Cost Conscious, Effective Uses of NSP-1 Funds??

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   NOTE:  The following are e-mail communications I had with HUD Washington, D.C. staff and Ginger Smith regarding the pre-submission content of the City's $2.144 Million NSP-1 grant application sent to the HUD Columbus Field Office on 11/15/2008.  It presented a well thought-out, much more productive plan to assist up to 75 first-time buyers (not the 11 now stated by City staff)!  My strategy fell on the deaf ears of senior City staff resulting in the today's direct, ineffective dabbling in the real estate market by the City.  You be the judge as to the costs/benefits of both. 

From:  Self, Nelson
Sent:  Monday, October 27, 2008 8:12 PM
To:  Smith, Ginger L
Subject:  Neighborhood Stabilization Program - Sample Funding Allocation

NEIGHBORHOOD STABILIZATION PROGRAM SAMPLE FUNDING ALLOCATION

A)   Foreclosure-Based Homebuyer Purchase/Rehabilitation Initiative

      1)  Down Payment & Closing Cost Assistance               $  450,000
           (Assist 75 Homeowners @ $6,000 Each)

      2)  Property Rehabilitation Assistance                          1,125,000*
           (Assist 75 Homeowners @ $15,000 Each)

B)   Targeted Residential Property Demolition Initiative

       1)  Clearance of Blighted/Dilapidated Structures                              400,000
            (Remove 50 Structures @ $8,000 Each)

C)    Program Administration/Legal/Contingency

       1)  Temporary Personnel                                                               124,000
            (Housing Rehabilitation & Clerical)

       2)  Additional Home Buyer Education & Credit Counseling                 20,000
            (LifeSpan, Inc.)

       3)  Additional Legal                                                                        25,000
            (Title Searches, Contract Documents Preparation, Etc.)

*  Additional funds available through HOME Program, Owner-Occupied Housing Rehab Revolving Loan Fund and potential Federal Home Loan Bank resources.

From:  Self, Nelson [mailto:nelsons@cityofmiddletown.org]

Sent:  Thursday, October 30, 2008 12:40 PM
To:  NSP Questions
Subject:  City of Middletown, Ohio - More NSP Questions

Scenario #1:  Is it permissible for the City of Middletown to provide NSP funds to bankable, income-eligible households for down payment/closing costs plus housing rehabilitation assistance via the FHA 203(k) Program?  Assume that up to $21,000 in NSP funds are provided for DPA (up to $6,000) and housing rehabilitation (up to $15,000) as a repayable, very low-interest second mortgage in conjunction with a market rate bank first mortgage of say $68,000.

Scenario #2:  Assume that the housing rehabilitation component of Scenario #1 cannot be funded through NSP.  Therefore, would it be permissible to provide NSP down payment/closing cost assistance (soft second $6,000 loan) to bankable, income-eligible households utilizing market rate FHA 203(k) purchase/rehabilitation mortgages?

Your assitance will be appreciated.

Nelson Self, Senior Planner
Community Revitalization Department
One Donham Plaza
Middletown, Ohio 45042
(513) 425-7942
(513) 425-7921 fax
nelsons@cityofmiddletown.org

From:  NSP Questions [mailto:nsp-questions@hud.gov]
Sent:  Friday, October 31, 2008 9:55 AM
To:  Self, Nelson
Subject:  RE: City of Middletown, Ohio - More NSP Questions

Dear Nelson

There is no problem with the scenario you describe from the NSP standpoint.  We are not FHA experts, but the people who have spoken about this at conferences seem to support it.  I don't know if it's the 203(k) program, but one FHA program requires that the house meet code while lender only want to sell as-is.  If what you describe bridges the gap, great.  If not, an intermediary like a non-profit housing developer might fill it.  Obviously, you would have to meet the affordability terms you set (at least equal to HOME Program periods) and securitize the financing to recapture program income down the road.  It sounds like you are on top of that, but we remind people before it's too late.

If FHA and the lender can support this, NSP can also.  If this is not an accurate or complete answer, let me know.

Best of luck.

John Laswick
CPD Specialist
202-401-4521

From: Self, Nelson
Sent:  Monday, November 03, 2008 8:05 AM
To:  Smith, Ginger L
Cc:  Kyle Fuchs
Subject:  FW: City of Middletown - More NSP Questions

Ginger -

Good news!  It appears that it's permissible for the City of Middletown to use NSP funds for down payment and closing cost assistance to households purchasing vacant, foreclosed properties.  Perhaps more importantly, it also appears that the City can provide NSP-based down payment and closing cost assistance plus housing rehabilitation funding to assist households purchasing vacant, foreclosed properties via an FHA 203(k) or equivalent program.

Should the above options be available to the City, it would preclude the time-consuming process of acquiring properties, rehabilitating same, and then marketing these rejuvinated homes for sale.

Nelson Self, Senior Planner
Community Revitalization Department
One Donham Plaza
Middletown, Ohio 45042
(513) 425-7942
(513) 425-7921 fax
nelsons@cityofmiddletown.org

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Nelson Self Members Profile Send Private Message Find Members Posts Add to Buddy List MUSA Resident Joined: Aug 17 2009 Status: Offline Points: 144	Post Options Post Reply Quote Nelson Self Report Post Thanks(0) Quote Reply Topic: Cost Conscious, Effective Uses of NSP-1 Funds?? Posted: Aug 10 2010 at 10:46am
	NOTE: The following are e-mail communications I had with HUD Washington, D.C. staff and Ginger Smith regarding the pre-submission content of the City's $2.144 Million NSP-1 grant application sent to the HUD Columbus Field Office on 11/15/2008. It presented a well thought-out, much more productive plan to assist up to 75 first-time buyers (not the 11 now stated by City staff)! My strategy fell on the deaf ears of senior City staff resulting in the today's direct, ineffective dabbling in the real estate market by the City. You be the judge as to the costs/benefits of both. From: Self, Nelson Sent: Monday, October 27, 2008 8:12 PM To: Smith, Ginger L Subject: Neighborhood Stabilization Program - Sample Funding Allocation NEIGHBORHOOD STABILIZATION PROGRAM SAMPLE FUNDING ALLOCATION A) Foreclosure-Based Homebuyer Purchase/Rehabilitation Initiative 1) Down Payment & Closing Cost Assistance $ 450,000 (Assist 75 Homeowners @ $6,000 Each) 2) Property Rehabilitation Assistance 1,125,000* (Assist 75 Homeowners @ $15,000 Each) B) Targeted Residential Property Demolition Initiative 1) Clearance of Blighted/Dilapidated Structures 400,000 (Remove 50 Structures @ $8,000 Each) C) Program Administration/Legal/Contingency 1) Temporary Personnel 124,000 (Housing Rehabilitation & Clerical) 2) Additional Home Buyer Education & Credit Counseling 20,000 (LifeSpan, Inc.) 3) Additional Legal 25,000 (Title Searches, Contract Documents Preparation, Etc.) * Additional funds available through HOME Program, Owner-Occupied Housing Rehab Revolving Loan Fund and potential Federal Home Loan Bank resources. From: Self, Nelson [mailto:nelsons@cityofmiddletown.org] Sent: Thursday, October 30, 2008 12:40 PM To: NSP Questions Subject: City of Middletown, Ohio - More NSP Questions Scenario #1: Is it permissible for the City of Middletown to provide NSP funds to bankable, income-eligible households for down payment/closing costs plus housing rehabilitation assistance via the FHA 203(k) Program? Assume that up to $21,000 in NSP funds are provided for DPA (up to $6,000) and housing rehabilitation (up to $15,000) as a repayable, very low-interest second mortgage in conjunction with a market rate bank first mortgage of say $68,000. Scenario #2: Assume that the housing rehabilitation component of Scenario #1 cannot be funded through NSP. Therefore, would it be permissible to provide NSP down payment/closing cost assistance (soft second $6,000 loan) to bankable, income-eligible households utilizing market rate FHA 203(k) purchase/rehabilitation mortgages? Your assitance will be appreciated. Nelson Self, Senior Planner Community Revitalization Department One Donham Plaza Middletown, Ohio 45042 (513) 425-7942 (513) 425-7921 fax nelsons@cityofmiddletown.org From: NSP Questions [mailto:nsp-questions@hud.gov] Sent: Friday, October 31, 2008 9:55 AM To: Self, Nelson Subject: RE: City of Middletown, Ohio - More NSP Questions Dear Nelson There is no problem with the scenario you describe from the NSP standpoint. We are not FHA experts, but the people who have spoken about this at conferences seem to support it. I don't know if it's the 203(k) program, but one FHA program requires that the house meet code while lender only want to sell as-is. If what you describe bridges the gap, great. If not, an intermediary like a non-profit housing developer might fill it. Obviously, you would have to meet the affordability terms you set (at least equal to HOME Program periods) and securitize the financing to recapture program income down the road. It sounds like you are on top of that, but we remind people before it's too late. If FHA and the lender can support this, NSP can also. If this is not an accurate or complete answer, let me know. Best of luck. John Laswick CPD Specialist 202-401-4521 From: Self, Nelson Sent: Monday, November 03, 2008 8:05 AM To: Smith, Ginger L Cc: Kyle Fuchs Subject: FW: City of Middletown - More NSP Questions Ginger - Good news! It appears that it's permissible for the City of Middletown to use NSP funds for down payment and closing cost assistance to households purchasing vacant, foreclosed properties. Perhaps more importantly, it also appears that the City can provide NSP-based down payment and closing cost assistance plus housing rehabilitation funding to assist households purchasing vacant, foreclosed properties via an FHA 203(k) or equivalent program. Should the above options be available to the City, it would preclude the time-consuming process of acquiring properties, rehabilitating same, and then marketing these rejuvinated homes for sale. Nelson Self, Senior Planner Community Revitalization Department One Donham Plaza Middletown, Ohio 45042 (513) 425-7942 (513) 425-7921 fax nelsons@cityofmiddletown.org

Nelson Self Members Profile Send Private Message Find Members Posts Add to Buddy List MUSA Resident Joined: Aug 17 2009 Status: Offline Points: 144	Post Options Post Reply Quote Nelson Self Report Post Thanks(0) Quote Reply Posted: Aug 10 2010 at 11:17am
	As per the City's website and a NSP-1 financial spreadsheet obtained from the Neighborhood Revitalization Department by a MiddletownUSA participant, it certainly appears that: 1) the City will substantially miss the mark in expending/commiting funds in 18 months from the date of grant award in 2009; and, 2) look for Neighborhood Revitalization Department staff to request an extension of time from the HUD Columbus Field Office in committing presently unobligated funds. Maybe this is one reason why up to $230,000 is being lavished on the purchase or certain residential properties? Just speculating out loud.

Hermes Members Profile Send Private Message Find Members Posts Add to Buddy List Prominent MUSA Citizen Joined: May 19 2009 Location: Middletown Status: Offline Points: 1637	Post Options Post Reply Quote Hermes Report Post Thanks(0) Quote Reply Posted: Aug 10 2010 at 11:54am
	Nelson - While I greatly appreciate all the info you provide and your knowledge in your opinion who or what group of people do you think benefits from what the city is doing or not doing with federal funds ? If your uncomfortable posting your thoughts just send me a private note on this sight. If you have read any of my postings here you probably know what I'm refering to being the pessimist I am.
	No more democrats no more republicans,vote Constitution Party !!