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City of Milwaukee Department of City Development Neighborhood Stabilization Program Federal Reserve Conference November 5, 2009 - PowerPoint PPT Presentation


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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 (2007-2008); more than double historical averages

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

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City of Milwaukee

Department of City Development

Neighborhood Stabilization Program

Federal Reserve Conference

November 5, 2009


Foreclosures in MilwaukeeBackdrop for the NSP Program

  • Over 10,000 foreclosure filings in Milwaukee (2007-2008); 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


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)

Homebuyer Assistance

Provides forgivable loans for owner occupant purchasers 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)

Rental Rehab

Provides forgivable loans to investor purchasers for the rehabilitation of foreclosed homes.


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)

Neighborhood Stabilization Program (NSP)

Buy in Your Neighborhood

Provides low interest loans for investors purchasing a foreclosed home in their neighborhood.


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.


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”

Access to financing, especially for non-owner occupied properties, continues to be a challenge

Create realistic expectations on process – partners are key in the communication

Working on this – applied for NSP 2 funds, as well as secondary market, and local banks

Challenges


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 of most severely blighting properties

Where unbuildable lots result, stipends for landscaping, urban gardens, or other productive reuse

Demolition and Reuse Funds


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

What’s Helping


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


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)


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.


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

Questions?


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