News & Views: Press Releases

CHR Launches New Mortgage Program

COMMUNITY INVESTMENT MORTGAGES

Community Investment Mortgages (CIM) are loans made by private individuals, corporations, investment funds, or other organizations other than conventional lending institutions for mortgages under the Below Market Rate Housing Program, Limited Equity Ownership Component.

The Community Investor provides funds through a recorded mortgage and promissory note for the purchase of the subject property. The loan is secured by the property (vertical improvement, building only). The Limited Equity Ownership model provides that the Coast & Island Community Land Trust, Inc. (CICLT), a wholly owned subsidiary of Community Housing & Resources Inc. (CHR), owns the land in perpetuity and allows use of the land under a renewable 99 year ground lease. All mortgages are co-signed and guaranteed by Community Housing & Resources, Inc. The mortgages are in first position. Loan to value of the houses are approximately 55% of total development costs to market appraisal.

The amortization term of fixed rate loans is a minimum of thirty years. The rate is 6% or less.

The Community Investor has three options from which to choose:

1. Loans to Intermediary: The Investor would loan the funds to CHR, who acting as an intermediary, would re-loan the funds to the home purchaser. CHR would service the loan and escrow account, paying taxes, insurance, and ground lease fees. The principle and interest would be paid monthly to the Community Investor based on the amortization payment schedule. CHR would add 25 basis points to the interest rate to cover expenses. In this scenario at a 6% rate the Community Investor would net a 5.75% rate.

2. Loans Directly to Borrower: The Community Investor would directly loan the funds to the borrower and service the loan directly receiving the entire interest yield not to exceed 6%. Payment would be made directly from the borrower to the Community Investor on a monthly basis. The Community Investor would decide whether or not to administer an escrow account. CICLT would directly bill the homeowner for the monthly ground lease fee.

3. Loans Directly to Borrower with Servicing Agreement with CHR or other External Entity: This scenario is the same as #2 with an external servicing agreement to collect PITI and allocate to the Community Investor and taxes, insurance and ground lease fee. This is a fee-based service, paid by the Community Investor to CHR on a monthly basis. The Community Investor could also opt to secure the services of another external entity to do this (e.g. accounting firm, law firm).

Participation in this program is not only a contribution to the community, but a solid, guaranteed, secured financial investment.

An example of the amortization schedule for $150,000 with interest yield and principal paid on a thirty year (30) loan at 6% interest is attached. Note that the interest on the loan is accelerated earning more in the earlier years of the note. At full term the $150,000 mortgage yields #323,757 of which $173,757 is interest.

The loan documents are developed by the law firm of Roetzel & Andress, L.P.A..

These mortgages are assumable by heirs. Consultation with a tax advisor is receommended.

For more information contact Scott Marcelais, 239-472-1189 or smarcelais@zebis.com. For more information about CHR visit our web site ate www.sanibelhousing.o

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