GWRC Affordable Housing Task ForceGWRC Affordable Housing Task ForceSept, 2008Sept, 2008

Affordable Housing Task Force

Mid-Year Report

& Program Recommendations

Housing Affordability ContinuumHousing Affordability Continuum

HousingActions

By Income Segment

Less than 30% of Area Median Income

Task Force Focus:

30% to 50% of Area Median Income

50% to 80% of Area Median Income

Under $20,800 - $29,500*

$20,800 - $29,500* to$34,650 - $49,200*

$34,650 - $49,200* to$55,540 - $61,400*

Housing Need:

Emergency Shelters

Supportive Housing

Affordable Rental

Low-Moderate Income

Homeownership

Moderate - Middle Income

Homeownership

ProductionContinuum

of CareContinuum

of Care CVHCCVHC & GFHFH CVHC

PreservationContinuum

of Care Continuum

of Care

CVHC &

Faith-

based

CVHC & GFHFH CVHC

* Range of HUD Income Guidelines for 4 person household in GW Region, see:

http://www.vhda.com/MultiFam/hudincome.asp for complete income guidelines

Findings:Findings:1.1. Region’s affordable housing problem tied Region’s affordable housing problem tied

to area’s growth as an exurb of Washington to area’s growth as an exurb of Washington & Richmond metro areas, especially since & Richmond metro areas, especially since 20002000

2.2. Recent housing market adjustments have Recent housing market adjustments have adversely affected housing valuations & adversely affected housing valuations & local government revenueslocal government revenues

3.3. The Region’s best opportunity to create The Region’s best opportunity to create affordable home ownership is acquire, affordable home ownership is acquire, renovate & re-sell foreclosure properties.renovate & re-sell foreclosure properties.

4.4. The Region has a network of housing The Region has a network of housing development agencies to support this development agencies to support this effort.effort.

Findings Findings (continued)(continued)

5.5. The Region has not experienced much The Region has not experienced much growth in rental housing stock, with over growth in rental housing stock, with over 90% of bldg permits issued from 2000-2006 90% of bldg permits issued from 2000-2006 as single-family & duplex units.as single-family & duplex units.

6.6. Affordable housing providers in the Region Affordable housing providers in the Region have difficulty increasing the supply due to have difficulty increasing the supply due to a number of factorsa number of factors

7.7. Some Northern Virginia localities have Some Northern Virginia localities have begun acquiring foreclosure properties to begun acquiring foreclosure properties to supplement their supply of affordable supplement their supply of affordable housing.housing.

8.8. AHTF members envision a regional AHTF members envision a regional foreclosure program as the most foreclosure program as the most immediately feasible initiative to increase immediately feasible initiative to increase affordable housingaffordable housing

Recommendations:Recommendations:1.1. Endorse Memorandum of Understanding:Endorse Memorandum of Understanding:

a.a. Ascertain the degree of need for affordable housing within each Ascertain the degree of need for affordable housing within each localitylocality; ;

b.b. Work with the community non-profit organizations, and the private Work with the community non-profit organizations, and the private sector to help find affordable housing solutionssector to help find affordable housing solutions;;

c.c. EvaluateEvaluate the local and regional the local and regional need for affordable housingneed for affordable housing in local in local and regional comprehensive plans as required by the Code of Virginia and regional comprehensive plans as required by the Code of Virginia (§15.2-2223) and (§15.2-2223) and consider the development of a Regional consider the development of a Regional Housing PlanHousing Plan;;

d.d. ConsiderConsider, upon the recommendation of the GWRC, such programs , upon the recommendation of the GWRC, such programs as:as:

• The The “Foreclosure Sale by Region”“Foreclosure Sale by Region” (FSBR) program, and (FSBR) program, and• Ensuring accessibility issues are addressed in workforce housing;Ensuring accessibility issues are addressed in workforce housing;

e.e. Explore Explore avenues ofavenues of financing such as grants, low interest loans, and financing such as grants, low interest loans, and bonds through local, state and national housing and lending bonds through local, state and national housing and lending organizations for affordable housing throughout the Region;organizations for affordable housing throughout the Region;

f.f. Solicit local citizen and business community input and educate Solicit local citizen and business community input and educate citizens on workforce housing issues; andcitizens on workforce housing issues; and

g.g. Consider Task Force recommendations as related to local ordinances Consider Task Force recommendations as related to local ordinances and zoningand zoning..

Recommendations (continued)Recommendations (continued)2.2. The AHTF proposes the “Foreclosure Sale by Region (FSBR) The AHTF proposes the “Foreclosure Sale by Region (FSBR)

Program” to:Program” to:assist banks that have foreclosed on residential properties in the assist banks that have foreclosed on residential properties in the Region to liquidate these properties from their inventory,Region to liquidate these properties from their inventory,renovate and remodel foreclosure properties to modernize, repair renovate and remodel foreclosure properties to modernize, repair and incorporate universal design components for consumer and incorporate universal design components for consumer accessibility,accessibility,assist local home buyers that fall within the 30 – 80% of area assist local home buyers that fall within the 30 – 80% of area median income to qualify for these foreclosure properties,median income to qualify for these foreclosure properties,educate low- and moderate-income home buyers on credit and educate low- and moderate-income home buyers on credit and budget management, home maintenance and other relevant budget management, home maintenance and other relevant topics to ensure sustainable home ownership, andtopics to ensure sustainable home ownership, andbuild a regional equity position in the public interest to preserve build a regional equity position in the public interest to preserve this affordable housing inventory by retaining a second deed of this affordable housing inventory by retaining a second deed of trust on properties transferred through this program.trust on properties transferred through this program.

3.3. Explore all outside sources of “seed” and planning funds to help Explore all outside sources of “seed” and planning funds to help the “FSBR Foreclosure Program” be successful. the “FSBR Foreclosure Program” be successful.

4.4. Establish regional program partnership between public & non-Establish regional program partnership between public & non-profit & business sectors to expand the supply of affordable profit & business sectors to expand the supply of affordable housing housing

5.5. Support regional initiatives to enhance the success of receiving Support regional initiatives to enhance the success of receiving outside public funding to further support aff housing programs.outside public funding to further support aff housing programs.

FSBR:FSBR:““FForeclosure oreclosure SSale ale bby y RRegion”egion”

ProgramProgram

GWRC Affordable Housing Task ForceGWRC Affordable Housing Task ForceSept, 2008Sept, 2008

62

104

21

55

3049

269

330

301

381

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50

100

150

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Caroline Fredericksburg King George Spotsylvania Stafford

Local Govts

Comparative Foreclosure Data

Listings June '08 Listings Sept '08

ObjectivesObjectivesTo increase the supply of affordable workforce To increase the supply of affordable workforce housinghousing by purchasing foreclosed homes at a by purchasing foreclosed homes at a reduced price, renovate, and resell to low- & reduced price, renovate, and resell to low- & moderate-income families using local, state and moderate-income families using local, state and federal programs for down-payment & closing cost federal programs for down-payment & closing cost assistance.assistance. To maintain workforce housing stock and To maintain workforce housing stock and preserve housing affordability for future preserve housing affordability for future property re-salesproperty re-sales..To stabilize neighborhoods, property values & To stabilize neighborhoods, property values & local government tax base.local government tax base.Increase opportunity for credit, budget and Increase opportunity for credit, budget and homebuying counseling to expand the pool of homebuying counseling to expand the pool of eligible homebuyers to become sustainable eligible homebuyers to become sustainable home owners.home owners.

StakeholdersStakeholdersGWRC & Local GovernmentsGWRC & Local GovernmentsNon-profit organizations:Non-profit organizations:Faith-based CommunityFaith-based Community (e.g. MICAH, Project (e.g. MICAH, Project Faith)Faith)

Business CommunityBusiness Community• e.g. Lowe’s & Home Depote.g. Lowe’s & Home Depot• Major EmployersMajor Employers (Mary Washington Hospital, UMW, Germanna (Mary Washington Hospital, UMW, Germanna

Community College, GEICO)Community College, GEICO)

• Utilities: Dominion Power & Rappahannock Electric Coop. Utilities: Dominion Power & Rappahannock Electric Coop.

Local BanksLocal BanksState & Federal AgenciesState & Federal Agencies

FSBR Program ComponentsFSBR Program Components

B. Identifying, Evaluating, Purchasing & Renovating REO Properties

C. Financial, Legal &

Governance Framework

A.Recruiting, Pre-Qualifying & Counseling

Potential Buyers

A. Recruiting, Qualifying & Counseling Potential

BuyersPromotional Campaign:Promotional Campaign:• Program PartnersProgram Partners: All Stakeholders, local : All Stakeholders, local

newspaper & radio stationsnewspaper & radio stations• MediaMedia: Newspaper, radio, pay stub insert, flyers: Newspaper, radio, pay stub insert, flyers• Regional Affordable Housing “Information Fairs”Regional Affordable Housing “Information Fairs”• Sub-regional Buyer Orientation Open House:Sub-regional Buyer Orientation Open House:

Program description & Pre-Qualification Survey & Program description & Pre-Qualification Survey & Pre-Purchase Counseling to get on “waiting list”Pre-Purchase Counseling to get on “waiting list”

• Ranking CriteriaRanking Criteria: Income, family size, locational : Income, family size, locational preference & housing type requirementspreference & housing type requirements

VHDA-required Pre-Purchase Counseling (6 hours) VHDA-required Pre-Purchase Counseling (6 hours) Includes:Includes:Personal financePersonal financeCreditCreditRole of realtorRole of realtorRole of LenderRole of LenderRole of Home InspectorRole of Home InspectorRole of Title Company/ AttorneyRole of Title Company/ Attorney

Pre-Qualification Counseling (2 appts., total of 2 hours) Pre-Qualification Counseling (2 appts., total of 2 hours) Includes:Includes:Explain Role of Title Company/ AttorneyExplain Role of Title Company/ AttorneyAssist in completion of Loan Application Assist in completion of Loan Application Proof of income on all earned/available incomeProof of income on all earned/available income2 months bank statements from all open sources2 months bank statements from all open sourcesCredit report with score dated within 60 daysCredit report with score dated within 60 daysReview of all documentation- does client meet criteria & obtain pre-approval from Review of all documentation- does client meet criteria & obtain pre-approval from bankbank

Post-Purchase Counseling (1-2 hours, w/in 6 months of closing) Post-Purchase Counseling (1-2 hours, w/in 6 months of closing) Includes:Includes:

Predatory Lending practicesPredatory Lending practicesBasic preventative home maintenance & repairBasic preventative home maintenance & repairGoing Green & Utility Conservation/ImprovementsGoing Green & Utility Conservation/ImprovementsWarranty & Insurance issuesWarranty & Insurance issuesGenerational wealth buildingGenerational wealth buildingEmergency reservesEmergency reservesClient will receive $200-500 reduction in down- payment lien from program after Client will receive $200-500 reduction in down- payment lien from program after attendanceattendance

COUNSELING PROGRAMS:COUNSELING PROGRAMS:

B. Identifying, Evaluating, Purchasing & Renovating Bank-Owned Properties

Developing Supply Chain by:Developing Supply Chain by:• Partnering with Realtor Association to:Partnering with Realtor Association to:

• Gain slight sales commission concession for supplying Gain slight sales commission concession for supplying waiting list of pre-qualified buyerswaiting list of pre-qualified buyers

• Get property managers to report complaint calls to identify Get property managers to report complaint calls to identify problem propertiesproblem properties

• Ask BANK managersAsk BANK managers to provide 1 to provide 1stst right of refusal to right of refusal to

FSBR Program for most affordable properties based FSBR Program for most affordable properties based on general program criteriaon general program criteria

• Mobilizing for quick property inspection, Mobilizing for quick property inspection, evaluation & acquisition decisionevaluation & acquisition decision

• Work with partners to minimize acquisition, Work with partners to minimize acquisition, renovation & selling costsrenovation & selling costs

Locate list of Bank-owned properties (“REOs”):Locate list of Bank-owned properties (“REOs”):• Contact investors for foreclosure property listContact investors for foreclosure property list

VHDAVHDANational & Local BanksNational & Local BanksHUD/ VAHUD/ VAReal Estate Disposition Co (REDC) (private auctioneer)Real Estate Disposition Co (REDC) (private auctioneer)NewspapersNewspapersAssociation of RealtorsAssociation of Realtors

• Work with BANKS directlyWork with BANKS directly on purchase of REOs in on purchase of REOs in package deal – reduction due to group purchasepackage deal – reduction due to group purchase

Get LOC from Bank for short time purchase? (PNC Bank?)Get LOC from Bank for short time purchase? (PNC Bank?)– Interest only/ flexible terms/ no prepayment penaltyInterest only/ flexible terms/ no prepayment penalty

If Realtor already has listing:If Realtor already has listing:• Each property must be bid on separatelyEach property must be bid on separately• Use established LOC from bank Use established LOC from bank • If purchased in groups from same realtor- possible If purchased in groups from same realtor- possible

reduction in realtor cost (i.e. commission reduction in realtor cost (i.e. commission concession)concession)

Sources of Funds:Sources of Funds:Private Bank Line of CreditPrivate Bank Line of Credit for for Foreclosure Purchase & Re-hab CostsForeclosure Purchase & Re-hab CostsTax & Permit Fee Waivers by Local Tax & Permit Fee Waivers by Local Govt.Govt.Va. DHCD Va. DHCD HOMEHOME & & CDBGCDBG Grants Grants::– Down payment & closing assistance fundsDown payment & closing assistance funds– Purchase, rehab & admin costsPurchase, rehab & admin costs– Land Banking fundsLand Banking funds

Permanent FinancingPermanent Financing::– Private 1Private 1stst time homebuyer programs time homebuyer programs– VHDA loans for 1VHDA loans for 1stst time buyers time buyers– Habitat for Humanity self-financing loanHabitat for Humanity self-financing loan

Example FSBR Deals:Example FSBR Deals:GFHFHGFHFH CVHCCVHC

Foreclosure Sale Foreclosure Sale Price to AcquirePrice to Acquire $70,000$70,000 $70,000$70,000 $80,000$80,000 $90,000$90,000

Rehab CostsRehab Costs 5,0005,000 10,00010,000 5,0005,000 10,00010,000

Down-Payment Down-Payment Assistance*Assistance*

5,0005,000 10,00010,000 10,00010,000 10,00010,000

FBSRFBSR

Re-Sale PriceRe-Sale Price$80,000$80,000 $90,000$90,000 $95,000$95,000 $110,000$110,000

Closing CostsClosing Costs $2,800$2,800 $3,150$3,150 $3,325$3,325 $3,850$3,850Loan Interest Rate Loan Interest Rate (15 or 30 yr fixed)(15 or 30 yr fixed)

0%0% 0%0% 5.5%5.5% 5.5%5.5%

Est. Tax & Insurance Est. Tax & Insurance PaymentPayment $100$100 $113$113 $119$119 $125$125

Estimated Monthly Estimated Monthly P+I+T+IP+I+T+I $572.00$572.00 $641.00$641.00 $650.00$650.00 $750.00$750.00

* FSBR investment backed by 2nd deed of trust

0 20 40 60 80 100 120 140 160

Active

Inactive

Active

Inactive

Active

Inactive

Active

Inactive

Active

InactiveC

aro

lin

eC

ity

KG

Sp

ots

yS

taff

ord

$ Unknown Under 80K 80K - 100K 100K - 110K

110K - 130K 130K - 150K 150K - 175K 175K+

144

100

75

135

9

12

1220

2034

Foreclosure Listings by Price Range, September 27, 2008

C. Governance, Financial & Legal Framework

Governance:Governance:• Program implementation through MOUs among Program implementation through MOUs among

all the partnersall the partners• Program developed through GWRC’s AHTF, Program developed through GWRC’s AHTF,

which manages Components A & B through which manages Components A & B through partner organizationspartner organizations

• GWRC functions as governing board to authorize GWRC functions as governing board to authorize property acquisition, renovation & disposition property acquisition, renovation & disposition guidelines to use w/ pre-qualified buyersguidelines to use w/ pre-qualified buyers

• GWRC could apply for any govt. planning grants, GWRC could apply for any govt. planning grants, acquisition program funds on behalf of the acquisition program funds on behalf of the regional affordable housing programregional affordable housing program

Local Bank(s) Provide LOC

$250,000 @ for CVHC & GFHFH

CVHC

GFHFH

OTHER CHDOs

Virginia DHCDManages

HOME & CDBG $

Participating Local

Governments

GWRC establishes guidelines & approves

Project(s)

AHTF AdvisoryComm. Considers& Recommends

Guidelines & Project(s)

Project Proposals

Project Approval for LOC or CDBG $$$ Draw

Staff

Input

Conceptual Program Governance &

Operational Model

Local Govt, Corporate, & Personal Donations:Local Govt, Corporate, & Personal Donations:Optional Local Government Contributions:Optional Local Government Contributions:

• Co-sponsorship promotional effort w/ public employeesCo-sponsorship promotional effort w/ public employees• Waiver of local recording feesWaiver of local recording fees• Waive taxes on property during FSBR holding periodWaive taxes on property during FSBR holding period• Waive LMI owner taxes for 1Waive LMI owner taxes for 1stst 6 months to allow buyer to 6 months to allow buyer to

acquire home furnishings, yard tools, etc.acquire home furnishings, yard tools, etc.• Waiver of water hook-up/turn-on feeWaiver of water hook-up/turn-on fee• Waiver of bldg permits and/or fast-track permit reviewWaiver of bldg permits and/or fast-track permit review• Public employee down-payment assistance programsPublic employee down-payment assistance programs• Future dedicated revenue stream for affordable programsFuture dedicated revenue stream for affordable programs

Corporate Options:Corporate Options:• Retailers: discounts on appliances & bldg suppliesRetailers: discounts on appliances & bldg supplies• Employers: down-payment assistance programsEmployers: down-payment assistance programs• Utilities: donate the cost of electrical meter re-installation & Utilities: donate the cost of electrical meter re-installation &

CFL light bulbsCFL light bulbs

Personal/Philanthropic Donations/Grants: Personal/Philanthropic Donations/Grants: • Voluntary fund-raising initiatives (e.g. car washes)Voluntary fund-raising initiatives (e.g. car washes)• Benefactor donationsBenefactor donations• LISC & other foundationsLISC & other foundations

Legal Framework:Legal Framework: • CHDO partners would retain 2CHDO partners would retain 2ndnd deed of trust deed of trust

to preserve future affordabilityto preserve future affordability• Proceeds (- admin fee) from sale of renovated Proceeds (- admin fee) from sale of renovated

REO properties would be retained by regional REO properties would be retained by regional CHDO to be re-invested in additional home CHDO to be re-invested in additional home purchases, renovation costs, down payment & purchases, renovation costs, down payment & closing cost assistanceclosing cost assistance

• Local governments &/or area employers could Local governments &/or area employers could put up down-payment assistance for eligible put up down-payment assistance for eligible workers which could be recovered through workers which could be recovered through employee payroll withholdingemployee payroll withholding

Federal Foreclosure Assistance $$Federal Foreclosure Assistance $$

$3.92 billion$3.92 billion in federal CDBG grants to in federal CDBG grants to buy and repair foreclosed homes.buy and repair foreclosed homes.

Virginia allocated: Virginia allocated: $45,691,843$45,691,843– Fairfax & Pr. William received $6.94 Fairfax & Pr. William received $6.94

million combined from US HUDmillion combined from US HUD

– Balance of VA: Balance of VA: $38,749,931$38,749,931– GWRC GWRC estimatedestimated regional allocation: regional allocation:

$5, 882, 402 $5, 882, 402 (see handout)(see handout)

Note: DHCD Guidelines not released yet!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 All applications name GWRCGWRC as “ as “fiscal & fiscal & administrative agentadministrative agent” & GWRC designates ” & GWRC designates the Affordable Housing Task Force as its the Affordable Housing Task Force as its regional advisory committeeregional advisory committee

Other Provisions:Other Provisions: First-time home buyers (First-time home buyers (4/08-7/094/08-7/09) ) would be eligible for a tax credit worth would be eligible for a tax credit worth up to $7,500up to $7,500

$200 million nationally available for $200 million nationally available for foreclosure-prevention counseling foreclosure-prevention counseling programsprograms

Local governments have authority to Local governments have authority to issue an additional $11 billion of tax-issue an additional $11 billion of tax-exempt bonds to refinance shaky loans.exempt bonds to refinance shaky loans.

ChallengesChallengesCreating a regional product = “Creating a regional product = “FSBRFSBR” is 1” is 1stst!!

Regional Cooperation = Regional Cooperation = Coordinated Coordinated support of Local Govts on program support of Local Govts on program development & CDBG grant applications development & CDBG grant applications

Establishing financing program & revenue Establishing financing program & revenue stream = stream = Bank $Bank $ & & CDBG $ CDBG $ && other sourcesother sources

Fair allocation of administrative costs & Fair allocation of administrative costs & responsibilitiesresponsibilities

Oversight Board DevelopmentOversight Board Development• What will be FSBR BoD responsibilities?What will be FSBR BoD responsibilities?

Questions?Questions?

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