California Housing Finance Agency announces $7.1 billion program to stimulate affordable housing

Business Wire, June 13, 1995

SACRAMENTO, Calif.--(BUSINESS WIRE)--June 13, 1995--As another ongoing indicator of the recovery taking place in the California economy, Maureen Higgins, executive director of the California Housing Finance Agency (CHFA), Tuesday announced the adoption of an aggressive $7.1 billion updated five-year business plan by the board of directors of the CHFA.

``That's a 54 percent improvement over the ambitious $4.6 billion affordable-housing plan first adopted by CHFA just two years ago,'' Higgins said. ``For California, this will mean an estimated 91,500 new jobs and over 45,000 much-needed new affordable homes and apartments,'' Higgins added. ``And this economic shot in the arm will happen at no cost to the taxpayers, as state law requires CHFA programs to be self-supporting.''

Using tax-exempt mortgage revenue bonds, CHFA provides mortgage loans with below-market interest rates for first-time home buyers and for the construction, rehabilitation or acquisition of rental apartment developments for low-income families throughout California.

This plan envisions continued expansion of CHFA single-family lending for a five-year total of $3.3 billion in newly originated home loans, which is up from $1.25 billion called for in the first five-year business plan adopted two years ago, and in line with the production goals of the previous plan adopted one year ago.

This striking increase is attributable to the success of CHFA's recently adopted ``Single Loan Reservation'' loan-delivery system, which made CHFA below-market interest-rate loans available in the market every day.

CHFA's re-entry into the builder forward-commitment market has also increased loan production. These forward commitments allow builders to begin constructing homes knowing that they would be able to sell their homes using CHFA below-market interest rates when the homes were completed.

In the business plan adopted last year, single-family-loan volume for the 1994 calendar year was projected at $401.6 million. At year-end, actual production for 1994 was $503.5 million.

With the current plan, the agency is shifting to using fiscal- year projections. Proposed single-family-loan production for the 1994-95 fiscal year was projected at $534.6 million. However, with only two months remaining in this fiscal year, actual loan volume has already reached $833.4 million.

Expanding the network of CHFA-approved lenders in the higher- cost coastal regions of the state, coupled with loan programs targeting the first-time home buyers in these higher-cost areas, has significantly contributed to this increase in loan volume.

``For the family dreaming of owning their first home, CHFA offers low-interest loans to make that dream come true. The big challenge facing the first-time home buyer today is not the monthly payment, but being able to save enough for the down payment,'' Higgins indicated.

``CHFA has met the challenge -- in the high-cost areas of the state, CHFA is offering, in cooperation with local housing agencies, an Affordable Housing Partnership Program (AHPP). Under this program, the local agency provides the first-time home buyer assistance with closing costs and the down payment, requiring the buyer to come up with only 3 percent down.''

Families with low and very low incomes who rent apartments are not forgotten in this plan either. The developers of multifamily rental apartments, nonprofit sponsors of affordable rental housing and recent recipients of tax-credit allocations will find three very attractive new programs offering below-market interest rates and very competitive terms.

The renting families will ultimately benefit from these programs in the form of affordable rents and safe new housing.

The economic benefits for the California affordable-housing market are impressive. At the conclusion of the plan's implementation in the year 2000, the agency will have assisted in the production of more than $3.3 billion in home loans, $751 million in multifamily rental housing and nearly $3.1 billion in mortgage insurance for home buyers.

To receive a copy of the 60-page plan or information about CHFA's loan programs, call 800/789-2432 or 916/322-0249.

CONTACT: California Housing Finance Agency, Sacramento

Bill Cranham or Jeannie Buchanan, 916/322-0249