Dublin City Council recently passed a series of changes to its First Time Homebuyer (FTHB) Loan Program to bring the Program into compliance with FHA underwriting standards. FTHB loans were also capped at $40,000. Prior to the change, FTHB loans were uncapped but the average loan to date has been roughly $35,000. The Program was also modified to require loan recipients to have 30-year fixed rate first mortgages. The previous guidelines allowed for FTHB Loan Program borrowers to take out exotic “teaser rate” and negative amortization first mortgage loans.

Councilmember Kevin Hart also asked Dublin City Manager Joni Pattillo to look into the possibility of outsourcing the FTHB Loan Program to an affordable housing non-profit organization like the Tri-Valley Housing Opportunity Center to make better use of Dublin’s administrative budget. Dublin’s FTHB Loan Program is staffed by City employees and originates about six loans each year. Councilmember Hart noted that in light of the drastic cuts to crucial city services the City of Dublin has made over the past few years because of its much publicized budget challenges in early 2010, the City should also consider outsourcing the administration of Dublin’s low volume FTHB Loan Program to save money. City Manager Pattillo noted that Dublin’s affordable housing team is responsible for more than administering the FTHB Loan Program, but she did not provide specific details about what those responsibilities are in response to Councilmember Hart’s comments.

Councilmember Hart’s proposal to outsource the FTHB Loan Program to a non-profit was met with disdain by Mayor Tim Sbranti and Councilmember Kasie Hildenbrand. Hildenbrand countered that she would be uneasy with outsourcing Dublin’s FTHB Loan Program to a non-profit given that many non-profits have had financial problems of late and that cities have recently had to bail out non-profit organizations that have mismanaged city funds. Mayor Tim Sbranti echoed Councilmember Hildenbrand’s concerns. This revelation is a legitimate concern on its own given that Dublin has given away more than $750K in the past few years in non-profit grants. Based on Councilmember Hildenbrand’s comments, residents may wonder just how many of those grants have been awarded to troubled non-profits.

Despite the reservations by Mayor Sbranti and Councilmember Hildenbrand, the Council asked City Manager Joni Pattillo to research the option of outsourcing the FTHB Loan Program and to bring the research back to a future Council meeting for direction. The Council also asked Community Development Director Jeri Ram to consider offering Dublin FTHB Loan Program recipients the option to pay back their loans on a fixed schedule versus the current approach of only requiring payback after thirty years, after the home has been sold, or after a few other circumstances.

As of March 1, 2011, Dublin has granted two loans for approximately $70,000 out of a $400,000 pool budgeted during the 2010-2011 fiscal year. The current FTHB loan portfolio stands at roughly $1M, and the Program has had one default out of 30 loans total.