Scaling Solutions to Housing Stabilization Sponsored by the Federal Reserve Bank of San Francisco and the Office of the Comptroller of the Currency in partnership with HOPE NOW March 20, 2014 1
Scaling Solutions to Housing Stabilization Welcome and opening remarks Eric Selk, HOPE NOW Alliance Susan Howard, Office of the Comptroller of the Currency Lena Robinson, Federal Reserve Bank of San Francisco 2
Housekeeping Restrooms are located out to the right toward the windows Badges should remain visible at all times Move freely on this floor but be mindful not to disrupt other meetings Request that you leave at a designated break on the program so that you can be escorted and badged out of the building 3
Disclaimer The views expressed in this presentation are the views of the speaker and do not necessarily reflect the views or policies of the Board of Governors or the Federal Reserve System 4
Mission The mission of the community development function of the Federal Reserve System is to support economic growth and financial stability for low- and moderate-income communities and households 5
California house prices back on the rise 250 FHFA (formerly OFHEO) House Price Index (2000=100, quarterly) California FHFA House Price Index 2000=100 210 170 United States 130 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Federal Housing Finance Agency (formerly OFHEO) 6
Neighborhood stabilization: concerns over investor purchases of distressed properties Who Is Buying Properties? October 2013 U.S. 3 Month Moving Average Percent of Property Type 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 14% 12% 33% 58% 34% 44% 32% 24% 54% 43% 35% 17% Damaged Move-In Ready Short Sale Non-Distressed Investor First-Time Homebuyer Current Homeowner Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions October 2013
Financing for home purchases Financing for Homebuyers October 2013 U.S. 3 Month Moving Average 100% Percent of Buyer-Side Transactions 90% 17% 25% 31% 80% 70% 60% 8% 2% 7% 5% 19% 50% 23% 40% 30% 16% 39% 73% 20% 10% 26% 10% 0% Current Homeowners First-Time Homebuyers Investors Source: Campbell/Inside Mortgage Finance HousingPulse Monthly Survey of Real Estate Market Conditions October 2013 All Other Financing VA Fannie/Freddie FHA Cash
Consequences of Investor Dominated Recovery Constrains the supply of property available for purchase by an owner occupant Increases the cost of homeownership beyond middle income buyers and destroys the opportunity for wealth accumulation Raises the cost of rental housing to cover financial returns required by investors Perpetuates disinvestment, instability and inequality as higher rent payments leak out of neighborhoods to investors Discourages social cohesion and personal investment that develops in owner occupied neighborhoods 9 *Paul Staley, Foreclosure Recovery: The Work That Remains; Community Development Investment Review: February 2014. (http://www.frbsf.org/community-development/files/cdir_vol9issue2_foreclosure_recovery_work_that_remains.pdf)
Most Low-Income Renters in NorCal Cost Burdened Housing Cost Burdened Renters, 2005-2009 Housing Cost Burdened Renters, 2008-2012 Vallejo San Jose Vallejo San Jose Sacramento Sacramento Richmond Richmond Oakland Antioch Oakland Antioch 0% 20% 40% 60% 80% 100% Percent Housing Cost Burdened 0% 20% 40% 60% 80% 100% Percent Housing Cost Burdened Renters Under $35,000 All Renters 10 Renters Under $35,000 All Renters
Housing Stabilization and Equitable Recovery 1. Provide sustainable modifications that continue homeownership for current occupants; not just alternatives to foreclosure 2. Prioritize owner-occupancy for REOs and short sales 3. Create access to properties that can be managed as long-term affordable rentals to a range of income levels from low to moderateincome 4. Transition vacant properties into productive housing assets 11
Innovative Responses to Housing Stability Addressing Chronic Homelessness. LAHD working in partnership with the Los Angeles County Department of Health Services (DHS), has set aside 15 NSP properties, totaling 56 housing units, to provide permanent supportive housing opportunities for homeless individuals with disabilities or chronic health conditions who are frequent users of DHS hospital services. (http://www.frbsf.org/communitydevelopment/files/cdir_vol9issue2_reflections_on_the_crisis.pdf) Mercedes Marques Landlord Entrepreneurship Affordability Program (LEAP) in Bridgeport, CT. Support LMI buyers to purchase 2 to 4- unit properties as owner occupied landlords 12
Innovative Responses to Housing Stability CRA Fund (Applied Residential). Partnership with National Community Reinvestment Coalition to bridge buyers back into homeownership through Trio lease option with one to five-year leases. Lease Purchase in Phoenix. Chicanos Por La Causa has converted six renters out of 45 lease purchase contracts into homeowners (Tom.Wilson@cplc.org) Project for Pride in Living in Minneapolis consolidated multiple properties for recapitalization using LIHTC. Exploring use of technology such as call centers based on UK model. 13
Scaling through Collective Impact Foster relationships and build partnerships that will result in more inventory and access to funding for mission motivated organizations who are committed to creating homeownership, affordable rentals and neighborhood stability Coordinate and harmonize multiple funding streams including capital markets FSG Definition 1. Common Agenda 2. Shared measurement 3. Mutually reinforcing activities 4. Continuous communication 5. Backbone support 14
Scaling through Collective Impact $$$ Competitively priced/long term capital Single source lender (e.g. CDFI) Subsidies targeting challenged populations Property preference Mission motivated buyers, owners & managers Local and state government resources Partnerships with program & service providers 15
Property Disposition: Accessing Inventory for Housing Stabilization Biniam Gebre, General Deputy Assistant Secretary for Housing, Department of Housing and Urban Development Thomas Dombrowski, Freddie Mac Jason Hall, Fannie Mae Annie Carvalho, National Community Stabilization Trust 16
Developing Partnerships Towards Housing Stabilization Kara Douglas, Contra Costa County Paul Staley, Self Help Housing Margaretta Lin, City of Oakland Jennifer Duffy, Hello Housing 17