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3. Adopt a "Shared Appreciation Loan". <br />Pleasanton's DPA loan would be restructured to a "shared appreciation loan", similarly <br />to the AC Boost (and City of Livermore) DPA loans. Under this loan structure, the loan <br />is interest-free, and the payments are deferred with no monthly payment for 30 years <br />(as described previously). The principal balance amount plus a share of the <br />appreciation becomes due at the end of the 30 -year term or when the homeowner sells <br />or transfers the property. <br />For example, if the borrower receives the DPA loan in the amount of $100,000 with a <br />purchase price of $900,000, the loan amount is 11 % of the purchase price. Therefore, <br />the share of the appreciation would also be 11 %. <br />Sample: <br />Original Purchase Price $900,000 <br />DPA Loan Amount $100,000 <br />Shared Appreciation 11% <br />Proposed Sale Price $1,100,000 <br />Amount Appreciated $200,000 <br />DPA Shared Appreciation $22,000 <br />Estimated 1St Mortgage Pay Off $677,302* (4.75% interest on a 30 -year loan) <br />DPA Loan Due $122,000 <br />Estimated Total Pay Off $799,302 <br />Estimated Funds to Borrower $300,698 <br />" Calculation assumption based on 10 years of repayment. <br />There are specific benefits for the DPA loan terms to mirror how the AC Boost loan is <br />structured. Having the same loan structures would avoid confusion among potential borrowers <br />and could simplify the home buying process for these borrowers. There could also be an <br />administrative advantage as Hello Housing already administers both the County's AC Boost <br />and the City's DPA program. Hello Housing could assist borrowers with a streamlined down <br />payment assistance program that "layer" these two assistance programs to provide borrowers <br />with larger DPA loan amounts vital to be competitive in today's real estate market in <br />Pleasanton. <br />Possibility of Success of a Restructured DPA Program <br />During the May 16th discussion, members of the Housing Commission expressed concerns <br />that the high costs of homes in Pleasanton would still make it very difficult for hopeful <br />Pleasantonian homebuyers to benefit from a "revamped" DPA Program. City staff requested <br />time to research and gather data that would outline actual "scenarios" in which homebuyers <br />would be able to take advantage of the new loan limit amount and loan terms, and <br />consequently, afford to purchase a home in Pleasanton. <br />Page - 3 - <br />