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File Number: 19-479 <br />required by the City to be sold at below market rate prices to eligible low and moderate income <br />homebuyers under the City’s Inclusionary Housing Program. The owner of 713 Bloom Street <br />purchased the BMR unit as part of this program. The intent of the program was to create <br />affordable homeownership opportunities for income qualified households, who were primarily <br />first-time homebuyers. If any BMR home is sold or transferred prior to the end of the affordability <br />period, then the home must be re-sold to a similar income eligible homebuyer at the restricted <br />resale value calculated based on the Consumer Price Index (CPI) formula in the recorded <br />Agreement between the owner and the City. <br />Staff found that the BMR owner had not only moved out and illegally rented 713 Bloom Street as a <br />non-hosted short term rental, but also had refinanced the property in excess of the allowed resale <br />amount. Staff contacted LoanStream, the refinancing originator, to make it aware that the home <br />was a regulated BMR housing unit. Staff later found that the property was refinanced multiple <br />times without the required City approval and in amounts that far exceeded the allowed resale <br />amount, as dictated by the Agreement. Ms. Ransom-Clark defaulted on her loan and refinancing <br />covenants, which caused her to offer LoanStream the deed to the property in lieu of foreclosure, <br />which effectively placed LoanStream in control of the property. <br />Analysis <br />In Summer 2019, staff began negotiating with LoanStream to buy back 713 Bloom Street. Due to <br />inadequate cooperation, the City Attorney’s Office took legal action against LoanStream and Ms. <br />Ransom-Clark to legally enforce the Agreement by filing suit in Alameda County Superior Court <br />and recording a Notice of Lis Pendens (written notice of the lawsuit) with the Alameda County <br />Recorder’s Office to halt any potential illegal resale. <br />After the lawsuit was filed, LoanStream, which wants to remove the delinquent loans and the <br />property from its portfolio and to hopefully settle the lawsuit, agreed in principle to sell the property <br />to the City at the deed restricted price in the Agreement. This is the ideal result for the City given <br />the current litigation, and the urgency to get this property back into circulation within the City’s <br />affordable housing stock. Therefore, staff recommends that the City Council approve the use of <br />available Affordable Housing Assets Fund Balance to purchase this property, and to conduct <br />minor repairs to address code compliance issues and make the home suitable for resale to an <br />income qualified homebuyer. <br />Assuming that the City is able to settle the litigation with LoanStream based on this agreement in <br />principle, then after the City closes escrow and purchases 713 Bloom Street from LoanStream, <br />the City’s contracted Homebuyer Program consultant, Bay Area Affordable Homeownership <br />Alliance (BAAHA), will market and manage the resale process, as it typically does for the resale <br />of other City BMR homes. BAAHA will utilize the interest list it accumulated in recent years of <br />households who qualify and are ready to purchase BMR units, like 713 Bloom Street. BAAHA will <br />give priority to qualified households who live or work in San Leandro per the City’s inclusionary <br />housing requirements. <br />Although there are no guarantees at this time because of the current status of the litigation, staff is <br />cautiously optimistic that the City should recoup the $415,000 it will borrow from the Affordable <br />Housing Assets Fund through a resale of the property to a qualified household. However, <br />Page 2 City of San Leandro Printed on 10/2/2019 <br />27