Monday, November 30, 2009

Administration's New Mortgage Modification Conversion Drive Kicks Off Today

Today, the U.S. Department of the Treasury and Department of Housing and Urban Development (HUD) kicked off a nationwide campaign to help borrowers in the trial phase of their modified mortgages under the Obama Administration's Home Affordable Modification Program (HAMP) convert to permanent modifications.

With tens of thousands of trial modifications being made each week, the Administration is now working to ensure that eligible borrowers have the information and the assistance needed to move from the trial to the permanent modification phase.
"We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowners," said the new Chief of Treasury's Homeownership Preservation Office (HPO), Phyllis Caldwell. "We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones." Caldwell will lead HPO's conversion drive efforts.

"Encouraging borrowers to move through the process of converting trial modifications to permanent modifications remains a top priority for HUD," said HUD Assistant Secretary for Housing and FHA Commissioner David Stevens. "As a part of our continuing efforts to improve the execution of the HAMP program, HUD is committed to working with servicers, borrowers, housing counselors and others dedicated to homeownership preservation to improve the transition of distressed homeowners into affordable and sustainable mortgages."
The Mortgage Modification Conversion Drive includes the following measures:
  • Servicer Accountability;
  • New Web tools for borrowers; and
  • Engagement of state, local and community stakeholders.
To learn more about the Administration's mortgage modification program, please visit www.MakingHomeAffordable.gov.

Tuesday, November 24, 2009

Guest Blogger Steve Bancroft: Appraisal Issues a Major Problem

When I headed up the resale efforts in Houston on Resolution Trust Corp (RTC) residential properties back in the late 80s and early 90s the comps on appraisals of the RTC sales caused significant problems with purchase/rehab sales prices. We ended up doing a small percentage of “cost-appraisals” to produce comps to overcome the downward pricing problems of REO fire-sales.

In Detroit we are facing this issue again as we try to stabilize neighborhoods affected by foreclosure. It is complicated by the new appraisal process being mandated by the banks. This process requires a “fire-wall” between the initiator of the appraisal and the actual appraiser. In theory, that makes sense as it seems to promote a more objective, less-influenced result. In practice it has produced a disaster. The process has spawned a group of national appraisal clearing houses that arrange the local appraisals through networks they have created. Unfortunately the quality is extremely spotty due to the bargain-basement fees offered. In addition, the appraisers are essentially doing BPOs and even sometimes doing appraisals by e-mail from MLS Listings. We have seen appraisals on even new construction housing range from $29,000 from these “network” appraisers to $160,000 from local appraisers on a house that sold to an actual buyer at $130,000.

We are producing a local, “distress” Automated Valuation Model (AVM) in an effort to counteract these low-ball appraisals which are preventing what little mortgage credit that is available from actually being used. We have produced workable value in our AVMs, but are still in a process of getting them confirmed for use by banks.

I would love to know if others are experiencing this phenomenon and if so; how are you addressing it?

Steve Bancroft is the executive director of the Detroit Office of Foreclosure Prevention and Response. To learn more about foreclosure prevention and neighborhood stabilization initiatives in Detroit, please visit www.foreclosuredetroit.org.

Monday, November 23, 2009

New NAR Report Shows Existing Home Sales at Highest Level in More Than Two Years

According to a report released today by the National Association of Realtors, existing home sales in October reached their highest level in more than 2-1/2 years.

The report states that existing home sales rose 10.1 percent last month to a seasonally adjusted annual rate of 6.1 million units, up from the downwardly revised rate of 5.54 million in September. The numbers indicate that sales activity is the highest since February 2007, when the annual rate was 6.55 million.

The increase in home sales is assumed to be attributed to the $8,000 homebuyer tax credit, which was due to expire at the end of November, but has now been extended to April 30, 2010.

More

Thursday, November 19, 2009

New $500 Million Goldman Sachs “10,000 Small Businesses” Initiative Addresses Rising U.S. Unemployment that is Fueling the Foreclosure Crisis

Statement by Conrad Egan
President and CEO of the National Housing Conference
"We applaud Goldman Sachs for the launch of their new ‘10,000 Small Businesses’ initiative – a $500 million investment in jobs and economic development nationwide. Rising unemployment is fueling the current foreclosure crisis, devastating American families and communities. Small businesses employ more than half of U.S. workers and play an integral role in economic growth. Yet, only half of small businesses survive the first five years.

This new initiative is an unprecedented investment in small businesses, our communities and the future. Goldman Sachs’s overall investment includes $300 million in direct support to Community Development Financial Institutions (CDFIs), which will in turn offer both professional counseling and financial assistance to small business owners. CDFIs promote economic development in struggling communities underserved by traditional financial institutions and supply much needed access to capital.

Not only will this key initiative help small businesses and communities now, but it will also have catalytic results by leveraging additional resources, production and jobs over the long-term."
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Learn More About the "10,000 Small Businesses" Initiative

NeighborWorks Partners to Help Combat Mortgage Loan Modification Scammers

Today's Columbus Dispatch highlights a new, nationwide initiative led by NHC Housing Leadership Support Program Partner NeighborWorks America to combat scammers preying on homeowners seeking mortgage loan modifications.

Launched in October 2009, the Loan Modification Scam Alert Campaign was created to empower homeowners to protect themselves against loan modification scams, find trusted help and report illegal activity to authorities. NeighborWorks is working with national, state and local partners on the ground and 235 community-based affiliates to combat this issue.

The campaign's roll out in Ohio yesterday brought together local, state and federal officials to discuss the implications of the effort.
"We can't afford to wait any longer," said Kenneth Wade, executive director, NeighborWorks America. "Loan-modification scams have reached epidemic proportions. There are thousands of fraudulent companies out there making a mint. The best defense is information, education. That stops these scammers in their tracks."
The campaign is being promoted at the Ohio Housing Conference, one of the largest housing conferences in the country with more than 1400 industry professionals, which concludes today.

To learn more, or become involved with the campaign, please visit the Loan Modification Scam Alert Campaign Facebook Fan Page.

Wednesday, November 18, 2009

Guest Blogger Judy Jacobson: Making NSP Effective

When Congressman Barney Frank (D-MA) first said that he’d advance legislation to stabilize neighborhoods through the acquisition of foreclosed properties, those of us in Massachusetts working on this issue were thrilled. In Massachusetts we had already organized ourselves into a state-wide task force focused on all aspects of foreclosed properties: acquisition, funding, holding properties for redevelopment, and exit strategies. The task force resulted in products such as a $22 million revolving Neighborhood Stabilization Loan Fund and a statewide lender-owned properties REO clearinghouse that provides a “first look” in conjunction with the National Community Stabilization Trust.

When the Housing and Economic Recovery Act (HERA) passed in July 2008 we were well-poised to put the resources that Congressman Frank had fought for to good use. Or so we thought. Although our focus was simple and direct: support the acquisition and rehabilitation of foreclosed properties by responsible developers and homebuyers, we quickly found ourselves mired in the minutia of federal requirements, policy guidance and frequently asked questions. Following U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan’s appointment, and with Congressman Frank’s help, some of the more problematic Neighborhood Stabilization Program (NSP) rules were modified. But despite the word “Emergency” in the subtitle of HERA, it took over a year for NSP contracts to flow.

Our NSP buyers are now competing with investors with cash shopping the market for foreclosed properties. Whether these investor purchases are sustainable and will contribute to neighborhood stabilization remains to be seen. Clearly our NSP buyers are hamstrung with requirements. Does it really make sense to require a homebuyer of a foreclosed property to send a voluntary acquisition notice – the type of form more appropriately suited for a government acquisition – to the seller? Are we really still talking about whether a property that is transferred by a foreclosing lender to an affiliate still qualifies as “foreclosed”? HERA gave HUD enormous flexibility in implementing NSP with only four sacred cows: fair housing, nondiscrimination, labor standards, and the environment. HUD should quickly convene practitioners on the ground to scour the NSP rules and determine those that can be modified or eliminated.

It’s time to get serious about solving the problem of foreclosed properties and making neighborhood stabilization a reality.

Judy Jacobson is the deputy director and general counsel of the Massachusetts Housing Partnership, a statewide quasi-public agency that provides financial and technical assistance to promote the development and preservation of affordable housing. She can be reached at judyj@mhp.net. More information about MHP is available at www.mhp.net.

Tuesday, November 17, 2009

Live at the Forum: The Impacts of High Housing and Transportation Costs in the San Francisco Bay Area

This Thursday, November 19 from 2-4 p.m., the Center for Housing Policy will host its next "Live at the Forum" event to learn more about a new report from the Urban Land Institute's Terwilliger Center for Workforce Housing and the Center for Housing Policy, based on data from the Center for Neighborhood Technology, Bay Area Burden: Examining the Costs and Impacts of Housing and Transportation on Bay Area Residents, Their Neighborhoods, and the Environment. In addition to describing key findings from Bay Area Burden, this two-part event will allow you to get answers to your questions from the authors of the report by logging on to the HousingPolicy.org Forum. Presenters for this event will include: Keith Wardrip, Center for Housing Policy; Janine Cuneo, ULI Terwilliger Center for Workforce Housing; and Peter Haas, Center for Neighborhood Technology.
  • Part I: Hear About the Report -- This "Live at the Forum" event will begin at 2 p.m. EST (11 a.m. PST) with a 30-minute conference call with the presenters. The call-in number is (712) 432-1001 and the access code is 452746624#.

  • Part II: Interact With the Speakers -- Immediately following the call, from 2:30 – 4 p.m. EST (11:30 a.m. - 1 p.m. PST), the speakers will be online to answer your questions on the HousingPolicy.org Forum. Please note that you must be a registered user on the Forum to participate in this portion of the event.
About the Report
Bay Area Burden provides a comprehensive analysis of the “cost of place” in nine counties located throughout the San Francisco region by examining the costs and impacts of housing and transportation on residents, their neighborhoods and the environment. The report demonstrates the severity of the problem in the region and how the combined costs of housing and transportation are leaving San Francisco Bay Area workers with insufficient resources to meet their basic needs.

Monday, November 16, 2009

WSJ Letter-to-the-Editor: FHA Will Not Need to Ask the American Taxpayer for Assistance, Agency's Role is Integral to the Housing Recovery

On November 5, NHC President and CEO Conrad Egan submitted the below Letter-to-the-Editor to the Wall Street Journal in response to an article entitled, "FHA Digging Out After Loans Sour."
"In recent testimony before the U.S. House Financial Services Committee, Federal Housing Administration (FHA) Commissioner David Stevens emphasized that “based on current projections, absent any catastrophic home price decline, FHA will not need to ask Congress and the American taxpayer for extraordinary assistance [and] will not need a bailout” (“FHA Digging Out After Loans Sour,” Nov. 4).

In addition, many experts agree that the worst is over. Default rates on FHA loans made recently are not anticipated to be as great as previous loan defaults. The credit quality of recently FHA-insured borrowers has also gone from an average FICO score of 633 two years ago to 693 today, making the loans that the agency is insuring now less risky.

We must not forget that for 75 years FHA has played a pivotal role in the home financing system by providing single- and multi-family home loans to qualified borrowers that might not otherwise be able to secure a loan at a reasonable cost.

FHA does, of course, face a number of financial and capacity challenges, but the agency is more important than ever and remains integral to the housing recovery."
Just one week later, Commissioner Stevens and U.S. Department of Housing and Urban Development Secretary Shaun Donovan held a press briefing, which affirmed that with $31 billion in total reserves, the agency will not need to seek support from the American taxpayer under even some of the most extreme economic scenarios. Furthermore, FHA continues to fill a void in the market by insuring single- and multi-family loans to qualified buyers who might not otherwise be able to secure a loan at a reasonable cost. While the agency faces a number of challenges, it is currently implementing necessary reforms, including additional real-time monitoring of portfolio performance and delinquency, default and economic conditions, in order to help minimize risks to remaining capital.

To learn more, please view this NHC Statement:
Toll of Housing Crisis on FHA Reserves Illustrates Agency’s Pivotal Role in the Recovery

Friday, November 13, 2009

Guest Blogger Alan Mallach: The Investors Are Back – What Does This Mean for Neighborhood Stabilization?

The large-scale movement of investors back into the real estate market has become a major issue in a lot of cities trying to implement strategies under the Neighborhood Stabilization Program (NSP). It seems pretty clear that in many market areas prices have come down to where an investor can make a decent profit on the cash flow from buying units and renting them out, and gambling on some future appreciation down the road. Currently, 2 out of 5 sales in the Vegas and Phoenix metro areas are investor sales, and 1 out of 3 in Miami-Dade. Cities and community development corporations (CDCs) often simply can’t compete with investors, who are not bound by the NSP discount requirements, who don’t have to jump through elaborate paperwork hoops to make decisions, and can offer lenders quick, all-cash deals for their REO properties.

It’s not clear how to think about this – is it a good thing, because investors are absorbing properties that would otherwise sit empty, or is it a bad thing, because they are taking properties away from homebuyers or CDCs, who might generate better long-term outcomes for the properties and the neighborhoods? Probably some of both, but in any event, investors are not going away. It’s time public agencies and CDCs recognize that they are a long-term and important part of the local housing scene, and figure out how to work with them. That, in turn, may involve new public sector strategies. Yes, many communities could do more to discourage bad actors, but hammers are not usually very effective by themselves; we should also be thinking about incentives, to motivate investors to become part of the solution to the crisis our neighborhoods are facing. The question is, how?

Alan Mallach is a non-resident senior fellow at The Brookings Institution. His most recent book is A Decent Home: Planning, Building and Preserving Affordable Housing (Planners Press, 2009).

Thursday, November 12, 2009

FHA Audit Finds No Need for Taxpayer Support, Toll of Crisis on Agency’s Reserves Illustrates Its Pivotal Recovery Role

Statement by Conrad Egan
President and CEO of the National Housing Conference
"The Federal Housing Administration's (FHA) annual audit released today confirms that with $31 billion in total reserves the agency will not need to seek support from the American taxpayer under even some of the most extreme economic scenarios. Experts also emphasized that the toll the housing crisis has taken on FHA’s reserves illustrates the agency’s pivotal role in the housing recovery.

Specifically, as private lenders tighten their credit standards and capital sources are diminished, FHA continues to fill the void in the market by insuring single- and multi-family loans to qualified buyers who might not otherwise be able to secure a loan at a reasonable cost. Almost 50 percent of all first-time homebuyers in the housing market used an FHA loan in the second quarter of 2009 alone.

The agency has provided this same type of temporary support to the nation’s housing markets over its 75 year history, resulting in an eventual net positive return for taxpayers. Of course, with an increased FHA role there is initial financial risk, but many experts agree that the worst is over for the current crisis. Default rates on FHA loans made recently are not anticipated to be as great as previous loan defaults. The credit quality of agency-insured borrowers has gone from an average FICO score of 633 two years ago to 693 today, making the loans that the agency is insuring now less risky.

FHA does face immediate challenges and is currently implementing the necessary reforms. In particular, the agency is emphasizing risk management that includes additional real-time monitoring of portfolio performance and delinquency, default and economic conditions, in order to help minimize risks to remaining capital. FHA is also tightening rules for appraisals, streamline refinances and lender approvals to help prevent further erosion of and ensure increases in its financial reserves."

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For more information on the audit's findings, please view the following materials from today's briefing with U.S. Department of Housing and Urban Development Secretary Shaun Donovan and FHA Commissioner David Stevens:

Press Release

Press Briefing Presentation (PPT)

Tuesday, November 10, 2009

Recession's Effect on FHA, Agency Backed by Full Faith of Treasury Department

Today's Washington Post includes an article on the Federal Housing Administration's (FHA) soon-to-be-released annual audit, which, according to FHA Commissioner David H. Stevens, will appear dire because it offers only a snapshot of the agency's financial standing at the depths of the recession and does not take into account new loans the FHA will insure or has made to more creditworthy borrowers. In addition, FHA officials have assured Congress that the agency will not need a taxpayer bailout. FHA's complex funding mechanisms do not require the agency to turn to Congress if it cannot cover losses on loans because the agency has been drawing on money it deposited with the Treasury Department.
"It is absolutely a myth that they would have to go to Congress for money," said Marvin Phaup, a former budget analyst at the Congressional Budget Office and now a budget expert at Pew Charitable Trusts. "The FHA has permanent authority to get money from the Treasury because it is backed by the full faith and credit of the federal government."
Read More

Friday, November 6, 2009

HUD Secretary Donovan to Keynote Prestigious NYHC and NHC 36th Annual Awards Luncheon

On December 10, U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan will deliver the keynote address at the 36th Annual Awards Luncheon hosted by the New York Housing Conference (NYHC) and the National Housing Conference (NHC). This annual event, which honors those who have made New York a better place to live and work, is one of the largest gatherings of housing professionals in the nation – attracting more than 1,200 attendees each year.

As the keynote speaker, Secretary Donovan, formerly commissioner of the New York City Department of Housing Preservation and Development (HPD), will not only help celebrate the success of this year’s honorees, but will also focus on responding to the foreclosure crisis, the future of HUD and more.

The 2009 Luncheon is also particularly significant because it marks the inauguration of the Clara Fox Award for Outstanding Achievement. Named in honor of the legendary founder of NYHC, this first annual award will be bestowed upon Felice Michetti, who is the CEO of Grenadier Realty, one of the city’s largest private owners and managers of affordable housing. As HPD Commissioner during the Dinkins Administration, she is widely credited with implementing many of the housing development goals set by Mayor Dinkins’ predecessor, Edward I. Koch.

Additional award recipients include:
  • Nonprofit Housing Developer of the Year: Adam Weinstein, president and CEO, Phipps Houses;
  • Private Housing Developer of the Year: BFC Partners; and
  • Public Service Award co-recipients Priscilla Almodovar, president and CEO, NY Homes and Deborah Van Amerongen, commissioner, New York State Division of Housing and Community Renewal.
Please join us in honoring this year's honorees, who have each played an integral role in helping ensure that New Yorkers have the opportunity to live in a decent, affordable rental or owned home in a suitable neighborhood.

For more information about this year's event, and to purchase tickets, please visit:
NYHC and NHC 36th Annual Awards Luncheon.

Wednesday, November 4, 2009

New Report Finds the Average Bay Area Household Spends Nearly 60 Percent of Their Income on Housing and Transportation Costs Alone

Bay Area Burden, a new report released today by the ULI Terwilliger Center for Workforce Housing finds that the average Bay Area household spends more than $41,000 a year - nearly 60 percent of their income - on housing and transportation costs alone.

These costs vary among the nine Bay Area counties examined, ranging from 54 percent in Santa Clara to 66 percent in Sonoma. But the study finds that one fourth of all households in the Bay Area live in neighborhoods where housing and transportation costs account for 65 percent or more of income - a level defined as an extreme housing and transportation cost burden.

The report, produced in partnership with NHC's research affiliate the Center for Housing Policy and the Center for Neighborhood Technology, provides a comprehensive analysis of the "cost of place" in nine counties located throughout the San Francisco region by examining the costs and impacts of housing and transportation on residents, their neighborhoods and the environment. The report demonstrates the severity of the problem in the region and how the combined costs of housing and transportation are leaving San Francisco Bay Area workers with insufficient resources to meet their basic needs. The report finds that three fifths of all Bay Area residents live in communities that are unaffordable to households earning less than $80,000.

Two former Secretaries of the U.S. Department of Housing and Urban Development, who are now ULI Terwilliger Center Board members, Henry Cisneros and Steve Preston, attended a press conference today along with other Bay Area leaders, to announce the report, a new website at www.BayAreaBurden.org and cost calculator, all designed to bring greater awareness and understanding of these issues and their impact on communities. To view the media release, please click here.

Tuesday, November 3, 2009

Live at the Forum: Subsidized Housing Opportunities Near Transit for the 50+ Population

Tomorrow, November 4, NHC’s research affiliate, the Center for Housing Policy, will host its next two-part "Live at the Forum" event, which will feature a new report from the AARP Public Policy Institute, in collaboration with the National Housing Trust and Reconnecting America, "Preserving Affordability and Access in Livable Communities: Subsidized Housing Opportunities Near Transit and the 50+ Population." See details below to take part in this event.

Part I: Hear About the Report - The event begins at 2:30 p.m. EDT (11:30 a.m. PDT) with a 30-minute conference call, where major findings from the report will be presented by authors Allison Brooks, Reconnecting America; Rodney Harrell, AARP Public Policy Institute; and Todd Nedwick, NHC Member Partner the National Housing Trust. The call-in number is (712) 432-1001 and the access code is 498796833#.

Part II: Interact With the Authors - Immediately following the call, from 3 - 4:30 p.m. EDT, authors of the report will be online to answer your questions. All questions for the authors should be posted to this thread, and you are welcome to post at any time leading up to or during the event. Questions will be answered on a first-come, first-served basis until time runs out, so post early to be sure yours is addressed. To participate in this portion of the event, you must be a registered user on the HousingPolicy.org Forum.

Monday, November 2, 2009

Guest Blogger Ali Solis: Saving Our Neighborhoods With A Better NSP

Two years ago, we in the housing and community development field, began to notice the negative impacts of a sharp rise in foreclosures and vacancies in neighborhoods. To confront this problem, Enterprise, in partnership with Neighborworks, NHC, and other organizations, led the Save America’s Neighborhoods Coalition and worked with Congress to create the Neighborhood Stabilization Program (NSP). We were among the first to sound the alarm about the foreclosure crisis, and the past two years have sadly proven us correct. Foreclosures continue to ravage America’s neighborhoods, and the NSP funds are more important than ever.

Over its short history, NSP has undergone several modifications. We are proud to say that most of these changes, including an additional $2 billion for NSP2, resulted from an effective feedback mechanism by which practitioners on the ground communicate with advocates in Washington who work with staff at the U.S. Department of Housing and Urban Development (HUD) and in Congress. The result has been a much more workable and effective NSP.

However, NSP must still be improved. Redevelopment or rehabilitation of vacant properties cannot count toward the requirement that 25% of funds be spent on very low-income families. A simple legislative fix would allow localities to assist their very low-income populations with creative leveraging mechanisms such as LIHTC and other multifamily solutions. Similarly, HUD needs to permit the drawdown of sufficient funds to facilitate the use of loan loss reserve pools to better leverage NSP.

Therefore, as we implement NSP1, await the award of NSP2 and advocate for NSP3, we will continue to work with HUD and Congress to ensure that NSP is the most effective program possible. Our neighborhoods deserve nothing less.

Ali Solis is the senior vice president for public policy and corporate affairs for Enterprise Community Partners, a Housing Leadership Support partner of NHC. At Enterprise, Ali oversees the areas of public policy, communications, marketing and resource development.