This month Minnesota Housing’s board heard several items of interest. Perhaps the most important was the restructuring of programs for home purchase and down payment assistance, which was approved by the board in concept. In addition, the board approved restructuring the Agency’s loan to the Twin Cities Community Land Bank. Finally, the board was briefed on a new loan purchaser (AFL-CIO Housing Investment Trust), the Commissioner’s activities in gaining support for improvements to the federal Low Income Housing Tax Credit, new staff, and greater visibility for the Agency’s Community Profiles.
Home Purchase and Down Payment Assistance Programs to Be Restructured
The board endorsed staff’s concept for restructuring the Agency’s home purchase and down payment assistance programs. This restructuring of the Agency’s largest program activity was spurred by several factors, including lender confusion over changing Agency mortgage products, increased federal requirements covering HOME funds used for down payment assistance, and a declining level of grant funds that can be used for that assistance. The plan for restructuring the mortgage programs has three major components. First, CASA loans will be discontinued and the Minnesota Mortgage Program (MMP) will be the Agency’s sole mortgage program for income-qualified first-time home purchasers. Second, interest will be charged on amortizing down payment loans available to higher income borrowers. Lower income borrowers will experience higher mortgage rates in return for deferred down payment loans. Third, the pool of eligible borrowers will be expanded. For this third component the Agency will increase eligible borrower incomes to the maximum permitted under federal law for first-time homebuyers. Non-first time homebuyers will become eligible under a new Fannie Mae program. The Fannie Mae program, exclusive to state housing agencies, allows a 97% loan to value ratio with no private mortgage insurance. Under this program the Agency must repurchase from Fannie Mae any loans that reach four months of delinquency in the first six months following origination of the loan. Staff told the board that they would monitor implementation of these program modifications to ensure that Agency objectives, such as those related to emerging market households, continue to be met.
Changes in Financing for Foreclosure Recovery in Twin Cities
The board voted to expand and reconfigure the existing financing for mortgage foreclosure recovery for the Family Housing Fund and its subsidiary Twin Cities Community Land Bank (TCCLB). The financing will increase from a total of $13 million to $20 million. Agency staff reported that the restructuring will make more resources available for the business activity of TCCLB. Staff wrote that the $15 million revolving loan for TCCLB will enable it to finance foreclosed single family homes, acquire strategic sites along transit corridors, and finance multifamily properties in high foreclosure areas. Family Housing Fund will guarantee the top 50% of any loss on the TCCLB financing. Since its inception, staff wrote, TCCLB has financed 234 units of housing that have been sold to qualified buyers.
AFL-CIO Housing Investment Trust Purchases First Agency Loan
Finance director Don Wyszynski announced to the board that the Agency expects for the first time to have the AFL-CIO Housing Investment Trust purchase an Agency loan. The loan will be used to rehab a 90-unit rental townhouse development owned by CommonBond in Edina. Wyszynski said that the Trust has agreed to extend a very favorable 3.75% interest rate for long term bonds. This financing does require the use of union construction labor, but the attractiveness of the terms extended by the Trust makes this a financing source that the Agency hopes to see used in other projects.
Support for Strengthening Federal Low Income Housing Tax Credit
Commissioner Mary Tingerthal reported on her efforts to build support among Minnesota’s Congressional delegation to strengthen the low income housing tax credit. At the end of this year, due to expiring legislation, the 9 percent rate used to calculate the tax credits allowed for a given property will float downward. This means that more subsidy funds will be needed for each development. Tingerthal told the board that, unless Congress acts to fix the rate at 9%, an additional $28 million in gap funding would be needed annually to utilize all the tax credits authorized for Minnesota.
MN Housing Community Profiles Reach New Audiences
Commissioner Tingerthal reported that the Agency’s Community Profiles data mapping resource has been expanded and is a very useful housing development tool. She recently was invited to present the profiles to the other members of the governor’s cabinet; they were impressed and would like to explore using the tool to access data from their own agencies. The Agency also will present a demonstration of the Community Profiles resource through a webinar on Tuesday, May 22, 9:00-10:00 am. To register visit https://www1.gotomeeting.com/register/991498280.
New Staff Introduced
Several notable new agency staff were introduced to the board this month. Commissioner Tingerthal noted that staff from several nonprofit developers are now helping strengthen the staff capacity at the Agency. The Agency’s new manager for asset management, Kurt Keena, came from CommonBond, and a new senior rental development manager, Dan Walsh, came from Aeon. Jonathan Stanley returned to the Agency after receiving a degree in public administration; Jonathan will be the lead staff for infrastructure and public housing bonding, as well as the HOME program.
