Item Description:
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Neg Agmt with MN Housing Finance Agency for the MN Cities Participation Program, 01/01/25-12/31/25 (no county cost)
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Resolution:
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BE IT RESOLVED, that the Executive Director be authorized to negotiate an Agreement with the Minnesota Housing Finance Agency for the Minnesota Cities Participation Program to support first-time homebuyer loans in suburban Hennepin County during the period January 1, 2025 through December 31, 2025; and that following review and approval by the County Attorney's Office, the Chair be authorized to sign the agreement and related documents on behalf of the Authority.
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Background:
The Hennepin County Housing and Redevelopment Authority (HCHRA) has participated in the Minnesota Cities Participation Program (MCPP) since 1997. Through the MCPP, the Minnesota Housing Finance Agency (Minnesota Housing) sells mortgage revenue bonds on behalf of city and county housing and redevelopment authorities, port authorities and economic redevelopment authorities (with the exception of those receiving direct entitlement bonding authority; i.e. City of Minneapolis); the proceeds of these bonds provide below-market interest rate home mortgage loans for low and moderate income first-time homebuyers.
Per state statute, Minnesota Housing uses a population-based formula to determine the HCHRA’s estimated allocation. Participating private mortgage lenders originate home mortgage loans, which Minnesota Housing buys in accordance with the Minnesota Housing Mortgage Program Procedural Manual. MCPP mortgages must meet the requirements of standard mortgage insuring and guaranteeing entities, mortgage industry accepted underwriting standards, and state and federal law governing mortgages provided through the issuance of mortgage revenue bonds.
Borrower income limits apply (currently $124,200 or less for a one-two person household). Maximum purchase price is currently set at $515,200.
Minnesota Housing provides marketing support in the form of first-time homebuyer brochures and inserts, press releases and advertising templates. Minnesota Housing absorbs all program underwriting costs and risks of bond issuance. HCHRA staff time is primarily limited to completing the application and monitoring fund usage.
In 2024, Minnesota Housing’s MCPP formula allocation calculation for the HCHRA was $15,496,924; however, as of October 31, 2024, suburban Hennepin County homebuyers have utilized $93,374,411 from the mortgage fund pool. Some details of Hennepin County usage since October 31, 2023:
• 380 households purchased their first home in suburban Hennepin County.
• The average loan amount was $245,722.
• 91% of the recipients also received approximately $8.4 million in down payment and closing cost loans to accompany the first mortgages, averaging $16,280 each.
• Across all loan types used in suburban Hennepin County, 61% of homebuyers were households of color.
Minnesota Housing estimates a similar amount of MCPP funding will be available in suburban Hennepin County in 2025. In order for Hennepin County to participate in the MCPP, the HCHRA must enter into a commitment agreement with Minnesota Housing.
Current Request: This request seeks authorization to negotiate an agreement with the Minnesota Housing Finance Agency to participate in the Minnesota Cities Participation Program from January 1, 2025 through December 31, 2025.
Impact/Outcomes: Approximately 450 Hennepin County first time homebuyer households will receive below-interest mortgages through Minnesota Cities Participation Program in 2025.
recommendation
Recommendation from County Administrator: Recommend Approval