Safeguard Properties

CFPB 2013 Final Mortgage Rules

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On September 13, the Consumer Financial Protection Bureau (CFPB) released a document titled Amendments to the 2013 Mortgage Rules under the Equal Credit Opportunity Act (Regulation B), Real Estate Settlement Procedures Act (Regulation X), and the Truth in Lending Act (Regulation Z).

Amendments to the 2013 Mortgage Rules under the Equal Credit Opportunity Act (Regulation B), Real Estate Settlement Procedures Act (Regulation X), and the Truth in Lending Act (Regulation Z)

ACTION: Final rule.

SUMMARY: This final rule amends some of the final mortgage rules issued by the
Bureau of Consumer Financial Protection (Bureau) in January 2013. These
amendments focus primarily on loss mitigation procedures under Regulation X’s
servicing provisions, amounts counted as loan originator compensation to retailers
of manufactured homes and their employees for purposes of applying points and
fees thresholds under the Home Ownership and Equity Protection Act and the
Ability-to-Repay rules in Regulation Z, exemptions available to creditors that operate
predominantly in “rural or underserved” areas for various purposes under the
mortgage regulations, application of the loan originator compensation rules to bank
tellers and similar staff, and the prohibition on creditor-financed credit insurance.
The Bureau also is adjusting the effective dates for certain provisions of the loan
originator compensation rules. In addition, the Bureau is adopting technical and
wording changes for clarification purposes to Regulations B, X, and Z.

DATES: This rule changes the effective date of §§ 1026.25(c)(2), 1026.36(a), (b), (d), (e),
(f), and (j) and commentary to §§ 1026.25(c)(2) and 1026.36(a), (b), (d), (e), (f), and (j) in
Supp. I to part 1026, as adopted by the 2013 Loan Originator Compensation Final Rule,
78 FR 11280 (Feb. 15, 2013), to January 1, 2014. In addition, the amendments to
§§ 1026.35(b)(2)(iii), 1026.36(a), (b), and (j), and commentary to §§ 1026.25(c)(2),
1026.35 and 1026.36(a), (b), (d), and (f) in Supp. I to part 1026 adopted by this final rule
are effective January 1, 2014. All other provisions of this final rule are effective
January 10, 2014.

To view the online document in its entirety, please click here.

Please click here for a related article from MortgageOrb:
CFPB Finalizes Second Set Of Clarifications On Mortgage Rules

 

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

This California Town Will Give a $500 Monthly Stipend to Residents

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Industry Update
July 9, 2018

Source: CNN

Just 80 miles east of Silicon Valley, one of the wealthiest regions in the country, is Stockton, California — once known as America’s foreclosure capital.

Soon, the former bankrupt city will become the first in the country to participate in a test of Universal Basic Income, also known as UBI. Stockton will give 100 residents $500 a month for 18 months, no strings attached.

The nontraditional system for distributing wealth guarantees that citizens receive a regular sum of money. The goal is to create an income floor no one will fall beneath.

The concept of Universal Basic Income has gained traction and support from some Silicon Valley leaders, including Elon Musk, Richard Branson and Mark Zuckerberg. It is seen as a way to possibly reduce poverty and safeguard against the job disruption that comes from automation.

“We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas,” Zuckerberg said at a Harvard commencement address in May 2017.

The Stockton project has its roots in Silicon Valley, too. Its financial backers include Facebook cofounder Chris Hughes’ organization, the Economic Security Project — a fund to support research and cultural engagement around Universal Basic Income. It contributed $1 million to the Stockton initiative.

In an interview with CNNMoney earlier this year, Hughes said being part of the country’s top 1% helped him realize the great inequities in the economy.

“It is such a fundamental idea behind America that if you work hard, you can get ahead — and you certainly don’t live in poverty. But that isn’t true today, and it hasn’t been true in the country for decades,” Hughes said. “I believe that unless we make significant changes today, the income inequality in our country will continue to grow and call into question the very nature of our social contract.”

With a population of more than 300,000, with one in four people living in poverty, Stockton was considered a great testing ground for Universal Basic Income.

“Stockton is a city that looks a lot like the rest of America,” said Natalie Foster, co-founder and co-chair of the Economic Security Project.

Stockton has a median household income of $49,271, compared to $57,617 nationally, according to U.S. Census Bureau estimates. It’s also diverse: More than 70% of the city’s population identify as minorities.

“We have a bunch of folks starting off life already behind, born into communities that don’t have a lot of opportunity,” said Stockton Mayor Michael Tubbs. “My mom always used to say, ‘You have to get out of Stockton.’ … But I want Stockton to be [a place people] want to live in.”

His interest in Universal Basic Income also stems from the “looming threat of automation and displacement.”

Tubbs believes the companies building these technologies, “have a responsibility to make sure people aren’t adversely impacted and also make their communities better places.”

This is one way to help. Stockton residents are clamoring to get one of the 100 UBI spots.

“My email inbox is inundated daily with residents from the community wanting to know, ‘What’s the sign-up process? Has it already started? Am I already too late? What do I have to do?'” said Lori Ospina, director of the Stockton Economic Empowerment Demonstration, which is running the project.

The project, expected to launch in 2019, hopes to use data to address the policy questions about UBI. For example, does a guarantee of a basic income affect school attendance and health, or cause people to quit their jobs or start new businesses?

The project is also interested at looking at how the funds impact female empowerment and if it can help pull people out of poverty.

The Stockton experiment is not the first demonstration of universal basic income. Similar programs have already been conducted by various organizations or governments in Finland, Italy, Uganda, Cambodia and India.

In Finland, a monthly stipend of 560 euros was given to 2,000 unemployed people between the ages of 25 and 58. In Cambodia, $5 a month went to pregnant women and children. A 12-year pilot program sponsored by the nonprofit GiveDirectly.org is underway in Kenya, while a similar program sponsored by the Canadian government is undergoing testing in Ontario. Another pilot, backed by startup accelerator Y Combinator, will give 1,000 people in Oakland, California, $1,000 a month for up to 5 years.

“I’ve watched the tech [community] become very interested in Universal Basic Income for the past several years. I think it stems from one part guilt and one part optimism,” Foster said. “These are folks who believe in the moonshot, believe in the big ideas, and that nothing is too big.”

Foster suggested that other cash transfer programs show how UBI could work more broadly. For example, for the past 40 years, all Alaska residents, including children, have received a varying annual cash payment from oil royalties.

“They use it to save for education, to get them through seasonal changes in their work, or to pay for heating during the winter when that gets much more expensive,” Foster said.

According to Allison Fahey, associate director of MIT’s Poverty Action Lab, it’s too soon to tell if UBI will help reduce poverty. But she believes the experience in Stockton and other cities will provide answers.

“It has really exciting potential, and this is why it is important to look into,” Fahey said. “It’s a very radical way of delivering aid. There is an elegance and beauty to how simple it is.”

Rockingham County to Collect Nuisance Fees for Cities, Towns

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Industry Update
July 4, 2018

Source: Rockingham Now

Additional Resources:

UNC School of Government (Fighting Blight with Property Tax Bills)

Center for Community Progress (CCP) (Implementing a Coordinated Approach to Address the Systemic Causes of Vacancy and Abandonment in High Point, North Carolina full report)

A handful of local municipalities will get some help from Rockingham County in collecting fees for nuisance abatement starting this month.

Earlier this year, a project was presented to the county commissioners to add city and town nuisance abatement fees to the county’s tax bills that are sent to property owners every July.

“The idea came out of Eden and a commissioner,” said Mark McClintock, county tax director.

What spurred it on, he explained, was a UNC School of Government study on fighting urban blight in High Point. Adding the code enforcement fees to the tax bills prompted some payments.

Eden, Stoneville and Reidsville have already submitted their paperwork, McClintock said, although all municipalities in Rockingham County have shown interest in the program. It’s a little more complicated for Wentworth, as the town does not have a tax rate for the county to collect.

The Reidsville City Council just approved the change on June 12.

When the city steps in and performs tasks that property owners fail to do, such as mowing grass or demolishing a condemned structure, the cost incurred by the city is passed along to the property owner.

However, according to Reidsville Assistant City Manager Chris Phillips, these charges are some of the most difficult to collect, even after researching ownership through the county’s tax records.

“Primarily, the owners are usually hard to track down. They are deceased with no clear heirs or there are multiple heirs with no one person taking responsibility,” Phillips said in a June 1 memo to the city manager.

“The same reason the properties got into bad condition makes finding a person to pay difficult,” he continued.

A lien is put on the property, and when the property changes hands, if the closing attorney does a proper lien search, the city gets paid. If not, the new owner is billed.

“Unfortunately, the related properties are not very marketable and do not get sold often,” Phillips said.

On June 12, Phillips addressed the entire city council about the issue – and about the opportunity the city has through the county to recoup nuisance fees.

“A while back, the county started working on the ability to put our nuisance fees on the tax bill. Every property gets a tax bill annually, and there are procedures to go through if you do not pay your tax bill,” Phillips said.

“With the county, if you don’t pay your taxes, at some point the county will consider foreclosing on your property,” he said. “The county has become a little more aggressive in the last couple of years at foreclosing. They have foreclosed on some properties in our city; these properties usually end up on the courthouse steps at auction.”

Phillips said sometimes a neighbor will buy the property and turn it into a community garden or park.

“The county was looking at [fee collection] as an experiment, and we said if we can do it, let’s do it,” he said.

An interlocal agreement between the city and county has been in place since 1992, enabling the county to collect municipal ad valorem taxes. That agreement had to be amended to include Reidsville’s nuisance abatement fees. The Rockingham County Board of Commissioners approved the amendment on June 4, followed by Reidsville Council’s immediate and unanimous approval.

Phillips is confident this change will increase the Reidsville’s collection rate of nuisance fees – although it only applies to new fees, not fees the city is already trying to collect.

“It will be clear what is owed on the property because it will be part of the tax bill,” he said. “It’s going to be clear that foreclosure is a possibility. A lot of these properties have low tax values, and the amount that we’re going to put on there for a nuisance fee may be more than the tax that’s owed.”

“This is going to be a step forward in collecting some of that money that the city and the citizens of Reidsville are putting out to keep the neighborhoods clean.”

Donna Setliff, Reidsville’s community development manager, explained that junk car removal is not included in these fees. The city has a deal with a local towing company which tows the vehicle away.

“Their pay is being able to salvage the vehicle, so we’re not actually having to pay anything at this point, so there are no charges with that,” she said.

If the agreement with the towing company was not in place, the city would incur the charge of removing a junk vehicle and, provided it’s deemed a nuisance, would be able to include it in the fees sent to the county for collection.

Phillips said the Reidsville sends notices to owners to clean up their properties – about 400 properties each year – and the city ends up cleaning up about 25 percent of them.

“It’s usually about $100 to $200 by the time someone has to go out and clean one up,” he said. “And then you get into demolition, which can be $5,000, $6,000, up to $10,000, depending… a lot of our old properties have asbestos which runs the price up.”

McClintock said while planning and zoning departments in municipalities have many other things to do, the county can take this fee collection off their plates. It was a simple function that could be maneuvered within the county tax department’s software. In its first year, about 300 nuisance abatement fees have been added to tax bills.

“It fulfills the interest that the county and city governments have, to get properties’ fees paid and to get blighted properties back on the books with someone paying the taxes or buying them and fixing them up,” McClintock said.

Puerto Rico Addresses

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Industry Update
July 10, 2018

Source: HUD (Puerto Rico Addresses full version)

When hurricanes Irma and Maria struck Puerto Rico last year, they caused extreme damage. The generosity of both the public and private sector in response to the recovery effort may provide enough funds to not only support disaster recovery but also support some economic revitalization and mitigation against future disasters. HUD has allocated more than $19 billion in Community Development Block Grant–Disaster Recovery (CDBG-DR) funds to Puerto Rico to support these efforts.

Various news outlets have reported stories about informal housing; the lack of clarity about who owns which homes because recording titles is both not mandatory and hard to do; and that numerous homes in Puerto Rico were not constructed in accordance with its building code. Puerto Rico’s high poverty rates, economic decline, and population loss before the storms are well documented. The Office of Policy Development and Research’s recent housing market analysis provides a very good overview of the economic and housing market trends before Irma and Maria.

Those reports, however, are not what this post is about. This post is about Puerto Rico’s addresses and my realization of why they are important. This realization unfolded a bit like a story, so I will present it in chapter form.

Indiana Reopens Embattled Foreclosure Prevention Program Following Criticism from Federal Auditors

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Industry Update
July 9, 2018

Source: WRTV ABC 6

Hardest Hit Fund offering up to $30K to homeowners

INDIANAPOLIS — An embattled foreclosure prevention program is once again taking applications in Indiana, more than one year after the Indiana Housing and Community Development Authority (IHCDA) stopped accepting homeowners’ requests for mortgage assistance.

Indiana’s Hardest Hit Fund reopened its application process on July 1, allowing Indiana homeowners who have fallen behind on their mortgage to apply for a one-time assistance of up to $30,000.

As Call 6 Investigates reported, in June 2017, Indiana’s Hardest Hit Fund stopped accepting applications due to lack of funding, and to make sure the program had sufficient money to help homeowners already enrolled.

However, IHCDA now says it has the money to continue the program.

“Due to recycled and reallocated funds, there are now sufficient funds available to reopen the application portal,” according to the IHCDA. “The portal will remain open until the funds available have been distributed.”

IHCDA’s announcement comes after federal auditors criticized Indiana’s spending of the federal money meant to help homeowners avoid foreclosures.

The federal Office of Inspector General for the Troubled Asset Relief Program (SIGTARP) released a report that said Indiana “squandered” federal funds on $45,100 on employee bonuses and $1,558 on water for employees.

The Indiana agency spent $34.4 million on its own salaries and expenses, according to the federal audit.

The Hardest Hit Fund re-launched this month will cover a one-time assistance for eligible Indiana homeowners up to $30,000.

Eligible homeowners must have fallen behind on their mortgage due to an involuntary job loss or reduction in employment income, and homeowners must be able to make current mortgage payments but unable to pay the past-due balance.

Foreclosure Prevention and Community Stabilization Activities Under CRA

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Industry Update
July 2, 2018

For a number of years,  regulatory agencies have been promoting different approaches for preserving affordable housing opportunities, including various disposition strategies for REO properties (click here).

For more information on organizations participating in these activities, please utilize the following links, which contain recent guidance.

Office of the Comptroller of the Currency (OCC):

Additional Information:

OCC: September 2016 Foreclosure Prevention and Community Stabilization Activities Under CRA

The Federal Reserve:

Court Temporarily Halts Evictions of 2,000 Puerto Rican Disaster Victims

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Industry Update
July 2, 2018

Source: HousingWire

NLIHC calls on Congress for permanent solution

A federal court ordered a temporary halt Saturday of the eviction of nearly 2,000 victims displaced by 2017’s natural disasters.

The lawsuit was filed with the U.S. District Court of Massachusetts by Disaster Housing Recovery Coalition members, LatinoJustice PRLDEF and Faith in Action against the Federal Emergency Management Agency, and seeks to decrease the risk of natural disaster victims facing homelessness.

The lawsuit alleged that FEMA was planning to prematurely abort its assistance to thousands of Puerto Ricans displaced by Hurricane Maria when it discontinued its Transitional Shelter Assistance on June 30, 2018.

From the lawsuit:

FEMA’s refusal to extend TSA is without any plan for transitioning into longer-term housing some 2,000 individuals who have already faced severe trauma and lost most, if not all, of their belongings, their homes and their jobs. For Plaintiffs and many other TSA evacuees, especially the poor, elderly and sick, returning to their homes (or what is left of their homes) in Puerto Rico is not a viable option.

A judge determined Saturday that the storms victims within the TSA program are entitled to reasonable notice of the termination of the temporary housing assistance, assistance as long as they remain eligible and assistance in transitioning to other housing. The judge’s ruling also pointed out that in previous, equivalent disasters, FEMA extended the temporary housing assistance much longer than in the present disaster.

The temporary halt extended the program until at least midnight on July 3, 2018, orders FEMA to provide notice and take whatever action is necessary to extend the assistance until the deadline and schedule a phone meeting with the judge Monday.

“By temporarily halting FEMA’s further displacement of nearly 2,000 families, the federal courts are holding FEMA accountable for the predictable increase in homelessness that could result from its decision to arbitrarily end its hotel program,” said Diane Yentel National Low Income Housing Coalition president and CEO. “Now it is Congress’ turn to hold FEMA accountable, by enacting legislation to provide survivors with the proven long-term disaster housing solutions that they need to get back on their feet.”

Latino justice explained the evictions could lead to unnecessary trauma and homelessness.

“The refusal to extend TSA to evacuees, as well as their refusal to provide direct rental assistance to most evacuees, means the eviction of hundreds of Puerto Rican families who have already experienced deep trauma, and who will now likely find themselves homeless or in shelters,” LatinoJustice Associate Counsel Natasha Ora Bannan said. “In addition, FEMA continues to refuse to enter into an Inter-Agency Agreement with HUD, which would allow the Disaster Housing Assistance Program to be implemented, providing evacuees with longer term housing solutions and helping them resettle.”

“FEMA’s actions are shameful and continues to expose a community that has already suffered greatly to potentially greater harm,” Ora Bannan said.

Since the storm hit, FEMA has been criticized for its response in Puerto Rico as much of the island was left without power. In fact, the criticism even sparked controversy between President Donald Trump, who stepped in to defend FEMA, and the area’s local government.

“There is no question that FEMA’s response to Puerto Ricans after Hurricane Maria has been woefully inadequate and unlike responses to other natural disasters experienced in the U.S.,” said Kira Romero-Craft, managing attorney for LatinoJustice PRLDEF’s Southeast Office. “The level of transitional support care to assist evacuees, many who lost everything, has been predicated on a fiction that too much has been done already.”

“That is false,” Romero-Craft said. “We must not allow inaction by the federal government to continue to tear communities apart especially after the devastating losses in Puerto Rico due to the hurricane. We must continue to care for the most vulnerable members of our community to ensure their safety and not further endanger their lives.”

Chicago Targets ?Zombie Housing? for Renewal, Block by Block

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Industry Update
July 9, 2018

Source: U.S. News & World Report

The city, nonprofit community groups, financial institutions and others are partnering to revitalize housing left behind in the foreclosure crisis.

Jeannie Oquendo was the first to move to North Central Park Avenue in the West Humboldt Park neighborhood of Chicago in winter 2016.

Amid frigid temperatures, the block had seven abandoned houses since the foreclosure crisis. It was the type of neighborhood that could attract crime, not necessarily first-time homebuyers.

But Oquendo, a single mother of three, didn’t see any trouble on several visits to the street where she found a vacant two-unit building with potential. She got an affordable mortgage and bought the building. It gave her a chance to live in her old neighborhood and to be close to her aging parents.

“It’s been two years now and you can see the neighborhood is changing so fast,” Oquendo says. Those six other empty buildings have since been bought and rehabbed and families are living there now.

West Humboldt Park is among several Chicago neighborhoods that needed an intervention after the foreclosure crisis peaked around 2010. Vacant lots and so-called zombie buildings were left empty and in disrepair, community leaders said.

In 2011, Chicago officials created the Micro Market Recovery Program (MMRP) to jump start individual blocks that had a high rate of vacant buildings due to foreclosures. MMRP sought to transform those abandoned, dilapidated buildings into affordable homes for renters or first-time homebuyers. It would help to re-settle diverse communities and attract businesses.

Chicago had already spent about $169.2 million from the Housing and Urban Development’s Neighborhood Stabilization Program (NSP) for areas hit hardest by foreclosures. MMRP would take the next step and include several community groups, such as Local Initiatives Support Corporation Chicago – known as LISC Chicago – to attract investors and families, according to the Chicago Department of Planning and Development.

Besides West Humboldt Park, MMRP has reoccupied nearly 1,000 buildings, including about 2,900 units, in Englewood, Auburn Gresham, West Pullman, Woodlawn and other neighborhoods. Also, more than 400 families received help with loans or obtained financial assistance to keep their existing homes.

“As long as the demand and the need are there, we will continue,” says David Reifman, commissioner of the Chicago Department of Planning and Development. “Right now, our recovery is steady but not complete.”

From 2011 through December 2018, about $12.8 million will be invested in MMRP, mostly from the city’s budget and grants from various nonprofits. The amount also includes about $3 million from the Illinois attorney general’s office settlement with major banks accused of questionable lending practices related to the foreclosure crisis.

“We wanted to focus our limited resources on key areas to bring back whole blocks at a time,” Reifman says.

Since then, foreclosure filings decreased by double digits in the MMRP zones from 2011 through 2016. The targeted areas in the north region had a 67.6 percent reduction. The middle region had a 66.1 percent decrease, while the south region had a 25.8 percent decrease. In comparison, foreclosure filings citywide decreased by 69.4 percent during the same period. Housing prices also increased in the MMRP communities, some as much as 33.1 percent, according to the Institute for Housing Studies at DePaul University.

The improvements are due to MMRP, community involvement, families returning to the area and an improving economy, says Geoff Smith, the institute’s executive director.

“Overall, (the city’s) strategy is one that’s important,” Smith says. “It targets small areas and helps the neighborhoods recover. When there are limited resources, you need to concentrate it and then target the areas to have some level of success.”

Also, providing an affordable mortgage, financial assistance, grants, and some forgivable loans are part of the equation, community experts say.

Oquendo obtained an affordable mortgage for about $86,000, which included about $39,000 for the home and the rest for the rehab project. Her monthly mortgage payment is $988, or about $75 more than what she paid in monthly rent for an apartment a few minutes away on North Avenue and Pulaski Road in Chicago.

But Oquendo faced a lengthy process. She closed on the property in February 2015 and anticipated a six-month rehab to replace the furnace, duct system, plumbing and roof. However, her contractor died and she needed to find another one. She finally moved in a year later.

Afterward, she bought the vacant lot next door for about $3,000 and turned it into a garden. She now raises tomatoes, green peppers, cucumbers and other vegetables. She also plans to install a basketball court for her sons.

“I’ve been very happy with my decision and would do it all over again,” Oquendo says.

Anthony and Michelle Johnson, who have two children, purchased a two-unit building on North Spaulding Avenue in West Humboldt Park in 2015. They wanted to stay in the community where they teach masonry work to young people.

The Johnsons’ $160,000 mortgage also included money for all new electricity, plumbing and sewer work. Their monthly mortgage payment of about $1,400 is offset by $850 earned from renting out the other unit. That leaves about $550 out of pocket each month, compared to when they used to pay $850 rent at an apartment in the West Garfield Park neighborhood.

“This has changed the trajectory of our financial lives,” Michelle Johnson says. “We now own a piece of Chicago real estate and it’s now a part of our retirement plan.”

Also, MMRP aims to transform tough, poor neighborhoods, such as Englewood, where high-end grocer Whole Foods opened about two years ago. And more commercial development is planned, says Jack Swenson, program officer for LISC Chicago, which partners with the city on housing and other projects.

LISC Chicago develops a relationship with residents on a targeted block, finds out their needs and concerns, and works on filling vacant lots and acquiring vacant buildings. It’s a process that ultimately leads to a stronger foundation, Swenson says.

“Crime is a reality in every neighborhood and we think we sometimes forget how important a community is,” Swenson says. “In many neighborhoods across the city, it’s the people’s commitment to their community that outweigh the obstacles and they still choose to reinvest.”

Besides Chicago, NSP has distributed roughly $6.8 billion nationwide over the last 10 years to cities hit hardest by foreclosures, says Brian Sullivan, HUD spokesman in Washington, D.C.

“It’s hard to say if the foreclosure crisis is over,” Sullivan says. “They say all housing is local and the foreclosure crisis ended sooner in some areas rather than others. But who says it’s really over?”

Dallas received about $8 million in NSP funds to help the southern area most affected during the foreclosure crisis. Then Dallas officials in 2015 created the Neighborhood Plus Plan, a citywide revitalization program to help troubled neighborhoods. Dallas also has invested about $75.3 million in housing projects since 2009, says Dallas spokesman Corbin Rubinson.

The nation’s capital received about $17.4 million in NSP funds for its struggling neighborhoods. Then in December 2017, Washington’s Property Acquisition and Disposition Division created the Vacant to Vibrant DC program to quickly dispose of or sell vacant properties. Washington budgeted about $3 million this year for both programs, says Polly Donaldson, director of the city’s Department of Housing and Community Development.

Los Angeles received about $143 million in NSP funds to rebuild neighborhoods. In 2010, the city also adopted a Foreclosure Registry ordinance to further protect neighborhoods from inadequately maintained and abandoned foreclosed properties or face penalties, says Douglas Swoger, director of the asset management division of the Los Angeles Housing + Community Investment Department.

What cities spend on such programs also is difficult to compare, because of the wide range of services, the geography involved, the number of vacancies and other factors, says Alan Mallach, senior fellow and researcher for the Center for Community Progress in Washington, D.C.

Thousands of cities have neighborhood revitalization programs, which may range from a modest effort to give elderly homeowners grants to fix their homes to a multifaceted strategy. Some notable programs are in Minneapolis and Baltimore, Mallach says.

Some neighborhood revitalization work also is done by nonprofit organizations and not by city governments. Some include Youngstown Neighborhood Development Corporation and Cleveland Neighborhood Progress in Ohio, Mallach says.

Chicago’s MMRP has made tremendous progress and offers a cross-sector effort between the city, nonprofit community groups, financial institutions and others, says Maurice Jones, president and CEO of LISC, based in New York with 32 offices nationwide. LISC is a MMRP partner with Chicago.

“It’s a recipe that produces results and is sustainable,” Jones says.

Ojo and Michelle Patterson, parents of three children, just started the MMRP process to possibly buy a 3-unit building in the Englewood neighborhood of Chicago. They are renting an apartment in the nearby Auburn Gresham neighborhood for about $680 a month. They’re hoping their income as a barber and hairstylist could qualify them to pay a $1,600 monthly mortgage while renting out the other units. They also want to live in Englewood where they grew up and where they do volunteer work.

“Moving back into this community would allow me to grow in my own community, be included with other small businesses, and have the opportunity to live, breath and eat in my own community, while we invest and own,” Michelle Patterson says.

As Hurricane Season Arrives, U.S. Homeowners Haven?t Fixed Their Big Underinsurance Problem

Posted on by Safeguard

Industry Update
July 18, 2018

Source: The Wall Street Journal

Many homeowners lack flood insurance or have insufficient policy limits for repairs or rebuilding following a natural catastrophe

Many U.S. homeowners are inadequately insured for natural-catastrophe damage ahead of the height of the Atlantic hurricane season.

Three major landfalling hurricanes in 2017—Harvey, Irma and Maria—revealed a widespread lack of full insurance coverage for homeowners in Texas, Florida, Puerto Rico and elsewhere. Those storms served as a wake-up call to some, but the underinsurance of Americans persists, according to regulators, trade groups and government data.

While most people have home insurance, many lack flood insurance, which is typically purchased from the U.S. government as a separate policy. Many homeowners also have home-insurance policy limits that are too low to cover the full cost of repairing or rebuilding their properties.

“Many people thought that they had a fully insured home or fully insured business” before last year’s catastrophes, said Iraelia Pernas, executive director of Acodese, an industry group for insurers in Puerto Rico. “They discovered that there were some exclusions in their policies.”

Javier Rivera Ríos, the territory’s insurance commissioner, said that a lot of the houses in Puerto Rico that suffered losses weren’t insured at all, let alone with flood coverage.

Jeremy Gundling of Friendswood, Texas, didn’t have flood insurance when his home filled with two feet of water during Harvey. His home insurance covered some wind damage to the house, where he lives with his wife and four children, but Mr. Gundling took out a loan to pay for most repairs.

When he decided to forgo flood insurance, he felt it was the right call based on recommendations from his real-estate and insurance agents.

“It was disheartening…to find out that I was severely underinsured,” Mr. Gundling said.

After the storm, he bought insurance from the National Flood Insurance Program and expanded his home-insurance coverage. The federal policies pay up to $250,000 for damage to a residence and $100,000 for contents.

The number of federal flood policies covering Florida homes and small businesses rose 2% between September 2017 and May 2018, to 1.76 million, according to government data. In Puerto Rico, the number of federal flood policies surged 77%?over the period, to 9,199. In Texas, 17% more households and small businesses owned the policies, bringing the total to 702,800.

“We often see post-disaster increases in flood insurance policies in force, but unfortunately, it is not unusual to see some of these policies dropped when they come up for renewal,” said David Maurstad, chief executive of the NFIP. “We have a long way to go to meet our goal of closing the insurance gap.”

The Houston area was devastated by flooding after Harvey, and about 70% of the flood-related damage wasn’t covered by insurance, according to analytics firm CoreLogic. Even for wind damage, which is covered under typical home policies, some people were frustrated to learn what their insurers would or wouldn’t pay.

Insurers received 717,000 Harvey claims for damage to homes and vehicles as of Oct. 31, the most recent data available, according to the Texas Department of Insurance. About one-third were closed with no payment, indicating that the damage wasn’t covered under the policy or the loss value was less than the deductible.

Insurers in Florida received nearly one million Irma claims as of June 12, and 91% had been closed, according to the state’s Office of Insurance Regulation. More than one-third of those closed didn’t entail payment.

Lisa Wansley, a realtor in Middleburg, Fla., said a home insurer offered $800 to cover damage to her roof after taking into account her several-thousand-dollar deductible. “It costs more than that for a roof,” she said. “This has just been a very frustrating battle.”

Homeowners often fail to increase policy limits if they expand or upgrade their homes, regulators said. They also can find that their policy limits are insufficient after a disaster pushes up the cost of building materials and contractors.

Like Ms. Wansley, many homeowners policies have higher deductibles for hurricane damage, which can run in the thousands of dollars. These became standard in coastal states after a spate of hurricanes in 2005 but have rarely been triggered due to a few major hurricanes hitting the U.S., until last year.

“People had no idea that they had a hurricane deductible” following Irma, said Barry Gilway, chief executive of Citizens Property Insurance Corp. “There’s still a lack of education in the industry regarding what is actually covered.”

In Houston, federal flood-insurance policyholders like Adriana Vargas say owning the coverage makes them feel lucky.

Thanks to the policy, “I got enough to rebuild what we needed” after four feet of water inundated her home, she said.

So far only about a quarter of the proceeds have been put to use because of delays with contractors, plus the need to route the insurance money through a mortgage firm and abide by its inspection procedures. Ms. Vargas doesn’t anticipate moving back in before October.

Hurricanes weren’t the only disaster that exposed issues last year.

Following devastating wildfires in Northern California in October, about two-thirds of the victims said their insurance wouldn’t fully cover the cost of repairing or replacing their dwellings, according to a survey by consumer-advocacy group United Policyholders.

Laney Wall and Scott Rooks ’ house in Santa Rosa, Calif., burned down. They are living in a rental house, which is currently paid for by insurance, but their home policy won’t cover the full cost of rebuilding, they said.

“What will we do when we run out of money?” said Mr. Rooks, a pilot. “There’s massive amounts of stress knowing that if we were insured for the proper amount, it would be no big deal.”

Waters Introduces Bill to Increase FHFA Foreclosure Oversight

Posted on by Safeguard

Legislation Update
June 18, 2018

Source: HousingWire

Additional Resource:

U.S. Congress (H.R. 6102 info)

Seeks to increase oversight of Fannie, Freddie loans

Ranking Member of the House Committee on Financial Services Maxine Waters, D-Calif., introduced a new bill that would increase oversight for mortgage servicers who work with Fannie Mae and Freddie Mac.

Waters introduced H.R. 6102, the Homeowner Mortgage Servicing Fairness Act of 2018, on Monday. She explained she is fighting “to ensure hardworking Americans can remain in their homes.”

The bill would increase oversight from the Federal Housing Finance Agency for all mortgage servicers who conduct business with Fannie and Freddie. This would cover about 60% of all mortgage loans.

“Mortgage servicers play a critical role in determining whether homeowners experiencing financial hardships will be forced out of their homes,” Waters said. “However, despite the lessons learned during the foreclosure crisis, we continue to uncover evidence of bad behavior by our nation’s mortgage servicers.”

“Borrowers can’t choose their servicer so it’s especially important that Congress provide strong protections to prevent servicers from taking advantage of borrowers and to protect borrowers from foreclosure,” she said. “This bill will implement common-sense reforms to ensure that servicers are giving borrowers every possible opportunity to avoid foreclosure.”

Some of the changes this bill would bring include increasing FHFA oversight of servicers who work with the GSEs, requiring documentation of servicer behavior and FHFA evaluation to be provided to borrowers and penalizing failures to meet the minimum standards established by the FHFA.

The legislation is supported by the National Consumer Law Center and the National Fair Housing Alliance.

This isn’t the first time Waters has sought foreclosure protection for homeowners this year. In April, she introduced a bill that would strengthen mortgage servicers requirements for Federal Housing Administration borrowers in an attempt to prevent foreclosures.

However, given the current administration’s push to roll back regulations, it is unlikely that anything will come of Water’s newly introduced bills.