Travis County Commissioners Court
Tuesday, April 12, 2011 (Agenda)
Travis County Housing Finance Corporation
Now let's call to order the Travis County Housing Finance Corporation.
item one, consider and to appropriate aches on the following, a, receive report from financial adviser and burn underwriter morgan keegan and company regarding potential restructuring of the corporation's single family mortgage revenue bonds series 2007 a bond with the sole bond holier freddy mac, and b, consideration and possible action with respect to resolution authorizing sale of the mortgage backed securities securing the corporation's 2007 of a bonds amendment for such bonds and early purchase redemption of all 2007 a bonds remaining outstanding.
other matters relating there to.
as you can tell, our lawyers have been at work.
>> yes, sir.
leroy knell is, Travis County budget director.
I have with me cliff blunt, corporation counsel, and mark o'brian from morgan keegan here to discuss this transaction.
>> that will be fine, thank you, judge Biscoe, board members, marc o'brian with morgan keegan, single family bond underwrirg for the Travis County hosing finance corporation.
as agenda item states, judge Biscoe, this is proposed restructuring of the 2007 a single family bond program.
it would involve an early payment or redemption of the bonds if approved as early as next week with cash payment to the issuer.
just by way of background, this was a 15 and a half million dollar single family bonds program we closed with the Travis County hf there.
July of 2007.
we had a 6.30 rate with down payment grant for low mod first time home buyers in Travis County.
we used almost 14 million or over 90 percent of the funds to 105 families, nine different lenders, very successful program.
mr. Patillo, who can't be here, the financial adviser, cliff blund, the wells adviser and our firm, your single family bond underwriter, the proposer we're structuring is as follows.
we had one bonds holder back in July of 2007, all 15.5 million, freddy mac, one of the gse's.
we had been involved in several restructuring and asked if freddy mac might have interest in redeeming bonds early to provide value to them as holder and to the Travis County hfc as issuer.
in principal we asked about that and reviewed this opportunity with your staff and your financial adviser and cliff blunt.
we then began discussions with freddy mac and they have given us an offer with respect to this transaction.
and this would involve, these bonds are not callable, can't be redeemed for another, at your option, until ten years.
so 2017.
what freddy mac is saying, let's agree, issuer, on the sole bond holier, you are the issuer and we agree with consents of the trustee, redeem these early, now pay oft off the bonds k make cash payer, early redemption.
in the memo we sent to you for back up last Wednesday, this transaction if completed today would provide slightly over our estimated $100,000 to the Travis County hf c.
so the real decision for the hfc as we see is to determine, the board, to determine what is the value if you do nothing.
and our present value we estimate based on normal prepayment speeds, you have an ongoing onish you're fee of approximately 4800 per year, that will decline as loans pay off and down, and also when bonds pay off you would have a little residual, a cash payment in the $60,000 range.
we present value both the value in 2017, another six years of income stream you will get plus the equity you will get at about $70,000, excuse me, about $64,000 with the two combined, clues me, 73,508.
that is the present value if you do nothing.
this transaction if successfully completed would provide slightly over $100,000 to you today.
if we did the transaction.
only other thing I might mention is that if you approve this, we would bid out the guinea mays and if we didn't get a high enough bid that met the bondholders requirements we wouldn't go forward.
we could approve but not get high enough collateral to meet what freddy mac wants to get.
even if you approve there's a chance we bid out tomorrow or this week or next and we still don't do the transaction because et doesn't meet the level of what freddy mac wants to make for these bonds.
so I'll stop there.
I'll also mention that lad patillo sent a memo to the board recommending the transaction.
I know your counsel has also reviewed the documents.
cliff, anything you'd like to add?
>> we have reviewed and actually drafted some of the documents.
if from a business perspective y'all want to proceed, we're fine with the transaction.
>> how would the 105 families be impacted?
>> good question, judge, your financial adviser asked the same question.
they are not affected right now.
they are making their monthly payments to the servicer, city mortgage, paying those to the bond trustee who is paying the bondholders .
when we sell off the securities to another firm or fund that mate be the winning bidder, they will still be making monthly payments and in turn the servicer will then transmit those payments to the buyer of these guinea may and family may security.
so there's no change for the home buyer who is benefitted 105 families who got mortgages back in 07 and 08.
>> if guinea may gets the deal you hope so, you close, we have given authorization but it's just not used.
>> that is correct, you would have the authorization but we won't do the transaction and everything would stay as it is and think about this in 2017 when the optional call date comes up.
>> questions or comments.
for us it's $100,000, familiar list receiving the same housing availability that we put the program in place for in the first place.
>> yes, sir.
>> that is correct.
they got there at that time the low market rate with their down payment grant to achieve the american dream.
you helped them and now additional benefit to the corporation early than you would have otherwise.
>> that is right.
>> I move approval.
>> second.
>> second.
>> anymore discussion on the motion?
>> all looks good to me.
>> all in favor.
that passes by unanimous vote.
>> that included a and b?
>> yes, sir.
>> okay.
thank you.
>> thank you all very much.
good to e sue you.
>> move adjourn.
>> second.
>> all in favor.
that passes by unanimous vote also.
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