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��
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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.
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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
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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
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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
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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