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Neighborhood Stabilization Program in FloridaFirst Look Programslorida’s NSP communities are not the first inthe game to purchasedramatically reduced foreclosedresidential properties from thebanks. Private investors andspeculators have come back fullstrength in Florida’s real estatemarket, spiking home sales above2005 levels in some areas. Thelist price of the homes offered bythe banks is in many areas beingbid up with multiple buyers- inone astonishing case in Lee County there were 41 offerson one house. Given the high level of private sectorcompetition along with the strict ground rules a localgovernment using NSP funds must use, NSP communities are turning to properties shunned by investorsfor needing substantial rehab, or utilizing First Lookprograms.FFirst Look ProcessWhen the foreclosure is final on the courthouse stepsand the bank is the owner of the real estate, there isa time lag before the NSP managers (term beingused for the local government staff person in chargeof coordinating NSP activities) can process the unitin-house, get broker opinions on list price and thenestablish it for sale through the multiple listingservices. During this period, the NSP manager canview “coming properties” (newly foreclosed properties that have not yet been put on multiple listingservice) on the various websites of the lenders. NSPmanagers should contact the lender to set up arelationship as an NSP community so that they areassigned an associate to work with. This can eitherbe through the eventual listing agent or the lenderitself. When interest is expressed in a comingproperty, there is a 15 day window opened when, inthe case of the Fannie Mae program for example, nooffers will be accepted unless they are from the owneroccupant or a public entity using NSP or other funds.This enables the community to conduct basic duediligence: driving by the unit; getting access; andmaking an offer. This occurs once a listing opinion is6THE HOUSING NEWS NETWORKestablished by the broker.The NSP manager would thenmake an offer contingent uponthe appraisal. The purchaseagreement can be amendedonce the appraisal is available.The prospective buyer has fivedays to present the appraisaland make a final offer basedon the amount of the appraisal.If unknown problems arefound during the appraisal,the offer might reflect thoseconditions. At this time the procedure unfoldsaccording to the purchase agreement. Most lenderswill allow for a 45 day closing period. Anotherbenefit of the First Look process is that, in someprograms, the earnest money deposit is either waivedor is nominal for buyers using NSP funds.The usefulness of First Look programs can vary fromcommunity to community depending on the nature ofthe foreclosure market. In areas where there is a highlevel of investor competition, the programs may be themost direct way to have access to acquiring move-inready homes. This can be a significant advantage incommunities such as Cape Coral, a highly competitivemarket where multiple bids frequently far exceed theseller’s list price.In areas where there is an abundant supply of homesthat are in need of significant rehabilitation or instressed neighborhoods, it may not be necessary to relyon the First Look program. In Miami Dade, forexample, the market is changing rapidly. Since therequired purchase price discount was reduced to just1% below appraisal, the purchase of REO propertiesis now successfully underway. Real estate agentsare presenting properties that can be acquired, butthere is a concern by housing providers that theeventual rehab costs will far exceed the appraisedvalue and there will be greater subsidy requirementsthan anticipated. In most areas, working directly witha Realtor who is committed to presenting offerspromptly to sellers is the most direct way to make offersand negotiate a purchase.

Donation Programsome lenders are willing to donate properties to qualified nonprofits. Properties that have languished and/or havelistings set to expire are the type of properties which are good targets for donation. The NSP manager need onlyidentify the properties and ask the seller for a donation. In these instances the seller will ask that in return the localgovernment waive any liens that have encumbered the property. Since these properties clearly have marketing problems due to the need for extensive rehabilitation, being located in a flood plain or other issues, they may be goodcandidates for demolition and land banking.SAt the Florida Housing Coalition Conference, JP Morgan Chase Vice President-Program Manager of the REO Gifting andDiscounted Sales Program described the process and welcomed requests. The goal is to leverage resources in order tostabilize communities and maintain housing stock while providing affordable housing through collaborative partnerships.The bank will work with individual non-profits and government entities and NSP jurisdictions to donate or sell Chase,WaMu REO properties within their service areas that will assist to stabilize neighborhoods with high foreclosure activity.Properties of interest are identified by nonprofit, government entities and NSP jurisdiction. The availability of propertiesis confirmed and property viewing is arranged. Nonprofit, government entities and NSP jurisdiction confirm interest inproperties after viewing. The properties are transferred.Some of the other provisions that may be found in FirstLook programs include the following: Purchase contract language is rarely negotiable andthere are addendums that are drafted by the sellerthat are not open to revisions. Bulk discounts are not available- each unit is separately priced. However, a single transaction canoccur for over five properties. NSP managers must ensure that the listing brokerand the seller’s agent are aware this is an NSPpurchase. If not, the seller has no way of knowingthat this is a priority purchase. After 15 days, if no offer is made, the properties arelisted for the general market. It is still possible tocontinue the negotiation but the NSP manager is nowcompeting with the private sector. We found onecase where on the 14th day a property was put in anauction. A call to the lender brought the propertyback, illustrating the importance of a good workingrelationship with the broker and seller. The Bank of America First Look program allows subrecipients to be designated to participate in the program.The National Community Stabilization Trustis a collaborative first look program. If the NSP communities engage the National Community StabilizationTrust, the NSP manager gains access to the properties ofthe larger lenders (there are currently 12 nationallenders participating). Offers are made on behalf of theNSP communities by the Trust. It is possible whensigning on to opt out of the Fannie Mae program so thatdirect purchases can be made through Fannie Mae.Otherwise all offers must go through the Trust. TheTrust is still mobilizing in Florida and even thoughmany communities are considering working with theTrust, others are making progress independently.Fannie Mae Visit the Fannie Mae REO website at www.homepath.com and email requests to Fran Pheeny at frances m pheeny@fanniemae.com or to Keith Bell at keith a bell@fanniemae.comFreddie Mac. visit the Freddie Mac REO website at www. Homesteps.com or contact the call center at 800-972-7555.Bank of America Contact Robert Grosinger at robert.grossinger@bankofamerica.com or call 312-904-9677. Purchase Requests should besent to tom.lin@bankofamerica.com or 805-579-5803JP Morgan Chase Email Yves.mombeleur@chase.com or call 866-803-9844Wells Fargo Visit rofit Organizations may write to REODiscountedPropertiesProgram@wellsfargo.com or call (612) 667-5131.Local governments should contact Jeff Mathison at Wells Fargo Home Mortgage/Premiere Asset Services Jeff.mathison@wellsfargo.com oremail pasinquiry@wellsfargo.com or call (612) 312-9773National Community Stabilization Trust Contact Racquel M. Reddie, Community Development Manager, East Coast Direct: (214) 710-3423Mobile: (813) 919-5136, Email: rreddie@stabilizationtrust.com, www.stabilizationtrust.comTHE FLORIDA HOUSING COALITION7

Neighborhood Stabilization Program in FloridaCommunity Progress:A Variety of Approaches Takenby Florida’s NSP ParticipantsAcross the StateFort Myers NSP home justlisted as a foreclosure beingchecked out by inspector.The City of Fort MyersHousing and Real EstateDivision is in charge of theNSP program.Division Director SharonRozier, Housing and RealThe City of Fort MyersEstate Division Managerworks with an outside consultant, Lee Combs, AICP, tocoordinate all NSP activities.The City team also includesa building inspector andome best practices are happening in this small but committedcity.With close to half oftheir NSP allocation of 2.2 millionobligated, Fort Myers is well on theirway to purchasing and rehabilitatingforeclosed properties.Ssustainability coordinator,Diana Giraldo, HousingDevelopment and FinancialSpecialist, Cary Mock,and managing the DRGRprocess, Keisha Cyriaano,Housing and DevelopmentPrincipal Planner.8THE HOUSING NEWS NETWORKLast spring, director Sharon Rozierasked the Florida Housing Coalition fortechnical assistance on overall programformat and several approaches wereconsidered. The City has chosen toacquire the units in its own name, bidout the rehab, and provide downpayment assistance and counseling tointerested buyers. The City also pur-chased a 7 unit apartment complexwhich will be rehabilitated using NSPfunds and deeded to a dedicatednonprofit support organization to meetits 25% set-aside for very low incomeresidents. It is turning out that many ofthe home purchasers are also below 50%area median income and thus ensure theprogram requirement will be met.Some observations of the NSPprogram in Ft. Myers: A record keeping system hasevolved to keep track of the propertypurchases. Each property has threefolders that will eventually be combined: Acquisition, Rehabilitation,and Sales. These contain all of the

The Neighborhood Stabilization Program provides opportunities for Fort Myers tooffer affordable housing to low/moderate income families. The City is stabilizingneighborhoods by acquiring, then rehabilitating, homes in foreclosure.Rehabilitation best practice includes energy efficiency and water conservationfeatures that benefit future homeowners. This program emphasizes the importanceof green building, energy conservation and effective sustainable practices for theNSP recipients and the overall community.– Robert Gardner, City of Fort Myers Community Development DirectorFort Myers NSP Homes nearing completion ofRehab with Green and Energy Efficiency features.compliance and due diligence documents thatwill be required for reporting. Along withthese active folders are the dead end folders ofdeals that did not materialize. The NSP plancalls for 15 homeowner units, of which 7 havebeen purchased. The rental property fulfills thedollar amount obligated in the plan with somecontingencies. Financing for homebuyers is being sought fromseveral mortgage companies through FHA loans. Many properties contain code liens that wereaccumulated after the foreclosure event. TheCity’s code board has been cooperative in waivingthese liens at the code enforcement hearings. One of the properties brought into the program wasa foreclosure owned by the City; NSP does notrequire that the foreclosed property be a bankowned foreclosure. The city has set aside 300,000 for demolition.They do not intend to land bank these propertiesbut will build new homes on these sites. Purchased properties must be added to the City’sumbrella liability policy. The seven unit rental property will be deeded to anonprofit organization to own and manage. Thesubrecipient agreement contains the rental occupancyand affordability requirements. This will also beincluded in a land use agreement that will run withthe property. The nonprofit does not have experiencein rental property management and will thereforereceive technical assistance from the FloridaHousing Coalition in regard to property management.THE FLORIDA HOUSING COALITION9

Neighborhood Stabilization Program in FloridaHope Gardens Home showing native landscaping for lowwater usage.Fort Myers NSP inspected home- no offer made as the homecannot be rehabbed. The rental property will require rehabilitationexceeding 100,000. Therefore, since it is below8 units, Davis Bacon will not be involved butSection 3 and bonding are required. The Cityheld a workshop for its qualified builders tomake sure they understand what is involved.Section 3 requires that a portion of employees ofthe contractor or subcontractors must be eitherpublic housing residents or low income. Threebonds are required- a bid bond, performancebond and payment bond. The City has taken Green Building technologiesseriously. Every home rehab has energy efficiencyfeatures including, for example, insulationinnovations: energy efficient appliances; solaroperated exterior lights; rain barrels; and nativelandscaping. These features are costing anestimated 10,000 per unit. There is an educationelement for the homebuyers so they understandtheir responsibilities in maintaining these systems.For example, a home in Hope Gardens has beencertified as "Silver" level by the Florida GreenBuilding Coalition. The HERS index went froman existing score of 102 to 73 post-rehab resultingin an estimated annual energy cost reduction from 1,251 to 947.10THE HOUSING NEWS NETWORKHope Gardens home showing rain barrels for wateringas a green feature. FEMA has re-drawn its flood zones in the city. Thishas created a complicating factor in neighborhoodstabilization. The relatively low market values ofthe homes and the limitation on expending over50% of the building value on rehab has put adamper on making the investments in new roofs,new flooring, HVAC systems, and new windowsbecause these costs exceed the FEMA maximums.These properties may be candidates for demolitionand new construction. So far acquisition costs are about a quarter of thetotal project cost with rehabilitation expensesmaking up the bulk of the expenditures. The NSP consultant and inspector spend a lot oftime together- communication is critical in findingproperties, making a drive by, setting up appointments with the listing agents and making an earlyassessment of whether to make an offer.

City of Plantaion NSP homes.The City of Plantationhe City of Plantation, a HUD funded NSPcommunity, received slightly more than 2million and chose to use the majority of theirfunds ( 1.3 million) to acquire and rehabilitate scattered site single family homes for resale to low and moderate income first time homebuyers.TThe City has initially chosen to concentrate the majority of its NSP funding on the two single family residentialneighborhoods that have been the most severely impacted by foreclosure. The purchase prices of homes in thetarget area range from 100,000- 200,000 and need anaverage of 50,000 in renovation.Recognizing the need to act quickly, the City issued arequest for proposals (RFP) in February of 2009 seeking a non profit agency to administer the program. Inthe RFP, the City agreed to advance funds for bothacquisition and rehabilitation to the selected nonprofit. This facilitated the buying process to allowthe non profit to take title to the property subject to a0% interest first lien by the City. In April 2009, theCity selected BAND (Broward Alliance forNeighborhood Development) which is based in nearbyFt. Lauderdale. The City’s Mayor, Rae CaroleArmstrong said “We welcome the opportunity to workwith BAND to address the City’s foreclosure issueswhile assisting new residents of Plantation by providing rehabilitated homes at an affordable price. Weplan to recycle the NSP funds as the homes are sold tocontinue this program well into the future.”BAND, a non-profit membership organization, is a collaborative comprised of non profits and other affordablehousing stakeholders. BAND identified three memberagencies to make up the development team and, according to their areas of expertise, entered into memoranda ofunderstanding that distributed tasks as follows: Identify properties for homeownership Approve scope of work for rehabilitation Work with Realtor/broker to negotiate and executesales contracts Assist with the identification of bank REO (RealEstate Owned ) departments; utilize other sources ofacquisition (Fannie Mae HomePath, NationalCommunity Stabilization Trust ) and bulk purchaseprograms Identify closing agents as needed Price homes for resale Assist with marketing the program and the houses topotential buyersAdditionally, four other member organizations areengaged to provide housing counseling and homeownerpreparation services. Fees associated with these services are paid for through the developer fee.BAND uses several methods in the acquisition processto locate potential properties: Realtor - BAND selected a Realtor who monitorsthe Multiple Listing Service (MLS) looking forproperties that fit the BAND criteria, arrangesinspections and prepares offers. Drive by - the acquisition team drives through thetargeted areas and researches the feasibility ofTHE FLORIDA HOUSING COALITION11

Neighborhood Stabilization Program in FloridaCity of Plantation home under inspection.“NSP has provided the opportunity forcities to address problem properties,correct code and zoning violations,improve curb appeal while at the sametime providing decent, affordablehousing for new buyers. BAND enjoysworking with the City of Plantation tobring new homeowners to theircommunity”– Pat Stephenson, Executive Director, BAND.homes that appear to be vacant or abandoned. BAND monitors the websites of Fannie Maeand Freddie Mae and other lender REO sites toidentify properties before they are listed on theMLS. National Community Stabilization Trust (NCST)First Look Program.Almost every day, BAND receives an email from theNCST. They have 24 hours to review the list, decidewhich property they want to see, notify the Trust,assemble the development team and visit the site. Ifthey are interested in the property they notify NCSTand request pric

Mae, Freddie Mac, and the Federal Home Loan Bank of Atlanta for funding the bulk of that work. Sadowski Education Effort Advocacy at the Florida Housing Coalition continues to be focused on restoration of the Sadowski Act state and local housing trust funds. We receive word almost daily that another local government has adopted a resolution .