STATEMENT OF SECRETARY SHAUN DONOVAN, CHAIR OF THE HURRICANE SANDY REBUILDING TASK FORCE

WASHINGTON – On January 29, 2013, President Obama signed into law a bill providing “supplemental appropriations to respond to and recover from the severe damage caused by Hurricane Sandy.” Today, Shaun Donovan, Chair of the Hurricane Sandy Rebuilding Task Force, issued the following statement:

“This funding represents our commitment to doing all we can to support the families, businesses, cities and towns in this region as they rebuild their communities and make them stronger, more economically competitive and better able to withstand the next storm. ”As chair of the Hurricane Sandy Rebuilding Task Force – and a native of the region – I am grateful to Congress for supporting the President’s request, which is so vital to this rebuilding effort. I am especially appreciative to the congressional delegations from New York and New Jersey and Governor Christie, Governor Cuomo, Mayor Bloomberg and all the local elected officials for their continued leadership. ”The Hurricane Sandy Rebuilding Task Force will continue to work closely with our federal as well as state and local partners to support impacted communities as they make important decisions about rebuilding and recovery. Our focus will continue to be on ensuring that these efforts, both at the federal and the local level, are coordinated, maximizing the impact of available resources to support recovery while also mitigating against future disasters.”

HUD AWARDS NEARLY $109 MILLION TO FOUR COMMUNITIES TO REVITALIZE HOUSING, SURROUNDING NEIGHBORHOODS

HUD Grants

Funding to Cincinnati, San Antonio, Seattle & Tampa spurs nearly
$500 million in economic, community investment

WASHINGTON – U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced today that four communities will receive a combined $108.9 million to redevelop distressed housing and bring comprehensive neighborhood revitalization to blighted areas.

HUD’s Choice Neighborhoods Initiative (Choice) will help transform distressed communities in Cincinnati, Ohio; San Antonio, Tex.; Seattle, Wash.; and Tampa, Fla.  This landmark initiative promotes a comprehensive approach to transforming areas of concentrated poverty into viable and sustainable mixed-income neighborhoods. The $108.9 million federal investment of Choice Neighborhoods has generated $393 million in private investments and commitments from local jurisdictions and partners, a more than 300 percent leveraging.

“HUD’s Choice Neighborhoods Initiative supports local visions for how to transform high-poverty, distressed communities into neighborhoods of opportunity,” said Donovan. “We’re emphasizing a comprehensive approach to revitalizing neighborhoods by considering the totality of a community with regard to health, safety, education, jobs and quality housing in mixed-income neighborhoods.”

Choice Neighborhoods Initiative Implementation grants announced today:

HUD Grants

The communities announced today were selected from nine finalists HUD announced in August. Each of the finalists completed a comprehensive local planning process and ready to move forward with their plan to revitalize the housing and redevelop their target neighborhoods. Building on the successes of HUD’s HOPE VI Program, Choice links housing improvements with a wide variety of public services and neighborhood improvements to create neighborhoods of opportunity.

The Choice Neighborhoods Initiative is one of the signature programs of the White House Neighborhood Revitalization Initiative, which supports innovative and inclusive strategies that bring public and private partners together to help break the cycle of intergenerational poverty.  It encourages collaboration between HUD and the Departments of Education, Justice, Treasury and Health and Human Services to support local solutions for sustainable, mixed-income neighborhoods with the affordable housing, safe streets and good schools all families need.

Congress approved the Choice Neighborhoods Initiative with the passage of HUD’s Fiscal Year 2010 budget.  Funding is provided through two separate programs – Implementation Grants and Planning Grants.  In 2011, HUD awarded its first Choice Implementation grants for Chicago, Boston, New Orleans, San Francisco and Seattle, a combined $122.27 million investment to bring comprehensive neighborhood revitalization to blighted areas in these cities.  With this announcement, HUD has awarded a total of $231,250,000 in Choice Implementation Grants in eight cities.

HUD ACCEPTING APPLICATIONS FOR ENTITIES TO PURCHASE TROUBLED MORTGAGES, OFFER CHANCE TO AVOID COSTLY FORECLOSURES AND STABILIZE NEIGHBORHOODS

September loan sale to include neighborhood stabilization pools in Chicago, Newark, Phoenix and Tampa as part of broader Obama Administration effort to address shadow inventory, target relief to hardest hit communities

WASHINGTON – Qualified entities interested in purchasing pools of severely distressed loans formerly insured by the Federal Housing Administration (FHA) can now submit applications for the Distressed Asset Stabilization Program, an expansion of an FHA disposition program that sells pools of defaulted mortgages headed for foreclosure and provides the opportunity for the purchaser and borrower to avoid a costly foreclosure. According to loan pool information released today, approximately 3,500 loans will be sold in four metropolitan areas that are among those hardest hit by the foreclosure crisis – Chicago, IL; Newark, NJ; Phoenix, AZ; and Tampa, FL – aligning with other neighborhood stabilization efforts to help those communities recover as quickly as possible. The program is part of the Obama Administration’s broader strategy to encourage public/private partnerships to stabilize neighborhoods and home values in critical markets. Details on the Distressed Asset Stabilization Program can be found at www.hud.gov/fhaloansales.

“The housing market has momentum not seen since before the crisis,” said HUD Secretary Shaun Donovan. “But some metro areas are still under pressure and some FHA borrowers remain seriously behind on their loans and stand to lose their homes in a matter of months. As one step towards avoiding unnecessary foreclosures and further stabilizing communities, we are increasing the number of loans beyond our original goals of 5,000 per quarter to approximately 9,000 this quarter. Providing the opportunity for borrowers to potentially stay in their home under a new sustainable mortgage or other meaningful help not only benefits that homeowner but reduces the costs to FHA and ultimately benefits the entire community.”

Under the program, loans are sold competitively at a market-determined price generally below the outstanding principal balance. FHA then processes an insurance claim, removes the FHA insurance and transfers the loan to the investor. Once the note is purchased, foreclosure is delayed for a minimum of six additional months, giving the new servicer time to work through alternatives with the borrower, possibly finding an affordable solution to allow the borrower to remain in their home. Because the loans are generally sold for less than what the borrower currently owes, the purchaser has the ability to reduce or modify the loan terms while still making a return on the initial investment. If no viable alternatives exist, the purchaser may be able to help the borrower sell the property through a short sale and avoid the costs of foreclosure.

“This program creates the opportunity for everyone – the homeowner, the new mortgage holder, FHA, and the community – to walk away a winner,” said Acting FHA Commissioner Carol Galante. “FHA not only avoids the costs associated with a long foreclosure process, but also the high costs of maintaining and selling vacant properties in already distressed markets.”

FHA began selling distressed single family loans through what is now the Distressed Asset Stabilization Program in 2010 and has successfully sold more than 2,100 single family loans to date. An FHA-approved mortgagee can file a claim for FHA insurance benefits and assign the loan to FHA if the borrower is at least six months delinquent on their mortgage; the servicer has exhausted all steps in the FHA loss mitigation process; the servicer has initiated foreclosure proceedings; and the borrower is not in bankruptcy. These assigned loans are then pooled by FHA for resale through the Distressed Asset Stabilization Program.

Neighborhood Stabilization Loan Sales

In addition to the standard note sales, the enhanced program features new neighborhood stabilization requirements to encourage investment in communities hit hardest by the foreclosure crisis. Approximately 40 percent of the 9,000 loans in the sale scheduled for September 2012 will be located in Chicago, IL; Newark, NJ; Phoenix, AZ; and Tampa, FL – four metropolitan areas where high numbers of seriously delinquent loans could expand an already large inventory of REO properties over the coming months. Designed to help stem the flow of distressed properties hitting these markets, these neighborhood stabilization requirements provide that no more than 50 percent of the loans within a purchased neighborhood stabilization pool may be sold as real-estate owned (REO) properties.

“These markets were chosen because of the high concentration of FHA loans in the pipeline for foreclosure and because each allows us to test this strategy under a variety of market conditions,” added Galante. “Further, in some of these communities, state and local leaders are already acquiring these loans and using tools like the Neighborhood Stabilization Program and the Hardest Hit Fund to offer workable solutions for homeowners and communities. And in each city, nonprofit and for-profit investors have shown great interest in using this program to help borrowers in their community find affordable solutions as quickly as possible. FHA is working with local leaders to create additional smaller pools to fit their targeted neighborhood strategies.”

All parties seeking to bid on the sale pools must first be qualified by HUD. Parties seeking to bid in the neighborhood stabilization pools are required to meet several additional criteria to ensure they will comply with the program’s goal that fewer homes end up as vacant REO properties in metro areas already struggling with high numbers of foreclosures. Eligible investors must have experience in asset management and property management, as well as a proven track record in helping borrowers seriously delinquent on their loans to re-perform or to achieve an affordable alternative to foreclosure. An emphasis will be placed on experience within the metro area in which the bidder is interested.

Bidder qualification materials and guidelines for the Distressed Asset Stabilization Program bidding process can be found at www.hud.gov/fhaloansales.