55A - MORTGAGE CREDIT CERT PROGRAM

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REQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: JUNE 1, 2009 TITLE: MORTGAGE CREDIT CERTIFICATE PROGRAM f ,l ./%~. ~' L CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ^ As Recommended ^ As Amended ^ Ordinance on 151 Reading ^ Ordinance on 2"d Reading ^ Implementing Resolution ^ Set Public Hearing For_ CONTINUED TO FILE NUMBER Adopt a resolution making the finding that the Merged Redevelopment Project Area of the Community Redevelopment Agency will benefit by the operation of the Mortgage Credit Certificate Program both within and outside the project area, but within the boundaries of the City of Santa Ana. DISCUSSION The County of Orange and participating cities have proposed to resume offering the Mortgage Credit Certificate (MCC) Program, which has not been offered since 2004 because of the increasing disparity between the cost of homes and applicable income restrictions. The MCC Program is limited to participants with annual household incomes of 100 percent of the area median for one and two person households, and 115 percent of the area median for three or more person households. The current maximum purchase prices are $643,322 for newly constructed homes and $694,905 for resale homes. The MCC Program assists eligible households to purchase a home by enabling them to take as much as fifteen percent of their annual mortgage interest payment as a dollar-for-dollar credit against their federal income tax. This credit enables them to reduce their federal income tax withholding, therefore making more of their monthly income available for mortgage payments. Participating mortgage lenders will take the value of the MCC into consideration when underwriting loans. The MCC can be applied throughout the life of the mortgage, provided the original first- time homebuyers remain the legal owners and continue to use the home as their principal residence. 55A-1