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Homeownership: Permanent Affordability vs. Equity Building

Homeownership: Permanent Affordability vs. Equity Building. October 7, 2003 Rick Jacobus, LISC John Lowry, Burbank Housing Mark Moulton, Peninsula Habitat for Humanity. Burbank Housing Development. Discussion Question. Given the costs and subsidies required, and Burbank’s goals…

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Homeownership: Permanent Affordability vs. Equity Building

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  1. Homeownership: Permanent Affordability vs. Equity Building October 7, 2003 Rick Jacobus, LISC John Lowry, Burbank Housing Mark Moulton, Peninsula Habitat for Humanity

  2. Burbank Housing Development

  3. Discussion Question Given the costs and subsidies required, and Burbank’s goals… • How should they handle the potential increases in the value of that home? • Should the homeowners be allowed to keep all of the increase in price? • Should they have to return all of the increase to Burbank? • …something in the middle?

  4. Peninsula Habitat for Humanity

  5. Discussion Question Given the costs and subsidies required, and Habitat’s goals… • How should they handle the potential increases in the value of that home? • Should Habitat be thinking about this differently from Burbank?

  6. Continuum of Approaches Shared EquityLoans Downpayment Grants Forgivable Loans Permanent Affordability Asset Building Resale Price Restrictions Index Formulas Mortgage Formulas Appraisal Formulas Option to Purchase

  7. Burbank Housing Development • Shared Appreciation Loan • Option to repurchase at appraised value • Deferred payments • Buyer repays percentage of appraised value based on loan amount as a percent of initial value.

  8. Peninsula Habitat for Humanity • Resale Price Restriction • Option to purchase at formula price (well below market) • Resale price indexed to CPI (up to 3%) • Habitat provides mortgage with term (length) adjusted to insure affordability to 50% of Area Median Income

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