and NSP 5/4/2011 U.S. Department of Housing and Urban Development

Transcription

1 U.S. Department of Housing and Urban Development Short-term term Lease-purchase and NSP 1 1

2 Who Are We? Sponsored by HUD Presenters: John Laswick, HUD David Noguera, HUD David Cramer, TDA Gladys Schneider, TDA 2 2

3 Housekeeping: If you are having technical audio problems, Please keep your phones muted We will stop for questions during the presentation The moderator will call you in order To ask a question: 1. Click the Raise Hand icon in your Q&A Chat section of your desktop. 2. State t Name and Organization i when called upon to un-mute (*6) your phone 3. When done (*6) to re-mute and lower the hand icon 3 3

4 Poll #1: What s your agency s background? We are an existing NSP HUD grantee and are currently using Lease Purchase We are an existing NSP HUD grantee and are planning to use Lease Purchase We are a NSP subrecipient/developer and are currently using Lease Purchase We are a NSP subrecipient/developer and are planning to Lease Purchase We are an non-nsp entity using and planning to use lease-purchase 4 4

5 Objective Provide NSP grantees and sub-grantees with the knowledge to design a short-term Lease Purchase program 5 5

6 Agenda Lease purchase is not a substitute for good marketing What is lease purchase? Five critical elements to succeed NSP regulations and lease purchase Essential tools: NSP Toolkit Additional resources 6 6

7 Lease purchase is not a substitute for good marketing Changing markets require new strategies Knowing your customer and having a plan Immediate strategies Reduce price/increase buyer assistance Add non-luxury amenities to improve competitiveness Use partners: realtors, counseling agencies to help market When best marketing efforts fail to produce buyers then consider lease purchase or rental 7 7

8 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-drivendriven 8 8

9 5 critical elements to succeed 1 Have an exit strategy Establish objective selection criteria Use a renewable lease with set sale price Have sufficient capacity, i.e. property management and homeowership counseling Capture all costs in a 3 part financial pro forma 9 9

10 1 Exit strategy Prevention: careful selection and support Financial incentives: Lease payment and PITI Sale price determined at lease-up Accumulating funds for later assistance Access to favorable financing Others Lease non-renewable (termination) and alternatives (rental) 10 10

11 2 Pre determined selection criteria 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 11 11

12 3 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 12 12

13 4 Sufficient capacity, i.e. property management Fiscal viability Homeownership counseling and other support Scattered site property management 13 13

14 5 Capture all costs in a three part financial pro forma Three phased pro forma: Development Lease period Sale Affordability and financial incentives 14 14

15 BREAK FOR QUESTIONS To ask a question: 1. Click the Raise Hand icon in your Q&A Chat section of your desktop. 2. State Name and Organization when called upon to un-mute (*6) your phone 3. When done (*6) to re-mute and lower the hand icon 15 15

16 NSP regulations and lease purchase HOME as safe harbor Lease purchase defined as homeownership: Recapture/resale starts at lease up Sale price determined at lease up Entered into DRGR as owner (title: lease purchase ) Cannot be counted toward rental priority in NSP3 application NSP national objectives: maximum income 120% and 25% <50% Cross-cutting Federal Regs apply Example: URA displacement 16 16

17 BREAK FOR QUESTIONS To ask a question: 1. Click the Raise Hand icon in your Q&A Chat section of your desktop. 2. State Name and Organization when called upon to un-mute (*6) your phone 3. When done (*6) to re-mute and lower the hand icon 17 17

18 Essential tools: NSP Toolkit Policies and Procedures manual Sample lease agreement Financial pro forma - demonstration Others: see complete list 18 18

19 NSP Help/Resources HUD NSP Help OR Find a Resource Frequently Asked Questions and Ask a Question Request assistance Join list serve! Learning Center 19 19

20 Give Us Your Feedback Answer a few short questions on the survey. THANK YOU 20 20