Q What new financing programs do you have for developers?
A Auger: The Homeownership Pool Program allows developers who are pool members to reserve HOME purchase assistance funds for a qualified homebuyer on a first-come, first-served basis.
The Community Workforce Housing Innovation Pilot Program promotes the creation of public-private partnerships to finance, build and manage workforce housing (both rental and homeownership) for essential services personnel earning at or below 140 percent of the area median income.
Bolen: MHC is one of a handful of states and development finance entities participating in the U.S. Department of Agriculture’s Preservation Revolving Loan Pilot program. MHC will use $2 million in loan funds from USDA to relend to developers who will combine them with housing tax credits to preserve Sec. 515 rental housing. MHC is receiving loan applications at this time and will take housing tax credit applications in our July 2007 cycle. Our goal is to finance the preservation of five to seven developments totaling up to 350 units.
DeVos: MSHDA launched a major preservation initiative in 2006, offering tax-exempt financing and gap funding of up to $15 million of agency reserves, to encourage the preservation of federally assisted housing, including expiring low-income housing tax credit projects. Eighteen Sec. 8, Sec. 236, and expiring LIHTC properties have been preserved, and several Sec. 202 and Sec. 515 loan preservation applications are pending.
MSHDA also offers HOME funds as gap financing for tax-exempt loans for new construction or acquisition/rehabilitation of rental units, with deep rental targeting required.
Dewey: VHDA’s REACH Virginia (Resources Enabling Affordable Community Housing in Virginia) Program is our multifaceted approach to serving the housing needs of Virginia’s diverse communities. It provides a yearly subsidy to lower the interest rates for multifamily rental strategic lending programs as well as homeownership programs.
Also, VHDA’s Mixed Use/Mixed Income Program is a valuable resource for localities seeking innovative ways to bring residents into struggling downtown areas. This program is financed by taxable bonds for the acquisition, construction and/or rehabilitation of developments promoting mixed-use and mixed-income developments. Financing is available to local jurisdictions, local housing authorities, for-profit developers and nonprofit developers.
Garver: The qualified allocation plan (QAP) was drastically changed to allow us more flexibility to fund the best development. For our Housing Development Assistance Program (HDAP), that is funded with federal HOME dollars and state housing trust funds, we are proposing an open funding round in order to provide more flexibility for our developers, especially smaller community-based nonprofits. We are also using a portion of the HDAP funds for an urban rehabilitation program that is for the renovation and sale of existing, vacant homes to low- and moderate-income households. After we examine the results of our pilot program this year, we may expand this initiative.
One new initiative on the horizon is our Phoenix Fund. This fund, using OHFA resources, is designed to provide assistance to developers who want to redevelop a troubled rental property in a comprehensive and collaborative manner. This fund would help facilitate the acquisition and pay for some of the capital expenses. We are still in the early implementation stages. Our board authorized the program late last year and we hope to fund one or two projects a year.
Herman: In the multifamily arena, we are still focusing on housing for seniors, and we will be focusing on workforce housing in the Seattle market. We haven’t changed our basic program mix, but we have stayed flexible to respond to changes in the market.
Markowski: We have placed increasing emphasis on the use of TIF to complement the use of tax-exempt bonds and 4 percent tax credits. We’ve also used money generated by the density bonus to provide rental subsidies. In 2007, $13 million will be generated by the downtown density bonus and will be used for rental subsidies for the lowest income renters and for developer subsidies in difficult to develop areas.
Q How do you hope to build more political and community support for affordable housing in your state?
A Auger: Our goal is to be as responsive as possible to media requests for information and local requests for participation in housing discussions. Our continued work with our state coalition of affordable housing stakeholders to educate the public about the relationship of affordable housing to a community’s quality of life and economic vitality is another important component of our strategy.
Bolen: a) MHC is currently developing an informational brochure and education campaign around tax credit housing designed to put a face to the families typically living in these developments. This will be targeted to local elected officials and ordinary citizens, b) MHC has an active program of sponsoring homebuyer fairs and public education events in partnership with lenders and community-based groups around how MHC’s programs can assist in homeownership, c) MHC participates in efforts to educate the public and leadership about predatory and unscrupulous lenders and how to avoid bad loans, d) MHC is providing its finance expertise and development contacts to a city of Jackson effort to supply additional housing units addressing chronic homelessness in the capitol area. We are exploring using housing tax credits for such housing but there are major challenges in using tax credits for homeless housing, e) MHC is currently working with advocates in the disability community on an examination of policies affecting disabled individuals who may desire more housing choice versus institutional care.
DeVos: The five-year plan served as a catalyst that brought together the affordable housing and community development industry around one vision—transform the Michigan economy by creating vibrant cities, towns and villages. The industry has now formed a powerful coalition of more than 30 statewide organizations representing the for-profit and nonprofit sectors that is requesting the state Legislature to provide $100 million to the Michigan Housing and Community Development Fund signed into law in 2004. The Coalition is sponsoring a rally in Lansing to show legislators the strong support for the Fund and expect in excess of 2,500 members representing the industry.
Dewey: First, we are planning to hold regional meetings this year with representatives of local governments throughout Virginia in order to identify and address the affordable housing challenges in each region of the state. Second, we are working to build better relationships and partnerships with local governments through a Local Governments Advisory Board and a staff person dedicated to outreach to local governments. Third, we are playing a lead role in Housing Virginia, which is a private-public partnership dedicated to educating the public on the need for and benefits of affordable housing. And fourth, we are putting increased emphasis on housing quality standards and effective property management to ensure that the housing we finance is a long-term community asset.
Garver: [We will] engage early on in policy and programmatic issues that affect the availability of affordable housing in Ohio. In the single-family, multifamily, and special-needs markets in which OHFA operates, we have worked hard to better understand what the range of needs are in these markets, prioritize those needs, and develop appropriate products and coalitions to address the most pressing needs. With the subsequent support of our board, the agency has rolled out eight separate initiatives during the last year as part of a continuing effort to work together with other members of the affordable housing community and maximize the use of limited resources.
Herman: Recently, I have been doing more public speaking around the state to call attention to our state’s affordable housing crisis and the importance of affordable housing to our state’s economy. We are part of a statewide advocacy organization that is reaching out to the business, education, and healthcare sectors to help them understand the relationship between their industries and people having a decent, affordable place to live. We have to broaden the support base for our housing programs by reaching out to other sectors to work on common problems and goals.
Markowski: There is widespread support for affordable housing from all sectors because of the need.
Q Give us a sense of the single-family home foreclosure problem in your state and the effects this problem is having.
A Auger: Data suggests that there are many metropolitan areas in Florida where delinquency and foreclosure rates of subprime mortgages are many times that of prime mortgage products. However, to date this issue has received very little mention in the local press and very little political attention at the state level.
Bolen: Delinquency data from the Mortgage Bankers Association shows that in 2005 Q4, the percentage of total Federal Housing Administration loans past due in Mississippi was 75 percent higher than the national rate (24.89 percent vs. 14.22 percent).
That rate was up 50 percent compared to the same period in 2004, when it stood at 16.50 percent. In contrast, the national rate in 2005 increased just 8 percent from the fourth quarter of 2004 when it stood at 13.19 percent. For the whole calendar year 2005, Mississippi's rate for FHA loans past due was 55 percent higher than the national average (19.49 percent versus 12.54 percent).
Mississippi's rate of foreclosures started for the year as a share of all FHA loans (.76 percent) was below the national rate (.85 percent). Mississippi’s rate of FHA loans in foreclosure for the year (2.05 percent) was below the national average (2.36 percent). (Mortgage Bankers Association, National Delinquency Survey, data not seasonally adjusted) These last two indicators for Mississippilook healthier than the reality, since the FHA forbearance allowed borrowers after Hurricane Katrina undoubtedly masks the real financial troubles many households are having after Katrina.
DeVos: Along with the rest of the country, Michigan is seeing an increase in delinquencies and foreclosures. But at MSHDA, we are making every effort to assist borrowers with their financial struggles during these tough times. Loss mitigation efforts along with referrals to well qualified credit counseling agencies are just a few of the extra steps being taken.
MSHDA’s overall production has significantly increased over the past three years. We have experienced a 53 percent increase in units purchased and the increase in dollar volume has tripled. Our 2007 production is still showing healthy increases from 2006.
Dewey: We are extremely fortunate in Virginia not to have a single-family foreclosure problem. The state foreclosure rate, as reported by MBA, has averaged 0.29% for calendar year 2006, well below the national average of 1.05 percent. VHDA's average foreclosure rate for 2006 was even lower—just 0.18 percent.
We attribute our low foreclosure rate to VHDA’s strong homeownership education program and loss mitigation efforts. VHDA’s low foreclosure rate can also be attributed to Virginia’s diverse and strong economy as well as the very strong housing market over the last four to five years.
Garver: The effect of the foreclosure crisis on Ohio’s neighborhoods and residents is vast. Declining property values, upside-down loans, and vanishing home equity are common derivatives of the problem. Gov. Strickland established the Foreclosure Prevention Taskforce to examine and recommend strategies to combat Ohio foreclosures. The introduction of our Opportunity Loan Refinance Program has provided the ability to talk directly to customers who are on the verge of losing their home. Divorce, medical emergencies, and other personal situations led to some foreclosures while a lack of understanding of the current mortgage product led to others. Vacant properties as a result of foreclosures are providing the environment for crime and leading to the downfall of Ohio neighborhoods.
Herman: Washington is fortunate to have had fewer sub-prime loans than many other states. Only about 8 percent of our loans in recent years have been in the sub-prime market. In addition, in 2006 we had the fourth highest percentage median home price increase among the 50 states. This combination means we are not suffering the foreclosure problems seen in other states. We hope this continues.
Markowski: In 2006, 10,290 foreclosures were filed in Chicago. Foreclosures affect more than just the homeowner who loses a home; they affect the entire community once a home is boarded up and sits vacant until a new buyer can be found for the property. In 2003, the city, Neighborhood Housing Services of Chicago and 20 key lending, investment and servicing institutions formed the Home Ownership Preservation Initiative (HOPI) to offer families counseling, loss mitigation, and workout options. HOPI has already educated over 4,300 people, prevented over 1,300 foreclosures and reclaimed over 300 buildings.