Lease-purchase and NSP

Transcription

1 U.S. Department of Housing and Urban Development Lease-purchase and NSP What practitioners are saying 1

2 Introduction Sponsored by HUD Speakers: David Cramer, TDA Donna Majors, CVC Keysha Cuyler, CVC William Brett, CHP 2

3 Objective e Provide NSP grantees and sub-grantees with practical knowledge to design a short-term Lease Purchase program 3

4 Agenda Seven crucial elements for success, a summary NSP Lease purchase example - CVC Lease purchase selection and support CVC Sponsor capacity in asset management - CHP Additional resources 4

5 What is lease purchase? Definition: lease & sales option Lease period length: but for less than one year 1 5 year Long term 15 yr (LIHTC) Types: buyer-driven vs. developer-driven 5

6 Lease-purchase and NSP Formal and informal lease purchase HOME affordability as safe harbor Homeownership/Lease-purchase vs. Rental regulations DRGR Considerations 6

7 Seven Tasks to Success Reinvigorate marketing Have a plan Have an exit strategy Have selection criteria Have a lease option agreement with termination ability Capture all costs in a three part pro forma Have sufficient capacity property management

8 1 Re invigorate i marketing kti The market has changed Leading or following the market Going back to marketing basics 8

9 DECISION TREE 1. Best efforts at marketing, curb appeal, financing, partners 2. Reduce price, increase downpayment assistance 3. Alternate rental or Lease Purchase Rental implications Lease-purchase implications

10 2 Have a plan Backing into All on the same page Design = Policies and Procedures manual Coordinating variables Addressing regulatory issues Re-inventing the wheel 10

11 3 Eit Exit strategy t Terminating lease Non-compliance evict Alternatives ti Prevention Selection criteria Support Financial incentives 11

12 4 Pre determined d selection criteria i Clear written standards based on objective criteria, e.g. FICO score Balance between prudent rental criteria and current mortgage standards Relate to goals, risk tolerance, success rate 12

13 5 Renewable lease with set sale price Lease renewed every 6-12 months up to period of leasing Option to purchase determined from beginning Expectations: maintenance, progress Lease-purchaser guidebook URA requirements 13

14 6 Capture all costs in a three part financial pro forma Three phased pro forma: Development Lease period Sale Affordability and financial incentives 14

15 7 Sufficient capacity, ie i.e. property management Fiscal viability Homeownership counseling and other support Scattered site property management 15

16 BREAK FOR QUESTIONS 16

17 Community Ventures Corporation Experience with NSP and Lease-Purchase Donna Major, Senior Executive Vice President Keysha Cuyler, Director, Homebuyer Education and Counseling 17

18 Building One Business... One House... One Neighborhood... One Step At a Time

19 Community Ventures Corporation OUR HOUSING MISSION: To provide safe, affordable housing through New construction Rehabilitation Foreclosure prevention Quality education and counseling Pre and post purchase support

20 Community Ventures Corporation Neighborhood Stabilization Program (Part I): Original LP program HOME Internal CVC funding Located in one county only (Fayette-Lexington) Production 95 homes

21 Community Ventures Corporation Basic Structure of NSP/LP: State a critical partner in design and implementation CVC utilized its original LP design for most of the NSP LP program Set up program as a rental program using Fair Market rents Able to set aside funds for HB acquisition

22 Community Ventures Corporation Lease Purchase Type: Consumer selected property within prescribed criteria including shopping price, location and condition. Customer Purchase Agreement: Client submits good faith and signs purchase agreement Sales price to client included in agreement

23 Community Ventures Corporation Basic Structure, cont.: Lease Agreement Up to 3 years to qualify, lease is written as 1 year Basic Maintenance & maintenance reserve 100% NSP1 funds for purchase and rehab: Program income at sale returned to state; program income during lease period returned to state on annual basis; leave up to 50% on second mortgage

24 Community Ventures Corporation Selection of Lease Purchasers: Requirements of lease purchaser including cash, income level Selection criteria including credit How different from direct purchase

25 Community Ventures Corporation Support: Housing counseling prior to lease Classes (financial i fit fitness) One on One Housing counseling during lease On line Ehome (home buyer) One on One Post-purchase counseling

26 Community Ventures Corporation Lessons Learned: Make adj djustments if necessary Others

27 Thank You For Your Interest t For more information, please contact: Donna Major and Keysha Cuyler Community Ventures Corporation 1450 N. Broadway, Lexington, KY

28 BREAK FOR QUESTIONS 28

29 Lessons learned: Asset management capacity Columbus Housing Partnership (CHP) 29

30 CHP s experience with lease purchase NMTC single-family scattered Near market rate downtown condos 15 year LIHTC 30

31 Importance of managing an asset Short term balance of managing and encouraging ownership Even with short term it s still an asset 31

32 Special challenges of scattered-site property management On-site management Different property managers Distance No uniform equipment, e.g. faucets, etc. 32

33 Tips and lessons learned Examples: Creating eyes and ears Handling lease-purchasers differently in regards to maintenance 33

34 BREAK FOR QUESTIONS 34

35 Essential tools: NSP Toolkit Policies and Procedures manual Sample lease agreement Financial pro forma - demonstration Others: see complete list 35

36 NSP Resource Exchange Links NSP Resource Exchange Search the Resource Library Search the FAQs View All Training Materials on the Learning Center Submit a Policy Question via Ask A Question Request Technical Assistance Connect with NSP Join the Listserv Visit the NSP Flickr Gallery Visit the NSP YouTube Channel

37 Give Us Your Feedback Answer a few short questions on the survey. THANK YOU 37