City of KCMO Foreclosure Subcommittiee

Comment

Comment by Charlie Cycholl - Mortgage Consultant on January 16, 2009 at 11:38am

Good thinking Kim!

Comment by Kim Tucker on January 16, 2009 at 11:16am

Notes from Post-Foreclosure Subcommittee meeting, 1-15-09, at LINC. Michael Duffy, Chair.
Next Meeting: February 19, 2009, 9:15 am, LINC office, 11th Floor Conference Room, 3100 Broadway.
Persons Present: Lynsey Juno (The Real Estate House), Malcolm Wilson (NAACP), Mark Stalsworth (NHS), Pat Gilmore (Housing Information Center), Kevin Sheilds (FDIC), Tim Harrison (Adamson & Assoc.), Cliff Pouppirt (Blue Hills Homes Corp.), John Wandlass (Urban Rangers), Sharon Sanders Brooks (City Council), Bill Jones (Swope Community Builders), Larry Washington (Northland Neighbors), Sheoni Jenkins (Liberty Bank), Gillian Ruddy (Legal Aid), Keith Worrel (Advantage Consulting), Doug Claussen (National Bank of K.C.), Tom Randolph (City Human Relations), Helen Bryant (SPENA, Bryant Real Estate), Eddie Tapper (KC Design Build), Keowa Willis (KC City Codes), Steve Hermes (Neighborworks), Eric Youngberg (Neighborworks), Pearline McFall (KC City Codes), JT Taylor (KC City Codes), Jesse Sendejas (KC Law Dept.), Katie James (KC Law Dept.), Kevin Sheilds (FDIC), Charles Cycholl (Midwest Capital Mortgage), Brent Schondelmeyer (LINC), Michael Duffy (Legal Aid).

Marketing of REO Properties: Best Practices. Lynsey Juno from The Real Estate House presented her recommended best practices. She indicated a fairly high level of interest among potential buyers in REO properties in inner-city neighborhoods. Advertising is the first step, with: MLS, Realtor.com, Craig’s List.com, KCHomes.com, Thrifty Nickel. She enlists the assistance of neighborhood churches for marketing. She makes generous use of photos. Making the house clean and presentable is important, such as by cleaning the carpets. She finds that about 75% of the REO sales in the inner-city are to investors. The principle source of owner-occupant buyers is existing or former residents from that same neighborhood. Houses needing $20,000 of rehab are more difficult to sell. Homes can sell in most areas for up to $60,000 or more, but at that higher level may need some source of subsidy, such as the KC Dream Program. She emphasized that the inner-city neighborhoods are not homogenous, and buyer interest may vary dramatically over a space of just a few blocks. She found that most of her buyers were using FHA financing.

Helen Bryant of Bryant Real Estate emphasized the importance of homebuyer education, both to help market to and qualify homebuyers and insure successful home ownership. Mark Stalsworth confirmed this observation, noting that homebuyers who part-take in such a program are 1/20th as likely to default on their loan. Helen Bryant observed that the neighborhoods will be healthier if marketing is targeted to owner-occupants rather than to investors.

Bill Jones and Sheoni Jenkins noted the need to put homebuyer marketing into a larger neighborhood revitalization strategy, to coordinate complementary efforts.

Can buyers of REO properties get a purchase loan? Charlie Cycholl of Midwest Capital Mortgage presented his analysis of the financing opportunities. Charlie was optimistic that credit is still fairly easily available for many buyers. FHA is the leading source. Many lenders now require larger downpayments, as high as 20%. The Kansas City downpayment assistance programs can often meet that need, but according to Charlie they are not available to his and other smaller brokers. Mark Stalsworth agreed to confer with Charlie about possible program modifications. Lynsey June commented that she finds financing accessible at People’s Bank, Liberty Bank, and Wells Fargo.

Pat Gilmore and Mark Stalsworth noted the need to reactivate the City’s maintenance reserve program, to assist homebuyers secure financing.

Kansas City proposed REO and vacant property registration ordinance. Jesse Sendejas and Katie James of the City Law Department presented the pending ordinance. It will require owners of vacant properties, and properties going into foreclosure, to register with the City, furnishing local contact information. The City Codes department will be able to use this information to secure property maintenance code compliance.

The ordinance requires all vacant properties to be posted with a notice furnishing local contact information. This feature elicited some comments that such a posting may invite criminal break-ins.

The ordinance requires foreclosing lenders to give notice of the foreclosure to occupants (tenants).

The Kansas City City Council Housing Committee will conduct a hearing on the proposed ordinance January 28, 12 noon, at City Hall. Testimony welcome.

Brainstorming Possible Missouri legislation. Michael Duffy lead a discussion on possible legislative ideas to combat the problems caused by foreclosures. Some of the ideas discussed:

(a) Enable municipalities to enact ordinance to place foreclosed homes in receivership. Eric Youngberg noted that several other states (such as Pennsylvania) now have such a tool, and Missouri needs it.

(b) Create registry at Missouri Secretary of State’s Office of all foreclosed homes, including servicer and local contact information.

(c) Nonprofit organizations (and perhaps for-profits as well) which buy foreclosed homes for rehab and sale would be exempt from property tax penalties and interest.

(d) Out of state owners of REO foreclosed properties could be served with lawsuit summons, or municipal administrative code citation, by giving notice to the Missouri Secretary of State.

(e) Foreclosure moratorium on sub-prime loans. (Loans with prepayment penalties.) This idea drew mixed reactions, and would make more sense if delaying foreclosure lead to some redemptive strategy.

(f) Require foreclosures (either all, or only subprime loans) to go through a judicial procedure. To offer an court review of possible fraud cases, and to allow more time.

Suggested Topics for next meeting:

(1) Creation of a broader neighborhood revitalization strategy. (Bill Jones)

(2) Availability of §203(k) rehab loans. (Charlie Cycholl)

Announcements:

Sharon Sanders Brooks announced an upcoming seminar sponsored by Rubin Brown: Not-For Profit Update; Managing Risk in Today’s Economy. Investment Accounting, Fraud prevention and other risk management. Thursday, January 22, 2009, 7:30-10:00 am, Doubletree Hotel, 10100 College Blvd., Overland Park, KS. RSVP by January 16, 2009. To register go to www.rubinbrown.com, or call 888.591.3140. Free.

Michael Duffy announced the front page story in the New York Times of ­January 15, 2009, headlined “Swindlers Find Growing Market in Foreclosures: ‘Rescue Firms’ Prey on Borrowers Who Face Loss of Homes.” Full story at: http://www.nytimes.com/2009/01/15/us/15mortgage.html?_r=1&ref=todayspaper