Transcript City of Milwaukee Department of City Development Neighborhood Stabilization Program Federal Reserve Conference November 5, 2009

City of Milwaukee
Department of City Development
Neighborhood Stabilization Program
Federal Reserve Conference
November 5, 2009
Foreclosures in Milwaukee
Backdrop for the NSP Program
•
Over 10,000 foreclosure filings in Milwaukee (20072008); more than double historical averages
•
Over 5,300 properties are currently subject to an
open foreclosure filing – an increase of almost 20%
from year end 2008
•
1,348 Milwaukee homes are currently bank owned
foreclosures (REOs). An additional 302 are City
owned tax foreclosed properties.
•
Two thirds of foreclosed properties have open
building code violations
Foreclosures in Milwaukee
•
Hardest hit areas are CDBG areas; significant
City investments are at risk
•
Subprime lending activity peaked in 2005 with
over $1 Billion of activity in Milwaukee
•
Subprime lending disproportionately impacted
low income and minority families; 59% of 2006
loans in CDBG areas were subprime/high-cost
Concentrations
of Foreclosed
Homes
Trends
• Foreclosure filings are up since last year
• “Second Wave” – related to economy in
addition to predatory lending
Trends
• Number of bank owned properties is declining
as prices are being slashed and more buyers
are entering the market
• In Milwaukee, there have been more sales of
foreclosed properties than regular market
transactions
Neighborhood Stabilization Program (NSP)
Milwaukee’s NSP Plan
Program Summary
Homebuyer Assistance (80 homes)
$1,600,000
Rental Rehabilitation (75 units)
$1,312,500
Rental Development - Large Project (40 units)
$1,200,000
Buy in Your Neighborhood (40 units)
$240,000
Acquisition, Rehab, Resale (5 homes)
$375,000
Demolition (75 properties)
$1,312,500
Vacant Land Initiative
Vacant Lot Reprogramming (50 properties)
Vacant Lot Redevelopment (40 units)
Land Bank
$100,000
$1,200,000
$864,219
Neighborhood Stabilization Program (NSP)
Homebuyer Assistance
Provides forgivable loans for owner occupant purchasers of
foreclosed homes
•
Up to 30% of purchase/rehab cost, indexed to buyer
income (final levels of assistance being determined).
•
0% interest 2nd mortgage, forgivable after five or ten
years depending on level of assistance received.
•
Code compliance: Each property will be inspected to
insure that it meets the minimum standards for the
program. A rehabilitation specialist will prepare a
scope of work, monitor the construction and perform
a final inspection to insure that the property meets
program standards)
Neighborhood Stabilization Program (NSP)
Rental Rehab
Provides forgivable loans to investor purchasers for the
rehabilitation of foreclosed homes.
•
Up to $17,500 per unit (example: 2 unit property is eligible for
$35,000). Funds can be used for rehab costs only and must be
matched dollar for dollar by landlord.
•
Property must be rented to income-eligible tenants and held for a
minimum of 5 years. Tenant income: < 60% AMI with priority to
landlords who agree to rent to tenants with incomes < 50% AMI.
•
Code compliance: Each property will be inspected to insure that it
meets the minimum standards for the program. A rehabilitation
specialist will prepare a scope of work, monitor the construction
and perform a final inspection to insure that the property meets
program standards.
•
Participating landlords must have a responsible track record
including a good record with the Department of Neighborhood
Services and a history of paying their property taxes on time.
Neighborhood Stabilization Program (NSP)
Buy in Your Neighborhood
Provides low interest loans for investors purchasing a
foreclosed home in their neighborhood.
•
3.0% interest 2nd mortgage for up to 20% of purchase/rehab cost.
•
Property must be located within three blocks of purchaser’s
primary residence.
•
Property must be rented to income-eligible tenants and held for a
minimum of 5 years. Tenant income: < 60% AMI with priority to
landlords who agree to rent to tenants with incomes < 50% AMI.
•
Code compliance: Each property will be inspected to insure that it
meets the minimum standards for the program. A rehabilitation
specialist will prepare a scope of work, monitor the construction
and perform a final inspection to insure that the property meets
program standards)
What’s Helping
• Created guidelines and before launching, met
with lenders, home buying counseling agencies
and realtors to solicit feedback
• Continue to meet to work through issues and
identify process improvements
What’s Helping
• Strong Marketing Efforts – Getting the Word Out
– Community Organizations
– Newly formed Milwaukee Homeownership
Consortium
– Website
– Other Partners – Milwaukee Public Schools, City
employee brown bags, Milwaukee Police Dept.
Challenges
• Most properties in need of
rehab – length of process
to approve assistance
doesn’t always match
timeframe of offer to
purchase –
lenders/servicers motivated
to sell and would prefer to
accept a “cash offer”
• Create realistic expectations
on process – partners are
key in the communication
• Access to financing,
especially for non-owner
occupied properties,
continues to be a challenge
• Working on this – applied for
NSP 2 funds, as well as
secondary market, and local
banks
Land Bank
•
City formed the Milwaukee Neighborhood
Reclamation Company LLC
•
Forged partnership with National Community
Stabilization Trust, as well as individual relationships
with lenders
•
Targeting neighborhoods with ongoing initiatives and
past and current investment activities
•
Currently acquiring first Land Bank properties
Large Project Pool
Rehabilitation and New Construction
• Resources for developers with the capacity to handle
larger scale projects
• Targeting neighborhoods with ongoing initiatives and
past and current investment activities
• Issued a “Request for Qualifications” to identify
development partners
Demolition and Reuse Funds
• Demolition of most severely blighting
properties
• Where unbuildable lots result, stipends for
landscaping, urban gardens, or other
productive reuse
What’s Helping
• Multiple tools (demolition, development subsidy,
property acquisition capability) provide more
options for making an impact as well as more
flexibility in decision making
• City already had an established development
arm, as well as real estate staff
• Utilizing local neighborhood partners to assist in
property identification as well as reuse strategies
Challenges
• Property condition – left
vacant, properties are
deteriorating and/or being
vandalized, creating
fewer and/or more
expensive options for
their reuse
•
DNS property
registration and vacant
property ordinances
•
Neighborhood outreach
Challenges
Foreclosed properties are
selling at 38% of assessed value
Speculators are active in the
marketplace – purchasing properties
without the intent or capacity to make
the necessary repairs
Recent Examples
2712 N. 46th St.
2009 Assessed Value: $104,800
Sales Price: $42,000
(10/29/2009)
1603 S. Union St.
2009 Assessed Value $72,000
Sales Price: $15,000
(10/9/2009)
What we are doing:
• Stepped up homeownership marketing
efforts
• Considering a real estate broker" incentive
program” for owner occupant purchases
• Aggressive and coordinated code
enforcement efforts
• Database for tracking foreclosed properties,
as well as properties in the foreclosure
process
Website
www.milwaukeehousinghelp.org
Additional Resources
Foreclosure Mapping (Public)
WHAT’S MOST HELPFUL OVERALL?
A coordinated effort –
NSP Program is part of a larger foreclosure
strategy for the City of Milwaukee that also
includes prevention and intervention activities.
Everybody has a vested interest in addressing
the issue – ask them to be part of the effort.
Questions?
• NSP program information, applications,
Q & A and information on other City
foreclosure initiatives
www.milwaukeehousinghelp.org
• Information on the Department of
Neighborhood Services foreclosure
legislation
www.city.milwaukee.gov/DNS/APIF