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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: October 21, 2014 <br />Action Agenda <br />Item No. 7 -a <br />SUBJECT: Community Home Trust Request to Amend Operational Procedures <br />DEPARTMENT: Housing, Human Rights & <br />Community Development <br />ATTACHMENT(S): <br />Letter from Community Home Trust <br />PUBLIC HEARING: (Y /N) No <br />INFORMATION CONTACT: <br />James E. Davis, Jr. <br />919- 245 -2488 <br />1 <br />PURPOSE: To review and approve proposed procedural changes by Community Home Trust. <br />BACKGROUND: The Community Home Trust (CHT) is an affordable housing provider whose <br />clientele includes first -time homebuyers earning less than 80 percent of the area median income <br />with subsidy from the federal HOME program. In May 2014 CEO Robert Dowling submitted a <br />letter addressed to the Town of Chapel Hill, the Orange County Board of Commissioners and <br />the Orange County HOME Consortium proposing procedural changes to its operations. The <br />proposal addresses two (2) issues- <br />1 . Homebuyers' limited access to financing; and <br />2. CHT's difficultly in selling homes. <br />CHT asserts that its homebuyer mortgage funding from the NC Housing Finance Agency will be <br />exhausted in 2015, making it necessary to identify alternative funding sources. To address this <br />issue, CHT is proposing to allow lenders to secure their investment with a fee simple interest. <br />Currently, CHT can only grant a leasehold interest in the home as collateral. This leasehold <br />interest secures the home, but not the land upon which the home is situated. Mr. Dowling <br />asserts that this form of collateral attributes to there being only one bank in the region that is <br />willing to extend financing to its buyers. While a fee simple interest could potentially result in a <br />lending institution foreclosing on the home and the property, CHT homebuyers have never <br />surrendered their home to a lender through foreclosure. Historically, CHT has re- acquired <br />property at risk of foreclosure and plans to continue this trend. <br />To address the issue of difficulty in selling homes, CHT has proposed that it be allowed to sell <br />homes that contain federal subsidy through the HOME program to households with an income <br />of up to 115% of the Area Median income (AMI), where permissible by US Department of <br />