Buying NSP Properties in Competitive Markets Webinar - Slides · 2019-03-16 · Shares of negative...

U.S. Department of Housing and Urban Development • Community Planning and Development

U.S. Department of Housing and Urban Development

Buying NSP Properties in Competitive Markets

Comprehensive Strategies for Accessing Property

May 14, 2013

2:00 – 4:00pm


Presenters

• Host: Kathy Kaminski, Training & Development Associates (TDA)

• Moderator: David Cramer, TDA

• Presenters: :

– Sergio Barajas, National Community Stabilization Trust

– Kevin Zwick, Housing Trust Silicon Valley

– Wayne Meyer, NJ Community Capital/Community Asset Preservation Corp.

• HUD: David Noguera, Hunter Kurtz

2


And you….as webinar participants

Poll

• Are you working with NSP 1, 2, or 3 or combination?

– NSP 1

– NSP 2

– NSP 3

– NSP 1 and 3

• Are you representing a state grantee, local grantee, sub-grantee, consortium, subrecipent, developer, other

• What region of the country

3


Webinar Objectives Today

• Provide an overview of today’s market

• Provide an overview of how the acquisition of foreclosed, abandoned and vacant properties is changing

• Review how the National First Look Program works

• Changing acquisition strategies and program design

• Modifying the program design including changing the target area

4


July 2012 – March 2013

0

500

1000

1500

2000

2500

3000

3500

4000

Jul Aug Sep Oct Nov Dec 2013 Feb Mar Apr

HUD / FHA

Freddie Mac

Chase

Bank of America

Wells Fargo

First Look Properties Shown by Top Five Servicers


$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

2007 Apr Jul Oct 2008 Apr Jul Oct 2009 Apr Jul Oct 2010 Apr Jul Oct 2011 Apr Jul Oct 2012 Apr Jul Oct 2013

Camden, NJ Las Vegas, NV Los Angeles, CA

New York, NY Phoenix, AZ San Diego, CA

San Francisco, CA San Jose, CA

Median REO sale prices have risen over 30% in the California, Nevada, New Jersey, and Arizona

metropolitan areas below from their average low in September 2010.

Median REO Sale Prices by CBSA


Shares of negative equity loans have declined slightly in Arizona, California, and Nevada, suggesting

modest housing market recovery. Shares have increased in both New Jersey and New York, judicial

states in which shadow inventory continues to impact recovery.

4

0%

10%

20%

30%

40%

50%

60%

Q1/2010 Q3/2010 Q1/2011 Q3/2011 Q1/2012 Q3/2012 Q1/2013

Arizona California Nevada New Jersey New York

Negative Equity Home Loan Shares


Poll

• What do you know about your market? Are sales trending….

– Showing a definite trend upward

– Still remaining flat with small ups and down

– Still going down

8


Traditional Approaches to Boosting Acquisitions

• Open market

• Direct relationships with servicers/lenders

• Short Sales

• Intermediaries: NCST

• HUD/FHA

• Donations

• Other – (Tax foreclosure, failed developments, etc.)

9


REO Property Source: Open Market Purchases

Traditional approach to purchasing properties

• Simplest route to accessing REO properties

• Can be managed internally or contracted out to a broker

• Competition from homebuyers and investors

• REO properties often do not reach the open market

• REO purchases are different from normal real estate purchases


Buyer responds:

Accept

Decline

Counter

Buyer responds:

Accept

Decline

Counter

Buyer performs

property

inspection

Buyer performs

property

inspection

Seller to make

property

available for

inspection

Seller to make

property

available for

inspection

Seller to secure

the property

Seller to secure

the property

Seller to

complete

foreclosure,

redemption and

eviction process

Seller to

complete

foreclosure,

redemption and

eviction process

Seller performs

property

inspection

Seller performs

property

inspection

Seller

determines

“ Market Value ”

and disposition

plan

Seller

determines


and disposition

plan

Seller provides

Adjusted Sales

Price

Seller provides

Adjusted Sales

Price

Seller proceeds

to market the

property

Seller proceeds

to market the

property

Seller incurs

holding costs,

market risk,

etc. until sold

Seller incurs

holding costs,

market risk,

etc. until sold

Property

Sold

Property

Sold

Elapsed time: 15 - 30d Elapsed time: 5-15d

(Elapsed time: 2 - 5d)

Buyer responds:

Accept

Decline

Counter

Buyer responds:

Accept

Decline

Counter

Buyer performs

property

inspection

Buyer performs

property

inspection

Seller to make

property

available for

inspection

Seller to make

property

available for

inspection

Seller to secure

the property

Seller to secure

the property

Seller to

complete

foreclosure,

redemption and

eviction process

Seller to

complete

foreclosure,

redemption and

eviction process

Seller performs

property

inspection

Seller performs

property

inspection

Seller

determines


and disposition

plan

Seller

determines


and disposition

plan

Seller provides

Adjusted Sales

Price

Seller provides

Adjusted Sales

Price

Seller proceeds

to market the

property

Seller proceeds

to market the

property

Seller incurs

holding costs,

market risk,

etc. until sold

Seller incurs

holding costs,

market risk,

etc. until sold

Property

Sold

Property

Sold

Elapsed time: 15 30d Elapsed time: 5-15d

(Elapsed time: 2 - 5d)

Seller to make

property

available for

inspection

Buyer confirms

interest

to inspect

First Look Timing

11


REOMatch Features

12

o Google Maps Interface

o Plot Multiple Target

Areas

o Transaction Tracking

o Properties from

Multiple REO Sellers

o Document Uploads

o Excel Export Option

o FHA First Look



Other Approaches To Consider

• Panel:

– Kevin Zwick, HTSV: moving toward rental

– Wayne Meyer, NJ Community Capital/Community Asset Preservation Corp: Mortgage Notes and rental

• FOR SALES/LEASE-PURCHASE or RENTAL

– Code enforcement

– Partner with investors (Rental Rehab)

13


Housing Trust Silicon Valley Dream Home Program 199 Checkers Drive

Before After


Housing Trust Silicon Valley Taylor Oaks Apartments

Before


Taylor Oaks Apartments

After


NJ Community Capital Community Asset Preservation Corporation (CAPC)

• Sample Nonperforming Mortgage Loan Pool

– 400 nonperforming mortgage loans

– 509 residential units

– 282 owner-occupied

– 118 vacant

– $78MM Unpaid Principal Balance

– $39MM Fair Market Value of properties

17


NJ Community Capital Community Asset Preservation Corporation (CAPC)

• CAPC’s Fundamental Strategies

– Purchase existing pools of nonperforming mortgage notes and REO properties

– Exit strategy drives transactions

– Mixed-market property disposition/revitalization through a variety of tools

– Allow local developers to access bulk purchases

– Non-traditional financing through strategic public-private partnerships

– Aggressive asset management

• Current Key Strategies

– Scattered-site Rental Properties

18


CHAT

Consider any of the following question and respond…..

• What’s working, what’s not

• What current acquisition approach(es) have you used that resulted in purchases?

• What approach(es) have yielded very little purchases?

• What has changed in the last year?

19


Program Design Strategies

• Consider capacity

• Change scope

– Type, i.e., sale, rental, lease-purchase

– Type of building – size, condition

– Single family to multifamily

– NSP Uses: from A&B to E

– Modify target area

……and consider the market context!

20


Modifying the Action Plan

• Modifying the Action Plan:

– NSP Policy Alert: Guidance on Amendment Procedures – March 28, 2011

– www.onecpd.info/resources/documents/NSPPolicyAlert_AmendmentProcedures.pdf

• Different modification requirements for NSP1&3, NSP2

21

http://www.onecpd.info/resources/documents/NSPPolicyAlert_AmendmentProcedures.pdf

http://www.onecpd.info/resources/documents/NSPPolicyAlert_AmendmentProcedures.pdf


Modifying the Action Plan

24 CFR 91.505 (a) Amendments to the plan. The jurisdiction shall amend its approved plan whenever it makes one of the following decisions:

• (1) To make a change in its allocation priorities or a change in the method of distribution of funds.

• (2) To carry out an activity, using funds from any program covered by the consolidated plan (including program income), not previously described in the action plan; or

• (3) To change the purpose, scope, location, or beneficiaries of an activity.

22


Modifying the Action Plan (cont.)

Some changes to not require a substantial amendment

Start by working with local HUD FO

Note differences between NSP1, 3 and 2

23


Modifying the Action Plan: Differences

NSP 1&3

• Informal program adjustments allowed

• CDBG requirements for substantial amendment with NSP modifications: 15 days vs 30 days

NSP 2

• Special provisions

• Must be approved go to HUD headquarters for repaneling

• 10 day notification

24


Notice of Default Filed

National Community Stabilization Trust supports Neighborhood Stabilization Program grantees in building data-driven stabilization strategies by providing spatial analyses of current indicators of market distress. Working together, NCST and NSP grantees determine where areas of service and previous experience in delivering high-quality affordable housing overlap with areas of current need for market intervention so that public funds are efficiently and effectively utilized.

Modifying NSP Target Area


Questions and Answers

26

U.S. Department of Housing and Urban Development • Community Planning and Development 27

Resources on NSP and OneCPD Resource Exchanges

Search the OneCPD Resource Library https://onecpd.info/resource-library/

Search the NSP FAQs http://hudnsphelp.info/faqs

View All Training Materials on the NSP Learning Center

http://hudnsphelp.info/learning

Submit a Policy Question via OneCPD Ask A Question

https://onecpd.info/ask-a-question/

Request NSP Technical Assistance http://hudnsphelp.info/RequestTA

Connect with NSP

Join the OneCPD Mailing List https://onecpd.info/mailinglist/

Visit the NSP Flickr Gallery http://flickr.com/photos/nspresourceexchange

Visit the OneCPD YouTube Channel http://youtube.com/onecpd

NSP Webinar Resource Links

https://onecpd.info/resource-library/



http://hudnsphelp.info/faqs

http://hudnsphelp.info/learning






http://hudnsphelp.info/RequestTA

https://onecpd.info/mailinglist/

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Buying NSP Properties in Competitive Markets Webinar - Slides · 2019-03-16 · Shares of negative...

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