Agenda - 09-01-2009 - 4c - Laserfiche WebLink

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Benefits to Home Trust Buyers • The Rider will ensure that our buyers have increased access to mortgage financing by expanding the number of participating lenders and increasing competition for our loans. . • The Rider will give our buyers access to a wider range of loan products and allow them to leverage their existing banking relationships to receive the most favorable loan terms. • The Rider will enable land trust homeowners to refinance their mortgage loans and reduce their monthly mortgage payments when interest rates decline. Benefits to the Home Trust Program • The Rider will expand the number of lenders for our homes, thereby ensuring continued access to long term mortgage financing for all our homes, including condominiums. • By removing current barriers to owner refinancing, the Rider will make our program more attractive to buyers and more competitive with private market homeownership. • The Rider will increase the number of potential homebuyers by allowing them to leverage their existing banking relationships to receive financing. Risks of using the Rider • Using the Rider will increase the risk that a land trust home could be lost in foreclosure. Currently we are able to work with our local lenders to forestall the foreclosure process when owners get into financial difficulty. When we use the Rider and loans are sold to Fannie Mae, we expect to receive only 20 days notice before a foreclosure sale. In the event of foreclosure, land trust homes may be more desirable to investors. Currently, the ground lease (without the Rider) prohibits renting the property, even if the home is sold at foreclosure. The Rider removes the restriction that the home must serve as a primary residence. If we use the Rider, and this restriction is removed at foreclosure, investors may compete with us to buy our properties at foreclosure. It is possible that we might lose a home in our affordable housing portfolio if we do not purchase it out of foreclosure. • If we were to lose a home in foreclosure, or if a home were to be rented, we would be in breach of restrictive covenants we are required to record on all land trust properties that contain subsidies. Recommendations 1. We recommend that the Town and County formally endorse our use of the Fannie Mae Uniform Community Land Trust Ground Lease Rider. We need your endorsement because we are unable to use the Rider on properties that are encumbered with restrictive covenants.