceed $20,000 and the assets of senior citizens cannot exceed $30,000 to qualify. The City may amend asset limitations under special circumstances on a case-by-case basis.
Mr. and Mrs. Gbondo applied for the Forgivable Loan through the Housing Improvement Program, a grant program offered by the City through CDBG funds to use for certain interior or façade improvements. However, the City disqualified the applicant because they did not meet the income requirements for the Forgivable Loan rent. Staff suggested that the applicant review and consider the Deferred Loan Program because they met the income qualifications for that program. The applicant applied and acknowledged that they did not have any other liens outside of their first mortgage and assets not exceeding $30,000.
The City preliminarily approved the applicant for the Deferred Home Improvement Program on January 30, 2023. The City orders a title report after preliminarily approving an applicant. The City received the title report on February 1, 2023 showing the property has two liens. The city does not stand in third position on titles and/or liens per the Home Improvement Policy Guidelines which resulted in the denial of the loan request.
The City mailed a denial letter on April 4, 2023. The applicant appealed the staff decision to withdraw the application and requested a Housing Loan Committee review. The Loan Committee, comprised of the Community and Economic Development Director, Interim Public Works Director and Director of Administrative Services, upheld the Home Improvement Program decision to withdraw the approval based on the Home Improvement Policy Guidelines and risk of not being paid back in the case the property went to default on April 18, 2023. The City also discovered that Mr. and Mrs. Gbondo own two additional properties in Fullerton and Diamond Bar besides their primary residence during the appeal process, which is also a disqualifying finding and makes them ineligible as their asset would exceed the $30,000.00 asset limitation per the Home Improvement Policy Guidelines.
Attachments:
Attachment 1 – Draft Resolution No. 2023-XXX (Appeal Denial) Attachment 2 – Draft Resolution No. 2023-XXX (Appeal Approval) Attachment 3 – Home Improvement Policy and Guidelines
cc: City Manager Eric J. Levitt
Housing Loan Committee’s Decision Appeal
August 1, 2023 – Page 2