CalSTRS Home Loan Program 2014 Annual Report

CalSTRS Home Loan Program 2014 Annual Report


Home Loan Program Team: Solange Brooks, CalSTRS Portfolio Manager; Michael Warmerdam, CalSTRS Investment Officer

General Information

Program Background

The California State Teachers’ Retirement System Home Loan Program, was originally created as a result of legislation in 1984. It was designed to add member value by providing CalSTRS members with access to homeownership in California via a market rate mortgage loan, while concurrently meeting CalSTRS investment goals by generating a mortgage asset.

The HLP started with conventional 15 and 30 year fixed-rate products but evolved over the years in response to the needs of our members. This evolution resulted in the development of low down payment products such as the 95/5 and 80/17 Programs that support the practical homeownership ambitions of our members. In the fall of 2011, new mortgage originations were suspended due to the strategic decision by the program’s master servicing agent and program administrator to exit the correspondent lending business nationwide.

General Information

Recent Developments

With origination activity indefinitely suspended, the focus has been on servicing the existing portfolio of whole loans. Home price appreciation and record low mortgage interest rates continue to drive significant payoff activity. The number of mortgages in the portfolio fell by approximately 30 percent during the calendar year (from 4,134 loans at the beginning of the year to 2,907 mortgages as of Dec 31, 2014).

General Information William Yee

Portfolio Performance

As of December 31, 2014, the net asset value of mortgage assets retained in the CalSTRS Home Loan Program portfolio was approximately $216 million.

Portfolio 1 Year 3 Year 5 Year
Home Loan Program Portfolio 4.78% 3.80% 5.48%
Debt Opportunity Policy Benchmark 5.78% 2.94% 4.68%

As of December 31, 2014. Source: State Street

General Information

Delinquency Data

The following graph compares the Home Loan Program portfolio’s monthly delinquency rate with state and national data made publicly available by Lender Processing Services, a leading provider of loan performance analytics.

General Information

Making Homes Affordable

CalSTRS participates in the federal government’s Making Homes Affordable programs which are designed to help struggling homeowners prevent avoidable foreclosures. Freddie Mac serves as the U.S. Department of the Treasury’s compliance agent for MHA and Fannie Mae is the programs’ administrator. In this section, we touch upon the two most significant pieces of MHA, both of which are scheduled to expire at the end of 2016.

General Information


We have continued to manage the Home Loan Program mortgage portfolio and other investment assignments, while also evaluating the opportunity to restart the program.  Given recurrent changes to federal mortgage guidelines and low-return potential in the present mortgage market, staff recommends the program continue to be held in suspense.