Safeguard Properties

A World of Difference: Recovery in Judicial vs. Non-Judicial Foreclosure States

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Industry Update
February 24, 2016

Housing recovery can happen at very different paces in states that use judicial foreclosure laws compared with those where the foreclosure process happens non-judicially.

Less than half (22) of the states have judicial foreclosure laws, yet more core-based statistical areas (CSBAs) from these states among near the top 10 and top 25 lists for most foreclosures than CSBAs in non-judicial states, according to the Pro Teck Valuation Services Home Value Forecast (HVF) for February 2016 released Wednesday. Seven of the 10 CBSAs with the highest percentage of foreclosures, as well as 19 of the top 25, came from judicial states, according to Pro Teck.

The difference in foreclosure laws has resulted in such a disparity in recovery in two housing markets, Phoenix and Cleveland, according to the HVF. Cleveland, which is located in the judicial foreclosure state of Ohio, ranked 21st of the list of CBSAs with the highest foreclosure rate; Phoenix, located in the non-judicial foreclosure state of Arizona, ranked number 174.

“In our May 2014 Update we highlighted the differences in the recoveries the two cities were experiencing, and how foreclosure laws in Cleveland (judicial foreclosure) versus Phoenix (quicker, non-judicial foreclosure) were impacting the market,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “Today, the lag in recovery can still be seen in states with judicial foreclosure laws, where the foreclosure process can take up to two years.”

Cleveland was ranked as one of Pro Teck’s “Bottom 10” housing markets in May 2014 due to its high share of “market” sales that were foreclosure sales (32.47 percent, nearly one in three). By comparison, in a healthy housing market, foreclosure sales would account for about 5 percent (one in 20) of all market sales.

While foreclosure sales as a percent of market sales remain elevated in Cleveland (17.45 percent), that share is nearly half of its total from May 2014. Also in Cleveland, the months of remaining inventory (MRI) has declined from 8.39 to 6.26 during that same period.

“Cleveland’s judicial foreclosure process has drawn out its recovery versus Phoenix, and prices have not rebounded to anywhere near pre-crash levels,” said O’Grady. “With a large number of 2006 HELOCs coming due, many could find themselves in a difficult situation when their loan is called.”

In Phoenix, housing prices rebounded strongly in 2012 after overshooting on the downside. Phoenix was quickly working through its foreclosure inventory during this time, and in May 2014, Pro Teck noted that Phoenix was on a path to returning to market fundamentals and that foreclosures were returning to historic norms.

Phoenix has now “recovered completely,” according to Pro Teck, with 5 percent of all market sales as foreclosure sales and an MRI of 4.51.

“This strength can be seen in pricing trends, where once the average home had lost more than 50 percent of its value are now back to 85 percent of pre-crash highs,” O’Grady said. “We believe that Phoenix will make up the majority of the 15 percent gap within the next two years.”

Source: DS News

One State Takes Mortgage Relief a Step Further

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Legislation Update
January 27, 2016

In December, President Obama signed into law the omnibus bill that included a provision allowing homeowners to exclude forgiven mortgage debt from their gross income when filing federal tax returns.

More than a month later, California State Senator Cathleen Galgiani (D-Stockton) has introduced a bill that would extend tax relief on forgiven mortgage debt for homeowners when filing their state income tax returns. Senate Bill 907 would allow California homeowners who have either sold their home in a short sale or received some type of forbearance on their mortgage payments to exclude forgiven or cancelled mortgage debt from their state income tax forms when listing their income. Without legislation, both the California state and federal government would require homeowners to list cancelled mortgage debt as income.

California has been one of the states hardest hit by the housing crisis. In January 2009, distressed residential property sales in the state peaked at 67 percent—meaning REO sales and short sales accounted for approximately two-thirds of all residential home sales in the state during the month, according to data released by CoreLogic on Tuesday. By November 2015, the distressed sales share had fallen to slightly more than 8 percent in California, according to CoreLogic—but the state still ranked fourth in completed foreclosures for the 12-month period ending in November 2015 with 24,000. Not only that, but financial troubles have still persisted in the state. For example, in 2015, more than 80,000 consumers filed for bankruptcy in the state of California—tops among states and more than 24,000 more than second-place Illinois, according to AACER bankruptcy data reported by Epiq Systems.

Galgiani’s bill would provide much-needed state income tax relief to borrowers who cannot afford to pay taxes on money which was counted as income but money that they never actually received.

“This is a common-sense measure to avoid additional fiscal burdens on those who are facing financial uncertainty as a result of the economic crisis and often unemployment,” said Galgiani. “Taxpayers who have lost their homes could face an additional income tax liability of thousands of dollars or more.”

The exclusion of forgiven mortgage debt provision for federal income tax that was signed into law by President Obama in December is an extension of the Mortgage Forgiveness Debt Relief Act of 2007, originally signed into law by President George W. Bush. The original act relieved distressed homeowners from having to pay taxes on forgiven mortgage debt for the three calendar years of 2007 through 2009. That tax exemption was extended three more years until the end of 2012 with the Emergency Economic Stabilization Act of 2008, and it was extended until the end of 2013 with the American Taxpayer Relief Act of 2012. In December 2014, president Obama extended the tax exemption for forgiven mortgage debt until the end of 2014. Last month, it was extended until the end of 2017.

“We want to make sure that families who are trying to stay on their feet aren’t kicked while they are down,” said U.S. Rep. Tom Reed (R-New York), sponsor of the standalone proposal included in the omnibus bill. “Many times they have tried to do everything right, but still run up against tough financial times and the Federal government shouldn’t add insult to injury by levying a tax bill that could cost their homes.”

Source: DS News

Non-Foreclosure Solution Totals Are Piling Up

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Industry Update
January 27, 2016

While foreclosure continue to steadily decline, the number of foreclosure alternatives completed is adding up, and the industry completed another 99,000 foreclosure prevention actions in November 2015, according to data released by HOPE NOW on Wednesday.

The 99,000 foreclosure prevention actions completed in November included permanent loan modifications, deeds-in-lieu of foreclosure, short sales, and other workout plans. Meanwhile, at the other end of the spectrum, foreclosure sales for the month totaled 24,500, meaning that non-foreclosure solutions still outpaced completed foreclosures by a four to one ratio.

“This metric is important as it shows the breadth of solutions available to at-risk homeowners and that these homeowners are likely to receive an alternative solution to foreclosure,” HOPE NOW’s report stated. “It is interesting to note that nearly 40 percent of foreclosure alternative solutions for families were repayment plans. This indicates most families are experiencing short term hardships.”

Approximately 26,00o of the foreclosure prevention action were permanent loan modifications, according to HOPE NOW. This number included 19,000 modifications through proprietary programs and 7,691 through the government’s Home Affordable Modification Program (HAMP).

“As we turn our attention to 2016, our data continues to indicate recovery in the overall housing market,” said Eric Selk, Executive Director of HOPE NOW. “Our November report shows that key trends remain consistent with previous reports. Specifically, foreclosure starts and foreclosure sales completed are at or near pre-crisis norms. Although fewer modifications are being reported, families are receiving assistance through foreclosure alternative solutions such as retention plans and formal repayment plans. This is reflective of an early intervention process that all servicers are employing. The goal is to keep families in their home and respond quickly when someone goes delinquent.”

The number of serious delinquencies in the mortgage market also tumbled year-over-year in November, from 1.97 percent down to 1.65 percent, according to HOPE NOW.

“Another key indicator of positive market stability is the decline in serious delinquency,” Selk said. “HOPE NOW tracks those homeowners who are 60+ days delinquent and we have reported a steady total of about 1.65 million borrowers for the past 5 months. This is a far cry from the nearly 2 million borrowers who were seriously delinquent just 18 months ago. This is a true testament to the hard work of the HOPE NOW Alliance and others, as well as the recent jobs report and economic recovery.”

Source: DS News

Kearns: Donate Zombie Homes to Local Charities

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Industry Update
January 27, 2016

BUFFALO, N.Y. (WKBW) – A Western New York lawmaker is teaming up with charities to confront the “Zombie Property” problem in local neighborhoods.

Vacant and abandoned properties are often referred to as “Zombie Properties;” they are usually part of an extended foreclosure proceeding where the owners have vacated and the banks have not yet taken control.

There are nearly 800 abandoned “Zombie Properties” in Western New York, and they impose a huge burden on local municipalities who have to spend large amounts of money to cut grass, board up windows, and tear down structures that are deemed unsafe.

The State Senate introduced a bill last May that its sponsors say would help alleviate the burden.  It was called the “Abandoned Property Neighborhood Relief Act of 2015” and it would mandate banks, mortgage companies, and credit unions to keep a close eye on the maintenance of homes in foreclosure; reducing the burden on cities, towns, and villages. It would also set up a state-wide registry through the Department of Financial Services so vacant homes can be tracked. New York Attorney General Eric Schneiderman vocally supported the bill, but it never made it out of committee.

In the meantime, New York Governor Andrew Cuomo has gotten agreements from 13 major banks, mortgage companies  and credit unions who say they will voluntarily monitor the condition of homes in foreclosure. The agreement represents about 70 percent of financing companies that have properties in New York State.

Locally, New York Assemblyman Michael Kearns has worked to hold banks accountable for these “Zombie Properties” with his “Shame the Bank” campaign.  Kearns and other concerned members of the community visit abandoned, “Zombie Properties” in Western New York and place a sign on the lawn calling on the bank who holds the mortgage to take responsibility.

In an editorial emailed to 7 Eyewitness News, Assemblyman Michael Kearns, along with representatives from the Western New York Law Center and Habitat for Humanity, proposed a new idea for handling the “Zombie Property” crisis — the banks should donate the homes to active community organizations and charities.

In the editorial, the writers say that the properties often need excessive and costly repairs, which Habitat for Humanity volunteers could do cheaply. Both the town and the banks would save money on maintenance.

The homes could then go to families on Habitat for Humanity’s waiting list, taking needy families and homeless veterans off the street. The local municipalities could then reap the benefits of collecting property taxes.

The editorial gives an example of how that is exactly what’s happening to a West Seneca property located at 290 Germania Street. The editorial reports that the investor who purchased the property has made a commitment to donate it once all of the legal hurdles are cleared.

The editorial ends with a plea from the writers to the banks asking them to share their lists of abandoned and foreclosed properties so that everyone can work together toward finding a solution.

Source: WKBW

Indiana Blight Bills Take Aim at Zombie Homes and Squatters

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Legislation Update
January 19, 2016

Lawmakers from two of the state’s hardest-hit housing markets — Gary and Indianapolis — have introduced four bills this session targeting urban blight, but those hoping for a major overhaul of Indiana’s distressed property laws will have to wait at least another year.

The overarching message from the Statehouse: Cities need to use the tools they’ve been given before pushing for further reforms. That puts the onus squarely on the shoulders of Indianapolis Mayor Joe Hogsett to make progress on an issue on which he campaigned heavily.

Still, backers say the bills should help to some degree, as cities across the state continue to grapple with a tangled web of property rights, competing government interests and perverse market forces that have stymied efforts to combat blight since the onset of the housing crisis.

One would revive a battle over whether banks should have to clean up so-called zombie homes amid a foreclosure. Another would create “opportunity areas” in which city redevelopment commissions could take control of tax-delinquent, abandoned properties more quickly. The overarching goal in each bill: trying to get dilapidated properties into good hands faster, while making sure they don’t fall into further disrepair in the meantime.

The latest batch of reforms follows an IndyStar investigation that revealed how a convoluted government tax sale process has helped blight proliferate across the state in the wake of the housing crisis. IndyStar’s analysis found that Marion County property auctions with loose restrictions have drawn investors from 31 states and multiple countries. Often, buyers don’t rehab or even secure their houses, leaving neighbors with eyesores that invite crime.

Zombies, revisited

One bill from state Rep. Justin Moed, D-Indianapolis, seeks to loosen a provision added a year ago that prevents cities from regulating banks. That provision effectively pre-empted the city of Indianapolis from forcing banks to take care of vacant homes amid a foreclosure.

The provision was backed by the Indiana Mortgage Bankers Association, which argued that banks shouldn’t have to navigate a patchwork of municipal foreclosure laws across the state.

That’s fine, Moed says. But when an owner has vacated a home amid a foreclosure, he thinks the bank should have to take care of the property until it takes the deed. Stalled and slow-moving foreclosures make it difficult for Code Enforcement to abate nuisances, because the owners often can’t be found.

“At the end of the day, (the bank is) going to be the one that has the property,” Moed said. “But they can determine how long that process takes. It could be two years, four years” — and can sometimes stretch on indefinitely if the home isn’t worth much to the bank.

After the law was passed, the Indianapolis City-County Council passed an ordinance requiring banks to secure, mow and clean up properties after they issue a foreclosure notice. But it won’t be enforced unless the state law is changed to allow it.

Moed’s bill, House Bill 1239, was assigned to the Financial Institutions Committee, and it remains unclear whether the bill will get a hearing. In other states, banks have fought similar requirements, often taking their case to court, with mixed results.

Land banking lite

Of the bills offered this session, Senate Bill 310, co-sponsored by state Sens. Earline Rogers, D-Gary, and Rick Niemeyer, R-Lowell, could be the biggest stepping stone to broader reform.

It would allow a redevelopment commission to create “opportunity areas” in neighborhoods with pervasive tax delinquency and where at least one-third of homes are abandoned. The bill is designed to make it easier for cities to take control of vacant homes in such areas and would allow the redevelopment commissions to auction them off to “responsible” bidders.

Kathleen Taylor, policy director for the Indiana Association for Community Economic Development, a nonprofit that supports local efforts to fight blight, says the idea arose from Gary, “where they have blocks and blocks of vacant properties with no market value.”

The concept is similar to how land banking is used in other states, but on a more limited scale. By snatching up vacant properties in a specific area as they become tax delinquent, a redevelopment commission could stockpile enough to make a significant change in a neighborhood, perhaps by auctioning them off in bulk to a developer or demolishing them for public green space. Cities already can demolish condemned homes that are privately owned, but having them under city control makes it easier to leverage state and federal dollars for larger redevelopment projects.

A major barrier today is that cities and redevelopment groups have a hard time getting control of tax-delinquent properties in a timely manner, because homeowners need a fair chance to pay off their taxes and keep their homes.

“You want to act in good faith and make sure that residents’ rights are protected, but a lot of these properties are sitting vacant,” Taylor said. “The owner will never step forward. And there’s no solution.”

Tax sale tweaks

Another bill, sponsored by Sen. Jim Merritt, R-Indianapolis, would further adjust the windfalls that tax lien investors can receive when they buy homes that the owner is going to redeem.

Today, homeowners are given a year after the tax sale to pay off the back taxes owed and keep their homes. Lien buyers are owed the back taxes, plus a penalty of up to 15 percent on the taxes owed. Investors who bid more than the value of the taxes also accrue 5 percent interest on the overbid. For instance, if the taxes are $5,000, and a bidder spends $6,000, the homeowner would owe an additional 5 percent interest penalty on the $1,000 difference.

Merritt’s bill, Senate Bill 204, would change the overbid interest to the amount the state pays each year on income tax refunds, which is determined by market rates. For 2015, that was 3 percent, but it has been as high as 9 percent in the past decade.

In the past, counties have pushed back against reductions in the interest rate, because they worry that the market will dry up and local revenues will drop.

Merritt’s bill would be a minor adjustment compared with a 2014 bill, which cut the overbid interest in half. “I don’t want anybody buying a home (at tax sale) thinking they’re going to make a windfall,” Merritt said.

His bill also would make it easier for police to evict squatters. Today, police efforts are often hampered because if they can’t find the owner of a vacant home, they can’t prove a squatter doesn’t live there. The new language would consider it criminal trespassing if people don’t leave a vacant home when they’ve been ordered to do so by police.

The initial draft of the bill also brings back a controversial provision from a year ago that would have eliminated mortgage settlement conferences. But that will be a fight for another year. Merritt said the provision on settlement conferences is coming out of the proposal because it lacked support in the Civil Law Committee, where the bill has been assigned.

House Bill 1124 from Rep. Cherrish Pryor, D-Indianapolis, would try to make it easier for tax sale buyers to take care of abandoned homes during a yearlong limbo period in which the homeowner has a chance to pay off the back taxes.

That limbo period has long been blamed by cities and community development groups for allowing abandoned homes to fall further into disrepair. In many cases, the prior owner is gone, but it’s risky for the buyer to spend any money on upkeep, because the homeowner could come in, pay off the taxes and keep the home without reimbursing the costs of maintenance.

Pryor’s bill would allow tax sale buyers to put liens on the home to recoup the costs of cutting the grass, boarding up the home or doing other exterior upkeep. Her bill would apply only to vacant and abandoned homes.

More needed?

State and local officials agree that more needs to be done on the issue, but there remains disagreement over how much further lawmakers should go. Some want a dedicated funding source for land banking. Others want a complete overhaul of the tax sale system.

But advocates for a blight fix at the Statehouse, such as Merritt and Moed, want to see how cities use tools that they already have, such as receivership, before more changes are discussed. And, with 2016 being a short session, comprehensive reforms may have been a nonstarter, anyway.

Said Moed, “it’s hard to keep coming back to the Statehouse and for us to keep coming up with ideas if the city’s not going to take advantage of them.”

Jeff Bennett, Indy’s new deputy mayor of community development, says the administration plans to do just that. The city is moving ahead with receivership and could approve a nonprofit to manage the program as early as this week. Meanwhile, he’s working to put together a comprehensive strategy for how to use the rest of the tools the city has available.

Part of that, he hopes, will include a better working relationship with the Marion County Commissioners. He also wants to look at expanding the role of Renew Indianapolis and to evaluate whether the city needs to devote more resources to fighting blight.

Bennett expects to have a full strategic plan complete by the spring at the latest.

Source: INDYSTAR

Additional Resources:

IN HB 1239 (bill info/text)

IN SB 310 Info (bill info/text)

IN SB 204 Info (bill info/text)

IN HB 1124 Info (bill info/text)

Hoopeston Hears Land Bank Plan

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Land Bank Update
January 6, 2016

HOOPESTON — Mike Marron, Vermilion County Board Chairman, and county board members Darren Duncan and Todd Johnson discussed the creation of a countywide land bank at Tuesday’s city council meeting.

Marron said Danville Mayor Scott Eisenhauer and county board members are looking at exploring a land bank for Vermilion County modeled after the South Suburban Land Bank. The land bank would address blighted properties.

“Urban blight is a problem,” Duncan said. ” It’s (land bank) a tool to address this, a unique tool.”

The county board and Danville would put up the seed money to start, Marron said, about $80,000. He added no seed money would be requested from surrounding communities to begin.

The purpose of the discussion Tuesday was to check Hoopeston’s interest in joining a land bank once created. At present, the county board and Eisenhauer are speaking with a consultant with land bank experience.

There are only two land banks in Illinois, according to Marron, the South Suburban Land Bank and Cook County Land Bank.

Marron said an intergovernmental agreement would need to be signed if Hoopeston were interested and would receive one vote and veto on the Vermilion County Land Bank Board. Danville would have two and the county board would have three. Other communities interested would each have a vote and veto.

“It’s not, by any means, a fix-all,” Marron said, “and not every property can be rehabbed. Some won’t.” Adding, “It’s not a quick fix. It’s just one option.”

The next Hoopeston City Council will meet at 7 p.m. Jan. 19, at City Hall, 301 W. Main St.

Source: Commerical-News

Foreclosure Mediation Waits for State Supreme Court OK

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Legislation Update
January 18, 2016

DECATUR – Officials such as Judge A.G. Webber were thrilled when preparations were made to implement a foreclosure mediation program in Macon County.

But that excitement has turned to curiosity over the past year, as the wait continues for the program to be approved by the Illinois Supreme Court.

“Lawyers still ask me about it, and I tell them I am anxiously waiting every day for word,” said Webber, the Macon County presiding judge. “I wish I knew what was going on with it.”

The county submitted documents to the administrative office of the Illinois Supreme Court in late 2013 to start a mortgage foreclosure mediation program in the circuit court.

While officials hoped they could start the program earlier this year, Webber said last week they still were awaiting approval from the office.

The circuit court continues to work with the Community Preservation Clinic of the University of Illinois College of Law to refine the program guidelines and answer any questions remaining over its implementation.

The clinic helped to train mediators and staff the program in Champaign County, which has operated since 2013.

Among the changes made since the initial proposal is to adjust the fee to help pay for the program. The tentative idea would be a $75 fee on every chancery case that deals with foreclosures.

Along with the fee, the program would also be paid for through a grant from the Illinois Attorney General’s Office.

That fee would be applied only to the mortgage company, as Webber said the goal is to make the self-sustaining and not a revenue source.

If approved, officials hope it would take just a few months for the program to be fully implemented. The program would require the lender and the borrower in a foreclosure case to meet with a mediator, who would explore ways the borrower’s mortgage loan could be reworked or reinstated. If mediation is unsuccessful, the case would then proceed to circuit court for foreclosure.

The Land of Lincoln Legal Assistance Foundation has been providing free representation in Macon County during these cases.

Officials from the Illinois Supreme Court could not be reached for comment.

Webber declined to speculate on the cause for the delay but said he has not been given any reason to believe it is related to the state budget impasse.

The judge said Macon County is ready for the program when it is approved.

“The ball is in their court,” Webber said.

Source: Herald & Review

Tax Relief Bill to Hit Presidents Desk

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Industry Update
December 17, 2015

The omnibus appropriations bill, which is a $600 billion bipartisan spending bill that includes the extension of several tax relief provisions, has passed in the House of Representatives and the Senate and is expected to go before President Obama on Friday.

The bill includes a standalone proposal sponsored by U.S. Rep. Tom Reed (R-New York) known as the Mortgage Relief Assistance Act that extends a provision allowing homeowners to exclude forgiven mortgage debt (the remaining mortgage loan balance when a borrower’s principal residence is sold in a “short sale” to avoid foreclosure) from their gross income when filing tax returns. According to the National Association of Home Builders (NAHB), the forgiven mortgage debt exemption is expected to save homeowners about $3.3 billion for the tax year 2015.

The President is expected to sign off on the bill. He signed off on a similar bill last year on December 19 that retroactively extended 55 tax provisions, including the one that provides tax relief for forgiven mortgage debt.

“We want to make sure that families who are trying to stay on their feet aren’t kicked while they down,” Reed said. “Many times they have tried to do everything right, but still run up against tough financial times and the Federal government shouldn’t add insult to injury by levying a tax bill that could cost their homes.”

The exclusion of forgiven mortgage debt provision is an extension of the Mortgage Forgiveness Debt Relief Act of 2007, originally signed into law by President George W. Bush, which relieved distressed homeowners from having to pay taxes on forgiven mortgage debt for the three calendar years of 2007 through 2009. That tax exemption was extended three more years until the end of 2012 with the Emergency Economic Stabilization Act of 2008, and it was extended until the end of 2013 with the American Taxpayer Relief Act of 2012. President Obama extended the tax exemption for forgiven mortgage debt until the end of 2014 when he signed off on the bill on December 19.

Another provision of the omnibus bill allows homeowners to consider mortgage insurance premiums paid as mortgage interest, thus allowing them to include the paid premiums as a tax deduction (same for FHA, RHA, and VA insurance premiums paid in addition to private mortgage insurance premiums). NAHB says this deduction is expected to save homeowners approximately $1.3 billion for the tax year 2015.

Both the exclusion of forgiven mortgage debt provision and the premium deduction for mortgage insurance will be extended through the end of 2016.

Source: DS News

Tampa Bay Nonprofits Rehabbing Foreclosed Homes Under Federal Program

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Industry Update
December 27, 2015

TAMPA — Tampa Bay nonprofits will get first crack at purchasing, rehabilitating and selling foreclosed houses owned by Fannie Mae and Freddie Mac under an expanded federal initiative that began this month.

Though foreclosure numbers continue to drop, between 700 to 1,200 foreclosed homes still remain in the Tampa metro area in need of rehabilitation and new occupants.

As part of the Neighborhood Stabilization Initiative, nonprofits in this area and 17 regions nationwide can buy the homes and get them back in shape.

The initiative, jointly developed by the Federal Housing Finance Agency and Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders. is designed to stabilize neighborhoods hardest hit by the housing downturn. The nonprofits will partner with the National Community Stabilization Trust.

The impact of the program can be far-reaching, from helping those in need of a home to improving the property values of the neighborhood.

“The more foreclosures there are in a neighborhood, the more adverse effects they have on property values,” said Tim Wilmath, director of valuation for the Hillsborough County Property Appraiser’s Office.

“In most cases when a property is foreclosed, you almost always have condition issues,” Wilmath said. Run-down abandoned houses — some boarded up with the previous owners furniture and trash strewn across a weed-infested lawn grass — can devalue neighboring houses by as much as 25 percent, he said.

“The idea is to get these homes occupied again, with quick and certain sales,” said Megan Moore, special adviser to the director of the Federal Housing Finance Agency. “You don’t want communities of investors, but of homeowners and renters who have a vested interest. Each (non-profit) buyer may focus on specific neighborhoods or only first-time buyers or just on veterans. The one thing we are trying to do is get them occupied.”

One of the problems would-be home buyers have had through the entire housing downturn is competition with investment buyers, said Ernest Coney, CEO of the nonprofit CDC of Tampa. “We’re really excited about the program because it really will help offer more inventory, especially in the affordable housing space, which is drastically needed in the Tampa market.

“We found a lot of residents who were trying to purchase homes were getting outbid every time by investors,” Coney said. “This program will create an opportunity for residents to gain direct access.”

Here is how it works: A nonprofit gets notified that a house is available and then has 12 days to look at it and evaluate it and decide whether to purchase the house, which could either be rehabilitated or torn down.

According to RealtyTrac, a national real estate trend tracker, there are plenty to choose from. One in every 65 houses in Hillsborough County is in foreclosure. While that is a drop of 38.5 percent in a year, it is still high on a national scale. In Hernando County, one in 61 houses is in foreclosure. Pinellas County is faring the best in the region, with one in every 81 houses in foreclosure, down 42.9 percent from November 2014. Pasco is doing the worst, with one in every 54 houses at some point in foreclosure.

“We can purchase the home and go in and rehab the home to make it brand new and provide that to someone who is looking for a first-time home,” Coney said. “We are also a HUD-certified housing counseling agency, so we have a lot of people that have taken our classes (for first-time home buyers) and we know who will qualify” to buy.

For the CDC of Tampa, the goal is to get back what it puts into a house, he said, and to provide affordable housing.

Even if one of these houses is torn down, it will benefit the neighbors, Wilmath said. “Some of these houses are too far gone to rehabilitate, but by tearing them down, it removes a blighted property that could have been used for drugs or other illegal activity. Just removing it is going to have a positive impact on surrounding property values,” he said.

In Pinellas County, Community Land Trust will focus on purchasing these homes for resale to low and moderate income families, said Marquaz McGhee, the nonprofit’s housing services director. “A family that makes $37,800 is still able to purchase a house in Clearwater. That is 80 percent of the median income for the area.”

Even if the houses are advertised on the open market, he said, Community Land Trust can establish income requirements so that the houses only go to low- and moderate-income families.

Nicole Lytwyn, a 22-year-old recent University of Florida graduate, has already benefitted from a similar program Community Land Trust has been involved with partnering with the City of Clearwater. Lytwyn closes on a renovated house on Neptune Avenue Dec. 29.

“I was looking for eight months and I could not find any decent home in my price range,” Lytwyn said. “Everything was either almost condemned or because it’s a seller’s market, first-time homeowners can’t afford the prices.” Lytwyn said she’s in love with the house she is purchasing from Community Land Trust and believes others can benefit like she did from the expanded federal program.

“Especially people like me who are just starting out,” this will be a great program, she said.

McGhee said his agency hopes to purchase 15 houses in 2016 under the expanded federal program.

Already, Community Land Trust has been involved in such purchases and resales, including the house on Neptune Avenue. It had a leaky roof, needed a kitchen remodel and other upgrades, he said. It had numerous code violations. Now, it has a new owner who is a Clearwater native and vested in the community.

“We buy, then take out the cost of the land and up-front pricing. That house sold for $134,000, instead of $182,000,” McGhee said.

The houses being sold through the federal initiative have a value of $75,000 to $175,000.

“This is a federal program that actually works,” McGhee said.

Organizations interested in purchasing the foreclosed homes must first become a National Community Stabilization Trust community buyer, Moore said.

She called it a “great and unique opportunity” for all parties. The initiative was first offered as a pilot program in Detroit, Chicago and in Cook County, Illinois. “What we learned,” Moore said, “is that this can be replicated. We’ve seen in the pilots that this can work.”

In addition to the Tampa Bay region, the Neighborhood Stabilization Initiative has also expanded into the Miami-Fort Lauderdale-West Palm Beach metro area, Jacksonville and into the Orlando-Kissimmee-Sanford metro area.

Source: The Tampa Tribune

Senate Votes to Extend Foreclosure Safeguard for Servicemembers

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Industry Update
December 11, 2015

The U.S. Senate on Thursday night voted unanimously to pass legislation extending a provision of the Servicemembers Civil Relief Act (SCRA) that protects active duty servicemembers from losing their homes.

The bill, introduced by Sen. Sheldon Whitehouse (D-Rhode Island), extends through 2017 the provision of the SCRA that safeguards active duty servicemembers against foreclosure for one year following the completion of their service in the field as they transition to civilian life.

“Some of the men and women who’ve served our country need time to find their financial footing as they leave active service. They should get it,” Whitehouse said. “Our servicemembers keep us safe from all manner of threats around the globe. It’s the least we can do to keep them and their families safe from foreclosure as they transition back to civilian life. I’ll keep fighting to make these protections permanent, but I’m pleased we’ve reached a unanimous, bipartisan agreement on a two-year extension.”

Whitehouse has fought for years to protect the rights of servicemembers who are homeowners. The Commission on the National Guard and Reserves submitted a report in 2008 that prompted Congress to extend foreclosure protection from 90 days to nine months under the SCRA later that year. The period was extended further to one year in 2012 as part of a bill introduced by Whitehouse.

Another bill introduced by Whitehouse in May 2014 extended the one-year grace period until January 1, 2016. That bill passed unanimously in both the House and the Senate and was signed into law by President Obama in December 2014. In April 2015, Whitehouse introduced a bill that would make foreclosure protection for active servicemembers permanent.

The current one-year safeguard is set to expire at the end of 2015, at which time the grace period will revert to its original 90 days.

“America’s servicemembers and their families make enough sacrifices for our country. Their homes should not be one of those sacrifices,” said Sen. Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking Committee and co-sponsor of the bill. “This bill will help ensure that America’s servicemembers don’t face the threat of eviction or foreclosure when they return from active duty.”

Source: DS News