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Utah and many other states are using nonprofits to leverage stimulus funds and create affordable housing with foreclosed properties.

Transforming Foreclosed Homes Into Affordable Housing

By Jennifer Harmon

Utah may be a small player in terms of how much housing stimulus funds it received from the federal government, but the state is leading the way with a unique and effective model for using the funds.

Standing in front of the first foreclosed home in Utah to be purchased with federal stimulus funds, Utah Gov. Gary Herbert praised a coalition of nonprofit organizations and financial institutions that is quickly putting to work Utah's share of federal housing stimulus funds.

Of the more than $3.92 billion designated by Congress for the Neighborhood Stabilization Program, Utah was awarded the minimum allocation of $19.6 million.

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Additional Features

• Foreclosures and Nonpaying Owners Creating Perfect Storm in Condos, Co-Ops and HOAs
• Technology Aims to Solve Home Valuation Uncertainty

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Data Map

Foreclosure Starts Decrease for FHA Loans

The non-seasonally adjusted foreclosure starts rate in the fourth quarter of 2009 was 1.20%, a decrease of 22 basis points from the third quarter of 2009 rate of 1.42%, according to the MBA's National Delinquency Survey.

By loan type, the foreclosure starts rate decreased three basis points for FHA loans (from 1.31% to 1.28%), and six basis points for VA loans (from 0.87% to 0.81%).

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Editor's Note

Confusion Mounting Over PTFA

By Jennifer Harmon

Numerous lender liabilities have been created as a result of the Protecting Tenants at Foreclosure Act.

Confusion is being expressed over whether or not there is a bona fide tenant in the property and if the lender has an oral lease with the borrower. The statute provides no guidance over what to ask for in order to prove occupancy. Lenders can take an aggressive or conservative approach to have borrowers produce evidence of occupancy. They can hire third party vendors, attorneys or use general counsel to collect documentation.

Speakers at the default super session at the MBA’s National Mortgage Servicing Conference & Expo in San Diego contemplated the best business decision for the lender when it comes to collecting rent. If the tenant is in the property for only 90 days then some of the panelists said it might not be worth it.

“But if the borrower is in the property for two years, then it might be a good decision especially if you cannot get rid of that property or find an investor to take the property off of your hands,” said Cynthia Nierer, a partner with Rosicki, Rosicki & Associates.

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Focus

Unique Device Safeguards Properties

With more real estate-owned assets coming on the market, ensuring the condition of those assets for eventual disposition is a big concern.

At the MBA Servicing Conference, REO Sentinel, Jacksonville, Fla., went live with a GSE and a top-five servicer to help these entities monitor their REO inventory.

“REO Sentinel has been and is in pilot,” said Dave Lawson, EVP and COO of REO Sentinel. “By the end of February we’ll be in 15 major cities in seven states. The product was designed to be a standalone unit that didn’t need electricity to operate. It has a motion detector and sensor that can detect any problems that may arise in the property. It also takes pictures of the inside of the home.”

REO Sentinel is a patent-pending product designed specifically to meet the harsh requirements of the REO and presale marketplaces.

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