SCOTT CREEK PARK - FINANCING

            The proposed method of permanent financing is HUD Section 235 mortgage interest subsidies. Section 235 is designed to provide mortgage interest subsidies to families of low and moderate income as defined by the Department of Housing and Urban Development. Section 235 financing, is presently being used in Alameda County to finance mortgages for the HUD Housing Cost Reduction Demonstration Project in Hayward, California,, which is also being built by Specialty Building Company.

            The income criteria for Section 235 qualification does not exactly match the criteria outlined in the Affordable Housing Competition, however, 235 does guarantee qualifying families will pay no more than 25% of their monthly gross income towards shelter cost. The adjustment of the monthly payment amount to fall within the 25% criteria is made by adjusting the effective interest rate to the borrower within a range of 4% to market rate with the buyers effective interest increasing as his ability to meet the payments increase. Buyers once qualified for Section 235 must re-qualify on an annual basis and the interest rate portion paid by HUD may be adjusted upwards or downwards based on family income.