Single Family production: As a result of the current environment, and our intentional slowing of homeownership lending through increased interest rates, VHDA expected lower overall production than in recent years. Homeownership loans were down 34 percent vs. FY08. Suspending the taxable and STEP Rate programs was a factor, as these loans made up nearly 22 percent of total lending in FY08. Still, VHDA closed a total of more than 4,300 Single Family loans for $664 million—a very strong year, despite the economy.
Our switch to primarily FHA lending enabled VHDA to maintain lending volume and favorable underwriting terms in the face of sharp curtailments in affordable housing programs by the PMI (private mortgage insurance) industry and GSEs (government-sponsored enterprises such as Fannie Mae). This change also enabled us to gain approval to use Ginnie Mae (GNMA) securitization as a means to maintain the flow of affordable capital.
FHA Plus: Our willingness to combine self-insured down payment assistance with FHA-insured first mortgages is one example of VHDA’s leadership. The FHA Plus program enables us to continue lending to first-time buyers who need down payment assistance at a time when these buyers are critical to the recovery of the housing market.
Homebuyer Tax Credit Plus: This new program was created to provide down payment assistance to first-time homebuyers. It offers an interest-free second mortgage which requires no monthly payment for the first 12 months. The 12-month “grace period” gives the homebuyer sufficient time to receive their federal first-time homebuyer tax credit and use it to repay the loan with no costs or penalty.
Delinquencies and foreclosures: As the recession deepened and housing prices continued to move downward, delinquencies in our Single Family portfolio increased. Higher loan losses followed. This, in turn, led to increased reserve requirements. However, due to VHDA’s strong underwriting and loss mitigation practices, our delinquency and foreclosure rates remain far below those for Virginia and the nation as a whole. (As of June 30—the latest period for which data is available—VHDA’s foreclosure rate was 0.57 percent vs. 2.18 percent statewide as reported by the Mortgage Bankers Association.)
Multifamily production: While Multifamily production continues to be difficult due to NIMBY and high taxable bond rates, we finished the year having committed more than $207 million for 3,577 units, compared to 3,549 units in FY08. More than 3,000 of these units are intended for Virginians at or below 60 percent of area median income, and many were in "preservation" developments. In light of the turbulence in the Multifamily market, maintaining production at FY08 levels is a remarkable achievement.
Mixed-use/Mixed-income: This program continues to be recognized as a great revitalization resource by local governments and developers throughout the Commonwealth. In fact, during FY09 we leveraged $62 million in total MUMI investment from $52 million in VHDA loans and achieved our goal of generating $100 million in total Mixed-use/Mixed-income investment a full year ahead of schedule.
REACH Virginia subsidies: These funds help us bridge the substantial funding gap now facing multifamily developers. We’ve maintained the flow of multifamily funding, and continued to finance highly targeted developments serving difficult needs at a time when other states are totally dependent on federal HOME funds to support multifamily lending. The REACH Virginia subsidy for FY10 will be $21.8 million.
Tax Credits: VHDA staff worked tirelessly to allocate federal assistance to tax credit developers as quickly and equitably as possible, while fully adhering to the rigorous requirements imposed by the TCAP and Exchange programs. A portion of TCAP funds was set aside for tax-exempt bond developments (15 percent) and for non-competitive disability developments (6 percent).
Housing Choice Voucher: We reached our FY09 goal of 100 percent and maintained it all year. The goal will drop back to 98 percent in FY10.