Travis County Commissioners Court
March 23, 2010,
Travis County Housing Finance Corporation
Now let's call to order the Travis County housing finance corporation.
one item, consider and take appropriate action on request to, 1, approve a letter to the Texas department of housing and community affairs requesting an amendment in the program design of the neighborhood stabilization program and two, provide an update on the progress of the program.
>> good afternoon, I'm harvey dais, manager of the -- Davis, manager of the corporation.
i'm here with mike gonzalez.
the letter asks the state to amend our contract to where we have to spend 35 percent of our funds to help families below 50% of median family income.
currently the contract provides that we would spend 76% of the funds to help families below 50%.
the reason that we are making this request is that we had a meeting with the state and ourselves and Austin habitat.
the state told us that -- two important things.
one is that we could use the funds within the city of Austin, if the city of Austin provided us a letter saying they didn't have a problem.
they have indicated that they will provide that letter.
and then too, they said that we could use -- if we met our 35% requirement of helping families below 50%, that we could use funds -- the remaining funds could be used to help finance homes that home buyers buy from Austin habitat.
these homes would not have to be foreclosed homes.
they could be homes in the city of Austin.
i think most of the homes that they construct are within the city of Austin.
and so -- and so this -- that's the rationale behind this letter.
the state has indicated that the approval would be granted to lower that percentage.
>> who -- is it the Austin housing finance corporation that promised a letter or the city of Austin officials?
>> the city would be sending a letter to the Austin housing finance corporation saying that they would allow --
>> the city manager?
>> well, somebody from the city staff.
i think from the state's -- the state's -- I got the impression from the state they weren't too concerned about at what level in the city that it came from.
>> so I'm just trying to wrap my brain around this.
so even though we are reducing our standard for what percentage of our money goes towards 50% or below, will it actually reduce the level of services that go to folks 50% or below?
or are we just shifting it over to habitat?
>> well, you know, the percentages -- they're just an educated guess.
in our original contract, which we use 76%, because will rationale is we would be able to spend more money on the below 50% because they could get a zero percent mortgage and for one home buyer it would be a lot more of the grant money spent because you're doing a whole mortgage instead of some assistance.
so if we made this shift, I would guess that we would -- it would -- we would not spend 76% of the money for families below 50%, but it may be that we would spend more.
what Austin habitat has told us is that they have plenty of home buyers.
they have plenty of -- they have land.
what they don't have is money to finance the loans.
you know, the loans they make are zero percent loans also.
so they -- what they're liking is the funds to make the mortgage loans.
so this change would enhance the Austin habitat's program and they would be able to complete more houses.
>> so we're just trying to find capacity, the most capacity for this money that we can.
and you think this shift will fa I will at a time that -- facilitate that.
>> yes.
because we will not be constrained with having to use the funds on foreclosed homes.
what we are finding is that we're finding plenty of applicants, plenty of applicants who are able to approve, but the issue is that -- and there are a lot of foreclosed homes, as we all know, but the foreclosed homes get bought up by investors and people, so it's really hard to find and be able to make a contract on foreclosed homes.
so this -- in our opinion it eliminates that constraint and it's still most or all these funds would be used for families below 50% because that's what Austin habitat -- that's where they're geared towards.
>> okay.
>> what's the deadline for using the funds?
>> I'm sorry?
>> what's the deadline for using the funds?
>> well, the deadline that we have right now is that they would be -- funds have to be committed by the end of may, and the program ends in November.
>> 100% of the funds have been to be ex-pebded by November 2010.
the may deadline is only for financing mechanism.
there are different categories of usage on this.
for the activity that we're doing is may, but if we have -- we've had so much communication with the state, I think if they see something coming together and I think there is a little bit of flexibility there.
the program it self, nsb was essentially it's a three-year program, but within there there was milestones of when stuff had to be expended for different categories.
so there may be a little bit of flexibility.
you know, 100% expended up to November 2010, so there is a little bit of time there.
>> so our builders use as much as possible before the -- our goal is to use as much as possible before the guideline f we can't meet it, then we ask for an extension?
is that the plan?
>> if they're entertaining extensions.
the state has the constraint of having to deal with hud.
and you know, if hud would grant extensions, then I think they would make that offer down to us.
i believe that our impression is that all entities that are -- have these nsp funds are experiencing difficulty and using the funds in a timely manner, so our hope is that hud will extend this program and give us more flexibility in using these funds.
and if we do -- if we do an arrangement with Austin habitat, I mean, I would see these funds being used during this summer.
>> did we try to work with the Travis County housing authority on the foreclosure part?
>> well, we have talked with them about the foreclosure part.
the difficulty they have is that those homes are not foreclosed.
so those homes are -- they're for sale, but nobody has initiated a foreclosure on the homes.
so they're not qualified really for the nsp program.
>> we did ask them about foreclosed homes and they said we don't have any?
>> that's right.
>> I thought they fell into both categories.
>> you thought what?
>> that they --
>> I thought they had homes in both categories, rent to own and then some where actually there was a mortgage in place because the renters succeeded and purchased a home with a mortgage.
>> I don't know for a fact that the homes are there, I'm just saying my recollection of my conversation with them was they had people at different stages.
some are in the rent to own category who are not succeeding.
>> as far as I know, the few renters that have assumed a mortgage, I don't know of any that have been -- of those homes that have been subsequently foreclosed, but there really aren't many of them.
the category of homes that -- the inventory that they have are homes that are vacant, but the mortgage holder is the housing authority and they have not been foreclosed on by the lender.
>> okay.
so update, or did we just get it?
>> no.
this -- on a we're asking the board to approve the letter.
>> okay.
move approval.
>> second.
>> let us know if you have any trouble getting the right letter from the right official?
>> I certainly will, thank you.
>> real quickly.
on the update this has definitely been an interesting program to try to implement.
the state always likes to make a joke that for nsp they're essentially prig trieg to build the plane as we fly it.
that's definitely been the experience we've had on our end.
Travis County housing finance corporation has been really at the leading edge of implementing the program, so often times we've kind of been somewhat begin any pigs to the state as far as how the procedures actually get implemented.
a lot of times we've had to create our own forms to try to implement the program because the state has not made it available to us yet.
we did have our first nsp closing back in February of 2010 and we were actually in the running to be the very first subrecipient from the state to close one of the nsp funds, but we missed it by a couple of days.
it's amazing that in the whole state of Texas we came close to being the first ones.
the other thing, we've had three closings and we've done -- we've provided 51,000 in assistance.
all these three households have been in the 50 to 120 income category, so they've all been above 50%.
and I guess as a little bit of background, neighborhood stabilization, the whole idea was to ploy financing mechanisms for neighborhoods facing large race of foreclosure.
they're not stimulus funds.
they were issued in 2008.
the contract with the state we received in September of 2010, and the funds were actually made available to us in December of 2010, and we had our first offer in January.
>> 2009.
>> 2009, right.
>> 2010 we're in right now.
>> right, December of 2009, sorry.
and that's kind of why we've been constantly looking for ways to use these funds within Travis County.
it's a good amount of funds.
they're very restrictive on the usage and that's why the Austin habitat is a unique opportunity.
we're just really trying to find ways to utilize these funds within Travis County.
but as you can see the time lines are just so constricted, that's something each the state says, the funds are great, we just wish we had more time to expend them.
that's where we're at right now.
the program has been -- was complicated to administer.
it takes a lot of administrative work.
we have to be pretty proactive from the beginning, so we actually did a great deal of marketing in the begin and we've had strong interest from Travis County employees, from teachers, from police officers.
it's been very well received.
we've had over 500 individuals actually gone to our website and register for the program with their information, and we followed up on these individuals to try to get them qualified.
of the over 500 people that registered, we've actually processed 40 applications.
of those 40 applications, 17 were aproved.
and from 17 approvals, we've had three closings.
so you can see it's just -- it's a good -- it like a huge funnel.
you have to process a lot of individuals to really find those few that really meet all the program requirements.
and there are significant program requirements.
and that's the other thing on it is also there's been quite a bit of change in the Austin market from 2008 to now.
we are seeing that there's still a lot of foreclosure activity.
in fact, in these targeted neighborhoods, foreclosures make up about 57% of all the sales that happen.
so there is a lot of foreclosures that are being sold, but the one thing that is surprising is that the foreclosures are going faster than those that are just at mask market.
so in other words, while a foreclosure -- a non-foreclosure property takes up to 90 days to sell, foreclosures are usually moving within 24 days.
so that presents a challenge to our individuals who are qualified for the program.
they just can't get there fast enough to submit the offer.
and the other thing that's a little bit of a challenge is this offer comes with a lot of administrative work that needs to come in that's associated with down payment assistance, so it makes their offers a little less competitive when they see the different choices.
the 8,000-dollar tax credit I think is one thing that's been created and a supply of buyers that have been scooping up the foreclosed properties.
we've also had some relaxed investor requirements, so I think there's a lot more investors entering the market.
so the -- while we still have a lot of foreclosure activity in the targeted neighborhoods, these properties are being absorbed by the market pretty quickly.
and it also helps that a lot of these foreclosed properties might only be four, five years old, so they're in pretty good condition.
they're not -- they're not complete rehabs where someone has to go and spend a lot of money.
that still makes it attractive for investors and for first time home buyers going in there.
and that's -- some of the challenges that we face again was the slow implementation details from the state.
qualifying below 50% households has been in a little bit after challenge because they have to have -- the income has to be low enough to be below 50%, but high enough to where they can still afford a mortgage and they still have to be credit worthy.
that's one thing that's really been a challenge.
of the over 500 people that we visited with, a lot of the information we've given back and forth is just basic how to fix their credit or give them guidance of who to reach out to to help them get that credit established with some local nonprofits that we build relationships with here.
so as we move forward to expend a greater amount of the money, we will be focusing more on the 50% and below.
we have eight households right now qualified that are below the 50% threshold.
and they're actively looking for property.
if those eight can qualify, they qualify for 100% zero interest, mortgage from the state, so just rough guess, that's up to $800,000 of the nsp funds that can be used just for those eight households.
that's kind of the background of where we're at right now.
if we are able to move fard with Austin habitat, I think that will that will be a unique opportunity for us to be able to retain and utilize that money within Travis County.
and really address households below 50%, which is a unique opportunity with these programs for us to do.
>> I want to add that two of the home buyers that we've closed are Travis County employees.
and the third is a manor school district.
mike did do special outreach to the schools in that part of the county so that all the teachers and school personnel were aware of this program.
>> questions, comments?
>> great work.
>> thank you very much.
>> thank you.
>> keep up the good work.
>> thank you.
>> move adjournment.
>> second.
>> all in favor?
that passes by unanimous vote.
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Last Modified:
Tuesday, March 23, 2010 2:53 PM
