Rural Development
RRHA of Illinois
May 20, 2015
State of the State
Barry Ramsey
Housing Program Director
Rural Development
• Throwback “Top 10” reasons in 2003 to be a
buyer/seller honoring David Letterman and
his final Late Show tonight!
• RD Portfolio Overview (Then & Now)
• Policy and Program Changes since last year
• Maturing Mortgages
• What is VAWA?
• 2016 Outlook
• Q&A’s?
“Top 10” Indicators that I
might be a Buyer
10. Those “generous” Rural
Development Management
Fees!!
“Top 10” Indicators that I
might be a Buyer
9. My Tax Returns are just too
easy to prepare!!
“Top 10” Indicators that I
might be a Buyer
8. Prepayment Incentives!!
(2023 is just around the corner)
“Top 10” Indicators that I
might be a Buyer
7. I just finished reading this
book I ordered from a TV
commercial about great
Government programs!!
“Top 10” Indicators that I
might be a Buyer
6. Eight percent (8%) annual
“return on investment” - - Where else can you find
that?!
“Top 10” Indicators that I
might be a Buyer
5. I want to set my own hours
and be my own boss!!
(never managed rental
property or read 1930-C =
today’s RD HB-2-3560)
“Top 10” Indicators that I
might be a Buyer
4. I’m hearing that those
“prepayment lawsuits” are
going to pay out BIG!
“Top 10” Indicators that I
might be a Buyer
3. I want to provide decent
rental housing to the poor
and less fortunate!!
“Top 10” Indicators that I
might be a Buyer
2. Non-recourse, 1% interest
rate loans!!
“Top 10” Indicators that I
might be a Buyer
1. Chuck Kirchner told me,
“That 515 program is the
greatest thing since sliced
bread!!”
“Top 10” Indicators that I
might be a Seller
10. I know when I bought this
property, it was for a good
reason --- but now I can’t
remember it!!
“Top 10” Indicators that I
might be a Seller
9. One Word: Depreciated!!
(my property & my lifestyle)
“Top 10” Indicators that I
might be a Seller
8. Too many Rules & Regs (will
7 CFR 3560 be any better?!)
It’s now 12 years later, so
what do you think?
“Top 10” Indicators that I
might be a Seller
7. Two Words: Phantom Income!!
“Top 10” Indicators that I
might be a Seller
6. I’d like to spend more quality
time with my family and less
“quality time” with the RD
folks!!
“Top 10” Indicators that I
might be a Seller
5. This wasn’t what I bargained
for --- I just want out!!
“Top 10” Indicators that I
might be a Seller
4. I bought the general partner
interest from an old “friend”
– trouble is, he “forgot” to
get RD’s permission.
“Top 10” Indicators that I
might be a Seller
3. That 8% “Return to Owner”
doesn’t go as far as it used
to ($1,000 in 1980 is only
worth $448 in 2003)!!
…and now only $351 in 2015
“Top 10” Indicators that I
might be a Seller
2. My wife’s been doing all the
work and she has earned
some time off !!
“Top 10” Indicators that I
might be a Seller
1. My wife’s been doing all the
work and she just took off!!
RD PORTFOLIO (THEN & NOW)
CASELOAD
1995
2015
Change
RRH Properties (IL)
785
549
-30.0%
RRH Total Units (IL)
11,808
10,231
-13.4%
Rental Assistance Units
6,576
7,324
+11.4%
% Units with RA
55.7%
71.6%
+15.9%
Project Size (IL)
15.0 units
18.6 units
+24.0%
 13.4% have been have prepaid or sold for cash,
 16.2% have been consolidated into scattered site projects,
 11.4% in additional RA was provided (748 more units) from new
projects or prepayment incentive offers prior to 2012,
 Today, 71.6% of units in Illinois include RA funded by USDA (up
from 71.2% last year due to projects without RA which prepaid)
RD PORTFOLIO (4 YEAR TREND)
56
ILLINOIS
57
Category 1
Category 2
581 properties (8/2011)
Category 3
549 properties (5/2015)
468
 Category 1 = 50 needed,
but able to prepay (-7);
 Category 2 = 466 needed,
core properties (-2);
 Category 3 = 33 not
needed, and not viable to
preserve (-23)
CHECK YOUR CLASSIFICATION
A) No unresolved findings or
violations…including
accessibility findings
B) Every finding addressed by a
current workout plan and/or
SE/TP
C) Unresolved finding (at least
one…including overdue
reports or an outdated T/P)
D) Unresolved violation (a
serious finding which
resulted in servicing letters,
or default)
Illinois
4
132
295
118
Source: see 9.7
(HB-2-3560)
A
B
C
D
NEW WEBSITE AND
UNDERWRITING CHANGES
• www.rurdev.usda.gov/il
• Is now www.rd.usda.gov/il
• Choose MPR Housing
Preservation &
Revitalization Demo
• Forms & Resources tab
• Preliminary Assessment
Tool (PAT) = Underwriting
deals since 12/16/2014
• Latest CNA Template and
3/16/15 guidance letter
BY THE NUMBERS…THERE ARE
THREE KINDS OF LIES – M. Twain
•
•
•
•
•
•
•
•
Lies, Damned Lies, and Statistics…Trivia?!
549 IL projects = #4 in the US (TX,MO,NC)
72 IL projects with HUD S8 = #1 in the US
13 IL projects with a non-revenue site mgr unit
(only 2.4% of all properties)
$11,142 avg annual income ($9,463 RA)
96.1% very low (3.5% low, 0.4% moderate)
66% are 1 person households (61% elderly or
person with a disability)
$454 average basic rent ($547 with HUD)
MFH CHANGES SINCE LAST YEAR
 Passbook Savings Rate = 0.06% (not 2%)
 Management Fee Increased from $44.50 to
$46.00 PUPM plus add-ons
 RD Vouchers now based on a conventional
weighted average rent by bedrooms in the
market, not adjusted for size or condition of
a comparable unit (CRCU) by an appraiser
 Maturing mortgage guidance 4/28/15
(Twenty in IL by 2019 and eight in the next
25 months now receiving letters)
MATURING MORTGAGES (cont’d)
 50 year loans closed in 1965…due in 2015
 40 year loans closed in 1975…due in 2015
 Paid ahead loans cannot make their final
payment prior to maturity unless they request to
prepay! Prepaying qualifies for vouchers.
 Owner and Tenant notifications are required.
 RA ceases when monthly payments and
worksheets are not processed.
 For loans maturing through 2019, an exception
to extend the loan & RA (reamortization “lite”)
for an additional 1-20 year term is available.
MATURING MORTGAGES (cont’d)
 Ream “Lite” streamlines the process:






No updated CNAs
No updated Appraisals
No mid-year superseded budget & rent change
No title work or OGC closing instructions
No new Restrictive Use Provisions (RUPs)
Reduced note rate, currently 3.125%
 Other options include:
 MPR loan restructuring and 20 year deferral so that
RA can continue to be provided;
 Do nothing and RA ceases when monthly
worksheets and last loan payment cannot process.
Reorganizational Changes FY 2015
• Illinois consolidated 7 Area
office locations into 6
(Effingham no longer has a
caseload - Marion’s caseload
is still divided between 2
specialists, Janet & Renee);
• RD Appraisers regionalized &
changed into review
appraisers. MFH applicants
are now responsible for hiring
and paying for appraisals.
WHAT IS VAWA?
 Federal Law 42 USC 14043e-11
Violence Against Women Act
 RD AN 4778 reissued AN 4747
 HUD, LIHTC, 515, 538 owners have already
certified to follow Federal laws
 VAWA prohibits victims of domestic violence,
dating violence, sexual assault & stalking from
eviction
 Attachment B – RD Model Tenant Emergency
Transfer Plan
 Tenant selection policy & rules must recognize
tenant displacement due to circumstances
beyond their control per 7 CFR 3560.159(c) for
priority placement – similar to a LOPE letter.
2016 Outlook  Fiscal year 2016
sequestration orders to
OMB have been issued by
the President effective
October 2015
 A temporary “continuing
resolution” for
appropriations is likely if
history is an indicator
 RA funding would be
subject to “across the
board” cuts
 Furloughs and temporary
closures are possible
TRIVIA (RD)
• T/F - Income from assets must be
imputed when the household assets
exceed $5,000 at a 2% interest
rate?
• False; UL effective 2/1/15 changed
the rate to 0.06%.
TRIVIA (RD)
• BONUS: What dollar adjustment to
annual household income is used for a
mother born on July 30, 1947 (tenant),
and her 34 year old disabled son?
• $400?
• $480?
• $880?
TRIVIA (RD)
• BONUS: What dollar adjustment to
annual household income is used for a
mother born on July 30, 1947 (tenant),
and her 34 year old disabled son?
• $400?
• $480?
• $880 $400 elderly + $480 dependent
under age 17, or individual with a
disability or full-time student. 6.9C1
(HB-2-3560)
TRIVIA (FINAL)
• Which four US Presidents shared
the same birthday month of
February with RD State Director
Colleen Callahan?
TRIVIA (FINAL)
• Which four US Presidents shared
the same birthday month of
February with RD State Director
Colleen Callahan?
George Washington – Feb 22
William Henry Harrison – Feb 9
Abraham Lincoln – Feb 12
Ronald Reagan – Feb 6
Thank you!
USDA is an equal opportunity provider and employer.
If you wish to file a Civil Rights program complaint of discrimination,
complete the USDA Program Discrimination Complaint Form, found
online at http://www.ascr.usda.gov/complaint_filing_cust.html, or at any
USDA office, or call (866) 632-9992 to request the form. You may also
write a letter containing all of the information requested in the form.
Send your completed complaint form or letter to us by mail at U.S.
Department of Agriculture, Director, Office of Adjudication, 1400
Independence Avenue, S.W., Washington, D.C. 20250-9410, by fax
(202) 690-7442 or email at program.intake@usda.gov