ECONOMIC DEVELOPMENT AUTHORITY - Erik Thorvig, Community Development Director
Title
DEFERMENT POLICY FOR EDA HOME LOANS
Background
The City of Blaine operates a Home Improvement Loan Program in partnership with the Center for Energy and the Environment (CEE), who administers the program, and the Community Reinvestment Fund (CRF), who services the loans.
There are currently 53 outstanding loans. The program was funded in 1996 through the sale of general obligation bonds. The revolving loan fund is separate from any operating budget and has substantial fund balances at this time to support initiating home improvement loans.
CRF received a request from a homeowner who has experienced hardship due to the COVID-19 pandemic to have a loan temporarily deferred. Many banks are offering deferments at this time to borrowers experiencing hardship and the City of Fridley, which operates a nearly identical home improvement loan program with CEE, recently approved a deferment policy to allow relief to borrowers. Staff is recommending that the EDA establish a loan deferment policy to provide relief to homeowners. By deferring payments on the EDA loan, borrowers will be more able to pay for other expenses and the EDA will eventually recover the full loan amount.
Loans could be deferred up to 6 months, with a 6 month extension of the maturity date of the loan. During the deferment period interest would not accrue. Borrowers would need to demonstrate the need for relief. Applicants may be required to provide supporting documentation to substantiate their hardship claim. Any deferment would be approved administratively. Any denied claims can be appealed to the EDA.
This policy shall be monitored by staff and formally retired by the Blaine EDA at such time the policy is no longer needed.
Recommendation
Approve the attached Resolution.
Body
WHEREAS, the Blaine EDA established a Home Improvement Loan Program in 1998 to assist residents in maintaining and improving the quality of Blaine’s existing housing stock; and
WHEREAS, the COVID-19 pandemic has resulted in economic hardship for Blaine residents, including borrowers participating the EDA Home Improvement Loan Program; and
WHEREAS, the Home Improvement Loan Program is funded through a revolving loan fund that is not available for operating expenses
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves the deferment of payments for up to 6 months on home improvement loans for borrowers that can demonstrate the need for relief due to economic hardship related to COVID-19. The maturity date of the loan would be extended by the number of months that loan payments are deferred and no interest will be accrued during the deferment period.
PASSED BY THE Blaine Economic Development Authority this 1st day of June, 2020.