The California Housing Finance Agency board approved Resolution 25-22 to move approximately $5,400,000 of uncommitted SB 129 funds from the closed forgivable equity-builder loan program into the State Route 710 affordable sales program. The motion to approve was moved and seconded and passed on roll call.

Ellen Martin, CalHFA's director of home ownership, told the board the agency received a $100 million SB 129 allocation in the 2021 budget act. The board initially directed $88 million to a forgivable equity-builder program that provided silent second loans (forgivable over five years) for down payment and closing-cost assistance to households at or below 80% of area median income. The remaining $12 million was allocated to a partnership with Caltrans for the State Route 710 affordable sales program.

Martin said after accounting for loan fallout, some repayments and interest earnings, about $5.4 million remains in the forgivable account. "We now have approximately $5,400,000 remaining in the forgivable account. So today, we are requesting that the board transfer those remaining uncommitted funds to the State Route 710 program," she said.

The State Route 710 program works with Caltrans properties in Pasadena, South Pasadena and Los Angeles that Caltrans acquired decades ago for a planned freeway extension that did not proceed. Caltrans must first offer the homes at an affordable price to low- and moderate-income occupants; when occupants do not qualify or decline, localities have options including purchasing the properties or releasing them for sale at fair market value under Caltrans regulations. Martin said the program uses a private-sector lender to originate loans because CalHFA is not an originating lender; phase one used Mountain West Financial and the current originator is American Veterans Mortgage.

Board members praised the program design and asked about safeguards that ensure the houses are habitable and the lending partner's willingness to operate on heavily deed-restricted properties. Martin said the program requires FHA-quality standards at purchase, including a two-year roof certificate, functioning HVAC, and a home-buyer warranty; CalHFA staff said lenders require hand-holding because deed restrictions make repurchase riskier.

Director Limon and others noted the program could be a useful prototype to expand in other contexts to increase entry-level homeownership in California. No public commenters spoke on the item during the meeting.

Staff recommended the reallocation because the SR-710 program's funding needs "appear to be on track to exceed the current allocation" given the number of properties preapproved and preapproval amounts, and because restarting the closed forgivable program for a small number of loans would not be operationally viable. The motion passed by roll call; courtney called the roll and the board approved Resolution 25-22.