We definitely look forward to working with you.  We are in the process of updating this page and process, but wanted to get you the most important information so that you can get started.  We also have buyers that need assistance so we want to get our loan officers set up ASAP.

Program Goal

The goal of the HouseKeys Lender Partnership Program is to streamline the Below Market Rate (BMR) purchase and refinance process so that loan officers and lenders that want to specialize in this unique niche can responsibly build their business, facilitate a satisfying experience for the borrower and hone their affordable lending skills.

We do this by establishing a formal relationship with loan officers and lenders who want to actively engage in originating mortgages that are secured by properties that contain restrictions on the resale or refinance of the home for a stated term.  We provide training, program updates and application status updates for the borrowers that you work with who hold Application Identification Numbers (App IDs).  

The Trade Off

In exchange for the opportunity to close a Below Market Rate purchase loan, we ask you to help us complete mortgage credit approvals for potential buyers and serve as an agent of the program to collect the application info, documentation and exhibits contained within the BMR Buyer Packet.

HouseKeys Service Area

HouseKeys is a Bay Area Program Administrator.  We administer community and economic development programming that targets program-eligible and opportunity-qualified households.  Our service area includes the 9 Bay Area Counties, with an additional 3 Counties (San Benito, Santa Cruz and Monterey) that we service based on our historical ties and Morgan Hill headquarters. Since 2015, we've been competing for and taking on contracts in our Service Area.  Our goal is to form relationships with knowledgeable and committed real estate professionals, including developers, lenders, escrow officers and real estate agents.

Mortgage Deed of Trust Rider

In 2016, our Legal Team developed a Affordable Housing Deed of Trust Rider draft.  The draft is being circulated to the GSEs, banks and mortgage finance companies.  Our goal is get this document accepted as a small step towards improving the mortgage servicing relationship that often becomes an obstacle to program preservation when a mortgage default occurs.  Click here to see the draft.

The Morgan Hill Program

Affordable Housing has been around since the 1970s.  Over the past 40 years there have been numerous changes to the policies, procedures and agreements that govern the various programs.  Morgan Hill's BMR Program is part of the Residential Development Control System that was enacted by the residents of Morgan Hill in 1977 to regulate growth.  Allotments are issued to developers who wish to build residential units in the City of Morgan Hill through a project competition process. During that process, a developer makes a series of commitments to the City (including Housing Needs - See Municipal Code Section 18.78.260) in exchange for points that allow their application to score higher.  The homes are restricted for up to 45 years and there have been various iterations of the resale restriction agreement used since the program was enacted.  

For the purposes of our work together, you should think of the program as having two types of resale restrictions:

  1. Current Restriction Agreements (Used for New Construction BMR Units entering the program inventory for the first time)
  2. Past Restriction Agreements that were used for existing units that are being resold or refinanced

You will need to get the current version of the resale restrictions reviewed and approved by the funding lender.  Mortgage Brokers and Correspondent Lenders, please take note that the funding entity must complete the review and approval program documentation and execute the agreements.  These documents include:

  1. Resale Restriction Agreement
  2. Excess Sales Proceeds Note
  3. Performance Deed of Trust
  4. Request for Notice of Default Contact Authorization

We will ask that funding lenders provide a form (on their letterhead) that confirms each document has been reviewed and approved and provide a document number that can be used to reference the documents during the application, approval and closing process.  An active library should be maintained by the funding lender so that any changes or updates can be tracked to ensure that the most current documents are approved.

Borrower Population

The borrower population is primarily made up of households who earn between 50% and 120% of the Area Median Income. These households have limited down payment funds and, due to the income restriction, have an affordability challenge when combining the housing payment, household expenses and any existing consumer debt.  This has a significant impact on the mortgage origination process.

It is important that lending partners acknowledge the following when it comes to Affordable Loan Origination

  • There can be a longer purchase timeline between when a borrower applies for a loan to the time that they are qualified to purchase
  • The borrower may require an "action plan" to get them to a place where they have the financial standing to qualify for a purchase
  • Qualified buyers may need multiple layers of down payment assistance from state, county, city and other local resources
  • Qualified buyers may need to have their compensating factors documented and/or credit history explained to the underwriter
  • Borrowers who immediately qualify may not score highly enough in the lottery/drawing to get an opportunity to purchase immediately

Due to the above characteristics, the Pull Through Rate - or the ratio of successfully funded purchase loans to mortgage credit applications taken and packaged - may be much lower than that of traditional purchase mortgages.

At HouseKeys, we anticipate that a ratio ranging from 7:1 to as high as 10:1.  In other words, our loan officer partners could take as many as 10 loan applications for every closed purchase transaction.

Action Items:

  1. Pay the $500 Registration Fee (this is an annual fee)
  2. Complete Your BMR Buyer Application Tracking Sheet
  3. Register to Attend the HouseKeys Affordable Lending Training
  4. Lender Participation Agreement Draft (In Review with City Attorney)
  5. Loan Officer Agreeement (In Review with City Attorney)