Nearly Evicted, SF Family Buys Affordable Home

Once on the brink of eviction from a below-market-rate rental that had been their home for 11 years, Brenda and Luis Palacios and their three children were finally able to purchase their home at the Tiffany Gardens apartment complex in La Lengua.

An exceptionally complicated situation involving a city agency, a nonprofit, and a homeowner’s association was resolved because the sale, as it turned out, was just good business.

“There were a lot of things that provoked this situation,” said Brenda Palacios. “We worked hard to keep surmounting each obstacle.”

“I’m tired,” said Luis Palacios. The father of three works two jobs, one at minimum wage and the other at $16 an hour.

Despite having just signed the paperwork that secured her home, Palacios did not allow herself to be too relieved. Recent months had shown her that something else could always go wrong in a saga that began with a promise of a “once in a lifetime opportunity” to buy into San Francisco’s housing market and nearly ended with them being pushed out on the street.

The  “once in a lifetime opportunity,” as Luis Palacios called it, came when the Homeowners’ Association at the Tiffany Gardens apartment complex decided to convert the building’s below-market-rate rental apartments into “owned units.” Doing so would help the association finance repairs for a faulty roof.

The Palacios had been renting the unit through the below market rate rental program and the city allows for such conversions so long as the occupants of the rental are offered a fair chance to buy the unit, at a price set by the city. Not only had the family managed to get in to a highly sought-after affordable rental unit, now they could buy it and stay there permanently.

But trouble started brewing when it came time to get a loan to finance their purchase of the $150,000 two-bedroom – the price determined to be within reach of anyone earning 60 percent of the Area Median Income. But the Palacios, having immigrated from Guatemala, had no credit history, and therefore found it impossible to get a loan from any of the banks that the city usually worked with. The Mission Economic Development Agency and the city’s Office of Housing and Community Development tried and failed to work with a new lender who could assist the family.

“Maybe it was that there was not enough interest from every party,” said Luis Palacios. Often, he said, it seemed like nobody quite knew what to do.

“I feel a little more calm. But I’m not going to shout with joy, because every day there’s new [issue],” said Brenda Palacios. “I don’t feel like I can dare to be happy.”

After months of delays, the loan still wasn’t settled, and the Tiffany Gardens HOA decided to evict the Palacios and move on to the next qualified below-market-rate buyer. The Palacios missed their window of opportunity to buy the building. What was more, the price went up – from about $150,000 to $339,000. The chances of remaining in place shrank further.

“We worked with and did everything that the HOA was required to do … We even extended [the purchase] period three more months,” said Andrew Baugh, the lawyer for the Tiffany Gardens homeowner’s association, in July of last year.

“For them this was a business transaction, it wasn’t emotional,” Luis Palacios said at the signing this week. “I understand that this is just how business is.”

After news of the impending eviction came out, MEDA and the city redoubled their efforts.

“I know we had a great responsibility to you,” MEDA’s Dairo Romero told the Palacios at their signing. “I felt that responsibility, and that the organization hadn’t done its work well the first time.”

MEDA tried a new lender – Umpqua Bank. The process of securing another loan was arduous, not only because the family had no credit, but because there were now legal eviction proceedings underway against them.

But this time, it stuck. Umpqua offered the loan, the city found a way to offer further financial assistance, and the Homeowner’s Association agreed to sell the home to the Palacios at $339,000 – after all, it now made economic sense to do so.

“Ultimately they did what was in the interest of their clients,” said tenant rights attorney and real estate broker Richard Hurlburt, who represented both buyer and seller in this transaction. “They actually have been very patient. It’s really been a complicated process.”

“Once you took the emotion out of the equation, it just made sense to sell the family the house,” said Juan Diego Castro, also of MEDA.

At last, after initialing and signing dozens of forms, the Palacios were secure in their home. Almost – one additional payment needed to be made, and they will now pay about $300 more in mortgage payments than they did for rent.

“This was teamwork,” said Brenda Palacios. “Everyone did their part. So I hope it works out.”

Disclosure: Mission Local rents an office space from a building owned by MEDA.