Council standardizes soft-second homebuyer loans, expanding aid using HOME funds

The City Council approved changes to the city's soft-second loan program on Wednesday that standardize deferred second loans at up to $60,000 for first-time homebuyers and $75,000 for properties requiring rehabilitation, funded through the federal HOME program.

Housing department staff told the council the program is intended to make modest-priced houses affordable to households at or below 80 percent of area median income. The staff said the 80 percent of median-income threshold for a family of five would be about $47,100, and that the program could finance homes priced around $180,000 in eligible areas.

Councilmember Jack Holden questioned whether the program advances overall affordable-housing funding and who ultimately bears the cost of deferred-interest loans. Housing staff (Mr. Penny) and Councilmember Ed Pacheco said the HOME funds are federal funds and that the city's affordable housing trust fund is intended to generate local funding to complement those federal resources.

Staff said the program had previously produced roughly 100 soft-second loans a year under older terms and that the revised, standardized amounts would be marketed after council approval. Staff also said the city has set aside $10 million a year for the program and that outreach funding of $20,000 for homebuyer education would be targeted to eligible council districts.

Councilmembers voted to approve the program changes (12 ayes). The action standardizes loan amounts, clarifies income eligibility and authorizes outreach funding; staff said marketing would begin after the council provided approval.