Thousands to be affected by loan change

By J.K. Dineen
Staff Writer, SF EXAMINER
Published: Wednesday, July 13, 2005 3:00 PM PDT

A home mortgage company today will announce a new individualized loan for tenancy-in-common owners, a development that could have wide-ranging implications for thousands of city homeowners and renters, according to experts.

The new mortgage product by E-LOAN, a $200 million publicly traded company based in Pleasanton, would apply to between 4,000 and 6,000 current tenancy-in-common owners and would make it easier and less risky for them and others to convert rental apartment buildings into so-called TICs, according to Wade Randlett, executive director of the pro-homeownership group SFSOS and an E-LOAN board member.

"We have real documents for a real loan that really will allow you to have an individualized TIC loan," Randlett said.

Matt Franklin, director of Mayor Gavin Newsom's office on housing, welcomed the news.

"The mayor and the administration are very supportive of these [loans] — we think they are fantastic," he said. "They will address some of the most serious challenges in TIC homeownership in regards to financing and will lessen the risk."

Over the past decade, TICs — in which multiple parties buy a building together by sharing a loan — have become increasingly popular for groups of residents priced out of the single-family home and condo market. But they have also become controversial among tenant groups, as some developers have used TICs as a way to clear rent-control tenants out of buildings that are subsequently sold off as individual units.

The news that individualized loans would become available has sparked fear among tenants in larger buildings that they will be evicted from their apartment to make way for TIC developments. It has been cheered by TIC owners who live in fear that one of their ownership partners could default on their portion of the loan.

Homeowner advocate Michael Sullivan of the moderate group Plan C said an increase of TIC conversion could generate millions of dollars in new tax revenue for The City in increased building valuations and transfer taxes, and that the money ought to be pumped into a fund for helping needy tenants rent or buy.

"We want to create stronger foundations, more stable neighborhoods and keep multiple generations in San Francisco," Sullivan said. "Now there is an alternative for the middle class."

San Francisco Tenants Union Director Ted Gullicksen said a TIC with an individual loan and deed was "tantamount to a condo" and should be held to The City's stringent condo-conversion laws.