INDUSTRY NEWS

 

First Deal Closes Under Freddie Mac’s Tax-Exempt Loan Program

Millennia Housing Development has closed the first deal through Freddie Mac’s new Direct Purchase of Tax-Exempt Loans initiative.

The firm’s $14.3 million acquisition-rehab loan is for The Lakewoods, a 417-unit affordable seniors housing property in Dayton, Ohio. Approximately 95 percent of the apartments will receive subsidies under a federal Senior Preservation Rental Assistance Contract (SPRAC). The property is also restricted under the low-income housing tax credit (LIHTC) program.

Under the new initiative, a Freddie Mac Targeted Affordable Housing servicer originates a direct tax-exempt loan, also called a funding loan, to a government entity such as city, county, or state housing agency that can issue tax-exempt multifamily housing bonds. Simultaneously, using the proceeds of the funding loan, the issuer makes another loan, the project loan, to the borrower to finance a specific housing project. Freddie Mac buys the funding loan from the servicer and holds it on its balance sheet before aggregating it with other tax-exempt loans. The pool of loans is then securitized into a series called M–Deals and sold to third-party investors.

Freddie Mac officials say the program is particularly attractive for projects developed with 4 percent LIHTCs. They estimate it will provide about a 40 percent reduction in closing costs due to private-purchase efficiencies when compared to a publicly offered credit-enhanced bond.

Walker & Dunlop originated and structured the first loan with a 16-year fixed-rate and 35-year amortization.

The Direct Purchase of Tax-Exempt Loans initiative was introduced after The Lakewoods had been initially underwritten. Frank Baldasare, senior vice president at Walker & Dunlop, recognized that the new program would benefit Millennia.

“Freddie Mac's new execution eliminates many of the costs that would normally be associated with bond issuance, making it ideal for projects like The Lakewoods, developed with 4 percent LIHTCs,” said Baldasare in a statement.

The deal not only involved the new loan program but one of only 12 SPRAC awards in the country, said Christine Robertson, vice president of Millennia Housing Development.*

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Substantial Increase in Need for Senior Housing

The nation is not prepared to meet the housing needs of aging Americans, according to a new report by Harvard University’s Joint Center for Housing Studies (JCHS) and the AARP Foundation.

As Americans continue to live longer, the number of adults aged 50 and older is expected to grow to 132 million by 2030. One in five Americans will be 65 and older in 2030, and one in eight people will be 75 and older in 2040.

Housing America’s Older Adults: Meeting the Needs of An Aging Population underscores the fact that there’s a shortage of accessible housing units and high housing cost burdens for seniors today, and the dramatic demographic changes coming down the road can only exacerbate the problems.

Seniors are at increased risks of financial stress, with typical household incomes dropping later in life. One-third of adults 50 and older paid more than 30 percent of their income for housing in 2012, with nearly 9.6 million severely cost-burdened seniors paying more than 50 percent of their income for housing.

Housing assistance also is limited for very low-income households 62 and older. In 2011, 3.9 million very low-income renter households were eligible for rental assistance, but only 1.4 million received the aid.

Current projections show that this gap will only continue to grow. Senior households eligible for rental assistance is expected to increase by 1.3 million between 2011 and 2020 and another 1.3 million between 2020 and 2030. If there aren’t any boosts in housing aid, there will be 4 million very low-income senior households by 2030 who will be left to find affordable and safe housing in the private market.

The report also shows that those with severe housing cost burdens spend much less on food and health care than those who can afford their housing.

Another staggering statistic is that a typical 65-year-old homeowner has enough wealth to afford in-home assistance for nearly nine years or assisted living for six and a half years, while typical renters of that age can only afford these services for two months.

“We’re going to face more challenges in the future. It’s a problem already, and it’s going to be a bigger problem,” says Chris Herbert, JCHS acting managing director. “But there’s still time to prepare.”

Herbert says there are a number of promising models today for housing and serving seniors, but more needs to be done to raise awareness and to understand the issues.

This will require efforts from all levels of the government as well as the nonprofit and private sectors, he says.

Former Department of Housing and Urban Development secretary and CityView chairman Henry Cisneros, who was the keynote speaker at the report release, agrees.

“Today’s report should be heard as a wake-up call,” he says. “We are aging. We are not ready. … We have some time, but we must think anew and plan comprehensively.”

Cisneros says it’s clear the nation needs more housing that’s appropriate for the various stages of aging. A vast majority of seniors want to stay in their homes or age in place, and more tools are needed to make this housing more accessible. The nation also needs new approaches to independent living, new ways to pay for assisted living, more memory care units, and more skilled nursing facilities, he adds.*  

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Goals for Fannie Mae and Freddie Mac

The Federal Housing Finance Agency (FHFA) has proposed housing goals for Fannie Mae and Freddie Mac for 2015 through 2017.

The proposal includes benchmark levels for multifamily housing goals and, for the first time, establishes a subgoal for small multifamily properties (five to 50 units) affordable to low-income families.

For Fannie Mae, FHFA's proposed multifamily benchmark levels hold steady at the current 250,000 units for low-income families and 60,000 for very low-income families.

For Freddie Mac the low-income goal would gradually rise by 10,000 units each year from the current 200,000 units to 230,000 in 2017. For very low-income families the current 40,000 units goal would increase to 43,000 in 2015, 46,000 units in 2016, and 50,000 units in 2017.

 

Current and Proposed Multifamily Goals
(number of multifamily units)

 

Current

Proposed

Benchmark Level

2014

2015

2016

2017

Fannie
Mae

Freddie
Mac

Fannie Mae

Freddie Mac

Fannie Mae

Freddie Mac

Fannie Mae

Freddie Mac

Low-Income Families

250,000

200,000

250,000

210,000

250,000

220,000

250,000

230,000

Very Low-Income Families

60,000

40,000

60,000

43,000

60,000

46,000

60,000

50,000

Under the new small multifamily property subgoal, Fannie Mae would provide financing for 20,000 affordable units in 2015; 25,000 in 2016; and 30,000 in 2017. For Freddie Mac, the goals would be 5,000, 10,000 and 15,000 respectively.

Interested parties are invited to submit comments on the proposed rule no later than Oct. 28.

 

 

 

 

Proposed Small Multifamily Properties Affordable to Low-Income Families Subgoal (5-50 units)

(number of multifamily units)

 

2015

2016

2017

Fannie Mae

20,000

25,000

30,000

Freddie Mac

5,000

10,000

15,000

Single-family housing

On the single-family side, FHFA seeks comments on three alternative approaches: Alternative 1 would use the current two-step process, which involves setting both a prospective benchmark level and a retrospective market level measure based on Home Mortgage Disclosure Act data; Alternative 2 would set only prospective benchmark levels; and Alternative 3 would use only the retrospective market level measure.

If FHFA were to adopt Alternative 2, the agency would consider adopting single-family benchmark levels in the final rule that are lower than the proposed levels. Alternative 3 would not involve setting a prospective benchmark level.

The Housing and Economic Recovery Act of 2008 requires FHFA to establish annual housing goals for both government-sponsored enterprises.

Comments should be submitted to the Federal Housing Finance Agency, Division of Housing Mission and Goals, 400 7th Street, S.W., Washington, DC, 20024 or via FHFA.gov.*

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Bank of America’s $17 Billion Settlement

The Obama Administration today announced an almost $17 billion global settlement with Bank of America. $1 billion of the total settlement amount resolves claims arising from allegations of fraud involving certain Federal Housing Administration (FHA)-insured single-family mortgage loans and a failure to perform under its servicing contract with the Government National Mortgage Association (Ginnie Mae).

Under the terms of the settlement, Bank of America will pay $800 million to resolve the claims relating to FHA and $200 million to Ginnie Mae. The remaining nearly $16 billion of the total settlement amount resolves fraud claims involving the pooling of residential mortgage backed securities, collateralized debt obligations, and other claims by the United States, along with the States of California, Delaware, Illinois, Maryland, New York, and the Commonwealth of Kentucky, and includes $7 billion in consumer relief with a focus on borrowers that were in the hardest-hit areas during the housing crisis.

"Today’s settlement with Bank of America is another important step in the Obama Administration’s efforts to provide relief to American homeowners who were hurt during the housing crisis,” said U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro. “This global settlement will strengthen the FHA fund and Ginnie Mae, and it will provide $7 billion in consumer relief with a focus on helping borrowers in areas that were the hardest hit during the crisis. 

HUD will continue working with the Department of Justice, state attorneys general, and other partners to take appropriate action to hold financial institutions accountable for their misconduct and provide consumers with the relief they need to stay in their homes. HUD remains committed to solidifying the housing recovery and creating more opportunities for Americans to succeed.”

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group.

Working with the Department of Justice, HUD’s Office of General Counsel, Office of Housing, and Office of the Inspector General worked extensively on the fraud investigation involving FHA-insured single-family mortgage loans that were underwritten by Bank of America during the period from May 1, 2009, to April 1, 2011. HUD also provided assistance with respect to a breach of contract claim involving Bank of America’s role as one of two master subservicers for Ginnie Mae’s portfolio of defaulted single-family mortgages.

The $7 billion in consumer relief will focus on areas that were hardest hit during the housing crisis. Consumer relief will take various forms including loan modification for distressed borrowers, including FHA-insured borrowers, and new loans to credit worthy borrowers struggling to get a loan in hardest hit areas, borrowers who lost homes to foreclosure or short sales, and moderate income first-time homebuyers.

Bank of America will also make donations to community development funds, legal aid organizations, and housing counseling agencies to assist individuals with foreclosure prevention and to support community reinvestment and neighborhood stabilization. They will also provide financing for affordable rental housing with a focus on family housing in high-cost areas.  An independent monitor will be appointed to ensure compliance with the terms of the agreement.**

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 COMPANY NEWS:

Events (2014)

  • Cash Gill plans to attend the Missouri Real Estate Appraisers Commission’s Quarterly Meeting as an Active Commissioner September 16th – 17th in Jefferson City, MO.
  • Gill Group attended the National Housing & Rehabilitation Association's Summer Institute August 16th - 17th in Newport, RI. 
  • Gill Group attended the Southeastern Affordable Housing Management Associations Regional Conference for Affordable Housing August 10th - 12th in Ft. Lauderdale, FL.
    • Cash Gill gave a lecture on Rent Comparability Studies
  • Gill Group attended the Midwest Buyers/Sellers Conference August 18th - 19th in Indianapolis, IN. 
    • Cash Gill gave a lecture on Appraisals and CNAs
  • Gill Group provided RAD and Affordable Housing Training July 29th - 30th in Alexandria, LA. 
    • Cash Gill gave a lecture on Appraisals, Market Studies, Rent Comparability Studies and Capital Needs Assessments (CNAs)
  • Gill Group attended the Texas Affiliation of Affordable Housing Providers' Annual Conference July 28th - 30th in Austin, TX.  
    • Jerry Anderson presented on the "Rental Assistance Demonstration" panel 
  • Gill Group attended the National Council of State Housing Agencies’ Annual Housing Credit Connect June 25th – 27th in Chicago, IL.
    • Cash Gill presented on a panel on Thursday, June 26th, entitled “Rural Development Opportunities.”
    • Jerry Anderson presented on a panel on Thursday, June 26th, entitled “RAD Report.”
  • Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Meeting as an Active Commissioner June 17th – 18th in Jefferson City, MO.
  • Gill Group attended National Association of Housing and Redevelopment Officials’ Annual Conference June 16th – 17th in Orlando, FL.
    • Cash Gill presented on a panel on Monday, June 16th, entitled “Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies.”
  • Gill Group attended HUD’s RAD Training June 4th – 5th in Washington, DC.
  • Gill Group provided affordable housing and RAD training at Great Lakes Capital Fund’s University of Affordable Housing May 22nd in South Bend, IN.
  • Gill Group attended the Council for Rural Housing & Development of Ohio’s Midwest Rural Housing Summit May 19th – 20th in Columbus, OH.
    • Cash Gill spoke on the Rural Housing Market Research panel on May 20th.
  • Gill Group provided affordable housing training at a regional seminar April 29th in Franklin, TN.
  • Gill Group attended Bank of Advance’s Annual Retreat and Meeting March 20th – 22nd in Norfolk, AR.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission’s Quarterly Meeting as an Active Commission March 18th – 20th in Jefferson City, MO.
  • Gill Group attended MACO’s Annual Retreat and Meeting March 13th – 16th in Biloxi, MS.
  • Gill Group attended the National Housing and Rehabilitation Association’s (NH&RA’s) Annual Meeting February 19th – 22nd in Palm Beach, FL
  • Gill Group attended the Council for Affordable Rural Housing’s (CARH’s) Mid-Year Meeting January 26th – 28th in Las Vegas, NV.

Events (2013)

  • Gill Group attended 22 conferences and meetings throughout the United States in 2013

GROWTH (2013 - Highlights):

  • Gill Group expanded our cutting-edge market analysis software and added our own in-house developed needs assessment software for CNAs, PNAs, PCNAs, PCAs, RPCAs, and every other acronym for this type of service.  
  • Gill Group added 4 offices with appraisers, market analysts, engineers and architects.
    • Within the offices are three architects, one MAI appraiser, two general certified appraisers, five market analysts and 10 additional support staff. 
  • Gill Group expanded the footprint of its subsidiary, National Title & Escrow, to cover the entire United States with a local presence.

Events (2012)

  • Gill Group attended 20 conferences and meetings throughout the United States in 2012

GROWTH (2012 - Highlights):

  • Gill Group developed cutting-edge market analysis software that will allow us to do preliminary analysis that is subject-specific in any market in the United States within minutes.  
  • Gill Group added 11 offices with appraisers, market analysts, engineers and architects.
    • The offices now employ an additional 34 people.
  • Gill Group expanded coverage of its subsidiary, National Title & Escrow, to cover the entire United States.
  • Gill Group expanded coverage of its subsidiary, Gill Insurance Group, to cover the entire United States.

  Gill Group has published the following:

  • New York Real Estate Journal - How can low-income housing facilities translate into high profits?
  • New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
  • Tax Credit Advisor - Boston MSA Market Snapshot
  • Tax Credit Advisor - Seattle MSA Market Snapshot
  • Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
  • Affordable Housing Finance – Urban and Rural Market Studies.
  • Tax Credit Advisor – LIHTC Appraisals 101

Cash Gill, MAI has had the opportunity to speak on the following topics:

  • (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
  • (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
  • (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
  • (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
  • (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
  • (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
  • (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
  • (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
  • (Washington, DC) Council for Affordable and Rural Housing - How to Foster Affordable Green and Rural Housing Needs Assessments
  • (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
  • (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
  • (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
  • (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
  • (Chicago, IL) AHF Live – Strategies for Rural Deals.
  • (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
  • (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
  • (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
  • (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
  • (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
  • (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
  • (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
  • (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
  • (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
  •  (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
  • (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
  • (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
  • (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
  • (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities

 

 

 

 

*as seen on housingfinance.com

**as seen on hud.gov

 

 

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