Residential Relocation Issues Displaced Homeowner Becomes a Tenant?

1. Residential Relocation IssuesDisplaced Homeowner Becomes a Tenant? IRWA Education Conference Seattle, Washington June 11, 2012

2. Uniform Act Requirements for Replacement Housing • Acquisition Payment:  Appraised FMV plus any settlement, plus court awards. • Ensure comparable replacement housing is made available to displaced persons. • Comparable replacement dwelling must be within the financial means of the displaced homeowner. • A replacement dwelling purchased by a homeowner ... is considered to be within the homeowner's financial means if the homeowner will receive the full price differential as described in §24.401(c), all increased mortgage interest costs as described at §24.401(d) and all incidental expenses as described at §24.401(e), plus any additional amount required to be paid under §24.404, Replacement housing of last resort. • Housing of Last Resort to Assist a Purchase of a Comparable Replacement. • Determination/Justification to Provide Housing of Last Resort • Maintain Basic Rights of Displaced Person • A Homeowner may elect to rent (TENANT CONVERSION IS ALLOWABLE).

3. Homeowners with Upside Down Mortgages(Loan Payoff Greater Than FMV) Case 1. Longer term owner and property value has declined below the outstanding mortgage balance. Owner is current and making payments. FMV and Mortgage Balance are “close” ( say within 15% to 20%). • Use of administrative settlement to purchase the property at mortgage balance. Recognizes the error in the appraisal, the inability of the owner to provide clear title at time of acquisition, the expense of condemnation, other justifications. Case 2. Relative recent mortgage (say post 2007) and declining property values. • Sponsor should advise owner and lender to consider principle reduction in accordance with available programs, and as well in lieu of condemnation. If variance with FMV may be adjusted to within 10% - 15% or so, then administrative settlement may be justified. Case 3: Interest Only Mortgage (or 125% of Value). • In lieu of condemnation (or to continue negotiations for noise purchase) seek principle reduction with lender for the proposed purchase at FMV. • If poor credit, assist owner to opt to tenant status for replacement housing.

4. Poor Credit / Foreclosure / Default Case 4. Unsustainable Ownership situation. Owner has missed payments and is facing foreclosure. • In lieu of condemnation (expansion project) seek principle reduction and/or short sale and transfer of note to replacement property. Assist relocation to a comparable replacement home as an owner, as is determined feasible under 49 CFR 24 requirements. • If no credit assist with owner opting to tenant status for replacement dwelling. Case 5. Conversion to Partial Owner . Property is subject to liens and judgments that leave no equity in property. • Allow replacement housing payment (purchase price differential) claim as a partial owner. Displaced homeowner purchases less expensive DSS replacement home.

5. Other Assistance Assistance for Homeowner facing foreclosure: http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure State and local foreclosure prevention programs. http://www.nclc.org/issues/foreclosure-mediation-programs-by-state.html FHWA Temporary Negative Equity Waiver: Allows RHP based on cost difference from FMV and not Settlement Cost (increases amount above that prescribed under 49 CFR 24). http://www.fhwa.dot.gov/realestate/tempwaiv10.htm • Offered to State DOT’s for use on Federal-aid Highway Program. Several state DOT’s have adopted the waiver for their highway programs (Caltrans, Ohio DOT, others). • No use to date on Airport Projects. FAA would have to approve waiver of the regulation. Sponsor would need to show that use of existing methods and requirements are not effective (e.g. above cases). APP 400 approval required for waiver of regulations.

6. Thank You!