REO AHTF-FSBR Program Presentation _9-30_ by fanzhongqing


									Affordable Housing Task Force
        Mid-Year Report
& Program Recommendations

GWRC Affordable Housing Task Force
           Sept, 2008
    Housing Affordability Continuum
                                                Task Force Focus:
 Actions        Less than 30% of           30% to 50% of                   50% to 80%
By Income      Area Median Income       Area Median Income           of Area Median Income
 Segment              Under               $20,800 - $29,500* to        $34,650 - $49,200* to
                 $20,800 - $29,500*        $34,650 - $49,200*           $55,540 - $61,400*
                                                      Low-Moderate       Moderate - Middle
 Housing       Emergency   Supportive   Affordable       Income              Income
  Need:         Shelters    Housing       Rental     Homeownership       Homeownership

               Continuum   Continuum                   CVHC &
Production      of Care     of Care      CVHC
                                                       GFHFH                CVHC

                                        CVHC &
               Continuum   Continuum                   CVHC &
Preservation    of Care     of Care
                                                       GFHFH                CVHC

* Range of HUD Income Guidelines for 4 person household in GW Region, see: for complete income guidelines
1. Region’s affordable housing problem tied
   to area’s growth as an exurb of Washington
   & Richmond metro areas, especially since
2. Recent housing market adjustments have
   adversely affected housing valuations &
   local government revenues
3. The Region’s best opportunity to create
   affordable home ownership is acquire,
   renovate & re-sell foreclosure properties.
4. The Region has a network of housing
   development agencies to support this
Findings (continued)
5. The Region has not experienced much
   growth in rental housing stock, with over
   90% of bldg permits issued from 2000-2006
   as single-family & duplex units.
6. Affordable housing providers in the Region
   have difficulty increasing the supply due to
   a number of factors
7. Some Northern Virginia localities have
   begun acquiring foreclosure properties to
   supplement their supply of affordable
8. AHTF members envision a regional
   foreclosure program as the most
   immediately feasible initiative to increase
   affordable housing
1. Endorse Memorandum of Understanding:
  a.       Ascertain the degree of need for affordable housing within each
  b.       Work with the community non-profit organizations, and the private
           sector to help find affordable housing solutions;
  c.       Evaluate the local and regional need for affordable housing in local
           and regional comprehensive plans as required by the Code of
           Virginia (§15.2-2223) and consider the development of a Regional
           Housing Plan;
  d.       Consider, upon the recommendation of the GWRC, such programs
       •      The “Foreclosure Sale by Region” (FSBR) program, and
       •      Ensuring accessibility issues are addressed in workforce housing;

  e.       Explore avenues of financing such as grants, low interest loans, and
           bonds through local, state and national housing and lending
           organizations for affordable housing throughout the Region;
  f.       Solicit local citizen and business community input and educate
           citizens on workforce housing issues; and
  g.       Consider Task Force recommendations as related to local ordinances
           and zoning.
     Recommendations (continued)
2.    The AHTF proposes the “Foreclosure Sale by Region (FSBR)
      Program” to:
            assist banks that have foreclosed on residential properties in the
            Region to liquidate these properties from their inventory,
            renovate and remodel foreclosure properties to modernize, repair
            and incorporate universal design components for consumer
            assist local home buyers that fall within the 30 – 80% of area
            median income to qualify for these foreclosure properties,
            educate low- and moderate-income home buyers on credit and
            budget management, home maintenance and other relevant
            topics to ensure sustainable home ownership, and
            build a regional equity position in the public interest to preserve
            this affordable housing inventory by retaining a second deed of
            trust on properties transferred through this program.
3.    Explore all outside sources of “seed” and planning funds to help
      the “FSBR Foreclosure Program” be successful.
4.    Establish regional program partnership between public & non-
      profit & business sectors to expand the supply of affordable
5.    Support regional initiatives to enhance the success of receiving
      outside public funding to further support aff housing programs.
“Foreclosure Sale by Region”

    GWRC Affordable Housing Task Force
    Sept, 2008
                                           Comparative Foreclosure Data

                              400                                                                 381

                              350                                                    330
Total Distressed Properties



                                     62                  55             49
                               50                   21             30

                                    Caroline    Fredericksburg King George   Spotsylvania   Stafford
                                                              Local Govts
                                               Listings June '08   Listings Sept '08
To increase the supply of affordable workforce
housing by purchasing foreclosed homes at a
reduced price, renovate, and resell to low- &
moderate-income families using local, state and
federal programs for down-payment & closing cost
To maintain workforce housing stock and
preserve housing affordability for future
property re-sales.
To stabilize neighborhoods, property values &
local government tax base.
Increase opportunity for credit, budget and
homebuying counseling to expand the pool of
eligible homebuyers to become sustainable
home owners.
GWRC & Local Governments
Non-profit organizations:
Faith-based Community (e.g. MICAH, Project
Business Community
• e.g. Lowe’s & Home Depot
• Major Employers (Mary Washington Hospital, UMW, Germanna
   Community College, GEICO)
• Utilities: Dominion Power & Rappahannock Electric Coop.
Local Banks
State & Federal Agencies
   FSBR Program Components
          B. Identifying, Evaluating,
   Purchasing & Renovating REO Properties

 A. Recruiting,                C. Financial,
 Pre-Qualifying                  Legal &
 & Counseling                  Governance
Potential Buyers               Framework
A.     Recruiting, Qualifying &
           Counseling Potential Buyers
Promotional Campaign:
• Program Partners: All Stakeholders, local
  newspaper & radio stations
• Media: Newspaper, radio, pay stub insert, flyers
• Regional Affordable Housing “Information Fairs”
• Sub-regional Buyer Orientation Open House:
     Program description & Pre-Qualification Survey &
     Pre-Purchase Counseling to get on “waiting list”
 • Ranking Criteria: Income, family size, locational
   preference & housing type requirements
 VHDA-required Pre-Purchase Counseling (6 hours) Includes:
        Personal finance
        Role of realtor
        Role of Lender
        Role of Home Inspector
        Role of Title Company/ Attorney

 Pre-Qualification Counseling (2 appts., total of 2 hours) Includes:
        Explain Role of Title Company/ Attorney
        Assist in completion of Loan Application
        Proof of income on all earned/available income
        2 months bank statements from all open sources
        Credit report with score dated within 60 days
        Review of all documentation- does client meet criteria & obtain pre-approval from

 Post-Purchase Counseling (1-2 hours, w/in 6 months of closing) Includes:
        Predatory Lending practices
        Basic preventative home maintenance & repair
        Going Green & Utility Conservation/Improvements
        Warranty & Insurance issues
        Generational wealth building
        Emergency reserves
        Client will receive $200-500 reduction in down- payment lien from program after
B. Identifying, Evaluating, Purchasing &
     Renovating Bank-Owned Properties
 Developing Supply Chain by:
  • Partnering with Realtor Association to:
      Gain slight sales commission concession for supplying
      waiting list of pre-qualified buyers
      Get property managers to report complaint calls to identify
      problem properties
  • Ask BANK managers to provide 1st right of refusal to
    FSBR Program for most affordable properties based
    on general program criteria
  • Mobilizing for quick property inspection,
    evaluation & acquisition decision
  • Work with partners to minimize acquisition,
    renovation & selling costs
Locate list of Bank-owned properties (“REOs”):
• Contact investors for foreclosure property list
    National & Local Banks
    HUD/ VA
    Real Estate Disposition Co (REDC) (private auctioneer)
    Association of Realtors
• Work with BANKS directly on purchase of REOs in
  package deal – reduction due to group purchase
    Get LOC from Bank for short time purchase? (PNC Bank?)
      – Interest only/ flexible terms/ no prepayment penalty
If Realtor already has listing:
• Each property must be bid on separately
• Use established LOC from bank
• If purchased in groups from same realtor- possible
  reduction in realtor cost (i.e. commission
Sources of Funds:
  Private Bank Line of Credit for
  Foreclosure Purchase & Re-hab Costs
  Tax & Permit Fee Waivers by Local
  Va. DHCD HOME & CDBG Grants:
  – Down payment & closing assistance funds
  – Purchase, rehab & admin costs
  – Land Banking funds
  Permanent Financing:
  – Private 1st time homebuyer programs
  – VHDA loans for 1st time buyers
  – Habitat for Humanity self-financing loan
    Example FSBR Deals:
                               GFHFH                    CVHC
Foreclosure Sale
Price to Acquire
                           $70,000    $70,000       $80,000    $90,000
Rehab Costs                  5,000      10,000        5,000     10,000
Down-Payment                 5,000      10,000       10,000     10,000
FBSR                       $80,000    $90,000       $95,000   $110,000
Re-Sale Price
Closing Costs               $2,800      $3,150       $3,325     $3,850
Loan Interest                  0%            0%       5.5%       5.5%
Rate (15 or 30 yr fixed)
Est. Tax & Insurance
                             $100         $113        $119       $125
Estimated Monthly
                           $572.00    $641.00       $650.00    $750.00
    * FSBR investment backed by 2nd deed of trust
Stafford   Inactive                                                    100




                      0         20        40        60       80      100       120         140         160
                           $ Unknown           Under 80K     80K - 100K      100K - 110K
                           110K - 130K         130K - 150K   150K - 175K     175K+

                          Foreclosure Listings by Price Range, September 27, 2008
C. Governance, Financial & Legal Framework
  • Program implementation through MOUs among
    all the partners
  • Program developed through GWRC’s AHTF,
    which manages Components A & B through
    partner organizations
  • GWRC functions as governing board to authorize
    property acquisition, renovation & disposition
    guidelines to use w/ pre-qualified buyers
  • GWRC could apply for any govt. planning grants,
    acquisition program funds on behalf of the
    regional affordable housing program
Conceptual Program
  Governance &
 Operational Model                            Virginia DHCD
              Project                        HOME & CDBG $
                         AHTF Advisory              Participating
                        Comm. Considers       Staff
   GFHFH                                               Local
                         & Recommends         Input Governments
                      Guidelines & Project(s)
                           GWRC establishes
                         guidelines & approves
      Local Bank(s)
      Provide LOC
     $250,000 @ for        Project Approval for LOC
     CVHC & GFHFH             or CDBG $$$ Draw
Local Govt, Corporate, & Personal Donations:
  Optional Local Government Contributions:
   •   Co-sponsorship promotional effort w/ public employees
   •   Waiver of local recording fees
   •   Waive taxes on property during FSBR holding period
   •   Waive LMI owner taxes for 1st 6 months to allow buyer to
       acquire home furnishings, yard tools, etc.
   •   Waiver of water hook-up/turn-on fee
   •   Waiver of bldg permits and/or fast-track permit review
   •   Public employee down-payment assistance programs
   •   Future dedicated revenue stream for affordable programs
  Corporate Options:
   • Retailers: discounts on appliances & bldg supplies
   • Employers: down-payment assistance programs
   • Utilities: donate the cost of electrical meter re-installation &
       CFL light bulbs
  Personal/Philanthropic Donations/Grants:
   • Voluntary fund-raising initiatives (e.g. car washes)
   • Benefactor donations
   • LISC & other foundations
Legal Framework:
• CHDO partners would retain 2 nd deed of trust
  to preserve future affordability
• Proceeds (- admin fee) from sale of renovated
  REO properties would be retained by regional
  CHDO to be re-invested in additional home
  purchases, renovation costs, down payment &
  closing cost assistance
• Local governments &/or area employers could
  put up down-payment assistance for eligible
  workers which could be recovered through
  employee payroll withholding
Federal Foreclosure Assistance $$
$3.92 billion in federal CDBG grants to
buy and repair foreclosed homes.
Virginia allocated: $45,691,843
– Fairfax & Pr. William received $6.94
  million combined from US HUD
– Balance of VA: $38,749,931
– GWRC estimated regional allocation:
        $5, 882, 402 (see handout)
  Note: DHCD Guidelines not released yet!
For regional CDBG foreclosure projects:
o One local government must be designated
  the lead locality.
o The lead locality and all participating
  localities must, prior to receiving a contract
  with DHCD, enter into a legally binding
  cooperative agreement to ensure equitable
  project implementation and compliance with
  all applicable regulations.
o All applications name GWRC as “fiscal &
  administrative agent” & GWRC designates
  the Affordable Housing Task Force as its
  regional advisory committee
Other Provisions:
 First-time home buyers (4/08-7/09)
 would be eligible for a tax credit worth
 up to $7,500
 $200 million nationally available for
 foreclosure-prevention counseling
 Local governments have authority to
 issue an additional $11 billion of tax-
 exempt bonds to refinance shaky loans.
Creating a regional product = “FSBR” is 1st!
Regional Cooperation = Coordinated
support of Local Govts on program
development & CDBG grant applications
Establishing financing program & revenue
stream = Bank $ & CDBG $ & other sources
Fair allocation of administrative costs &
Oversight Board Development
 • What will be FSBR BoD responsibilities?
  Credits: Prepared by Staff of the Central Virginia Housing Coalition,
            Greater Fredericksburg Habitat for Humanity &
            the George Washington Regional Commission
with input from the members of the GWRC Affordable Housing Task Force

To top