Regents Policy 5306: Policy on University of California Supplemental Home Loan Program
Approved July 2010
Amended November 20, 2015
Amended November 17, 2016
Generally, Supplemental Home Loan Program (SHLP) loans are funded from available campus resources, which may include discretionary funds, as well as unrestricted and appropriate restricted gift funds. State funds (19900) cannot be used to fund SHLP loans.
The President is authorized to designate a portion of the Faculty Housing Programs Reserve Fund (Reserve) as a centrally-available pool of funds to make SHLP loans that comply with the parameters outlined in Section C. below.
A. ELIGIBILITY AND PARTICIPATION POLICIES
In all eligibility and participation policies described herein, it is understood that any appointee in a position specifically designated by the Regents as requiring Regents’ approval for compensation-related matters, must be approved for SHLP participation by the Regents.
1. The eligible population for SHLP consists of full-time University appointees with positions in the following categories:
- Academic Senate members;
- Academic titles equivalent to titles held by Academic Senate members as specified in Section 105.1 and 103.3 of the Standing Orders of the Regents of the University of California or in successor Regents Policy;
- Acting Assistant Professors;
- Senior Management Group members;
- UC Hastings College of the Law (UC Hastings) faculty members;
- University or UC Hastings employees who will be appointed to any of these eligible categories effective no more than 180 days after loan closing;
- Other appointees who have received required additional approvals to be eligible for participation.
2. From the eligible population, the Chancellor, Lawrence Berkeley National Laboratory (LBNL) Director, or the Dean of UC Hastings shall designate eligible individuals for participation in SHLP based on each location’s determination of its requirements for recruitment and retention. Additionally, the President is authorized to approve individuals not in the eligible population defined in Section A.1 for participation in SHLP, based upon the essential recruitment and retention needs and goals of the institution. The University of California Delegation of Authority (DA) 2587, dated July 18, 2015, delegates this authority from the President to the Chancellors, LBNL Director, Executive Vice President-Chief Operating Officer, and the Agriculture and Natural Resources Vice President for specific titles as outlined in an Appendix to the University of California Home Loan Program Corporation-Program Lending and Administrative Manual.
3. SHLP participation may continue for the term of employment by the University of California or UC Hastings, as long as the property securing the loan continues to meet the specifications outlined in Section B.2, it being understood that:
- if the property securing the loan no longer meets the specifications outlined in Section B.2, the SHLP loan shall be reviewed for appropriate disposition; and
- if University or UC Hastings employment is terminated or, in the case of academic appointees, there is a permanent change to an appointment status not considered to be in full-time service to the University or UC Hastings, the SHLP loan is to be repaid within 180 days of such date of separation or change in status, with the understanding that:
- participation can continue when separation is due to disability or retirement under the provisions of the University of California Retirement Plan or other retirement plan to which the University or UC Hastings contributes on behalf of the participant; or
- in the event of the death of the participant, participation can continue for a surviving spouse or surviving Domestic Partner, or, in the absence of a surviving spouse or surviving Domestic Partner, for a surviving Eligible Child (as the terms Domestic Partner and Eligible Child are defined by the University of California Retirement Plan); or
- in hardship cases, reasonable forbearance beyond the required repayment period may be granted, provided all other terms and conditions of the loan are satisfied.
1. SHLP loans shall be used primarily for the purchase of a participant's primary principal residence. At the discretion of the authority designating participation, SHLP loans may also be used to refinance existing qualifying housing-related debt secured on a participant’s principal residence, including related loan transaction expenses included in the prior loan balance or related to the SHLP loan. SHLP loans may not be used to pay off loans, secured or not secured, used for non-housing-related expenses or for any mortgages on other properties. For any debt secured on a participant's prinicipal residence that was incurred during the five years prior to loan closing, the participant must document the purpose and use of funds as qualifying housing-related indebtedness associated with the subject property.
2. SHLP loans shall be secured, using a recorded Deed of Trust for residences that are:
- owner-occupied single-family residences, including planned unit development and condominium units, which may include one secondary unit that does not comprise more than one-third of the total living area of the home;
- the principal place of residence for the participant, other than during absences for sabbatical leave or other approved leaves of absence;
- used primarily for residential, non-income-producing purposes; and
- 50% or more participant-owned.
3. The maximum loan-to-value ratio (LTV) of a SHLP loan, either alone or in combination with other loans, is to be determined as follows:
- for loans totaling up to (including) the Indexed Program Loan Amount ($1,430,000 as of April 2016), the maximum combined LTV is 95%;
- for loans totaling more than the Indexed Program Loan Amount, the maximum combined LTV is 90%;
- SHLP loan amounts greater than the Indexed Program Loan Amount shall require the approval of the President and the concurrence of the Chair of the Finance and Capital Strategies Committee.
The value of the residence is in all cases defined as the lesser of the purchase price or current appraised value. The above dollar threshold amounts for determining the maximum LTV and for the Indexed Program Loan Amount reflect applicable levels in effect as of April 2016, which shall be adjusted annually each April, based upon any increases in the All-Campus Average Sales Price determined by the annual zip code study performed by the Office of Loan Programs.
4. The maximum term of a SHLP loan shall be 40 years, with repayment schedules designed to accommodate the needs of SHLP participants as well as any requirements of the funding source. Authorization by the Chancellor or other designated official is required when offering a loan with a term greater than 30 years.
5. Each location shall determine the mortgage interest rate to be charged on a given loan, with the understanding that maximum rates may be established to comply with federal and State lending and tax laws and regulations. All SHLP interest rates must include a service fee component of .25%. The minimum SHLP interest rate shall be equal to the most recently available average rate of return earned by the Short-Term Investment Pool (STIP) for the four quarters preceding the issuance of a loan commitment letter for the mortgage loan, plus a margin of 25 basis points (.25%).
6. For adjustable rate SHLP loans approved on or after February 1, 2017, the overall cap on the adjustment of the interest rate over the term of the loan will be 10% above the initial interest rate for the loan.
7. The sum of monthly mortgage payments (principal and interest) of the SHLP loan and all other loans secured by the residence may not exceed 40% of the participant's household income.
8. When administratively feasible, SHLP payments shall be made by payroll deduction while on salary status.
9. SHLP loans are not assumable.
10. SHLP loans carry no prepayment penalty.
C. CENTRALLY FUNDED SHLP LOAN PROGRAM
The parameters of the loans made from the Reserve will fall within the guidelines as outlined in Sections A. and B. with the following additional restrictions:
1. Loans must be in second position.
2. The maximum loan amount will be the lesser of 5.0% of the purchase price or $75,000. The maximum loan amount will be indexed to any increase in the All-Campus Average Sales Price determined by the annual zip code study performed by the Office of Loan Programs.
3. The maximum term is 15 years (180 months).
4. The loans will have a fixed interest rate equal to the most recently available 4-quarter average rate of return of STIP, plus a .25% servicing fee. The minimum interest rate will be 2.75%.
D. INTEREST-ONLY SHLP (IO-SHLP) LOAN PROGRAM
The Campuses have the option to offer IO-SHLP loans using authorized Campus funding sources. There are no central funds available for the IO-SHLP loans. All loan parameters must fall within the guidelines outlined in Sections A. and B., with the following additional terms:
1. The Interest-Only Term (IO-Term) is available for 5, 7, or 10 years. Following the IO-Term, the loan will convert to a fully amortizing loan with an overall term as follows:
- 5 year IO-Term: 15 year fully amortizing (20 year total amortization)
- 7 year IO-Term: 23 year fully amortizing (30 year total amortization)
- 10 year IO-Term: 30 year fully amortizing (40 year total amortization)
2. The Chancellor or other designated official will be required to acknowledge and accept any regulatory risk or potential litigation associated with making IO-SHLP loans, which are non-Qualified Mortgages, according to the CFBP's definition.