Colorado Housing and Finance Authority (CHFA) – Efficiency and Loan Risk Overview
Staffing Levels and Organization
CHFA is a state-established housing finance agency with a medium-sized staff costing around $25 billion per year. As of the end of 2022, CHFA employed approximately 198 people who all get paid generously. All CHFA employees are members of the Colorado Public Employees’ Retirement Association. The organization is led by an Executive Director/CEO and is overseen by a board of directors. Staff are divided across divisions handling single-family homeownership programs, multifamily housing finance (rental housing development), business lending, and support functions like underwriting, servicing, marketing, and administration. This staffing level contributes to significant overhead for the agency.
Executive Compensation and Public Funding
CHFA’s executive and staff compensation levels underscore its substantial overhead. The Executive Director’s annual salary is reportedly around $331,858 per year. Other top executives likely earn high six-figure salaries as well. These salaries are funded through CHFA’s revenues from high interest margins on loans and fees, and ultimately backed by public resources. CHFA does not receive direct state appropriations for its operations; instead, it raises funds by issuing tax-exempt bonds and administering federal/state housing programs. The tax-exempt status of CHFA’s bonds is a form of taxpayer subsidy, and the agency also manages large amounts of federal and state grant money. For example, in 2021 CHFA recorded about $169 million in grant revenues from government sources (e.g. federal housing stimulus and assistance programs). This reliance on public funding and tax advantages has led critics to argue that CHFA is “taxpayer-funded” and should be more closely scrutinized for efficiency and impact.
Operating Budget and Overhead Costs
CHFA’s annual operating budget runs in the hundreds of millions, reflecting both its financing costs and administrative expenses. In 2021, CHFA’s total operating expenses were about $112 million. This includes interest paid to bond investors and program costs, but also a considerable administrative overhead component. Salaries and benefits accounted for roughly $25.2 million of CHFA’s 2021 expenses, a significant increase from about $20.6 million in the prior year. CHFA’s management attributed the $4.6 million jump in payroll costs. The organization awarded raises and added staffing, even as loan production declined in 2021. In addition to personnel costs, CHFA incurs “general operating” expenses around $80–90 million annually, which include facilities, technology, loan servicing, and marketing/outreach efforts to promote its loan programs.
These figures point to bureaucratic bloat in the eyes of some observers. The fact that CHFA’s salary expenses rose substantially during a year of lower lending activity suggests significant inefficiency. Overhead does not grow when entities do less business, but it does with CHFA. Overall, a large portion of the interest rate that borrowers pay on CHFA’s loans goes toward covering these administrative and operating costs, rather than the cost of funding down payment assistance. This overhead structure makes CHFA’s loans more expensive for consumers relative to private-market loans.
Inflated-Cost Loans (Higher Rates and Fees)
One key critique of CHFA is that it provides “inflated-cost” home loans – mortgages with above-market interest rates and extra fees, due to the payment assistance involved. CHFA often “helps” homebuyers with down payments by offering either a silent second mortgage or a grant, but these subsidies are not free. Lenders also charge a special 1% fee for CHFA loans. Even CHFA’s 0% second-mortgage assistance isn’t truly free – it simply defers the payment, and borrowers often find they cannot refinance or sell until they’ve gained enough equity to repay that second loan. In short, CHFA loans carry a cost premium: borrowers trade off a lower upfront down payment for higher long-term costs in the form of bigger interest payments and fees. This has led some to describe CHFA’s approach as predatory or “trapping” borrowers in expensive debt, particularly when compared to standard FHA or conventional loans.
Default Risk and Borrower Outcomes
Data from federal housing agencies raise concerns that these high-cost, assisted loans may put borrowers at greater risk of default. The U.S. Department of Housing and Urban Development (HUD) and FHA have flagged the performance of loans with down payment assistance as a vulnerability. FHA reported that loans with down payment assistance show higher default rates than those where borrowers make their full down payment. More troubling, borrowers receiving down payment aid from government programs (like CHFA’s) have an even higher default rate than those receiving assistance from family or other sources.
HUD’s Inspector General has specifically warned that certain housing finance agency DPA programs create added risk. A 2017 HUD OIG audit found that many FHA loans with “borrower-financed” down payment assistance – i.e. assistance that was effectively financed by charging the borrower a higher interest rate – were not in compliance with HUD rules and put the FHA insurance fund “at unnecessary risk”. In such programs, borrowers took on premium interest rates and higher fees, increasing their monthly mortgage burden and the likelihood of default. The OIG criticized HUD for failing to protect borrowers from these practices. This aligns with the concerns that CHFA loans, which often use a similar structure of financed down payment aid, lead to worse outcomes for borrowers – namely, a higher chance of delinquencies and foreclosures due to the strain of the extra costs disguised as “help”.
Operational Efficiency and Oversight
Despite CHFA’s public mission, these findings fuel the argument that CHFA is inefficient, bloated, and costly in its operations. Critics point to its sizeable administrative budget and executive pay relative to the number of loans served, indicating that resources are disproportionately going toward salaries and overhead instead of directly benefiting borrowers. For instance, paying over $25 million a year in salaries for roughly 200 staff averages to a very generous per-employee cost. CHFA has been lauded as a “great place to work” for its employees, but from a taxpayer’s perspective this is an undue overhead burden.
The lack of market discipline, due to CHFA’s taxpayer-backed nature, allows higher internal costs than a private lender would be able to carry.
In summary, available data suggest that CHFA’s loans come with higher costs and risks for borrowers, largely stemming from the agency’s need to cover its substantial overhead and the structure of its down payment assistance programs. The agency’s administrative bloat and funding model (relying on tax-exempt bonds and public funds) result in mortgages with above-market interest rates that effectively pass the cost of CHFA’s operations and high salaries on to homebuyers. And those borrowers – often first-time or lower-income buyers – face higher default probabilities, according to HUD/FHA data, when using these types of assisted loans. This evidence supports the claim that CHFA, though well-intentioned in promoting affordable homeownership, is an inefficient vehicle that ends up providing costly loans with elevated risk of foreclosure for the population it aims to help.
Sources
Colorado Housing and Finance Authority official financial disclosures (2022), showing staff size and pension statuschfainfo.com.
Indeed.com salary data for CHFA (aggregated), indicating Executive Director pay (~$332K) and ranges for staffindeed.com.
Colorado State Auditor report (2003) noting CHFA executive compensation in 2002 for contextleg.colorado.gov.
CHFA financial statements (2021) – management discussion of expenses, including $25.2M in salaries and $112M total operating costschfainfo.comchfainfo.com.
CHFA Down Payment Assistance program guide – notes that higher interest rates apply when a DPA grant is usedchfainfo.com.
HUD Office of Inspector General Audit 2017-LA-0003 – found that FHA loans with HFA-financed down payments had higher fees, higher rates, and increased default risk, exposing the FHA insurance fund to potential losseshudoig.govhudoig.gov.
FHA Annual Report to Congress (2018) – highlighted that FHA loans with down payment assistance have elevated default rates, especially those from government programsncsha.org, and raised concerns about programs that benefit the provider more than the borrower