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Wilherst Program Rescues REOs and Provides AH

Tampa, FL-Experts in the real estate-owned marketplace have launched Wilherst Oxford LLC, a new venture capital company whose goal, they say, "is to spearhead a real estate rescue program" focused on generating opportunities for first-time and lower-income homebuyers in the country's inner cities.

It is an effort to create new homeowners in times when the crisis has reduced affordable financing options for these borrowers.

Peter Monroe, Resolution Trust Corp. oversight board president and CEO from 1990 to 1993, has joined forces with other REO experts to create the new firm.

"The RTC successfully oversaw the largest liquidation of REO in our nation's history," he recalled, noting the experience has enabled him to be an REO business expert. His experience includes chief operating officer of the Federal Housing Administration, which helps combine needed know-how about both REO and affordable housing resources. He is a licensed real estate broker and corporate lawyer who has also served as executive director of the Urban Land Institute Foundation and is a member of REOMAC, a research group dedicated to the expanding REO industry.

"Our fund will invest nationwide and across product lines from residential to income properties."

The new real estate rescue program will also provide borrowers with the option "to purchase and restructure defaulted mortgages to allow homeowners to remain in their homes," and help avoid foreclosure wherever it is possible, he said.

"Wilherst Oxford has already achieved profits for its investors in its first few months," he said, "and will now focus on stabilizing neighborhoods by providing debt and equity capital to debt-starved real estate markets."

Through the new product Wilherst executives plan to help make vacant homes available to inner-city residents using seller financing and low downpayments, tapping on previous experiences with RTC and FHA, both of which have successfully used seller financing in the past.

The new program implements several well-known concepts.

It appears, however, the strategy is similar to the downpayment assistance industry, recently banned from the marketplace by federal law. The 100% seller-funded downpayment assistance option on FHA ensured loans are out of the market and deemed high-risk lending. What the new company offers instead is low seller-funded DPA and financing.

In addition, it is a so-called sweat equity or self-help program that enables borrowers to select, purchase and fix up their own homes while they vacate substandard rental housing.

Mr. Monroe is at the same time calling on local governments "to encourage entrepreneurs to buy and resell these vacant homes as affordable housing by waiving existing tax and utility liens, which will not be paid anyway," and grant enough time for code compliance. Furthermore, he said, "the proceeds of lien waivers should be returned to new homeowners to help them make capital improvements."

"Cities must no longer be short-sighted here by placing roadblocks to the reuse of vacant and abandoned homes," he said.

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