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Hubbard County HRA/EDA reviews history and usage of down-payment assistance program
Summary
Staff presented a program recap showing the HRA’s down-payment assistance program has made 25 loans since 2009, lent $157,744 in total with $74,900 outstanding, and typically issues loans up to $7,500 with a 4% rate and five-year interest-free deferral.
HRA/EDA staff provided a detailed recap of the agency’s down-payment assistance program, outlining its origin, loan terms, portfolio performance and options for future use or expansion.
Staff said the program began with a contract-for-deed partnership with Nevis High School in 2009 and later broadened to countywide down-payment assistance. The program has made 25 loans since then, with a total of $157,744 lent and $74,900 currently outstanding. The director reported 11 of the loans are no longer active (9 paid in full, 2 charge-offs), 14 loans are active, 5 are in repayment and 9 are scheduled to begin repayment when the five-year deferral period ends.
Program mechanics described by staff: loans have a $7,500 maximum, carry a 4% interest rate, and include a five-year interest-free deferral so payments do not count toward mortgage front-end ratios until month 61. If a borrower sells the property before repayment begins, staff said the second-mortgage lien must be cleared and loan funds are returned to the HRA per the recorded documents.
Board members asked for more financial transparency. One member requested that loan payments and interest receipts be included in monthly cash-flow and asset statements; staff said payments appear in the general checking account and that reconciliation work is nearly complete. The director said program use has been modest — roughly three loans per year historically — and that marketing would likely increase utilization if the board chose to expand outreach or set a dedicated fund. The board discussed distinctions between down-payment assistance (which is typically recycled) and rehabilitation programs (which are often deferred loans that do not fully recycle funds).
Staff also briefed the board on an existing state-funded portfolio (referred to in the meeting as the MURAL program) with about $308,000 remaining in funds that are administratively tied to outstanding loans; staff said those funds cannot be spent locally until the loans are paid or the state authorizes release. Board members asked staff to prepare a short write-up for legislators describing the constraints and potential local uses.
