BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Actions Related to the First-Time
Homebuyer Loan Program: Equity
Share Reduction
Erik L. Soliván
Housing DirectorApril 8, 2025
Item 8.1 Banu San
Deputy Director
Approve reducing the City’s Equity Share payment from 30% to 15% for the First-Time Homebuyer Loan Program
Authorize the Housing Director to renegotiate Equity Share terms related to the City’s single-family housing portfolio in accordance with applicable laws and funding source requirements.
2 Recommendation Overview
3 Background & Purpose
Background:
The First-Time Homebuyer Loan Program was established to help low to moderate-income families purchase below-market-rate homes The program portfolio consists of:
• 438 loans with the Equity Share loan re-payment provision. • Lower-cost, lower-value condos (71%) and single-family homes (29%). • Average area of 1,200 total square feet or less.
Purpose:
Align with the City’s racial and social equity goals by continuing to support affordable homeownership.
4 Proposed Change & Financial Impact
First-Time Homebuyer Program Equity Share Loan Portfolio Overview • Total loans: 438
• Total loan balance: $30,827,666
• Average loan per home: $70,383
• Loans due today: 13
• Loans due by 2029: 18
• Loans due after 2030: 407 (93% of loans)
AT THE TIME OF SALE, reducing the City's Equity Share from 30% to 15%, valued at approximately $48,600 per loan, will lower homeowner costs and help stabilize families, when they choose to sell their home. 5 Proposed Change & Financial Impact (Cont’d)
Assumed average market value of $650K per unit and a 4.4% annual appreciation rate.
Loans # of
Loans
30% City
Equity
Average
Borrower
Equity per
Loan (70%)
15% City
Equity
Average City
Equity per
Loan (15%)
Average
Borrower
Equity per
Loan (85%)
Average City
Equity
Subsidy per
Loan
Loans Due
Today 13 $1,263,600 $226,800 $631,800 $48,600 $275,400 -$48,600 Loans Due
by 2029 18 $1,989,631 $257,915 $994,816 $55,268 $313,183 -$55,268
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Actions Related to the First-Time
Homebuyer Loan Program: Equity
Share Reduction
Erik L. Soliván
Housing DirectorApril 8, 2025
Item 8.1 Banu San
Deputy Director