FORECLOSURE. Minnesota Foreclosure Partners Council. Fix Housing Fix the Economy

Transcription

1 FORECLOSURE Minnesota Foreclosure Partners Council Fix Housing Fix the Economy

2 Presenters: Warren Hanson, president & CEO, Greater Minnesota Housing Fund (GMHF) Michelle Vojacek, Foreclosure Program Coordinator, City of Saint Paul Cherie Shoquist, Foreclosure Project Coordinator, City of Minneapolis

3 2008 Over 110,000 households fell behind on mortgage payments in Minnesota.

4 2008 Nearly 28,000 families lost their homes to foreclosure in Minnesota.

5 1 out of every 30 HH in Minnesota has now entered foreclosure

6 Minnesota Foreclosure Table % change Metro 3,759 7,039 12,974 18,019 39% Greater MN Total 2,702 4,168 7,430 9,426 6,466 11,207 20,404 27,445 Nearly Double Nearly Double Slower Rate 27% 35% Table: Foreclosures in 2008 An All Time High

7 Minnesota Foreclosure Chart Sheriff Sale Data - Chart 30,000 27,000 24,000 21, % Increase 27,445 9,426 18,000 15,000 7,430 12,000 9,000 6,466 4,168 18,019 6,000 3, ,702 12,974 3,759 7,

8 Geographic Distribution of Foreclosures ( ) 34% Metro Greater MN 66% 2/3 in the Metro Area 1/3 in GM

9 Greater Minnesota Foreclosures A Four Year Trend ,726 (same as metro area had in one year) GM Foreclosures 54% increase % increase % increase The rate has slowed, but the NUMBERS keep climbing Statewide Count per year: 6k, 11k, 20k, 27k

10 Metro Foreclosures Metro Foreclosures A Four Year Trend ,791 Metro foreclosures 87% Increase % Increase % Increase The rate has slowed, but the NUMBERS keep climbing Statewide Count per year: 6k, 11k, 20k, 27k

11 65,500 Foreclosures Statewide

12 2005

13 2008*

14 How Many Foreclosed Homes are on the Market Today? All Counties 46,000 All Listings Statewide

15 How Many Foreclosed Homes are on the Market Today? All Counties 4,660 Foreclosed Listings Exactly 10% of MLS listings are Foreclosed Homes. This is Only Part of the Story.

16 Best Localized Source of Lender Mediated Sale Data. mplsrealtor.com

17 Percent Lender Mediated in 2008 Q4 Brooklyn Center 66% Minneapolis north 65% Saint Paul Central 59% Buffalo 40% Sherburne Cty 34%

18 Traditional Reasons for Foreclosure Loss of Job Loss of Spouse Loss of Health

19 Initial Causes of Foreclosure Crisis

20 Predatory lenders pushed high priced sub-prime loans that were too costly for borrowers. Many borrowers could have qualified for lower cost, fixed rate prime loans Freddie Mac, estimates up to 35 percent of all subprime loans could have qualified for prime-rate rate loans. Fannie Mae, estimated up to 50 percent of subprime borrowers had d adequate credit for a prime rate loan.

21 Lending standards allowed home buyers and investors to buy homes without adequate proof of income.

22 Negative amortization loans which increased loan balance over time rather than decreased. Monthly payments too small to pay interest much less principle reduction.

23 Adjustable rate mortgages (ARMs( ARMs) which are re-setting to higher interest rates. Sub-prime ARMs have much higher delinquency rates.

24 Mortgage fraud and collusion among unscrupulous speculators, realtors, appraisers, lenders.

25 Mortgage Fraud Minnesota Ranks 4 th in Sub-prime Mortgage Fraud 8 th in Overall Mortgage Fraud 2006 Data: FBI, HUD, FANNIE MAE, Mortgage Asset Research Institute

26 Declining Home Values = more loan than home is worth Difficult to sell without owing the bank money easier to walk away.

27 Home Price Appreciation (MN)

28 The Impact on Nearby Values: 1 Foreclosure Affects Values of Over 150 Homes Combined Impact: Negative $351,000 to $530,000 $2,200 to $3,400 Loss in Value Per Nearby Home X 156 Homes 1/8 Mile 600 feet 45 th Street Woodstock Institute Method for Calculating Foreclosure Impacts Total Impact of 1 Foreclosure on Nearby Homes (Low) $351, % Damage to Home Value Factor (low) Total Impact of 1 Foreclosure on Nearby Homes (High) $530, % Damage to Home Value Factor (high) Low Estimate Impact Per Foreclosure Per Home $2, % Damage to Value Factor (low) High Estimate Impact Per Foreclosure per Home $3, % Damage to Value Factor (high) Cedar Ave

29 Perfect Storm Sub-prime Loans -- Higher Rates And Fees Than Often Warranted Exploding Loans -- Adjustable Rate Mortgages Reverse Redlining -- Targeting Low Income Neighborhoods No-Doc Loans / Liars Loans -- Lack of Income Verification Unscrupulous Players Mortgage Fraud, Speculation, Flipping, Dreams & Excitement on All Sides R/E Bubble Falling Home Values = Mortgage larger than value of home Foreclosures Abandonment Neighborhood Decline Contagion Effects Recession Job Loss

30 Predicting Where Future Foreclosures Are Most Likely to Occur

31 The Data Exists Federal Reserve Bank obtained data from First American LoanPerformance (LP) LP tracks and analyzes the performance of securitized mortgages in subprime and alt-a pools. Data included about 70 percent of subprime securities and 95 percent of alt-a A securities. Data does not include loans held by a lender in portfolio (securitized only)

32 Data has Predictive Nature Data on subprime and alt-a securities is relevant.

33 Alt-A A and subprime loans are considered riskier than prime loans and more prone to default due mainly to the credit worthiness of the borrower, condition of the property, and the loan amount. Alt- a = better than subprime, but not prime. Option ARMs = pick a payment

34 Rate resets on subprime mortgages peaked in Credit Suisse

35 Resets on other types of alternative mortgages will escalate in 2010 and peak in Credit Suisse

36 The Next Yesterday Wave Tomorrow Past Subprime Resets $1Trillion Today Future Resets Future Resets Alt-A: $1Trillion Option Arms: $500-$600B Alt- a = better than subprime, but not prime. Option ARMs = pick a payment Source: Credit Suisse

37 SUBPRIME Alt-A Option Arms

38 70% of those with an Option Arms will fail to make their mortgage payment... and many will fail during the initial 3% teaser rate period... even before the reset! (Tilson, 60 Minutes, )

39 The Problem Minnesota s Resets Source: Calculations using Federal Reserve Board estimates based on data from First American Loan Performance, August 2008 and October Future Resets Yesterday s Resets Today s Resets

40 The Problem ~ Alt-A distribution The past foreclosures were of subprime loans. The next wave will be of Alt-A loans. The shaded areas depict the zip codes with more than 25 Alt-A loans. Although concentrated in the metro, Alt-A loans were used throughout Minnesota.

41 Greater Minnesota Abandoned Subdivisions

42 Becker Minnesota Photo: Brian Peterson, Star Tribune. Sunday, March 22, 2009 Photo: Brian Peterson, Star Tribune. Sunday, March 22, 2009 Lakeland Finance Company Fallout

43 Dassel Minnesota Summit Hills Development Photo: Brian Peterson, Star Tribune. Sunday, March 22, 2009 Lakeland Finance Company Fallout

44 Greater Minnesota Foreclosure Impacts in Older Neighborhoods

45 City of Monticello Ghost town sub-divisions New spec homes auctioned at 40%-60% discounts Home values have dropped 30% Values are back to 2001 to 2003 levels. 86% of home sales in Monticello are bank owned properties

46 Bankrupt, Foreclosed, Abandoned Subdivisions City of Monticello

47 Foreclosures Olmsted County 347 Foreclosures 293 in Rochester 54 in Olmsted County Byron Rochester OLMSTED COUNTY

48 ROCHESTER FORECLOSURES Highest Concentrations of Foreclosures on East Side Neighborhoods Close to Downtown 293 Citywide

49 Core Neighborhood Vacant & Boarded

50 Duluth Foreclosures Concentrated in older Duluth Neighborhoods near downtown Duluth Foreclosures St Louis County Foreclosures

51 The Problem ~ What is to come? Things are going be much worse Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default Whitney Tilson Investment Fund Manager Amherst Securities

52 The Need: Increased Foreclosure Counseling For Home Owners & Tenants Early Intervention, Early Outreach Strategic, Targeted Acquisition & Neigh. Remediation (focus on hardest hit areas) More Coordination of Efforts State & Local Government Non-profit Organizations Financial Institutions Funders Policy Work, More Regulation (do we agree?) Public and Charitable Investment

53 Foreclosure Prevention Partners Council Data Collection, Trend Analysis Homeowner and Tenant Counseling Financial Product Development Foreclosure Recovery Strategies Legislative Strategy Legal Strategies Coordinated Fundraising

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55 The Solutions ~ Prevention Counseling Minnesota Home Ownership Center Network of 50 counseling agencies through MN During 2008, provided counseling to 18,000 Minnesota households Success rate of more than 50% Prevention cost of $500 per HH During 2008, conducted outreach to more than half a million Minnesotans through nearly 100 different events/outlets

56 The Solutions ~ Prevention Counseling Early Notification 2008 legislature passed early notification requirement Provides contact information on at risk HH to qualified foreclosure counseling agencies (HOC) Since August 2008, law in effect, Notification of foreclosure counseling assistance to over 19,000 Minnesota households Renew HECAT Key to Stable H.O. (Homeowner Educ Counseling and Training) $1,730,000 in base budget funding for

57 Foreclosure Counseling Success Story 88 year old widower He was a victim of predatory loan Only Social Security and small VA pension Referred to agency through new legislation (Early Notification Law) Had been trying to negotiate down from a $3,000 / mo payment on his own, unsuccessfully Counselor negotiated with the lender and was able to get payment lowered to $1,500 / mo

58 Solutions ~ Recovery Federal NSP funding addresses less than 1/20th of the need MN allocated: Nearly $58 million federal funds Direct allocations of about $19 million Competitive process for about $38 million Need to leverage these Federal dollars with private sector investment

59 Neighborhood Recovery Neighborhood Stabilization Program 2009 Federal Neighborhood Stabilization Program Awards Metro Greater Mn $46.5 MM $10.8 MM

60 Uses of NSP Funds for Neighborhood Recovery 1. Establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties

61 Uses of NSP Funds for Neighborhood Recovery 2. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed, in order to sell, rent, or redevelop

62 Uses of NSP Funds for Neighborhood Recovery 3. Establish land banks for homes that have been foreclosed

63 Uses of NSP Funds for Neighborhood Recovery 4. Demolish blighted structures

64 Uses of NSP Funds for Neighborhood Recovery 5. Redevelop demolished or vacant properties

65 Federal Home Loan Bank Des Moines 2009 Affordable Housing Program $6.3 Million Minnesota Foreclosure Recovery Metro Funds Greater MN $2.4 Million $3.8 Million

66 What Local Government are doing to Address Foreclosures

67 Foreclosure Partner s Council and League of Minnesota Cities Providing Resources to Small Cities and Towns

68 Foreclosure Prevention Coordinate efforts with local foreclosure counseling agency LSS, CAP, HOC Insert Foreclosure Information in City Water Bills Reach out to Renters in Foreclosed Units Provide Helpful Literature and Web Links Use Door to Door Techniques in Targeted Areas Work with Local Faith and Community Organizations Promote Don t Borrow Trouble Consumer Education Foster Pre-Purchase Counseling

69 Track Existing Early Warning Data Coordinate And Monitor Inspections, Utility And Police Reporting Track Utility Bills For Later Payers And Usage Monitor Federal Reserve Data On Sub Prime Loan Concentrations, Resets (ended 2008)

70 City Management of Vacant Properties Revise Rental Licensing and Housing Codes Step Up Use of Legal Remedies (St Paul example) Track & Map Foreclosures Track & Map Vacant Properties Consider Point of Sale Code Compliance Ordinance Long Grass Ordinances Recoup Board Up Costs (Mpls)

71 Acquisition, Rehab & Neighborhood Recovery Target Funding to Foreclosure Concentrations (NSP, FHLB, CDBG) Develop New Strategic Partnerships with Non-profits and For-Profits Explore Purchasing Strategies with Local Developers and Lenders

72 Litigation Example City and County Legal Strategies for Vacant REO Properties

73 REO / LENDER OWNED PROPERTIES AS PROBLEM PROPERTIES Spring 2008 St Paul Had Record Vacant Properties Rise in Arson, Vandalism, 911 calls, Garbage, Hazardous Conditions, Unkempt Lawns, Noise Undermining community stabilization Public costs: police, fire, property maintenance, board ups, inspections, eroding tax base.

74 St Paul Retained Special Counsel City of Saint Paul retained Foreclosure Relief Law Project To research and develop legal theories and strategies

75 Multiple legal tools available to Cities Statutory nuisance claims Negligence and damage claims Hazardous & dangerous building statutes Tenant remedies act receivership to meet code Fair Housing Act Business practices that unfairly affect communities of color

76 City Attorney Actions Against Owners of REO Problem Properties Sent letter notice to six lenders (April 9, 2008) Lenders owned more than 1,000 vacant & problem properties.

77 Letter From: From: St Paul City Atty To: To: Deutsche Bank Re: Re: 93 Problem Properties

78 City Researched and Listed All Problem REO Properties Owned by Each Lender

79 Purpose of Letter Set forth lender liability on vacant properties Evidence of scale of REO ownership Sought lender plan of action for vacant properties Required 30 day response Each lender responded High level meetings held with each entity Motivated toward voluntary agreement If necessary, legal action

80 REO Vacant Property Legal Strategy Overview Research REO/Bank Owned Property Via Tax Records Quantify scale of REO property Identify Owner Entities & Institutions Quantify Costs to City / County Scale of Problem City, County, Regional? Send Letter & Negotiate with Lenders

81 More Information on Legal Remedies for Cities and Counties Foreclosure Relief Law Project Contact: Mark Ireland

82 The Problem Seven County Metro Abandoned Structures Boarded Homes

83 2008 The Problem ~ so far Hennepin County 2008: 7, : 5, : 3, : 1, : 1,197

84 2008 The Problem ~ so far Hennepin County 2008: 7, : 5, : 3, : 1, : 1,197

85 Ramsey County 2008 Foreclosures Most Concentrated in Saint Paul

86 Community Impact Lower Property Values Crime Dangerous Conditions Divestment Remediation Costs

87 The Problem ~ Saint Paul 2008: 2, : 1, : 1, : 503 In years past, foreclosures were generally concentrated in an arc north of the downtown.

88 The Problem ~ Saint Paul Now, foreclosures are spreading into EVERY neighborhood.

89 The Problem ~ Saint Paul In addition to the vacancies due to foreclosure, there is a growing number of vacant buildings. The result: a substantial decrease in property values.

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91 Neighborhood Recovery Efforts Strategic acquisition and rehabilitation within our Invest St Paul neighborhoods 4 th Street Preservation Project Getting homeowners/tenants to stay CityLiving Mortgage Program Make It Possible Bridge to Success Home Prosperity Fund Getting new homeowners to move in Stabilizing balance between rental and owner-occupied Stepped up code enforcement and crime prevention

92 4 th Street Preservation Project th Street East Non Contributing Rental For Sale Lot Size: 40 x th Street East Contributing th Street East Non Contributing Owner Occupied Lot Size: 40 x th Street East Empty Lot 2001 Lot Size: 40 x th Street East Pivotal Owner Occupied Lot Size: 40 x th Street East Pivotal Owner Occupied Lot Size: 40 x th Street East Pivotal Rental Vacant Lot Size: 40 x 110 Owner Occupied Lot Size: 40 x Maria Ave Pivotal Owner Occupied Lot Size: 75 x th Street East Contributing Owner Occupied Lot Size: 40 x Maria Ave Pivotal Rental Lot Size: 55 x Mounds Blvd. Pivotal Rental For Sale 325 Maria Ave Non-Contributing Rental Lot Size: 85 x 120 Lot Size: 120 x th Street East Non Contributing Rental For Sale Lot Size: 60 x 65 Legend Owner Occupied Non Owner Occupied/ Rental th Street East Pivotal Owner Occupied Lot Size: 40 x th Street East New Construction Owner Occupied Lot Size: 80 x th Street East Contributing Rental For Sale Lot Size: 75 x th Street East Pivotal Rental Lot Size: 80 x Maria Ave Non Contributing Rental Lot Size: 80 x105 Forclosed/Vacant/For Sale

93 4 th Street Preservation Project Legend Owner Occupied Non Owner Occupied/ Rental Forclosed/Vacant/For Sale 346 Maria Ave Pivotal Rental Lot Size: 40 x th Street East Pivotal Owner Occupied Lot Size: 45 x th Street East Non-Contributing Owner Occupied Lot Size: 40 x th Street East Contributing Owner Occupied Lot Size: 40 x th Street East Pivotal Owner Occupied Lot Size: 40 x th Street East Non-Contributing Owner Occupied Lot Size: 30 x th Street East Non-Contributing Owner Occupied Lot Size: 80 x Maria Ave Pivotal Owner Occupied Foreclosed/For Sale Lot Size: 40 x Bates Ave Pivotal Owner Occupied Lot Size: 40 x Maria Ave Pivotal Owner Occupied Lot Size: 40 x Bates Ave Pivotal Owner Occupied Lot Size: 40 x Maria Ave th Street East Contributing Owner Occupied Lot Size: 40 x Maria Ave Pivotal Pivotal Owner Occupied Lot Size: 40 x th Street East Pivotal th Street East Non-Contributing Rental Lot Size: 30 x 110 Owner Occupied Owner Occupied Lot Size: 60 x 110 Lot Size: 40 x th Street East th Street East Non-Contributing Retail Foreclosure/Vacant Lot Size: 40 x Bates Ave Contributing Rental Vacant Contributing Owner Occupied Lot Size: 60 x 110 Lot Size: 40 x Maria Ave Contributing Owner Occupied 315 Bates Ave Lot Size: 40 x 120 Owner Occupied Lot Size: 50 x th Street East Contributing Rental Lot Size:40 x th Street East Contributing Rental Foreclosure/Vacant Lot Size: 40 x th Street East Non Contributing Rental Lot Size:40 x th Street East Contributing Rental Foreclosure/Vacant Lot Size: 40 x th Street East Contributing Rental Lot Size: 40 x th Street East Contributing Rental For Sale/Vacant Lot Size:40 x th Street East Pivotal Owner Occupied Lot Size:40 x th Street East Pivotal Owner Occupied Lot Size:40 x 55

94 4 th Street Preservation Project th Street East Contributing Owner Occupied Lot Size: 40 x th Street East Contributing Rental Lot Size: 40 x th Street East Contributing Rental Lot Size: 40 x th Street East Contributing Rental Lot Size: 40 x th Street East Contributing Owner Occupied Lot Size: 40 x th Street East Contributing Owner Occupied Lot Size: 40 x /734 5 th Street East Pivotal Rental For Sale Lot Size: 35 x Maple Street Contributing Rental Lot Size: 60 x Maple Street th Street East Pivotal Owner Occupied Lot Size: 80 x 105 Contributing Rental Vacant Lot Size: 40 x Bates Ave Pivotal Owner Occupied Lot Size: 120 x Maple Street Non-Contributing Owner Occupied Lot Size: 55 x Maple Street 324 Bates Ave Contributing Owner Occupied Pivotal Owner Occupied Lot Size: 55 x 120 Lot Size: 140 x th Street East Non Contributing th Street East Contributing Owner Occupied Lot Size: 35 x 105 Owner Occupied Lot Size: 60 x th Street East Pivotal Rental Lot Size: 50 x 110 Legend Owner Occupied Non Owner Occupied/ Rental Forclosed/Vacant/For Sale th Street East Contributing Owner Occupied For Sale Lot Size: 40 x Bates Ave Contributing Owner Occupied Lot Size: 110 x th Street East Contributing Owner Occupied Lot Size: 40 x th Street East Contributing Owner Occupied Lot Size: 40 x th Street East Contributing Owner Occupied Lot Size: 40 x th Street East Non Contributing Rental Lot Size: 40 x th Street East Contributing Rental Lot Size: 40 x th Street East Contributing Rental Lot Size: 80 x th Street East Non Contributing Owner Occupied Lot Size: 40 x th Street East Non Contributing Public Housing Lot Size: 40 x th Street East Non Contributing Rental Lot Size: 40 x 110

95 Improve & Reoccupy Strategically Located Vacant Properties 2009 Goal: Reoccupy 400 vacant homes Number of Fire Certificate of Occupancy or Code Compliance permits issued on vacant properties

96 Mortgage Foreclosure Prevention Program Department of Planning & Economic Development City of St. Paul March 25, 2009

97 PED s Mission To actively create opportunities and encourage investment for the benefit of Saint Paul residents and businesses, which preserve, grow and sustain downtown and the city s diverse neighborhoods.

98 Mitigate Residential and Commercial Foreclosure in Saint Paul Intervention/Prevention Reaching at-risk residents is key Mitigation Coordinated effort to minimize foreclosure

99 Mitigate Residential and Commercial Foreclosure in Saint Paul

100 Saint Paul Foreclosure Prevention Program Outreach Outreach Targeted mailings to homeowners, water bills and property tax statements Counseling locations at Saint Paul Public Libraries Magnetic signs on Public Works vehicles Educational workshops Training city employees who work in neighborhoods

101 Saint Paul Foreclosure Prevention Program Foreclosure Counselors Explain the foreclosure process and legal timelines Provide financial and budget counseling services Evaluate possible foreclosure solutions Refer residents to other community resources Offer one-time loans to cure default

102 Mitigate Residential and Commercial Foreclosure in Saint Paul A wave of commercial real estate foreclosures, driven by job losses, retailer bankruptcies and a near freeze on refinancing, will sweep the metro area during 2009, and 2010 doesn t look much better. Gary Holmes of CSM Corp Minneapolis/St. Paul Business Journal s Industry Outlook Breakfast

103 Mitigate Residential and Commercial Foreclosure in Saint Paul 28 Commercial Foreclosures as of March 2, 2009

104 Contact Information for City of St Paul Foreclosure Counseling Michelle Vojacek City of St Paul, Dept of PED

105 Foreclosure Recovery Neighborhood Stabilization Strategies Sensible Land Use Coalition March 25, 2009 Department of Community Planning & Economic Development CPED March 2009

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107 Neighborhood Stabilization Strategies Reinvestment and Repositioning to Restore a Healthy Housing Market Examples: Neighborhood Stabilization Program Twin Cities First Look Program Northside Cluster Developments Minneapolis Advantage Program

108 History of Foreclosures in Minneapolis Foreclosures to date

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110 Neighborhood Stabilization Program Program Elements and Requirements $57.8 M to Minnesota; $14 M allocated to Minneapolis One time emergency funds to address foreclosures Funds must be obligated within 18 months Funds must be spent on foreclosed properties and related expenses only Funds can be spent on families up to 120% AMI 25% of funds must be spent to assist families at or below 50% AMI

111 Housing and Economic Recovery Act of 2008 Neighborhood Stabilization Program Eligible Activities Eligible Uses* A. Establish financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop C. Establish land banks for homes that have been foreclosed upon D. Demolish blighted structures E. Redevelop demolished or vacant properties * The Neighborhood Stabilization Program requires that 25% of the funds received must be targeted to households at or below 50% of the area median income.

112 Neighborhood Stabilization Program Minneapolis Foreclosure Recovery Plan Sources & Uses NSP Eligible Use Minneapolis NSP Funds Minnesota NSP Funds Total 2008 NSP Funds to Minneapolis Units A. Establish financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties $500,000 $0 $500, B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop $1,464,800 $5,030,836 $6,495, * C. Establish land banks for homes that have been foreclosed upon $1,517,167 $2,771,045 $4,288, D. Demolish blighted structures $1,700,000 $0 $1,700, E. Redevelop demolished or vacant properties $0 $0 $0 0 Administration $420,000 $599,391 $1,019,391 0 TOTAL $5,601,967 $8,401,272 $14,003, ** The Neighborhood Stabilization Program requires that 25% of the funds received (approximately $3.5 m) must be targeted to households at or below 50% of the area median income ($40,500). *175 properties will yield 236 units. **There may be duplications in the numbers of units between uses. The numbers of units may project the ability to recycle funds.

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114 National Community Stabilization Trust Transfer real estate owned (REO) properties from financial institutions to local housing organizations, in collaboration with state and local governments. Formed by Enterprise Community Partners, the Housing Partnership Network, LISC, and NeighborWorks America First Look Program Minneapolis and St. Paul are the national pilot in launching the First Look Program. Six national lenders: Wells Fargo, Chase, Citigroup, Fannie Mae, Freddie Mac, and GMAC have signed on to date. Several hundred properties are slated to come through the program in the Twin Cities over the next year.

115 NCST Key Roles LENDER- SERVICER (SELLER) Lender- Servicer Seller Lender- Servicer Seller Lender- Servicer Seller NCST INTERMEDIARIES Planning / Pre-Acquisition DEVELOPERS HOMEBUYERS Acquisition Const. Distribution Non-Profit Developer (Acq/ Rehab) GMHF As Acquisition Coordinator DISCOUNTS Non-Profit Developer (Acq/ Rehab) Non-Profit Developer (Acq/ Rehab) 115

116 Minneapolis and St. Paul First Look Pilot Program Purchase foreclosed properties premarket and at an adjusted price

117 Minneapolis Cluster Development Program Northside Home Fund is a partnership between north side neighborhood organizations, nonprofit housing and homeownership organizations, governmental and enforcement agencies, community development organizations, private housing developers, and financial institutions. The core focus of the NHF is the redevelopment of vacant and boarded homes (on the City s 249 list) for re-sale to stable owner-occupants. This focus on small geographic areas, or clusters, is intended to make a noticeable positive impact on the housing stock and to stabilize and strengthen the homeownership market of North Minneapolis neighborhoods. The City committed $1 million in un-programmed funds to seed the NHF. These funds have been used to establish the NHF - Pilot Project Fund for acquisition of boarded and vacant blighted properties for redevelopment and sale to owner-occupants.

118 Minneapolis Cluster Development Program The NHF partners have removed the blighting influence of more than 100 boarded and vacant properties in the clusters through property acquisition, demolition, and working with property owners to bring their buildings up to code.

119 Minneapolis Advantage Program Provided $10,000 in deferred loans to buyers of houses in neighborhoods heavily impacted by foreclosures The program was funded with $500,000 which allowed for 50 loans, forgiven over a five-year period 62% of the properties, registered as non-homestead prior to being purchased, now have a homestead status The program had a mix of purchase prices, but more than 50% of the buyers bought homes under $100,000 $500K for Phase II and FHLB award for $1.5 million approved 200 new loans will be made in 2009.

120 Minneapolis Advantage Program Down payment and closing cost assistance for home buyers purchasing a foreclosed home in a neighborhood impacted by foreclosures

121 Contact: Cherie Shoquist Foreclosure Project Coordinator City of Minneapolis - Community Planning & Economic Development or cherie.shoquist@ci.minneapolis.mn.us

122 Foreclosure Related Legislative Proposals Tax Increment Law Changes Lender Mediation & Foreclosure Process Property Maintenance by Lenders/Servicers Vacant Building Controls Targeted Community Revitalization Contract for Deed Legislation Housing Replacement Districts

123 Legislative Proposals Tax Increment Financing Intent is to provide increased flexibility in pooling authority Current law allows an authority to increase the amount of pooled increment for affordable housing by 10%. Additional pooling authority would support market rate housing and allow an authority to acquire foreclosed properties with TIF

124 Legislative Proposals Contract for deed requires plain language disclosures by vendors to vendees Lease-with-option-to-buy (AKA rentalpurchase or rent-to-own) requires plain language disclosures to lessees concerning legal interests, rights, and duties adds statutory protections for lessees

125 Legislative Proposals Targeted Community Revitalization Program tool was very successful in 1980s (was URAP) provides specific, targeted dollars for most devastated neighborhoods $ for construction, reconstruction, alteration and repair of buildings, energy assistance loans and grants, and relocation or acquisition of real property bill expands authority to all MN cities $30 million requested to leverage Federal NSP $

126 end