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» VISIT US ONLINE @ DSNEWS.COM you can derive for them a quick and certain sale for cash—that has real value." The quick turnaround time has particular appeal for servicers. "All of this," Nickerson notes, "is typically done during a window of time when the servicer wasn't in a position to sell the property yet anyway—because they had to do the trash-out, they had to get their estimate of value, they had to engage an asset manager, and all those things. So, we're using that window of time when the servicer is getting the property ready to be marketable to actually execute on a sale, so that they're not losing anything on this transaction." Finding the Cash In an age when governments as well as individuals are financially strapped, coming up with funding can be a challenge. The NeighborWorks affiliate project in East Camden used a public-private collaboration that typifies many of these efforts: Half of the financing came through the CHOICE program, funded by the New Jersey Housing and Mortgage Finance Authority. That lessened the risk enough for a local private lender to come in with the rest. The federal government allocated some $7 billion through its Neighborhood Stabilization Program, which began with the Housing and Economic Recovery Act of 2008. Pairing those funds with corporate contributions has been a winning formula for many groups. NeighborWorks recently announced a partnership with Capital One, which has enabled it to fund more groups than before. The relationship is reciprocal, as In the chaos that followed the mortgage crash . . . . "I felt like, frankly, almost 40 years of work in the housing and community development arena was being wiped away." credits usually exceed the financial needs of the developers, they typically sell them to large financial institutions that can use them—sometimes to satisfy their obligations under the Community Reinvestment Act. Those transactions then provide capital for building. Grossinger describes the process: "[The neighborhoods that we're transforming into single-family rental neighborhoods." There's a tipping point at which such credits] flow from the Treasury Department down to the state on a per capita basis. [It's] very competitive; there are usually five times the number of requests [as] available tax credits. When they're awarded, the developer who is awarded those tax credits then sells them, usually in a syndication way. If it's CRA-driven, usually those low-income housing tax credits will make up somewhere between 45 and 55 percent of the total deal." The Last Puzzle Piece The point of all these activities is to get properties into the hands of people who can live in them, maintain them—and pay for them. But the catastrophe that followed the overzealous push for homeownership a few years ago has led to a more sober and cautious approach across the board. As Grossinger observes, "The difference Mariadele Priest, Capital One's director of community development banking, explains: "This partnership aligns with Capital One's overall community involvement and investment efforts, which focus on expanding economic opportunities for individuals and families in communities where we do business." For new developments, low-income efforts can become counterproductive, according to Cheryl Travis-Crawford, EVP for Vendor Resource Management. "You've got to have at least 80 percent of that neighborhood being owner-occupant to have some degree of stabilization," she maintains. Like most others in the field, she supports the lease-option approach—with safeguards. "We would like to see investors go to a lease- purchase solution," she says. "Maybe a short- term rental period that's going to lead to that occupant being able to purchase that home at a certain point as they reestablish their credit and develop some savings component." By common agreement, buyer counseling and education are crucial. VRM also provides a range of services to ease that transition process for buyers and sellers— from rental management to property valuation. Is it possible to make sound transactions between pushing to raise homeownership from 64 percent to 68 percent … resulted in a couple of million bad loans. So this country has to come to grips with what does it really want out of homeownership." One realistic alternative is to ease housing tax credits (LIHTC) are often the currency that makes things happen. A vestige of the Tax Reform Act of 1986, these credits are made available to developers who produce affordable housing units. Since the qualified candidates into ownership through a lease-option program. "We see that happening in a lot of places," Sisk observes. But, she cautions, "There's a lot of work to happen around the management of the properties, but also preparing the tenants to be ready for homeownership." Nickerson describes another obstacle: that raise the quality of communities—and respect the interests of all parties? Like a marriage, it's all about good communication. Grossinger observes, "It's the communica- tion and dialogue between the entities that give us the best chance of having it done re- sponsibly and consistent with the community and municipal wishes," he says, "while not completely making bankrupt the servicers that are responsible for this stuff." Providing an efficient conduit for funds "There's a fundamental opposition to that by local elected officials [and] urban planners because these are historically owner-occupied is also key, according to Grossinger. "Where there is coordination," he says, "where the city and the state and federal governments have either put together funding sources that can work together well, or on the ground, you've figured out how to use those funding sources correctly—that's where real stabilization happens." 55

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