OLR Research Report

December 4, 2008




By: Emily Shepard, Associate Analyst - OFA

Joseph Holstead, Associate Analyst - OLR

You asked for the current funding levels and a description of Connecticut housing programs administered by the Department of Economic and Community Development (DECD), Connecticut Housing Finance Authority (CHFA), and Connecticut Housing Investment Fund (CHIF).


As the state's lead housing agency, DECD administers various state and federal programs, such as the federally funded Small Cities Community Development Block Grant program. CHFA is a quasi-public agency whose mission is to alleviate the shortage of housing for low- and moderate-income individuals and families. Its homeownership focus is on assisting low- and moderate-income people who do not own, because generally homeownership helps a person or family accumulate capital (the recent subprime meltdown notwithstanding).

CHIF is a private, nonprofit organization established to finance affordable housing and neighborhood revitalization projects throughout Connecticut. It works closely with state housing agencies. For example, first time homebuyers obtaining a mortgage through a CHFA program often use down-payment assistance provided by CHIF to aid them in purchasing a home. Additionally, CHIF administers programs for DECD. More information is available at: http://www.chif.org/about/index.shtml.

CHFA provided the information for tables 1-3 below, which describe FY 2009 funding levels for their housing programs. Table 4 describes CHIF's programs and funding levels for the programs it administers for DECD. We are still waiting for information from DECD and will forward it to you as soon as we receive it. However, DECD's December 1, 2008, plan for using $25 million in federal Neighborhood Stabilization Programs funds, authorized under the federal Housing and Economic Act of 2008 (Public Law 110-289), is available at: http://www.ct.gov/ecd/lib/ecd/2008_action_plan_substantial_amendment_-_neighborhood_stabilization_program.pdf .

Table 1: CHFA New Homeownership Programs, 2009 Adopted Budget (estimated as of July 31, 2008)

Program Name

Program Description

2009 Funding

Homebuyer Mortgage Program

This program provides mortgage financing at below-market interest rates to eligible first-time

homebuyers and prior homeowners buying homes in federally targeted areas. The following

programs are also a subset of the homebuyer mortgage program:

Special Mortgage Programs - These programs offer mortgages at below-market interest rates to teachers, police officers in participating cities and towns, as well as active duty service members and veterans of the U.S. military.

Home of Your Own Program - This program helps persons with disabilities secure affordable home financing.

Homeownership Program - This program offers mortgages at below-market interest rates to eligible tenants of publicly assisted housing who wish to transition from renting to homeownership.

Section 8 Housing Choice Voucher Homeownership Program - This program allows eligible borrowers to use their Section 8 Housing Choice Vouchers towards a monthly home mortgage payment.

Mobile Manufactured Home Loan Program - This program provides financing for qualified purchasers of mobile manufactured homes in state-licensed mobile home parks.

Manchester Pilot Homeownership and Downpayment Assistance Program – This program offers opportunities for first-time homebuyers to purchase homes with loans at reduced interest rates in specific targeted areas of Manchester and provides a forgivable second mortgage for downpayment. The Town of Manchester approved the support of infrastructure changes in the specific targeted areas of the Program.

Total - $440,000,000

$100,000,000 – Tax Exempt Bonds

$30,000,000 –Housing and Economic Recovery Act Tax-Exempt Bonds1

$100,000,000 – Prepayment Recycling

$70,000,000 – Government National Mortgage Association (GNMA) Repayment/Prepayment Recycling

$140,000,000 – Taxable Bonds

Pilot Suburban and Rural Affordable Housing Technical Assistance Program

Provides technical assistance to municipalities or community organizations to support affordable single family and multifamily housing efforts in suburban and rural areas of the state.


(Community Investment Act

(CIA) Funds)2

Urban Rehabilitation Homeownership Program


This program provides eligible homebuyers in eligible communities with first home mortgages at reduced interest rates and a forgivable second mortgage to repair homes in the communities where they work.


(CIA Funds)

Homeowner Emergency Loan Fund

Provides CHFA borrowers with loans when emergencies related to property conditions jeopardize living conditions and mortgage security.


(CHFA Investment Trust

Account (ITA) Funds)

Reverse Annuity Mortgage Program (RAM)

A RAM is a low-interest rate first mortgage loan that allows low-income elderly homeowners with long-term care needs, to use the equity in their homes to provide a monthly, tax-free cash payment.


(CHFA Investment Trust

Account (ITA) Funds)

Downpayment Assistance Program

This is a revolving loan program that provides low-interest second mortgage loans to eligible

borrowers who need help paying upfront expenses for downpayments and/or closing costs.


(Revolving Loan Fund)


1 The Housing and Economic Recovery Act provides the State of Connecticut $109,665,263, which must be used for housing. Of these funds, $30,000,000 is being allocated for the Homebuyer Mortgage programs in 2009.

2 CIA funds originate from Public Act 05-228 which implemented a new recording fee of which 25% is allocated to CHFA for affordable housing.

Table 2: CHFA Refinancing and Foreclosure Avoidance Programs, 2009 Adopted Budget

(estimated as of July 31, 2008)

Program Name

Program Description

2009 Funding

Connecticut Fair

Alternative Mortgage

Lending Initiative and

Education Services


CT FAMILIES offers low-to-moderate income homeowners the opportunity to refinance their non-FHA mortgage into an affordable 30-year fixed rate mortgage loan. All borrowers must attend at least one counseling session within the first 6 months of the closing of their CT FAMILIES loan. This program includes $4,000,000 of second mortgage financing to cover appraisal gaps, arrearages, real estate taxes and/or sewer liens.

Total - $41,000,000

$32,000,000 – Pre-Ullman Mortgage Bond Proceeds

$5,000,000 – (CHFA Investment Trust Account (ITA) Funds)

$4,000,000 – Second Mortgage Revolving Loan Fund

Emergency Mortgage

Assistance Program (EMAP)

EMAP, offered directly through CHFA, provides financial assistance for up to five years to Connecticut homeowners suffering a temporary financial hardship, who have fallen behind on their mortgage payments, and have received a notice of foreclosure action from their lender.

$50,000,000 (Taxable Bonds)

(Debt Service Payment is Paid by the State)

(Plus $13,910,000 - Additional Funds from State Banking)

Homeowner's Equity

Recovery Opportunity Program (HERO)

The purpose of HERO is to permit CHFA to negotiate on behalf of eligible homeowners the ability to purchase their mortgages directly from lenders and refinance those borrowers into a CHFA mortgage with an affordable repayment plan.

$30,000,000 (Pre-Ullman Mortgage Bond Proceeds)


Table 3: CHFA Ongoing Rental Housing Programs, 2009 Adopted Budget (estimated as of July 31, 2008)

Program Name

Program Description

2009 Funding

Rental Housing


Increases the supply and availability of affordable housing for low-and moderate-income

households by offering financing terms not generally available in the commercial marketing in order to help developers achieve feasibility for projects which otherwise would not be possible. CHFA offers financing for the creation of new or rehabilitated affordable units, construction to permanent, or permanent "takeout" financing, first mortgage loans with interest rates at or below conventional rates, loan terms of up to 40 years, flexibly structured loans to fill financing gaps (limited funds are available) and non-recourse debt. In addition to financing housing development, the Authority's multifamily program plays a role in creating employment for Connecticut's construction industry, supporting the local property tax base, and revitalizing urban neighborhoods.

Total -$192,995,000

$80,000,000 – Tax Exempt Bonds $79,665,000 –Housing and Economic Recovery Act Tax-Exempt Bonds

$4,330,000 – (Community Investment Act (CIA) Funds)

$29,000,000 -(CHFA Investment Trust Account (ITA) Funds)



Supportive housing creates permanent, affordable service-supported housing opportunities for

homeless individuals and families or those at risk of becoming homeless, particularly those experiencing repeated or persistent homelessness. The appearance of supportive housing resembles other types of rental housing, and people living in permanent supportive housing reside in their own apartments, enter into rental agreements and pay their own rent, just as any other resident living in rental housing. Unlike other rental housing alternatives, residents in permanent supportive housing may access, at their option, support services. Individuals may receive health and employment services along with life skills training enabling them to stabilize their lives and assist them in regaining a stake in the community. CHFA is one of several state agencies that supports the development of supportive housing. CHFA provides the development funding for building or rehabilitating housing units and other state agencies provide rent subsidies and support services.

$77,955,000 (501(c) (3) Tax-Exempt Next Steps Bonds Rounds II and III) (Debt Service Payment is Paid by the State)

Group Homes

Mortgage financing for community-based residential facilities for mentally retarded persons.

$10,000,000 (501(c)(3) Tax-Exempt Group Home Bonds) (DSS reimbursement rate supports CHFA mortgage costs)

Residential Care

Provides mortgage financing to rehabilitate establishments that provide services and needs beyond the basic provisions to elderly residents.

$6,000,000 (Taxable Bonds) (DSS reimbursement rate supports CHFA mortgage costs)




The objective of the asset management programs are to preserve and enhance the value of the

Authority-financed and State-acquired housing assets and ensure the quality of housing and

support services provided to residents. Loans are provided to properties with reserves and/or income that are able to support the debt.

$12,000,000 (CHFA Investment Trust Account (ITA) Funds)

3 The Housing and Economic Recovery Act provides the State of Connecticut $109,665,263 which must be used for housing. $79,665,000 of these funds are being allocated for Rental Housing Development programs in 2009.


Program Name

Program Description

2009 Funding

Energy Conservation Loan Program and Multifamily Energy Conservation Loan Program

These programs are administered by CHIF and funded by DECD. The programs provide financing at below market rates to single family and multi-family residential property owners for the purchase and installation of cost-saving energy conservation improvements (for example: siding, insulation, heat pumps).

Loan Amount and Term
Single family (1-4 units) homeowners may borrow up to $25,000 and multi-family property owners may borrow up to $2,000 per unit (a maximum of $60,000 per building) for a period of 10 years for eligible improvements.

Energy Conservation Loan Fund

Unallocated Balance: $13.0 million

Note: PA 08-2 of the August Special Session appropriated $2 million in additional funding to DECD for these programs.

Table 4: CHIF Administered Energy Conservation Programs


More information on the energy conservation programs is available at: http://www.chif.org/owner_borrowers/index.shtml.

More information on CHIF's funding overall is available in its 2007 annual report, which is available at: http://www.chif.org/about/2007annualreport.pdf