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HomeMy WebLinkAbout1979-01-29 - Minutes - MINUTES OF A RESIDENTIAL HOUSING FACILITIES BOARD MEETING A meeting of the City of Fayetteville, Arkansas, Residential Housing Facilities Board was held on Monday, January 29, 1979, at 3:15 o'clock P.M. in the Chamber of Commerce Decision Room, Fayetteville, Arkansas. MEMBERS PRESENT: Chairman F. H. Martin, Ron Pennington, Dale Christy, George Faucette, Jr. and John Dominick. MEMBERS ABSENT: None. OTHERS PRESENT: Jim McCord, Jim Buttry, John Rauscher, Don Grimes (Powell E Satterfield) , Gail Biswell, John Carpenter (Commercial Natl. Mtg. Co.) , Wade Bishop, Phil Colwell, Jim Bell (First Natl. Mtg. Co.) , Don O'Dell (Verex Cola.) , Karen Childers and Randy Herlocker. (Superior Federal Say. F, Loan) . ROLL CALL: Roll call was made, and it' being found that all members were present, the Chairman announced the meeting open for business. MINUTES: The minutes of the previous meeting of January 12, 1979, were approved. NEW BUSINESS: The Chairman stated that the main purpose of this meeting was to review the survey material prepared by Phil Taylor of the Bureau of Business and Eco- nomic Research. He requested that John Dominick review the data with the Board and explain certain items. After a review thereof and discussion thereon, Mr. Dominick stated that he felt the Board' s main concern should be to determine the approximate cost of "a modest priced house and then determine what sort of income will support that." He said that the 'survey material was necessary in order to support the decision the Board would make on those two items. George Faucette stated that he felt the survey should have more precisely pinpointed the size of incomes required in order for a person to afford a low to moderate income house. Mr. Dominick stated that he would request Phil Taylor to supply that information. After considerable discussion, the Chairman stated that it was the con- census of the Board that the income limit for familieseligible for loans would be set at $28,000.00 and that $60,000.00 would be considered, for this Board's purposes, as a moderately priced house. Dale Christy questioned Mr. Buttry whether he felt satisfied that the Board had sufficient data to support their decisions on these two amounts in order to conform to "public purpose." Mr. Buttry responded that he felt "com- fortable" with those figures. MICROFILMED DATEJui Y o Isis REEL -o N'..,:' . 1-Residential Housing Faciltties Board Meeting ® January 29, 1979 Page 2 . Discussion was had concerning the desirability of setting an amount for the size of the bond'issue. John Rauscher, representing the underwriting firm - of Rauscher, Pierce, Refsnes, Inc. , stated that he felt it was too early to set ` a definite priceon the issue, but that at this time he felt the Board was "looking at a. $10 million' dollar bond issue." He also said':' . !!I''.think we can make it work with $8 million and probably $10 million is all I 'd want to. sell ." Mr. Buttry suggested that in order to help decide. on a definite size for the issue, .Mr. Rauscher should use the $28,000 and $60,000 figures and follow up with the lending institutions to determine the amount. of money each lender . felt. they could place. He stated that Mr. Rauscher should emphasize to them the fact that they would, be expected to "put up" a:percentage of the figure they quote in a commitment fee. A discussion was had concerning what types of documents and information ' would be necessary in order to confirm incomes of people applying for loans. . - It was: suggested that the "adjusted gross income" figure' on the applicant's most recent tax return be used; Other suggestions were to use the "gross income figure, statements from employer.s. of everyone other than self-employed persons, . and income-averaging for self-employed persons. Self-employed persons might . . be required to submit copies of either the last one or two years' income tax • ' returns: Jim Bell, First National Mortgage Co. , felt strongly that tax returns should not be required since 'he did not think that' banks and savings and loan . companies 'should "have to fool with individual tax returns when they already have standard forms that we all use which are sent to all.'employers of the ap- plicant for the last two .years" in order to' confirm income. . • Don Grimes of Powell $ Satterfield offered the following definition of • income: Adjusted gross income excluding non-recurring windfalls (such as capi- tal gains and unearned income) within the last 'twelve months preceeding appli- ' cation for the loan. - Although no final decision was made with regard to income substantiating information, several of the Board members agreed that it should mainly be the lenders' concern to substantiate income on "a good faith" basis. . Mr. Rauscher stated that the Board needed to decide on the. type of struc- ture they would use for the bond program, i.e. ,' whether they wanted to use a trustee/custodian structure or a program administrator structure, etc. Discus- sion was had concerning the 'd.esirabilities of using a separate trustee, a . separate custodian, a combination' trustee/custodian, a program administrator, or an administrator/trustee structure. Mr: Rauscher explained that a custodian/ trustee structure differed from an administrator/trustee structure in that, the • administrator/trustee:doesn't. handle funds. . He stated that this is the type . • proposal being made by the ,Lomas $ Nettleton firm. . Mr-. Rauscher stated that-it had been the feeling of the Board that they Would like to involve the 'local banks, as much as possible and that using the . large Lomas & Nettleton company as administrator could allow for local institu- tion involvement more-so than several of the other poss.ible 'structures. Mr. Rauscher also, stated that, basically, Lomas' f Nettleton proposed to • charge 1/6th of 1% of the issue (16 basis points) and that other 'proposals �'# have been for between 20-25 basis points. Residential Housing Facilities Board Meeting January 29, 1979 Page 3 • Mr. Buttry explained that in a custodian/trustee 'structure, the custodian reviews documents, advances the funds, holds the notes, holds all the funds, • - etc. • He stated that if the custodian is also a lender that a trustee is needed to oversee the custodian. :Typically, 'he stated, the custodian is obligated to see that servicing is done, then the custodian can either (1) get another lender to assume the servicing, or (2) take it over himself. • The Chairman stated that he would set another meeting in order to decide • on the type of administrative structure the Board desired after each of the members, the underwriters and bond counsel have had time to review all the pro- posals. He stated that he would like Mr. Rauscher and Mr. Buttry to be prepared . to give the .Board their recommendations at that meeting. He stated that only • three of the expected six proposals had been received by Mr.• McCord to this date.. Mr. Christy asked Mr. Rauscher and his firm to prepare "an outline with • a recommended structure as well as an outline of the decisions the Board needs to make" and submit it to the Board members as soon as.possible. • Mr. Rauscher introduced Don O'Dell of Verex Corporation, a mortgage insur- • ance company. Mr. O'Dell outlined the various types of insurance policies his company could provide for the bond :package, 'i.e. :. • 1. Private mortgage insurance covering each individual loan for standard hazards; 2. Mortgage pool insurance for the.entire bond package; and/or 3. Surety bond policies and other minor- "extended and special hazard" policies. • After discussion concerning insurance policies and other related items with representatives of the various lending institutions present at the meeting, Mr. Buttry' stated that he would prepare an agenda for the next meeting which would include items for discussion and decision, such as: ' 1. Size of the issue; 2. Allocation between lenders; 3. Custodian/Trustee, Program Administrator, etc. structure alternatives; 4. Participation and origination fees; • 5. • Income and loan limits; .'6. Reallocation provisions. • ' There being no further business to be discussed or conducted at this meeting, said meeting adjourned at 6:00 o'clock P.M. • .Ron Pennington, Secretary • ATTEST: - • • F. H. Martin, Chairman