2007-10-16_Agenda - Laserfiche WebLink

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1.3 As part of the program approval process, the HRA provided administrative approval for gap funding up to $65,000 in a second mortgage and $15,000 in permanent loss on any one home transaction. This was to allow purchases of property to occur in a timely manner rather than delay 1 month for HRA approval. 2.0 Program Status – 1000 Woodhill: 2.1 Under the RHRA specific SHRP program, 3 homes have been purchased. Two of those homes are renovated and have been sold to first time homebuyers. After the second mortgage and gap funding provided to these 2 homes, there is $63,347 available for second mortgage and permanent gap funds for the final home located at 1000 Woodhill. 2.2 The home at 1000 Woodhill has been on the market for 160 days which has increased the carrying costs as well as the amount of the gap funding. Based upon a market analysis (see attached) the asking price for 1000 Woodhill is believed to be overpriced at $230,000. GMHC’s Realtor, Paul Sigurdson, is suggesting a reduction in price to $218,000 to be more in line with other like properties for sale in the market area. 2.3 However, reducing the sales price increases the total gap beyond what is available for the program by $1,123. (See attached SHRP fund summary). Roseville SHRP Program- 1000Woodhill (10-16-07) - Page 2 of 3 3.0 HRA Options: Option1: Reduce the asking price to $218,000 and provide an additional $1,123 to the program from other HRA funding sources. This option allows the HRA to maintain the program goals of providing a first time homebuyer options at Ramsey County level of $175,000 to families with one child under age of 16 as well as keep on the multiple listing service (MLS) and include as many realtor options as possible. There would be a RHRA 2 nd mortgage of $43,000 and a permanent loss of $26,470. Option 2: Reduce the asking price to $218,000 and rely only on the GMHC agent to sell the home. This option would allow the RHRA to maintain most of the program goals except the requirement that the home be marketed on the MLS. By relying upon the GMHC agent to sell the home, the sales commission is reduced by $5,886 and the transaction allows the program to remain within budget by $4,763 with the same level of RHRA 2 nd mortgage of $43,000 and a lower permanent loss of $20,584. GMHC has an agreement with their agent for a flat commission fee of only $3,000. All other homes under the SHRP program throughout the metro area are not listed on MLS which reduces the overall gap for the program. The Roseville requirement for the homes to be listed on MLS was in response to increasing the marketing exposure for the homes and increasing the partnership efforts with local real estate agents. Option 3: Reduce the asking price to $218,000 and require that the first mortgage be increased from $175,000 to $180,000. This option would allow the RHRA to continue marketing the property on MLS but pass the burden to a new owner by requiring them to qualify for a larger first mortgage. In addition, this option would eliminate the potential buyer from being eligible for $20,000 in first time homebuyer funds from Ramsey County as they require that the first mortgage sale limit be $175,000. However, the transaction would remain within the program budget by $3,877 but with a