REAL ESTATE : Irvine Builder Gets Second Loan From Unusual Source for Affordable Homes

Pacific Gateway Homes has received its second construction loan from an unusual source for its Pacific Grove development in Aliso Viejo.

Chief Executive Harvey Stern said the company will get $5 million to $6 million from a special loan fund established by Fannie Mae--the Federal National Mortgage Assn.--to finance construction of affordable single-family homes in California.

It is the first loan by Fannie Mae under the new program, which promises to pump about $50 million into California’s cash-strapped housing industry. That’s enough to build 1,500 or so single-family homes, according to the the quasi-governmental mortgage banking organization.

The loan to Pacific Gateway could finance construction of up to 60 new homes at Pacific Grove. Prices that start at $175,000 for a 1,240-square-foot, three-bedroom, 2 1/2-bath detached home are luring buyers to the development at a boom-time rate. Since sales began three months ago, Pacific Gateway has sold 52 of the 58 homes it has built at Pacific Grove.

Because the company established prices that are low by Orange County standards (the median new home price in the county is about $265,000), the homes meet Fannie Mae’s standard for affordability without placing income limits on buyers. In other words, any of the homes in the development can be bought by anybody who can qualify for a conventional mortgage. There isn’t a special section at Pacific Grove reserved for lower-income buyers.

Earlier this year, Pacific Gateway, which is based in Irvine, received about $3 million in construction funds for the first phases of Pacific Grove from Calpers, the state employee pension fund. That investment is part of a Calpers commitment to boost the state’s home building industry and the supply of affordable housing in California.

Stern, a former Mission Viejo Co. divisional president who co-founded Pacific Gateway in 1989, said that the Pacific Grove project has not been hurting for lenders.

But money from new sources like Fannie Mae is especially welcome, he said, because it demonstrates a rising confidence in the future of California’s economy “and helps make it more acceptable for banks and other (conventional) construction lenders to make loans to home builders again.”

Hearthstone Advisors, a San Fernando Valley financial consulting firm that serves as an adviser to Fannie Mae’s new construction lending program, obtained the loan for Pacific Grove, Stern said.