HomeMy WebLinkAboutMINUTES - 10131987 - 1.41 TO: BOARD OF SUPERVISORS
FROM: Harvey E. Bragdon Coo ltra
Director of Community Development
A�a
DATE: September 30, 1987 ���l^^,, ,,�
SUBJECT: Increase in FHA Loan Limit
SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
Authorize the Chair to sign a letter to County' s Congressional
delegation' supporting the increase of FHA loan limits contained in
HR 4.
BACKGROUND/REASONS FOR RECOMMENDATIONS
In the last two years Contra Costa County and a number of- other
local governments in California have substantially. revised their
Single Family Bond Programs to purchase GNMA securities backed by
pools of -FHA insured and VA guaranteed home mortgages. These
changes were required to avoid the difficulties encountered by
prior bond issues involving private mortgage insurance, while
focusing on the most affordable housing stock in their respective
areas. Higher private mortgage insurance rates along with more
restrictive underwriting- criteria ,have virtually eliminated from, the
market those first time homebuyers targeted in. the past who could .
only afford a five percent down payment. Thus in 1987, the County
only marketed an FHA/VA issue. Future issues of single family
bonds will likely also be structured as a FHA/VA issue. Under the
1986 tax law requirements for single family bonds, the maximum
purchase price for new homes in Contra Costa County is over
$150,000. Since it has not been increased in over three (3) years,
the current FHA loan limit of $90,000 is therefore far below what
is -appropriate for the -County. As a result the County' s efforts to
structure bond issues without the proposed increase are hampered.
The current limits make it difficult (1) to assemble a pool of
mortgages with a range in unit sizes and types to meet various
housing needs and ( 2) to provide financing in diverse geographical
areas of the County. The -program is effectively limited to
financing primarily condominiums and townhouses priced under
$95,000, assuming a five percent down payment.
CONTINUED 'ON ATTACHMENT: X YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATOF BO rr COMM
APPROVE OTHER
7
SIGNATURE(S) :
ACTION OF BOARD ON APPROVED AS RECOMMENDED _� OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
UNANIMOUS (ABSENT TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
cc: Community Development ATTESTED "OCT 13 1987
PHIL BATCHELOR, CLERK OF
THE BOARD OF SUPERVISORS
,O .AND COUNTY ADMINISTRATOR
BY Li DEPUTY
JK/mb
jk3/fhainc.bos
Increase in FHA Loan Limit
September 30, 1987
Page 2
Therefore, the County and other local governments are extremely
interested in seeing this increase occur statutorily as soon as
possible in order to allow bond issues to proceed under the annual
allocation rules. It should be noted that even with the proposed
increase in the FHA loan limit to $101,250, the homes financed by
the County will not only remain extremely affordable, but will be
far below the purchase price limits established by Congress for
such higher cost areas as well.