Author Topic: City Won’t Let Me Out-HELP!!!  (Read 1101 times)


  • 5 O'Clock Shadow
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City Won’t Let Me Out-HELP!!!
« on: January 15, 2019, 10:06:45 PM »
Hi everyone,

So a little back story. I was young and thought I was making a great move. I live in a suburb of Los Angeles and in 2013 I came across what I thought was a steal at the time. A 2 bed 2.5 bath townhome central to freeways for $244k. The only caveat, you guessed it, was that for me to be able to purchase it I had to use a city HAP (Home Affordable Program) loan that the city was offering at that time. The program was you put down 5% of your own money ($12,500) and the city gives you a $40k silent second mortgage through HUD. There was no interest due monthly, the only hiccup was upon selling/refinancing the home to take cash out you would have to not only repay the silent second $40k but also give the city 16.3 percent as part of a “equity share” provision.

I thought this was all fine and dandy because I only planned on living in the home 5-7 years and figured me walking away with 84% of the equity gain was better than nothing, so I forged ahead.

Another caveat for me to qualify for the program was that my income had to be under a certain threshold to meet the low-mid range income guidelines for the area. In Dec. 2013 when I closed, me being single I had to make $48k or less. I qualified and went about my merry way. There was another stipulation that during the first 15 years after purchase you could only sell to someone else that could qualify under the HUD income guidelines

Fast forward to today and the home has appreciated via Zillow to around $410k, but the HUD income limits are only indexed to inflation. Meaning the max one person could make in 2019 is around $55k and a family of 3 around $70k. We have had it listed now on and off since June of 2017. We have it listed at $390k, but obviously trying to find a buyer that can qualify for a $390k home with the given limits has proven impossible.

After running several loan scenarios with loan officers we are pretty much looking for a unicorn of a buyer. They would have to not only make under the max limit, but would have to have no debt, and around $50k for the down payment if it was a family of 3. Probably pretty easy targets to hit for a mustachian, but in this area it seems impossible to find someone like that. Also keep in mind it’s only a 2 bedroom, so not too many young families would seek this place out as an option. I can only think of possibly a widow that maybe doesn’t make a lot, but has significant cash savings or a situation like that.

I’m looking to see has anyone else ever faced a situation like this and what did they do? I’m at my wits end. My family situation has changed and we’re needing more space. Should we just try to pay it off and rent it? We ideally want some of the equity from here to use on a single family home in the area. We’re just feeling really stuck.


  • Walrus Stache
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Re: City Won’t Let Me Out-HELP!!!
« Reply #1 on: January 16, 2019, 12:20:18 AM »
Answered your other thread... you should delete one or mods should merge

Bottom line, you can sell it way cheaper and come out ahead.  You were in need and now you can sell it to another person in need at a price they can afford.  That's the point of these programs.


  • Magnum Stache
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Re: City Won’t Let Me Out-HELP!!!
« Reply #2 on: January 16, 2019, 07:42:40 AM »
Are you even allowed to rent it? Typically that's not allowed in affordable-housing programs. But yours may be different.

As Dragoncar says, drop the price. A lot. You got a nice boost into homeownership at the expense of the taxpayer. Pass it on.



  • Handlebar Stache
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Re: City Won’t Let Me Out-HELP!!!
« Reply #3 on: January 16, 2019, 08:14:08 AM »
Drop the price or suck up the space issues until your 15 years runs out.  Tons of families in the LA area live in 2-bedrooms and manage to survive.

former player

  • Walrus Stache
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Re: City Won’t Let Me Out-HELP!!!
« Reply #4 on: January 16, 2019, 08:35:33 AM »
We have similar affordability problems with housing in the UK and one of the solutions has been a similar "shared equity" scheme.  It's great when you are starting out, because you get more and sooner than you would without the help, but on the other hand it can be similarly difficult to move out into the wholly private sector for the same reasons you are having: a lack of available buyers who meet the criteria and because you've only got a part of the equity value the same issue of leaping into a new market without the full equity of the affordable house behind you.

You might try to contact your city HAP program to see if they are interested in buying the house back from you, as well as lobbying for changes to the future program.  But in the meantime I think you either make the best of where you are, hang on with the current price in hopes of a unicorn buyer (strikes me that a FIREd LA mustachian would fit the bill quite nicely, if there is such a thing - @spartana ?) or lower the price.