N A C E D A P e o p l e & P l a c e s C o n f e r e n c e
M a r c h 5 , 2 0 1 5

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Creating the bridge to stronger neighborhoods
The National Community Stabilization Trust is a non-profit intermediary organization offering innovative programs and services to state and local governments and communitybased housing providers to expedite the productive reuse of foreclosed and vacant properties to stabilize neighborhoods and to create affordable housing opportunities for underserved families.
Facilitating the effective transfer of foreclosed and abandoned properties to localities
Providing flexible financing to support local and state efforts
Award-winning mapping and property transaction technology
Organizing local collaborations through NCST sponsor organizations and industry partners
Serving as an industry ‘voice’ for foreclosure remediation and neighborhood stabilization

18,000
Since 2009, NCST has conveyed more than
16,000 properties to community buyers, who in turn, rehabilitate and resell those homes at a discount to owner-occupants
In our first five years of operation, NCST conveyed
$1,039,447,847 in real estate back to the community through our non-profit providers. 1,200
The number of houses donated to local organizations through the Veteran Donation
Program, future renovated homes that will benefit our country’s military veterans.
976
We have 976 community buyers .
3,000
Our buyers operate in 48 U.S. states, which includes 3,000 cities and nearly
4,000 zip codes.
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Our community buyers have saved over
$135 million by buying their properties at a discount through NCST’s programs. The buyers utilize these savings to run other community programs
6,000
The number of donation properties accepted through NCST by organizations in 48 states since 2012.
10,000
In 2014, we transferred our 10,000th
First Look property to a community buyer.

HAMP
Donations

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NCST has participated in two distinctly different nonperforming loan efforts
Mortgage Resolution Fund (MRF)
– A nonprofit established by Enterprise Community Partners, the Housing Partnership Network, Mercy
Portfolio Services, and NCST to acquire nonperforming notes in hard hit markets.
– The objective was to keep families in their homes by right sizing mortgage payments or, when that was not feasible, to convert paper to property to that the real estate could be improved.
– Bought notes directly from financial institutions and from FHA as part of DASP.
– Notes were purchased in the Chicago metro area and in northeastern Ohio.
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The ReClaim Project
– A joint effort by the Housing Partnership Network and NCST to purchase very low value distressed notes, typically on vacant property, where there is little expectation of any further owner contact or economic recovery for the servicer/investor. Nationwide in scope.
– These properties often sit in limbo for years undermining neighborhood stabilization efforts.
– NCST and HPN, via an entity called CRC, remediate the situation in the most economic manner possible, working closely with local community providers.

The Ultimate Resolution Tool for Zombie Properties
NCST and HPN operate a tax exempt non-profit holding entity, called CRC, that accepts nonperforming notes as donations, with a financial contribution from the Servicer for the resolution of each asset.
Unprecedented value proposition for communities:

Creates a mechanism to permanently resolve very low value, abandoned ‘zombie properties’

Includes new financial resources from participating servicers to remove blight

Supplies options for owners occupants or legal tenants in place and resolution for long standing blighting properties
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Primary Objectives:
Provide servicers with a pre-foreclosure pathway to resolve low value assets
Create efficient execution that is more costeffective than foreclosure and less damaging to communities than lien releases.
Enable communities to take control of distressed properties
A transparent and predictable program that will align with local goals and strategies and leverage existing local capacity with new resources.

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Donating notes creates positive outcomes for Servicers and the communities embattled by abandoned properties.

Conveyance of distressed low value notes to a single entity is more efficient than negotiating individual conveyances and/or payouts in communities, large and small, across the nation.

Designed to enhance the scale and speed of asset transfers and ensure consistency of execution.

Based on sound real estate practices with a clear mission focus.

Homeowner retention and community-focused property remediation are prioritized .
BENEFITS
QUICK RESOLUTION —Loans can be transferred over a
30-day period after due diligence and pricing
COST EFFICIENCY — Resolution costs may be less costly than the servicer’s standard foreclosure path
RESPONSIVE TO COMMUNITY NEEDS — Alleviates financial burdens that communities face with bank
“walkaways” by proactively contributing resources for significant blight removal and neighborhood reclamation
INSULATION FROM LOCAL HEADLINE RISK –
Compared to other liquidation alternatives, NCST, and
HPN - as mission-focused nonprofit - will direct community-responsive resolutions, rather than the
Servicer making subjective decisions that have negative local repercussions.

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1: Pursue Alternative to
Foreclosure with Borrower
Occupied Vacant
2: Initiate Process to Take Title
DIL/Short
Sale
Statutory or
Judicial
Foreclosure
Tax
Foreclosure
3. Position Property for Reuse
Demolition Transfer - Rehab
1) Preserve homeownership and occupancy of properties to the extent possible
• Where willingness and baseline financial capacity exists
• When property does not present a health and safety hazard to occupants and/or neighborhood
• When a local partner is available to maintain long-term tenants if title to property can be conveyed
2) Maximize Use of Foreclosure Alternatives or Fast-Tracking
• Maximize opportunities to negotiate DIL or short sales to obtain title to properties
• Work with local authorities on the path to foreclosure that will expedite local control of property (tax foreclosure vs. statutory or judicial foreclosure)
3) Determine asset resolution with the highest community development value
• Use Servicer funding to expedite demolitions to reduce blight
• Co-develop and/or transfer properties to Community Buyers to create affordable homeownership or rental opportunities for income eligible families.
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Repayment
Plan/
Settlement
•For small
UPBs
Modification
•Lesser of UPB or LTV at least
90% or below
Fair Market
Value
DIL/Short Sale
Deed in Lieu
•With cash for keys
•Quick Sale
•Quick Donation
Foreclosure
•REO Sale
•Property Donation
•Demolition
Tax
Foreclosure
•With
Demolition
Contribution to local authorities
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Foreclosure
•Borrower transition +
•Sale
•Donation
•Demolition
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March 5, 2015


First HUD-approved national housing counseling intermediary
(1995)
 Over the last 5 years, HPN’s network of counseling agencies has helped 79,000 households prepare for homeownership
 HPN’s members advise on average close to 1,400 households annually

Building on our 20 year track record in the industry, HPN has led efforts to increase access to high quality homebuyer education and counseling for consumers through our network of high performing counseling agencies and through technology innovation

At the core of our business practice is facilitating peer learning between our members with a focus on catalyzing innovation in the sector
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HPN is a business collaborative of the nation’s leading housing and community development nonprofits and, as a CRC partner, will manage the national counseling network focusing on borrower engagement.
 Identification of local providers and management of counseling provider subcontracts
 Establishment of counseling work plan, job description and training needs
 Technical Assistance
 Management of monthly reporting and payment requisition to counseling providers
 Sharing best practices through peer exchange to enhance the integrated counseling model
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•Demonstrated commitment to CRC business model
•HUD Certified Counseling Agency
•National Homeownership Industry Standards and National Industry Code of
Ethics and Conduct for Homeownership Professionals
•Documented capacity to serve borrowers (minimum 1,000 households)
•Documented capacity assisting borrowers to restructure secondary nonmortgage debt
•Experience working with mortgage servicers
•Formal training and certification plan for new hires
•Quality Control Plan
•Program Directors
•Ability to refer Borrowers to additional resources including: legal, social supports; housing search assistance; down payment or other financial assistance programs; financial literacy programs
•Currently uses client management system that is able to submit client level data and aggregate reporting electronically
•Electronic client files
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
Local presence
– High capacity local organizations provide the market presence needed to help distressed homeowners reach positive solutions

High-touch role
– Ongoing and intensive interactions with borrowers throughout the loss mitigation process
– Evaluate desire and capacity for retention
– Assist with soft-landing and transition counseling for alternative disposition

Enhanced outcomes
Special
Servicer
– Enhanced contact rate
– Foreclosure avoidance
Borrower
Integrated
Counseling
Approach
Counselor
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MRF and ReClaim Have Been Valuable Learning Opportunities
1.
Due Diligence: Thorough due diligence on every asset must be undertaken.
 MRF did title work and some on-site sampling, relying too much on seller representations.
 With ReClaim , NCST and HPN conducted loan by loan analysis prior to pricing, including determining tax/title deficiencies, subordinate liens, active bankruptcies, current property condition, occupancy status, and estimated value.
2.
Special Servicer: Servicing seriously delinquent, often vacant property is a specialization. Fund a servicer with the right focus, experience, and incentives.
3.
Nonprofit and For-Profit Partnerships: Accepting low value notes is a high risk undertaking.
Working with a for-profit partner has real benefits, but ensure that interests are aligned from the outset. And, remember, all capital comes with “strings”.
4.
Waterfall Your Options and Work Fast: Time is not the friend of the note remediator –the costs of servicing, foreclosure, and subsequent resolution are daunting.
5.
Borrower Ability and Willingness: Not all borrowers want to stay. Working to establish their trust is important, but ultimately building trusted local relationship is even more important.
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Annie Carvalho | acarvalho@stabilizationtrust.com
| (651) 245-2010
Joe Ferguson | ferguson@housingpartnership.net
| (617) 259-1821
National Community Stabilization Trust (NCST) is a national nonprofit organization working with the nation’s largest financial institutions and local housing providers across the U.S. to reclaim neighborhoods hard hit by high levels of foreclosure and abandonment. To support the recovery of distressed neighborhoods, NCST ensures local housing providers have the right tools to transform empty, foreclosed properties into community assets that increase the stock of affordable ownership and rental housing.
Housing Partnership Network (HPN) is a member-driven collaborative of the nation’s 100 leading housing and community development nonprofits who combine social mission with business acumen to create affordable homes in healthy communities for lower-income and working families. The HPN approach is based on peer exchange among the top performers in the field who share ideas and knowledge, pool resources, collaborate on business enterprises, and provide credible, practitioner-based solutions that drive our policy recommendations and advocacy.
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Privileged & Confidential