HomeMy WebLinkAboutAGENDA REPORT 2013 0904 CCSA REG ITEM 10I ITEM 10.1.
MOORPARK CITY COUNCIL
AGENDA REPORT
To: Honorable City Council
From: David C. Moe II, Redevelopment Manager O"
Date: August 22, 2013 (CC Meeting of 9/4/13)
Subject: Consider Prohibition of Residential Developers from Engaging
Directly or Indirectly with Financing of Mortgages in the City's First
Time Home Buyer Program
BACKGROUND AND DISCUSSION
The City of Moorpark (City) has successfully assisted 57 low and very low income
families purchase homes through the City's First Time Home Buyer (FTHB) Program.
The majority of these homes, with the exception of four (4), were provided by residential
developers to satisfy their affordable housing requirement in their negotiated
development agreement with the City.
Due to increasing home values in the City, developers are once again proceeding with
home building. Both Pardee and SHEA Homes are moving forward with the next
phases of their developments which will produce an additional 27 affordable units.
In the past, staff has worked with Wells Fargo Home Mortgage to provide financing for
the low and very low income buyers in the City's FTHB program. The City does not
have a contract with Wells Fargo Home Mortgage to provide the financing for the FTHB
program, but Wells Fargo Home Mortgage was the only lender willing to accept the
City's deed restrictions. However, with the City Council's change to the Resale and
Refinance Restriction Agreement on December 19, 2012, restricting the City's equity
share provision, the program is now lendable under Freddie Mac guidelines.
The City has been contacted by various lenders wanting to participate in the FTHB
program. Staff is considering having a meeting to explain the FTHB program to the
lending community in an effort to expand the lender choices for the buyers. Staff is
supportive of increasing the lending choices for the FTHB program provided that the
lender is a third party entity not directly or indirectly affiliated with the residential
developer. For example, staff does not think it would be appropriate for SHEA or an
affiliate to provide the buyers in the City's FTHB program with financing to purchase
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9/4/2013
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their home in one of SHEA's residential developments. Staff believes that the
developer or one of its affiliates providing the financing may suggest that the transaction
is not an "arm's length transaction"
Staff recommends the City Council immediately prohibit a residential developer or
affiliate from providing mortgages to buyers in the City's FTHB program for their
development and direct staff to amend City Council Policy No. 3.5 to reflect this
prohibition at the next City Council Policy update.
FISCAL IMPACT
None.
STAFF RECOMMENDATION
1. Prohibit a residential developer or affiliate from providing mortgages to buyers in
the City's First Time Home Buyers Program for their development; and
2. Direct staff to amend City Council Policy No. 3.5 at the next update to reflect this
prohibition.
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