NEIBORHOOD STABiLIZATION PROGRAM – NSP 2008

1. NEIBORHOOD STABiLIZATION PROGRAM – NSP 2008 Lender’s Meeting

2. INTRODUCTIONS & WELCOME

3. CONGRESS PASSES H.R. 3321 KNOWN AS HOUSING and ECONOMIC RECOVERY ACT OF 2008 • On July 26, 2008 Congress passed bill H.R. 3221 commonly referred as the Housing and Economic Recovery Act of 2008. Under this section, $3.92 billion is set aside to provide emergency assistance for the redevelopment of abandoned and foreclosed homes. Congress also indicated in the bill that the U.S. Department of Housing and Urban Development (HUD) would establish the formula allocation and fund “states and units of general local government with the greatest need, as such need is determined in the discretion of the Secretary”. • HUD RELEASES METHODOLGY FOR ALLOCATION • On September 26, HUD released their Methodology for Allocation of $3.92 billion along with the list of states and local governments who will receive the allocation and their amounts. • Louisiana’s state allocation amount is $34,183,994 Local government allocation for • Baton Rouge is $2,308,848 million and New Orleans is $2,302,208. • LHFA AND LOUISIANA OCD PARTNERS • On September 29, the Federal Register published and released HUD’s notice to implement its newly created program, Neighborhood Stabilization Program (NSP). NSP will be regulated under HUD’s existing Community and Development Planning through Community Development Block Grant (CDBG). LHFA will develop the Action Plan through OCD, who will serve as the lead and responsible entity. OCD will monitor LHFA as it implements the NSP Action Plan. BACKGROUND

4. ELIGIBLE USE • ELIGIBLE ACTIVITIES Uses of NSP Funding • A. Establish financing mechanisms for purchase & redevelopment of foreclosed upon homes & residential properties… • As an activity delivery cost for an eligible activity (designing & setting it up) • Financing of an NSP eligible activity, to carry out that activity, is eligible as part of that activity 4

5. ELIGIBLE ACTIVITIES • ELIGIBLE USE Uses of NSP Funding • Acquisition • Disposition • Relocation • Direct homeownership assistance • Eligible rehabilitation and preservation activities for homes and other residential properties • Housing counseling for those seeking to take part in the activity B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties 5

6. ELIGIBLE USE • ELIGIBLE ACTIVITIES Uses of NSP Funding • Acquisition • Disposition (includes maintenance) C. Establish land banks for homes that have been foreclosed upon 6

7. ELIGBLE USE • ELIGIBLE ACTIVITIES Uses of NSP Funding Clearance, for blighted structures only D. Demolish blighted structures 7

8. ELIGIBLE USE • ELIGIBLE ACTIVITIES ELIGIBLE USE & ACTIVTIES • Acquisition • Disposition • Public facilities and improvements • Housing Counseling Public Services (limited to prospective purchasers or tenants of redeveloped properties) • Relocation E. Redevelop demolished or vacant properties 8

9. ELIGIBLE USE • ELIGIBLE ACTIVITIES Uses of NSP Funding • New housing construction • Direct homeownership assistance • 570.204 activities by Community Based Development Organizations E. Redevelop demolished or vacant properties (continued) 9

10. Eligible Uses Summary • All grant funds must be used for an eligible activity according to HERA • Each activity must also be CDBG eligible and meet a LM national objective • HUD must grant written approval for any CDBG activities not listed for that eligible use • CDBG regulatory definitions of eligible activities apply to NSP except where specifically modified • New housing construction is eligible as redevelopment ELIGIBLE USE & ACTIVTIES 10

11. Ineligible Activities: • Generally, if an activity is ineligible under CDBG, it is ineligible under NSP • Not eligible under HERA: • Foreclosure prevention • Demolition of non-blighted structures • Purchase of properties not abandoned or foreclosed upon Ineligible Activities 11

12. Income eligibility for NSP based on 120% of area median income • Metro area median or state non metro median, based on where the activity is undertaken • HUD is providing 120% AMI data on website – www.hud.gov/nsp • NEW TERMINOLOGY • Low • Moderate • Middle-Income • 80-120% of median = Middle Income • CDBG Low/Mod benefit national objective criteria apply, except beneficiaries can be Low, Moderate and Middle Income NSP Income Targeting 12

13. Housing Counseling • Limited clientele activities • Housing counseling for prospective purchasers/tenants • Public facilities such as emergency shelters, group homes • Land Banks – benefit a defined service area if maintenance and demolition also take place • Land Banks – NSP-funded properties must be obligated for a specific, eligible redevelopment within 10 years • Land Bank • Acquisition, rehabilitation, rental, sale, conversion, construction of housing unit • Discount for purchase properties – single family purchase • Homeownership assistance • Infrastructure for housing as part of redevelopment • All units must be LMMI-occupied • Housing Activities NSP Income Targeting 13

14. 25% to 50% of median income targeting • Each grantee must use at least 25% of its NSP grant plus program income for purchase/redevelopment of abandoned/foreclosed residential properties to house individuals or families with incomes at/below 50% of area median income NSP Income Targeting 14

15. Abandoned. A home is abandoned when mortgage or tax foreclosure proceedings have been initiated for that property, no mortgage or tax payments have been made by the property owner for at least 90 days, AND the property has been vacant for at least 90 days. definitions

16. Current market appraised value. The current market appraised value means the value of a foreclosed upon home or residential property that is established through an appraisal made in conformity with the appraisal requirements of the URA at 49 CFR 24.103 and completed within 60 days prior to an offer made for the property by a grantee, sub recipient, developer, or individual homebuyer. Definitions – current market appraised valve

17. Acquisition: • Section 2301(d)(1) of HERA requires any purchase of a foreclosed-upon home or residential property under NSP be at a discount from the current market-appraised value of the home or property. Such discount shall ensure that purchasers are paying below-market value for the home or property. • For mortgagee foreclosed properties, grantees must seek to obtain the “maximum reasonable discount” from the mortgagee, taking into consideration likely “carrying costs” of the mortgagee if it were to not sell the property to the grantee or sub recipient. • Section 301 of the URA, regarding just compensation, does not apply to voluntary acquisitions. • All acquisitions of property under NSP require an appraisal for purposes of determining the statutory purchase discount. • For individual purchase transactions, the purchase discount is to be at least 5% from the current market appraised value of the home or property. Definitions - purchase

18. For purchase transactions in the aggregate, the average purchase discount depends on how the purchase discount for an individual property is determined. • The average purchase discount shall be at least 10% if the State, unit of general local government, or sub recipient determines the discount for each purchase transaction through use of a methodology that results in a discount equivalent to the total carrying costs that would be incurred by the seller if the property were not purchased with NSP funds (provided the discount is at least 5%). • Such methodology shall provide for an analysis of the estimated holding period for the property and the nature and amount of the carrying costs of holding the property for this period. • Carrying costs shall include, but not be limited to: taxes, insurance, maintenance, marketing, overhead, and interest. • If this methodology is not used, the minimum average discount shall be at least 15%. purchase

19. An NSP recipient may NOT provide NSP funds to another party to finance an acquisition of tax foreclosed (or any other) properties from itself, other than to pay the necessary and reasonable costs related to the appraisal and transfer of title. purchase

20. Sale • If an abandoned or foreclosed upon home or residential property is to be sold to an individual as a primary residence, no profit may be earned on such sale. • Section 2301(d)(2) directs that the sale of such property shall be in an amount equal to or less than the cost to acquire and redevelop or rehabilitate such home or property up to a decent, safe, and habitable condition. • The maximum sales price for a property is determined by aggregating all costs of acquisition, rehabilitation, and redevelopment (including related activity delivery costs, which generally include, among other things, costs related to the sale of property). • In determining the sales price, HUD will NOT consider the costs of boarding up, lawn mowing, maintaining the property in a static condition, or, in the absence of NSP-assisted rehabilitation or redevelopment, the costs of completing a sales transaction or other disposition to be redevelopment or rehabilitation costs. sale

21. Each NSP-assisted homebuyer is required to receive and complete at least eight hours of homebuyer counseling from a HUD-approved housing counseling agency before obtaining a mortgage loan. • Grantees must ensure that homebuyers obtain a mortgage loan from a lender who agrees to comply with the bank regulators’ guidance for non-traditional mortgages. • Grantees are cautioned against providing or permitting homebuyers to obtain subprime mortgages for whom such mortgages are inappropriate. sale

22. PUBLIC PROJECT IN TARGET AREA • Rental Redevelopment – (Acquisition + Rehab/New Construction) • $5,642,302.00 • Single Family Homeownership Development (Acquisition + Rehab/New Construction ) – • $5,001,000 Million • Land bank + Redevelopment • $2Million • Homebuyer Education & Training – • $1Million • Projects for the 25% set-aside for 50% Area Medium Income – • $7,691,398.00 (all activities applicable except for Homebuyer Education & Single Family Bond) • LHFA IN-HOUSE PROJECTS • Homeownership Assistance • Single Family Bond • $10 Million FUNDING FOR PROJECTS

23. Projects Areas • Shreveport • Alexandria • Monroe • Baton Rouge • New Orleans • Lake Charles • Bastrop • New Iberia • Kentwood/Tangipahoa Village • Winnsboro • Homer • FORECLSOURE RISK MAP Project area

24. Applies to each direct NSP grant, not to each project/ activity or the NSP program as a whole Grantee action plan amendment must show how grantee will comply Final determination of actual compliance upon completion of the grant Compliance based on dollars, not number of units 25% set a side requirement 24

25. Principal way to comply will be through rental housing New construction or conversion Acquisition or acquisition + rehab Affordable rents & affordability period Address needs in Continuum of Care 25% set aside requirement 25

26. Any purchase of a foreclosed upon home or residential property under this section should be at a discount from the current market appraised value of the home or property. Current condition must be taken into account Rehabilitation Standards 26

27. Any rehabilitation of a foreclosed-upon home or residential property should be to the extent necessary to comply with applicable laws, codes, and other requirements. This requirement differs from the “regular” CDBG program. Rehabilitation may include improvements to increase the energy efficiency of conservation of such homes and properties or provide a renewable energy source or sources for such homes and properties. Rehabilitation Standards 27

28. The sale of an abandoned or foreclosed upon home or residential property to an individual as a primary residence must be in an amount equal to or less than the cost to acquire and redevelop or rehabilitate such home or property up to a decent, safe, and habitable condition. Sale of Homes 28

29. Maximum sales price for a property is determined by aggregating the costs of acquisition, rehabilitation and redevelopment Grantees must maintain sufficient documentation Maintenance of the property w/o other NSP assisted activities not considered redevelopment or rehabilitation costs Sale of Homes 29

30. Any revenue from the sale, rental, redevelopment, rehabilitation or any other eligible use of NSP funds must be provided to and used by the State or unit of general local government. This includes revenue received by a private individual or other entity that is not a sub-recipient. Revenue from sale, rental project 30

31. Funding Consideration • Provide funding set-asides for rehab and redevelopment projects (rental and homeowner) that did not receive a direct set -aside under the NSP as identified by HUD within their datasets: • Provide a general funding round through a request for proposal (RFP) for rehab and redevelopment projects (rental and homeowner) outside of the set-aside established by HUD. • Explore partnerships with land banks of foreclosed and abandon properties to place back into commerce. • Provide soft-seconds to low, moderate and middle income Louisiana residents for purchase and redevelopment of foreclosure properties. Utilize LHFA’s existing Mortgage Revenue Bond Program and other mortgage products to allow families to purchase these properties. Funding consideration

32. Funding Priorities • Caddo Shreveport • Rapides Alexandria • Ouachita Monroe • *East Baton Rouge Baton Rouge • *Orleans New Orleans • Calcasieu Lake Charles • Morehouse Bastrop • Iberia New Iberia • Tangipahoa Kentwood/Tangipahoa Village • Franklin Winnsboro • Claiborne Homer • with the greatest percentage of home foreclosures; • with the highest percentage of homes financed by a subprime related loan; • indentified by the State or local government as likely to face a significant rise in the rate of home foreclosures. Funding priorities

33. Project prequalification process currently on websiteat www.lhfa.state.la.us

34. QUESTIONS AND ANSWERS

35. Lender’s Meeting