When the California Housing Finance Agency (CalHFA) was created in 1975 – Governor Jerry Brown’s first term – its mission was simple: to help low- and moderate-income families buy their first home. More than 40 years later, in the midst of huge gaps between incomes and prevailing home prices, that goal is getting harder and harder to achieve.
But, just because federal rules allow higher-income individuals in California to use CalHFA financing to buy homes doesn’t mean the agency should stray from its original mission. Unfortunately, the leadership at CalHFA doesn’t feel that way.
Authorized by the Internal Revenue Service (IRS), state governments sell tax-exempt housing bonds, commonly known as Mortgage Revenue Bonds (MRBs), and use the proceeds to finance mortgages for lower-income, first-time homebuyers. The IRS qualifies borrowers earning up to 115 percent of area median incomes, which amounts to six figures in some California communities. Under this authority, the CalHFA board has increasingly been approving these higher-value loans.
In a recent trade article, Tia Boatman, CalHFA’s Executive Director, defended the agency’s practice of making loans to individuals earning $228,000, by suggesting doing so has no affect on lower-income borrowing opportunities, although lending to higher-income individuals has grown nearly 1,000 percent in just two years.
Boatman further defends lending to earners of six-figure incomes by citing California’s soaring home prices. According to the California Association of REALTORS®, median home prices in the state has climbed to just under $600,000, making it harder to buy here, no matter what assistance is provided.
However, rather than announcing a new program aimed at assisting lower-income families – would-be first-time homebuyers – Boatman, seemingly beleaguered by California’s uncooperative housing markets, falls back on shopworn rhetoric of the past: “If we know that supply is fewer, and that incomes haven’t kept pace with prices, how do we continue to help out the low-to-moderate space?” She concludes, “One of the ways you do it is to help more people by broadening our income targets.”
This is just plain wrong. Especially, coming from an agency whose organizing principle is built on helping poor people. The correct answer goes something like: “One of the ways you do it is to expand the reach into the really hard-to-serve markets by introducing a new program or two.”
Isn’t that what CalHFA’s well-compensated staff should be doing, after all? Has the housing brain trust there yet experimented with sweat-equity programs? Or, with mainstreaming its shared-equity programs among targeted income groups? Or, instead of raising qualifying incomes, why doesn’t CalHFA simply increase the size of the down-payment assistance it’s providing? And, so on.
Boatman should know better. Before landing the CalHFA gig, Tia headed the respected Sacramento Housing and Redevelopment Agency (SHRA), where she greatly improved the delivery of housing assistance to agency customers. (Unfortunately – for Sacramento and a few hundred other needy jurisdictions – redevelopment agencies were de-authorized by the Governor and the Legislature some years later.)
Sure, housing markets in California have changed dramatically thanks to a chronic shortfall in production. Prices and rents are skyrocketing. UCLA just came out with a study showing how much the lack of housing affordability is affecting/contributing to the state’s burgeoning homelessness problem.
UCLA is presumably responding to the profound increase in tents lining the sidewalks of major cities in California. But, according to the UCLA study, 75 percent of homeless individuals had a home then lost it. So, instead of adjusting upwards qualifying incomes, how about spreading a little of the CalHFA largesse around Skid Row and get a few needy families back into homes? This is time for brainpower and bold moves, not the status quo (with a few minor adjustments).
CalHFA has a reputation of being a conservative lender – rightfully concerning itself with policies and programs that guarantee timely repayment of the capital it provides to borrowers – for both single-family and multifamily, rental housing. Through its programs, CalHFA is proudly a financially self-sustaining state agency.
But, the state is in crisis. Maybe it’s time for CalHFA to – if only temporarily –redirect funding away from the safer bets and towards the riskier ones.
UPDATE: California Housing Finance Agency (CalHFA) wishes to make the following corrections to the article:
- The agency follows the California Health and Safety Code to determine its maximum qualifying income, not the Internal Revenue Service (IRS).
- The maximum qualifying income for a loan under the Health and Safety Code is $228,000, although CalHFA wants it to be clear that it has not yet made a loan to a family earning $228,000.
- The agency also wants it to be understood that although it was MRB authority that originally capitalized its homeownership program, the agency no longer uses that authority to make its loans.
- The agency further wants it to be clear that its current Executive Director previously held the position of General Counsel for the Sacramento Housing and Redevelopment Agency (SHRA) and was not its “head”, as the article suggested.