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Affordable Housing Short Sale Program

Background
One of the fundamental goals of redevelopment in California is the production, improvement, and preservation of the supply of housing affordable to very low-, low-, and moderate-income households. This goal is accomplished, in part, through the execution of three different, but interrelated requirements imposed on redevelopment agencies by the California Community Redevelopment Law (CCRL).

    1. An agency must use at least 20 percent of its tax increment revenue to increase, improve, and preserve the supply of low-and moderate-income housing in the community (CCRL Section 33334.2);
    2. An agency must replace, in equal or greater number, very low-, low-, and moderate-income housing units and bedrooms which are destroyed or removed as a result of a redevelopment project (the “replacement rule,” CCRL Section 33413 (a)); and
    3. An agency must ensure that a fixed percentage of all new or substantially rehabilitated dwelling units are affordable to very low-, low-, and moderate-income persons and families (the “inclusionary rule,” CCRL Section 33413(b)(1)).

    Over the last years... The Soledad Redevelopment Agency (the “Agency”) has assisted numerous households through a number of Agency housing programs.

    While it is the Agency’s goal to keep households in their home, there are circumstances where a short sale may be necessary to avoid foreclosure. This may only occur when there has been a reduction in household income or unanticipated expenses, creating a documented financial hardship.

     What is a "short sale"?
    A “short sale” is specifically designed to help borrowers who are unable to afford their first mortgage and want to sell their home to avoid foreclosure, even if the sale price may not pay off the full amount owed to the mortgage lien holders.

    For the Agency, approving a short sale is an attempt to negotiate the recapture of a portion of the loan amount as oppose to losing the entire amount in the case of foreclosure. The Program is only applicable to loans of $10,000 or less owed to the Agency.
     SHORT SALE
    Affordable Housing Loans Short Sale Program
    Any transaction that involves a shortage in the repayment of the Agency loan amount of $10,000 or less via short sale requires Agency review/approval via the following process:

     1. Request for Approval of Short Sale  - The borrower of Agency funds (the “Applicant”), will need to submit this  document to the Agency and approval is based on the determination that household income has changed significantly and caused the household’s debt-to-income ratio to increase to 45 percent or greater. 

    Debt-to-Income (DTI) ratio is the percentage between how much the household owes each month on personal debt and  how much is earned: Monthly Debt Payment /Gross Monthly Household Income = DTI Ratio

    2. Agency issues Conditional Approval of Short Sale Request and Short Sale Agreement
    • If approved by the Agency, a “Conditional Approval of Short Sales” will be issued to the Applicant.
    • The Agency will accept a minimum of one percent (1%) of the gross sale price to release the Agency’s lien and the affordability covenants. For example, a short sale price of $200,000 would require a $2,000 payment to the Agency.
     3. Agency issues Disapproval of Short Sale
    • Agency issues a Disapproval of Short Sale letter to the Applicant if the Agency finds that the Applicant does not meet the financial hardship criteria of a debt-to-income ratio of 45 percent or greater.
     

     For more information, contact the Housing Division at (831) 553-5063


    Contact the City of Soledad
    248 Main St.
    P.O. Box 156
    Soledad, CA 93960
    Ph: (831) 223-5000
    Fx: (831) 678-3965
    Email: info@cityofsoledad.com
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