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HomeMy WebLinkAboutAgenda Report - July 21, 1993 (44)� s � CITY OF LODE COUNCIL COMMUNICATIGiI r • AGENDA TITLE: Agreement With Housing Authority of the County of San Joaquin for Mortgage Credit Certificate Program MEETING DATE: July 21, 1993 PREPARED BY: City Manager RECOMMENDED ACTION: That the City Council adopt Resolution No. 93-92 approving the agreement between the City of Lodi and the Housing Authority of the County of San Joaquin to provide for the implementation of the Mortgage Credit Certificate Program in the City of Lodi. BACKGROUND INFORMATION: The Mortgage Credit Certificate Program will provide sLhstantial tax benefits to qualified first-time home buyers at no cost to the City. Representatives of the County's Housing Authority will be fn attendance at wednesday night's meeting to review this program and answer any questions Councilmembers may have. A copy of the agreement is attached (Exhibit A). A copy of the Resolution is also attached. This will be the second year in which the City will be participating in this program. FUNDING: None required TAP:br Attachmentc CCCOM809/TXTA.07A APPROVED Respectfully submitted, Thomas A. Peterson City Manager THOMAS A PETERSON Ctty Manager ,ecyc Nd paper CC -1 JUL 0 8'93 City Managers Office Housing Authority Post Office Bax 447 •Stockton, California 95201 of the County of San Joaquin July 7, 1993 Thomas A. Peterson, City Manager City of Lodi 305 West Pine Street Lodi, CA 95240 RE: Mortgage Credit Certificate Program Dear Mr. Peterson: The Housing Authority of the C,)unty of San Joaquin has received notice that applications for renewal of the Mortgage Credit Certificate Program for first time homebuyers will be accepted by the California Debt Limit Allocation Committee in anticipation of federal authorization to continue the program. Applications must be received in Sacramento no later than Wednesday, August 18, 1993. Our original application required a Cooperative Agreement for each city participating in the program. The current instructions require a resolution supporting the application, as well as the cooperative agreement. Accordingly, I am requesting a resolution supporting the Mortgage Credit Certificate Proejram and adoption of the enclosed Cooperative Agreement Five copies of the Cooperative Agreement are enclosed for your use. If possible, we would like to receive the resolution and executed Cooperative Agreements by August 5, 1993. If you have questions or need further information please call Mary Kuk of A,;ministrative Office • 448 South Center Street • Stockton, California • (209) 466-1487 Thomas A. Peterson Page Two July 7, 1993 my staff at 466-1487. Sincerely, HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN David R. Ward Executive Director DRW/jd Enc.: Cooperative Agreements MCC Status reports Previous Resolution ti COOPERATIVE AGREEMENT BETWEEN THE HOUSING AUTHORITY AND THE CITY OF LODI THIS COOPERATIVE AGREEMENT (the *Cooperative Agreement') is made and entered into as of , 1993. by and between the Housing Authority of the County of San Joaquin (the "Housing Authority"), and the City of Lodi (the 'City') WITNESSES THAT: WHEREAS, the Tax Reform Act of 1984 established the Mortgage Credit Certificate Program (hereinafter referred to as the 'MCC Program') as a means of assisting qualified individuals with the acquisition of new and existing single family housing; and WHEREAS, the Housing Authority and the City have heretofore determined to engage in an MCC Program pursuant to §50197, et. seq.. of the Health and Safety Code of the State of California (the 'Act') in order to assist individual home purchasers in the City of Lodi to afford both new and existing homes within the statutory limits as provided for in said Act; and WHEREAS, in furtherance of the MCC Program, the Housing Authority has authorized its staff to apply to the California Debt Limit Allocation Committee (CDLAC) for a mortgage bond allocation in the amount of $20,000,000, to be traded for authority to issue Mortgage Credit Certificates in a face amount of $5,000,000 (based upon the 4:1 trade-in value of bond allocation); and WHEREAS, it is expected that the application for the MCC Program will be subsequently acted upon by CDLAC at its next regular meeting; and WHEREAS, the City and the Housing Authority wish to cooperate with one another pursuant to the Act in the exercise of their powers under the Act for the purposes of the MCC Program; and WHEREAS, the Housing Authority has the capacity both to issue bonds and to establish and administer an MCC Program; and WHEREAS„ the Housing Authority intends to administer an MCC Program in the County, and the City desires that the Program be applicable to eligible real property in the City. NOW, THEREFORE, in consideration of. the mutual covenants hereinafter providFd, the parties hereto agree as. follows: SECTION 1: The words and phrases of this Cooperative Agreement shall, for all purposes hereof unless otherwise defined herein, have the meanings assigned to suct- words and phrases in the Act. SECTION 2: The Housing Authority shall staff a program for the effective administration of an MCC Program within the geographical boundaries of the City. The Housing Authority shall cooperate with local real estate and lending institutions in order to maintain their participation in securing applications from eligible applicants for review and approval by Housing Authority representatives on behalf of the Housing Authority and the City. SECTION 3: Noihing in this Cooperative Agreement shall prevent the Housing Authority from entering into one or more similar agreements with the County of San Joaquin and other municipalities within the County, if deemed necessary and advisable to do so by the Housing Authority, so long as such other agreements are not inconsistent with this Agreement. SECTION 4: This Cooper2tive Agreement may be amended by one or more supplemental agreements executed by the Housing Authority and the City at ally time as long as those amendments comply with State and Federal MCC Program regulations. SECTIONS: This agreement may be terminated by either party upon 90 days' written notice delivered to the other party. The term of this ag.eement shall extend until such termination by written notice or until the mortgage credit certificates are fully retired, or shall terminate should an allocation not be receivLJ from CDLAC. SECTION 6: The City agrees to undertake such further proceedings or actions as may be necessary to carry out the terms and intent of this Cooperative Agreement as expressed in the recitals; provided, however, that nothing in this Cooperative Agreement shall require the Ciry to appropriate any funds to the Housing Authority for services under this Cooperative Agreement. Funds for the administration of the MCC Program shall be derived by the Housing Authority from the fees paid by the MCC applicants. SECTION 7: Nothing contained herein shall be interpreted to impose a relationship of partners or joint ventures between the City and the Housing Authority. SECTION 8: The signatories to this Agreement represent and warrant that they are authorized by the parties to execute this Agreement and bind the parties to its terms, conditions, and covenants. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their proper officers thereunder duly authorized. and their officials' seals to be hereto affixed, all as of the day first above written. 2 ATTEST: Clerk of City of Lodi By Deputy Clerk APPROVED AS TO FORM: City Attorney By City Attorney ATTEST: DAVID R. WARD, Secretary APPROVED AS TO FORM: WILSON, HOSLETT & WHITRIDGE M AL WARREN HOSLETT Attorneys for Housing Authority 3 City of Lodi, a municipal corporation By Mayor APPROVED AS TO CONTENT: HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN By LINCOLN ELLIS Chairperson, Board of Commissioners RESOLUTION NO. 93-92�� aasaaazzsaaamssx=vc= A RESOLUTION OF THE LODI CITY COUNCIL APPROVING THE AGREEMENT BETWEEN THE CITY OF LODI AND THE HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN TO PROVIDE FOR THE IMPLEMENTATION OF THE MORTGAGE CREDIT CERTIFICATE PROGRAM IN THE CITY OF LODI. aaassassaaaaaassaa:azs:azaaz=aaasaasazazazmzassaaaaaaasazaaaaaaaaaasaaa VAEREAS, inVlementation of the Mortgage Credit Certificate Program in the City of Lodi will provide substantial tax benefits to qualified first-time home buyers at no cost to the City; NOW, THEREFORE, BE ZT ABSOLVED, that the Lodi City Council hereby. approves an Agreement (Exhibit A) between the City of Lodi and the Housing Authority of the County of San Joaquin to'provide for the implementation of the Mortgage Credit Certificate Program in the City of Lodi. Dated: July 21, 1993 I hereby certify that Resolution No. 93-92 was passed and adopted by the Lodi City Council in a regular meeting held July 21, 1993 by the following vote: Ayes: Council Members - Noes: Council Members - Absent: Council Members - Jennifer M. Perrin City Clerk 93-92 RES9392%TXTA.01V RESOLUTION NO. 93-92 asssassasasassaaassa A RESOLUTION OF THE LODI CITY COUNCIL APPROVING THE AGREEMENT BETWEEN THE CITY OF NODI AND THE HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN TO PROVIDE FOR THE IMPLEMENTATION OF THE MORTGAGE CREDIT CERTIFICATE PROGRAM IN THE CITY OF LODI xsaassxsasasaasaaasasaax:assassass:assesszsaaaaar=aaa:aa=aaaassazzsazaa 1PHmus, implementation of the Mortgage Credit Certificate Program in the City of Lodi will provide substantial tax benefits to qualified first-time home buyers at no cost to the City; NOW, THEREFORE. BE IT RESOLVED, that the Lodi City Council hereby approves an Agreement (Exhibit A) between the City of Lodi and the Housing Authority of the County of San Joaquin to provide for the implementation of the Mortgage Credit Certificate Program in the City of Lodi. Dated: July 21, 1993 aasassaaaaazrza=zaasaasaaaaaa==�axaaaaaaaaaxa=a.e.�=aza=axxxzaaaasar:.a I hereby certify that Resolution No. 93-92 was passed and adopted by the Lodi City Council in a regular meeting held July 21, 1993 by the following vote: Ayes: Council Members - Davenport, Mann, Sieglock, Snider, and Pennino (Mayor) Noes: Council Members - None Absent: Council Members - None �Erfnifer N. Perrin City Clerk RES9392/TXTA.02J Housing Authority of the County of San Joaquin MARY K. KUK Administrative Analyst 4" South Center Street Post oir" Box 447 Stodnon, Caiitomia 95MI (20°) 466'1487 4�lr! .% MORTGAGE CREDIT CERTIFICATE PROGRAM January S. 1993 PARTICIPATING LENDERS The following Lending Institutions have Lender Participation Agreements on file with the Housing Authority of the County of San Joaquin. These lenders are eligible to process applications using the MCC Program. Acorn Mortgage Services 2233 Grand Canal Boulevard 11113 Stockton, CA 95207 Contact: Bruce Goldsmith/Dave Ehlers Phone: (209) 472-7272 American Savings Bank 343 E. Main, Ste. 61O Stockton, CA 95202 Contact: Luis Sanchez Phone: (209) 546-2647 ARCS Mortgage, Inc. 7339 Pacific Avenue #A Stockton, CA 95207 Contact: Fred WomacklSteve Nilssen Phone: (209) 474-6161 Bank of Stockton 301 East Miner Avenue Stockton, CA 95202 Contact: David Chavier Phone: (209) 941-1444 Barcus Financial Corporation 7510 Shoreline Drive, B-7 Stockton, CA 95219 Contact: Mike or Kathy Phone: (209) 951-9650 Cal -Bay Mortgage Group 241 East 10th Street #D Tracy, CA 95376 Contact: Chip Ricca Phone: (209) 836-1983 Capital Pacific Mortgage Co. A California Corporation 735 N. Main St. Manteca, CA 95336 Contact: Lynette Brigham Phone: (209) 239-5550 Coast Funding Corporation 3120 Tracy Boulevard, Suite E Tracy, CA 95376 Contact: Debbie Jones/Scott Miller Phone: (209) 836-0363 Commerce Security Bank 2033 Howe Avenue #200 Sacramento, CA 95825 Contact: Mike Meyer Phone: (916) 923-9500 Ext.352 Commonwealth United Mortgage 1776 W. March Lane, Ste. 180-B Stockton, CA 95207 Contact: Deborah Morris Phone: (209) 473-3091 Countrywide Funding Corporation 874 West Benjamin Holt Drive Stockton. CA 95207 Contact: Joan Erickson Phone: (209) b%'-7120 Cypress Financial Corporation 39420 Liberty St., Suite 250 Fremont, CA 94538 Contact: Inga Sorensen Phone: (510) 790-9244 Directors Mortgage Loan Corp. 2200-A Douglas Blvd., Ste. 275 Roseville, CA 95661 Contact: Jean Taylor Phone: (916) 782-2221 Directors Mortgage Loan Corporation 1776 West March Lane #300 Stockton, CA 95"07 Contact: Linda Murphy Phone: (209) 472-7793 First California Mortgage .. 1031 15th Street Modesto, CA 95354 Contact: Shareen Carnes Phone: (209) 527-2500 First Mortgage Corporation 4600 N. Pershing Ave., Ste. A Stockton, CA 95207 Contact: Kirk E. Nimmo Phone: (209) 951-8943 First California Mortgage 1625 W. March Lane #101 Stockton, CA 95207 Contact: Claudia Fox Phone: (209) 476-1100 Guild Mortgage 1001 W. College Avenue Santa Rosa, CA 95401 Contact: Markus Czirban Phone: (707) 528-6300 Guild Mortgage Co. 4609 Quail Lakes Dr., Ste. 5 Stockton, CA 95.207 Contact: Colleen Stewart Phone: (209) 957-8016 Headlands Mortgage Co. 1 100 Larkspur Landing Cir. Larkspur, CA 94939 Contact: Shannon Montgomery Phone: (415) 461-6790 Heartland Mortgage Company, Inc. 1620 N. Carpenter Rd., Ste. A-3 Modesto, CA 95351 Contact: Liz Bass Phone: (209) 544-1000 Kaufman & Broad 4701 Sisk Road, Ste. 103 Modesto, CA 95356 Contact: Vicky Jacobs Phone: (209) 545-6400 Kaufman and Broad Mortgage Company 6379 Clark Avenue, Ste. 205 Dublin, CA 94568 Contact: Mark Crivelli Phone: 1-800-446-2624 Kaufman and E A Mortgage Company 2190,0 Burbank Blvd., Ste. 300 Woodland Hills, CA 91367 Contact: Mark Crivelli Phone: 1-800-446-2624 LP Mortgage Company 1000 Burnett Avenue #140 Concord, CA 94520 Contact: Gwinette Ashe Phone: (510) 356-3602 Medallion Mortgage Corporation 2027 Grand Canal Boulevard #29 Stockton, CA 95207 Contact: Rich Biddle Phone: (209) 473-2970 Mission Hills Mortgage Bankers 2529 West March Lane #202 Stockton, CA 95207 Contact: Lauren Rezendes Phone: (209) 476-9901 North American Mortgage Company 3255 W. March Lane #310 Stockton, CA 95219 Contact: Sara E. Myers Phone: (209) 476-1831 Norwest Mortgage, Inc. 1110 West Kettleman Lane, Ste. 23 Lodi, CA 95240 Contact: Robert Cunnington Phone: (209) 339-8780 Plaza Funding 7777 Greenback Lane, Suite 208 Citrus Heights, CA 95610 Contact: Bruce Siegal Phone: (916) 723-5626 Stockton Savings Bank 2287 West March Lane Stockton, CA 95207 Contact: John Cotton Phone: (209) 948-0388 The Hammond Company 2694 Bishop Drive, Ste. 105 San Ramon, CA 94583 Contact: Chris Lanweller Phone: (510) 277-1288 'Tracy Federal Bank 1003 Central Avenue Tracy, CA 95376 Contact: Paul Rengh Phone: (209) 836-5111 Western Colonial Funding 2282 Fourth Street Livermore, CA 94550 Contact: Christine Oliver Phone: (510) 449-7777 Western Sunrise Mortgage Corporation Sunrise Blvd., Suite 101 Rancho Cordova, CA 95742 Contact: Chris Grady Phone: (916) 638-1620 World Savings 833 Tenth Street Modesto, CA 95354 Contact: Rich Fikani Phone: (209) 524-7479 uMl'ORTOQGLE CRLl�lT CHER FC CATS PROGRAM BROCHURE HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN Post Office Box 447 Stockton, CA 95201 HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN MORTGAGE CREDIT CERTIFICATE PROGRAM GENERAL OVERVIEW The Mortgage Credit Certificate Program, authorized by Congress in the Tax Reform Act of 1984, is a means of providing financial assistance to "first time homebuyers" for the purchase of new or existing single-family housing. In 1985, the State adopted legislation authorizing local agencies to make Mortgage Credit Certificates (MCCs) available in California. The Housing Authority of the County of San Joaquin received the authority to establish a Mortgage Credit Certificate Program on April 22, 1992. This authority, which is sufficient for approximately 125 to 150 loans (depending on average mortgage amounts), can be used in the cities of Lodi, Stockton and Tracy as well as in the unincorporated County.. The Housing Authority will administer the program. What is an MCC? The MCC provides qualified homebuyers with a federal income tax credit. Income tax credits reduce an individual's tax payments by an amount equal to the credit. Under the MCC program, the maximum tax credit available is equal to 20 percent of the annual interest paid on the borrower's mortgage. By reducing the borrower's federal tax liability, the tax credit essentially provides additional income which can be used for mortgage payments. How does the MCC reduce your taxes? In the example given in Table 1, a borrower with an 8.5% fixed rate 30 -year mortgage of $85,000 would make $7,200 in interest payments during the first year of the mortgage.' Under normal circumstances, the borrower deducts ' Interest pavments on a fixed-rate mortgage will go down gradually each year. On variable-rate mortgages, the total annual interest may increase. 1 80% of that interest, along with other allowable deductions from his total gross income, in order to figure the "Adjusted Gross Income" used to calculate his/her total tax liability. After the borrower has calculated the total tax liability, under the MCC program the remaining 20% of the interest ($1,440 in our example) is also deducted from his/her total tax liability. If this subtra.;tion results in a negative number (in other words if the borrower is unable to use the entire MCC fax credit this particular tax year) the credit may be carried forward and used up to three calendar years in the future. The borrower may consider adiuscing his/her federal income tax withholding (W-4) so as to benefit on a monthly basis from the MCC. By taking this action, the borrower will have more disposable income to make mortgage payments. Table 1: Effect of a Mortgage Credit Certificate - Example 1. First Mortgage Amount $85,000 2. Mortgage Interest Rate 8.5% 3. Annual Interest Payment $7,200 4. Mortgage Credit Certificate Rate 20% 5. Annual MCC Amount (Line 3 x Line 4) $1,440 6. Monthly Credit Amount (Line 5 _ 12) $120 Note that the MCC program applies only to the borrower's federal tax liability. State taxes are not affected. What are the purchase price and income limitations for MCC participation? Mortgage Credit Certificates are available to first-time homebuyers in San Joaquin Coo --r y. Table 2 shows the purchase price and income lim;cations for MCC Program participants. 2 EJ Table 2: MCC Program Purchase Price and Incomes Limitations Maximum Purchau Price! 2 Non - Target Area target Area3 New (never occupied) units $165,510 $202,300 Existing (resale) units $116,010 $141,800 Maximum Income Limitation 1 and 2 person households` $42,700 $51,240 3+ person households $49,105 $59,780 Lower incoiae reservation $34,160 How does a borrower obtain an MCC? The Housing Authority does not underwrite the loan, included in the MCC program. Rather. all underwriting and execution of required state and federal certifications or affidavits are performed under agency agreement by Lenders participating in the program. The Housing Authority reviews executed certificates and affidavits from the Lender in order to determine qualification and eligibility. Lenders process the underlying mortgages using standard procedures, with adjustments to those procedures as needed in order to satisfy MCC requirements. Therefore, a Purchaser of a new or existing single-family home applies for an MCC through a P rtici ating_Lender at the same time as applying for the mortgage loan. 2 90% of average area purchase price for Non -Target areas and 110% of average area purchase price for Target Areas. 3 Target Areas in San Joaquin County include the following census tracts located in the City of Stockton: 01, 02, 03, 05. 06, 16. 22, 23, and 25. Maps are available through the Housing Authority. 4 Households of 1 and 2 ;,arsons — 100% of median; 3 + person households= 115% of median; target area households of 1 and 2 persons= 120% of median; 3 + persons = 140% of median; lower income reservation = 80% of median. J s May an MCC be used in connection with a re -financed loan or to assume an existing mortgage? An MCC cannot be issued to a homeowner who is refinancing an existing mortgage or to an applicant desiring to assume an existing mortgage unless (1) the mortgage is held by a current MCC holder and (2) the sales price of the house being sold falls under the sales price maximum for the program. In all other cases, only new, first mortgages are eligible for MCC participation. How many MCCs will be available under the program? The number of MCCs available depends on the amount of issaiing authority which is allocated to the jurisdiction. The Housing Authority has received $10 million in mortgage revenue bonding authority which converts to $2.5 million in MCC authority or $12.5 million in mortgages. Approximately 125 to 150 MCCs can be issued with this amount. Potential for recapture of portion of the tax credit if home is sold within the first nine years after purchase. In order to discourage individuals from buying a home primarily to benefit from the tax credit and short tern appreciation potential, the federal government has initiated a recapture of a portion of the tax credit if a home is sold within the first nine (9) years after purchase. Certain conditions must exist for the recapture to take effect. The Housing Authority's MCC staff and your Lender will outline the specifics of this recapture provision at the time of your application. APPLICATION AND ELIGIBILITY REQUKIEMENTS FOR THE MCC PROGRAM: The following eligibility requirements have been adopted under the Housing Authority of the County of San Joaquin MCC Prn gram: • MCCs will be available only to "first-time i>omebuyers," (i.e. not owning a "Principal Residence" within the past ttaae (3) years) in Non -Targeted areas. This restriction is not applicable in Targeted Areas. • As first-time homebuyers complete their normal application procedures with a participating lending institution, their mortgage lenders will prepare PACC applications and forward them to the Housing Authority. The 4 Housing Authority will issue MCCs on 'a first-come, first-served basis according to when the initial application is received by the Housing Authority. • Applicants may buy a residence only for their own occupancy, not for rental or reinvestment. Occupancy as "Principal Residence" must be within sixty (60) days of the close of escrow. • The MCC tax credit can be taken for the life of the loan as long as the homeowner continues to occupy the residence as his/her "Principal Residence." • The lender may charge each borrower an application fee of not more than $150 1,;4 processing each MCC. • The MCC can be used when buying a new home with a maximum purchase price of $165,510 ($202,300 in Target Areas) or an existing home with a purchase price that does not exceed $116,010 ($141,800 in Target Areas). • At the time that the applicant applies for an MCC, the total income of all co -mortgagors who will occupy the home as their Principal Residence cannot exceed 100% of the area -wide median income ($42,700) for one and two person households or 115% of median income ($49;105) for three plus person households. For purchases of homes in Target Areas, the respective income maximums are $51,240 (120% of median) for one and two person households and $59,780 (140% of median) for households of three or more. • MCCs can be used with new first mortgages only (no refinancing or subordinated mortgages). • MCCs can only be transferred in cases where the home is being sold to another eligible MCC applicant. In such a case, all MCC requirements must be met and the mortgage must be assumed for the transfer to occur. NOTE: For additional information you may call your Lender or the Housing Authority of the County of San Joaquin (209) 466-1487. 5 Housing Authority of the County of San Joaquin Post Office Box 447 Stockton, California 95201 Board Of Commissioners Lincoln Ellis. Chairman Diane Morgali George L. Dutra Diane Hackett Carol J. Ornelas Patricia Strong Bob White