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HOUSING CONSTRAINTS <br />Market changes have also affected residents wishing to purchase a home. Interest <br />rates for loans have varied from 5 to 7 percent, down payment requirements have <br />ranged from zero to 10 percent, allowable income -debt ratios have significantly <br />varied. Recent changes in lending policy will have an impact on the housing <br />market in southern California. The U.S. government stopped guaranteeing big <br />loans in expensive cities. The new policy caps guaranteed loans at $625,000, <br />which restricts lending and means that potential borrowers may not qualify for a <br />loan or will pay a higher interest rate. <br />Foreclosures <br />In recent years, the sizeable number of home foreclosures throughout southern <br />California dampened the housing market. The crisis originated in the early 2000s <br />with subprime lending, loosening of credit terms offered by financial institutions, <br />overproduction of housing, and declines in the economy. According to Data <br />Quick, the City had 5,661 foreclosures over the past five years. The number of <br />foreclosures has decreased and is expected to remain low over the next several <br />years. <br />As in other metropolitan areas, the availability of foreclosed units and the <br />associated lending crisis in Orange County and in Santa Ana make up a market <br />constraint on the production of housing. Financial institutions have increased <br />equity requirements for developers, requiring greater equity contributions than in <br />recent years. For the consumer, home loans are also more difficult to qualify for <br />and obtain. <br />Summary <br />State law does not require jurisdictions to mitigate market constraints, as <br />economic conditions are beyond the control of any one city. Nonetheless, Santa <br />Ana is implementing programs to lessen the impact. The City competitively <br />applied for and received Neighborhood Stabilization Program funds to purchase <br />foreclosure properties and have them reoccupied. The Program was actively <br />involved in facilitating the production and rehabilitation of housing. Other <br />housing incentives programs add more flexibility and clarity to development <br />standards to facilitate housing production. These three programs are some of the <br />ways the City is addressing market constraints. <br />JA& <br />CITY OF SANTA ANA GENERAL PLAN HOUSING ELEMENT B -5 <br />