Buying NSP Properties in Competitive Markets Webinar - Slides · 2019-03-16 · Shares of negative...
Transcript of 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
U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
U.S. Department of Housing and Urban Development • Community Planning and Development
$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
U.S. Department of Housing and Urban Development • Community Planning and Development
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.
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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
U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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.)
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
U.S. Department of Housing and Urban Development • Community Planning and Development
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
“ Market Value ”
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
“ Market Value ”
and disposition
plan
Seller
determines
“ Market Value ”
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
REOMatch Features
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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
U.S. Department of Housing and Urban Development • Community Planning and Development
U.S. Department of Housing and Urban Development • Community Planning and Development
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)
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U.S. Department of Housing and Urban Development • Community Planning and Development
Housing Trust Silicon Valley Dream Home Program 199 Checkers Drive
Before After
U.S. Department of Housing and Urban Development • Community Planning and Development
Housing Trust Silicon Valley Taylor Oaks Apartments
Before
U.S. Department of Housing and Urban Development • Community Planning and Development
Taylor Oaks Apartments
After
U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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?
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U.S. Department of Housing and Urban Development • Community Planning and Development
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!
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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.
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
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U.S. Department of Housing and Urban Development • Community Planning and Development
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
U.S. Department of Housing and Urban Development • Community Planning and Development
Questions and Answers
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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/
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NSP Webinar Resource Links