INTRODUCTIONS. Robert Klein Founder and Chairman, SecureView

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2 INTRODUCTIONS Who we are Community Blight Solutions is the advocacy arm of SecureView Where we are Located in Cleveland, OH with national reach Experience 30 years experience in property preservation and housing / foreclosure market management Connections with nation s largest mortgage lenders (Fannie Mae, Freddie Mac, Wells Fargo, Bank of America, V.A., HUD, etc.) What we do Work with communities, nonprofits, and others to create affordable housing and revitalized neighborhoods

3 INTRODUCTIONS Robert Klein Founder and Chairman, SecureView Founder & Chair of Safeguard Properties, America s largest mortgage field services company, a $1.4B corporation Innovator & creator of Clearboarding technology and industry Chair of National Vacant Properties Registration Committee of the Mortgage Bankers Association (MBA). Board member in Mortgage Bankers Association, USFN, CMBA and REOMAC. Founder of National Property Preservation Conference. Ernst & Young Entrepreneur Of The Year Award, 2009

4 PROBLEM: ZOMBIE PROPERTIES

5 PROBLEM: ZOMBIE PROPERTIES Crisis largely over only 3.93% delinquency but going up! (Q3 2017) Annual foreclosure rate down 7.27% year-over-year 90-day delinquency are approx. 557,000, down 112,000 from 2016 (but up 2,000 from July 2017) Still 1.3M vacant residential homes Welcome to Phase 2 of the mortgage crisis: cures, clean-up, repair, rebuilding

6 PROBLEM: ZOMBIE PROPERTIES NY State Senate Report: a foreclosed home reduces the house price value of homes located within a 300-foot radius by 1.3 percent. 1.3% = $2K avg. reduction/house within 300 ft. radius This represents $3-$30 billion in potential value lost.

7 PROBLEM: ZOMBIE PROPERTIES UPenn report finds link between blight remediation and crime reduction Every $1 invested in remediating a building yields $79 in government savings At 10% estimate for necessary remediation of vacants nationwide, this represents $5.9 billion in savings.

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9 PROBLEM: ZOMBIE PROPERTIES Responsibility is often with the municipality or bank. Not the absentee. Most municipalities missing out on $200K $10M+ in lost tax revenue due to blight. The banks WANT TO MOVE INVENTORY. They want to reduce the time it takes to re-sale as much as possible.

10 PROBLEM: ZOMBIE PROPERTIES Steps can be taken to remediate issues. Perfect storm of ingredients for blight: Lax lending policies Weak rental market Natural disaster Seismic economic shift (plant closed, etc.) Small investors, highly leveraged Shuttered / siloed neighborhoods (folks do not know one another) Proximity to urban area (in most but not all cases)

11 SOLUTION: REVITALIZATION PLAN Where there s a will, there s a way. Unfortunately, most neighborhoods need to hit bottom before large-scale recovery. Necessary ingredients for revitalization: Geographically condensed area of blight w/ some salvageable homes Strong CDC Champion in City Government Land Bank that is hip Connections to banks Catalytic Venture Philanthropists Supportive First Responders Interested community & media

12 SOLUTION: REVITALIZATION PLAN Prioritize needs: Meeting with citizens in impact area Assigning the personnel in the CDC Securing catalytic funding round 1 for demolition Air cover in City Hall / Buildings Dept. Grant applications submitted (CDBG, philanthropic, etc.) Lay groundwork of initial media coverage

13 SOLUTION: REVITALIZATION PLAN Get First Responders Activated Let them know that you will be demolishing properties. Make sure first responders know about Clearboarding. Ask first responders about which are the problem properties.

14 SOLUTION: REVITALIZATION PLAN Fast Tracking (OH, MD, NJ) Land Banking / Bank handoff Abandonment Waiver Process must begin as soon as possible following a property being certified as being abandoned Image courtesy of Casey Serin Make necessary foreclosures happen.

15 PROPERTY HANDOFF PROCESS Individual Person has long walked away from property Bank Properties are identified as abandoned and are foreclosed Banks allow for transfer of properties Land Bank Land bank ingests property, receiving clean title Land bank conducts appraisals / assessment Advises on demo plan CDC / Resale Agent CDC does clearboarding CDC does rehab CDC markets and works with realtor to sell property New Family Family moves in to affordable housing Neighborhood thrives and housing prices rise

16 SOLUTION: REVITALIZATION PLAN Demolition WITH A PLAN. Houses with NO shelf life Remove 1 house to save 2 Geographic planning to avoid razing whole blocks, unless that s critical Sequencing demolition to stagger funds

17 SOLUTION: REVITALIZATION PLAN Stabilize ALL other properties involved Clearboard all other properties that are part of the project Especially after construction starts, the job site cannot have theft. Liability must be limited to mitigate loss mid-project. Each house must be accountable.

18 SOLUTION: REVITALIZATION PLAN Startup Funding Initial demolitions, renovations & CREDIT Philanthropic/Public Funding First Gen. demolitions, renovation Self-sufficient Funding No more demo., all renovations

19 SOLUTION: REVITALIZATION PLAN Renovations should be meaningful If $40K is budgeted, use the $40K. Upgrades should surpass the neighborhood s status quo of the local housing market Renovations have to exceed expectations to make enticing to new home buyers overcoming neighborhood stigma.

20 SOLUTION: REVITALIZATION PLAN Creation of Affordable Housing Housing stock begins depressed (i.e. $20K / house) Adding $40-$45K in high-level renovation Removal of demo d houses Resale at $70-$80K (selling at $10-$20K margin) Resale Amount % Interest On 30 yr. Monthly Mortgage $60, $284 / mo $70, $331 / mo $80, $378 / mo $90, $426 / mo $100, $473 / mo

21 SLAVIC VILLAGE TODAY

22 SLAVIC VILLAGE TODAY

23 SLAVIC VILLAGE TODAY

24 STEPS YOU CAN TAKE RIGHT NOW Policy & Code Ordinance to Prohibit Plywood Begin community conversations Begin Fire/Police/Code Enforcement conversations Assign Blight Task Force the tangible steps 1. Identify Project Area 2. Stabilize (Clearboard & Demolish) 3. Rehabilitate 4. Rinse + Repeat

25 Q&A SCR.VIEW