TO: University of Colorado Faculty Council
FROM: David E. Chadwick, Manager of Real Estate
DATE: October 15, 2003
RE: Faculty Housing Assistance Program
Since the Foundation began participating in the Faculty Housing Assistance Program ("FHAP") in 2001, the Foundation has provided down payment assistance loans to 43 faculty members from all four University campuses. Currently, about $2 million in FHAP loans and commitments remain outstanding.
In response to the Foundation's desire to support FHAP to benefit the University but also limit the use of Foundation resources, the Foundation requested proposals from financial institutions to provide programs and services capable of achieving the FHAP objectives. The request for proposals was developed by the Foundation with the assistance of Thistle Community Housing in Boulder and Judy Van Gorden, University Treasurer. Based on established evaluation criteria, this group narrowed the submitted proposals to two institutions believed to be accessible, experienced, financially strong and the most likely to achieve the FHAP goals. The review group met with representatives from the two institutions, and as a result of these meetings, Foundation staff proceeded with exclusive negotiations with the U of C Federal Credit Union to further define a new program.
The Foundation believes that the following proposal will result in increased funding capacity to support FHAP while eliminating reliance upon Foundation investment capital for program growth and simplify the FHAP structure for faculty and the Foundation while meeting the original FHAP objectives.
PROPOSAL SUMMARY
• Credit Union funds both a first mortgage and a second mortgage for faculty members selected by the University; Foundation discontinues any additional funding beyond the current FHAP loans and outstanding commitments
• Second mortgage is no greater than $50,000
• With combined first and second mortgages, minimal down payment is required of the borrower
• Interest-only payments are due on the second mortgage, and interest rate is variable rate of Prime (currently, 4.00%) minus.50% ($146/month based on $50,000 FHAP loan and current rate) • Second mortgage is due no more than 20 years from origination
• Second mortgage is guaranteed by the Foundation
• Comprehensive and competitive selection of first mortgage products is available
• Credit Union performs underwriting of both the first and second mortgages using industry-standard underwriting criteria, policies and procedures
• FHAP participants are offered reduced closing fees and homebuyer and homeowner seminars