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HomeMy WebLinkAboutRDA - AUTHORIZATION TO PURCHASE AFFORDABLE HOME IN FORECLOSURE PA- 1110 ,1- G IDENTIA �v.o DATE: JANUARY 3, 2000 a�S� Inter- Com rti JA r�O TO: WILLIAM A. HUSTON, CITY MANAGER V,-,G FF RE FROM: REDEVELOPMENT AGENCY STAFF APPROVED STACOMMENDATfON SUBJECT: AUTHORIZATION TO PURCHASE AFFORDABLE HOME IN FORECLOSURE SUMMARY Redevelopment Agency staff,are requesting authonzation to purchase property;at 1241 Palm Court from an owner who previously received loan and downpayment assistance from the Redevelopment Agency. The home is now in foreclosure and the Agency would need to purchase the unit to preserve the affordability.status. RECOMMENDATION It is recommended that the City Council authorize the Executive Director, or his designee, to make an offer to purchase the property at 1241 Palm Court either from the current owners prior to anticipated foreclosure sale through negotiation with the current mortgage holder or to respond to the open competitive sale process subject to City Attorney approval of any and all agreements. FISCAL IMPACT • If the Agency is able to purchase the home from the current owner prior to going into public sale then the cost will be $170,745.06. If the home moves forward in the foreclosure process and the Agency attempts to purchase the home in an open competitive scenario, then the costs could be higher. BACKGROUND In September 1996, Delfino and Maria Cuellar purchased one of the homes designated as an affordable home for the low income purchaser in the Shea Homes Tustin Grove Project. The Cuellars received two loans from the Agency, one in the amount of $7,743.00 as the Agency subsidy loan for low income units and $4,422.00 for downpayment assistance. In September 1999, the Agency received a Notice of Default from Lonestar Mortgage Services that the Cuellar's property had been placed into default because of non-payment of the mortgage by the owner. As of January 1, 2000, a total of $182,710.06 is due. This amount is broken down as follows; $144,657.86 in principal, $9,465.00 in principal interest (April 1999, through January 2000), $2,091.80 in miscellaneous principal fees, $11,210.16 in late payments, $2,043.76 in late fees and charges, $7,743.00 and $4,222.00 in Agency assistance. State Redevelopment law requires 15% of all new housing constructed in redevelopment project areas to be designated affordable to low and moderate income households. The Shea Homes SCANNED Mao. January 3, 2000 Mr. William Huston Purchase of Affordable Unit project was required to have a total of twenty-one affordable homes. Seven homes were for moderate income buyers, six homes were for low income buyers and eight homes were for very low income buyers. The home purchased by the Cuellars in 1996 was one of the six homes that were made available to the low income buyer. In addition to satisfying State requirements for the Shea Homes project, the unit was also counted toward the required replacement housing for the Warmington Homes Ambrose Lane project. The subject property has been identified in the Warmington Homes Housing Replacement Plan as mitigation for the demolition of the Tustin Meadow apartment complex. If the home goes into foreclose and sale to a third party the unit will no longer be identified as affordable. This will have the double effect of reducing the number of required affordable units.in Shea Homes but will also reduce the number of available affordable units that are needed due to the construction of the Warmington Homes Ambrose Lane project. If this unit is lost, then Agency will then have to require its replacement with another one that will carry a similar affordable restriction. The City Attorney has identified a strategy to acquire the property and keep it as an affordable unit. The City Attorney has indicated that the Agency should attempt to contact Mr. Cuellar to determine if he Sends to let the property go into foreclosure. Depending upon Mr. Cuellars plans, the Agency may be able to purchase the property from the owner prior to it being sold in the foreclosure process. The second part of the strategy is to contact the current holder of the mortgage (Lonestar Mortgagee Services) and have the Agency intervene prior to the property going into foreclosure and being sold to a third party. Agency staff have been attempting to contact Mr. Cuellar by telephone and mail but have not received any response from him. Agency staff have been able to contact Lonestar who have indicated that the property is in active foreclosure. The sale date of the property is set for January 13, 2000. Due to the timing constraints in this matter the Redevelopment Agency is requesting authorization to purchase the property from the current owner for an amount not to exceed $182,710.06 prior to the anticipated foreclosure sale date. If that fails, the Agency is requesting authorization to purchase the property through negotiation with the mortgage holder or in an open competitive sale process. ath-a_cue_AA cSitet% Christine Shingleton Davi Gottlieb Assistant Executive Director Senior Redevelopment Project Manager