Piece by Piece Update
January 25, 20123
Happy New Year! There is a lot of activity to report from the first few weeks of 2012. Please note the news and calendar items below.
Senator Isakson at ARC
US Senator Johnny Isakson met with ARC Board Members and PBP leadership on January 11 for a conversation about foreclosure, its impact on the region, and action at the federal level to address the crisis. Senator Isakson spent more than an hour discussing, responding to questions, and sharing his expertise in real estate/housing and the intersection of federal policy. His comments touched on the following:
- The foreclosure crisis is a result of poor underwriting coupled with direction from Congress to securitize subprime loans. The underwriting "pendulum" has swung too far in the opposite direction. The current Qualified Residential Mortgage (QRM) rule proposal calls for lenders to hold 5% risk retention. This would only compound the current lending freeze. The QRM rule is currently being held in abeyance in Washington.
- Isakson has introduced legislation to replace Fannie Mae and Freddie Mac with the Mortgage Finance Agency, a new entity - to be sold and privatized within 10 years - to securitize loans.
- Housing stakeholders should be talking about the challenges of faulty appraisals when short sales and foreclosures are used as comparables and deflate values. Isakson has been talking to Secretary Donovan and others about this issue.
- Isakson has joined Senator Barbara Boxer in sponsoring legislation that will allow homeowners to refinance their underwater loans at new lower interest rates without cost. This bill is an effort to stem "strategic foreclosures" and encourage people to stay in their homes if they possibly can.
- He noted that we need to let foreclosures "wash out" of the system. Unfortunately, it is estimated that there are as many loans in default currently as have been foreclosed on already indicating that we are half-way through the crisis. At present, foreclosures sell faster than any other house on the market. We need to promote lending for acquisition of foreclosed properties.
REO to Rental Strategies
As reported by PBP partner the National Housing Conference, the Federal Reserve Board submitted a 26-page letter (with cover from Chair Ben Bernanke) to Congress on January 4 recommending action on real estate owned, or REO, properties nationwide in the portfolios of Fannie Mae, Freddie Mac, FHA, and various other lenders comprising around "one-fourth of the 2 million vacant homes for sale in the second quarter of 2011." This paper is a notable move for the Fed in several ways, because it:
- Identifies Metro Atlanta as having the largest inventory of government-owned REO properties in the country
- Points to weak housing markets as an impediment to economic recovery
- Highlights the need for greater housing affordability and stability of tenure amidst unemployment and foreclosures
- Signals possible action by the Fed to clarify banks regulatory obligations if renting REO property
- Identifies conversion of REO homes to rental use as a needed step, which requires action by others--Congress, FHFA, the GSEs, FHA, and private lenders
- Provides useful discussion of other steps to revive housing markets, including principal reductions, broader refinancing efforts, targeted interventions and rental options for underwater homeowners, and improvements to mortgage servicing.
Mark your calendars for the Atlanta Neighborhood LIFT Affordable Home Tour on February 10-11at the Georgia World Congress Center Exhibit Hall B1. Neighborhood LIFT is a program that works to support sustainable homeownership and to advance neighborhood stability. The Atlanta Neighborhood LIFT program - a collaborative effort sponsored by Wells Fargo, NeighborWorks America and RRC - will help prospective buyers identify sources of down payment funds, find out if they're ready to buy a home, prepare for sustainable homeownership, preview features and prices of area homes for sale and take a free bus tour of local property listings. Visit the NeighborhoodLIFT website to register or call 1-866-858-2151. Real estate professionals interested in learning more about opportunities available through the Atlanta LIFT program should review the attached instructions and visit the website.
Foreclosure Report for 2011
RealtyTrac has published their year-end report on foreclosures. Links to the report and article are included below.
- Notices and repossessions down 33%, lowest level since 2007.
- 1 in every 69 US homes received at least one notice. 804,000 homes were repossessed.
- More than 4 million homes foreclosed in past 5 years
- Decrease likely backlog from robo-signing issue
- Because there were strong signs in Q3, Q4 of 2011 of the backlog loosening, RealtyTrac expects, 2012 to be above 2011 numbers, but below the peak year of 2010
- 4TH in foreclosure filings in 2011 - behind #1 Nevada, #2 Arizona, #3 California
- 1 in 37 homes (2.71 percent) in Georgia received at least one filing in 2011
- 12th in foreclosure filings in 2011 (10 of top 20 were in California)
- Atlanta's 2011 numbers up 2 percent from 2009
RealtyTrac Report | CNN Money
Housing Counseling Makes a Difference
Housing counseling greatly increases the ability of homeowners to stay current once they cured a serious delinquency or foreclosure, according to the results of a new report prepared by the Urban Institute for NeighborWorks America on rounds 1 and 2 of the National Foreclosure Mitigation Counseling program. The report shows that counseled homeowners were more likely to receive better loan modifications, cure a serious delinquency or foreclosure and stay current, and avoid a foreclosure completion altogether. Counseled homeowners received loan modifications resulting in a monthly payment that was $176 less, on average than non-counseled borrowers --- a savings of close to $2,100 a year. Housing counseling organizations may find helpful recommendations/best practices included in the Executive Summary section of the full report. FULL REPORT
What Happens to Victims of Foreclosure?
PBP partner the National Housing Conference's Center for Housing Policy examines this question in a Live at the Forum webinar about a new Urban Institute Report on the impact of foreclosure on residential stability? Join PBP Partner the National Housing Conference's Center for Housing Policy for a "Live at the Forum" webinar on Thursday, January 26 at 2:00 p.m. EST. This first 2012 Live at the Forum event will focus on where families go after foreclosure. Jennifer Comey of the Urban Institute; Ingrid Ellen Gould of New York University and Mathew Kachura of the University of Baltimore will highlight a recent Urban Institute report on the impact of foreclosure on residential stability. The researchers will present studies from Baltimore, New York City and Washington, D.C., and compare where families go after foreclosure. Click here to register
Can Lease Purchase Save Us?
If you missed the webinar presented by PBP partner NeighborWorks America and the National Housing Institute/ShelterForce, you can listen to the audio link HERE.
ANDP's John O'Callaghan is one of the presenters along with Bill Goldsmith from Mercy Portfolio Services and Staci Horwitz from City of Lakes Community Land Trust.
As developers struggle to find buyers for rehabbed affordable homes, many are looking to a lease-purchase model to expand the pool of potential owners. But lease purchase is far more complicated than just an end-run around the credit crunch.
Shelterforce editor Miriam Axel-Lute moderated this informative discussion among the subjects of her groundbreaking article "Can Lease-Purchase Save Us?". Speakers addressed a variety of issues that are critical in planning a successful lease-purchase program:Short-term vs. long-term conversion: what is the primary goal of your lease-purchase program? Is it to turn the property over to a homeowner as quickly as possible or to get the property occupied quickly to avoid vandalism and further deterioration of the neighborhood?Property management issues: what are the challenges and strategies to address what is unique about scattered site property management for occupants in transition from rental to ownership? Buyer development issues: how can you make sure that your lease-purchasers are on a steady path to ownership?
Piece by Piece Coordinator