PowerPoint Presentation (Added 2/20/2026)*
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US Department of Housing and Urban Development Loan Portfolio Discussion February 24, 2026, City Council Workshop Presentation Overview 2 • Purpose and Background • Loan Portfolio Composition and Servicing • Recommended Actions • Grant Impacts and Benefits • Consensus Purpose 3 • Discuss HUD Community Planning and Development funded loan portfolio • Provide recommendations to address inefficiency and benefits to residents • Seek consensus on recommendations 4 Background Funding Sources • Community Development Block Grant (CDBG) • Home Investment Partnerships Program (HOME) • Neighborhood Stabilization Program (NSP) Activities Supported • Homeowner Rehabilitation • First-Time Homebuyer Assistance • Replacement of Substandard Homeowner Housing Background 5 • Loans older than 30 years not consistent with industry lending practices • Rehab improvements past useful life • Ownership changes limit tracking • Cost of third-party servicing greater than the amount collected • Neighborly technology platform – remove external loan servicer and service in-house • Internal Audit Finding – reliability and accessibility of outstanding loan data 6 Portfolio Composition • Deferred: no regular payment required; exist until repaid through sale/transfer of property or voluntary repayment • Forgivable: depreciate equally over term of the loan (5, 10, 15 or 20 years) • Repayable: monthly payments (with or without interest) 18 loans across all types also have escrow accounts 7 Portfolio Amounts Types of Loans Approximate balance at end of FY 2025-26 No. of Loans at end of FY 2025-26 Loans with Escrows 1. Deferred $2.2 million 60 6 2. Forgivable $1.1 million 82 6 3. Repayable $0.2 million 6 6 Total: $3.5 million 148 18 8 Recommended Actions 1. Remove escrows from all loan types 2. Convert deferred loans to forgivable with 30-year term 3. Convert repayable loans to forgivable with existing terms 4. Keep forgivable loans as is – no changes 5. Cancel external vendor service contract 6. Transition servicing in-house 9 Grant Impact Deferred Loans: • Loans >30 years = $298K of $2.2M balance is forgiven now • Loans <30 years = no immediate grant impact; loans will depreciate over remainder of existing term Forgivable Loans • No grant impact = will continue to be forgiven over existing term Repayable Loans • All loans become forgivable over existing term = no immediate grant impact with possible impact up to $209K if loans chosen to be repaid • $70K in interest foregone over 19 years All loan funds and interest repaid must be used for eligible HUD program activities 10 Benefits • Provides debt relief/wealth building for low-income clients • Resolves Internal Audit finding • Aligns city practice with industry standards • Maintains compliance with regulations while providing continued grant revenue to support HUD programs • Reduces long-term service costs • More efficient administration Consensus Requested 11 Proceed to formal adoption of a Council resolution giving staff authority to implement these changes.