The National Association of Real Estate Brokers has launched a $1.2 billion loan foreclosure mitigation program to help alleviate housing problems for individuals struggling to stay or purchase homes in low-income metropolitan statistical areas.
The Homeowner’s Assurance Program initiative developed by NAREB is designed to address the devastating effect of the foreclosure and mortgage crisis on communities across the country.
HAP purchases REO and nonperforming assets from the Department of Housing and Urban Development as well as other assets and then renovates and sells these properties to prospective homebuyers such as individuals struggling with the process of purchasing their first house.
According to RealtyTrac, five million families lost their homes to foreclosure between 2007 and 2011. In 2012, lenders are projected to repossess another one million homes as foreclosure processing accelerates.
“The overall goal of the Homeowner’s Assurance Program is to bring back the American dream to millions of people throughout the nation,” said Julius Cartwright, president of NAREB, a trade association formed in 1947 by minorities to support equal housing opportunities nationwide.
“We’re seeing a wholesale eviction of families and tens of thousands of vacant and blighted properties in cities that have been historically stable homeownership communities,” Cartwright continued. “We have the experience, expertise and tools to provide a ‘boots on the ground’ effort to identify and screen qualified buyers for these properties and help sustain or rebuild impacted neighborhoods.”
In order to provide the agent infrastructure required to manage, market and dispose these nonperforming loans and REO assets acquired under the Homeowner’s Assurance Program, NAREB has a vast network of industry professionals including Realtors, brokers, sales agents, appraisers, mortgage brokers and loan officers, plus experts in pre- and post-counseling, loss mitigation, foreclosure, property management, housing construction and development to help distressed homeowners and first time homebuyers who have been shut out of the home buying process to advance during the loss mitigation effort.
Private and Wall Street investors are providing the capital for the program, which will be rolled out in 25 markets. The program is currently being tested in Atlanta and is expected to expand into the Los Angeles, Houston, Miami and Baltimore markets in the beginning of the second quarter.
“We welcome NAREB’s initiative of aligning efforts with HUD’s mission of providing quality affordable homes for all,” said Ed Jennings Jr., the Southeast regional administrator for HUD. “We are pleased to hear NAREB’s interest in buying HUD properties that have been on the market for more than four months, and their comprehensive approach of partnering with other entities to get them back in to move-in condition.”
HUD homes, which are REO single-family properties, are initially offered to owner-occupant purchasers who are buying the home as their primary residence. Following the priority period for owner occupants, unsold properties are then available to all buyers, including investors.
“We hope NAREB’s program will have many positive impacts including stabilizing neighborhoods, creating employment and enhancing economic development,” Jennings added.
First Guaranty Mortgage Corp., a McLean, Va.-based mortgage lending firm that offers retail and wholesale mortgage solutions to various clients, will be the preferred lender on all new mortgages originated through HAP for homebuyers referred by NAREB.
Besides prequalifying borrowers interested in owning a home through this program, First Guaranty will also provide financing options such as 203k renovation lending to facilitate REO sales.
“HAP is a promising and practical approach to a national nightmare,” said James Cromartie, assistant vice president of national business development at First Guaranty Mortgage. “We are offering a 360-degree solution designed to create sustainable homeownership. HAP will address social and economic barriers to homeownership and help rebuild communities, mitigating the deep costs of the crisis while restoring dignity and empathy to a huge number of borrowers.”
Lawrence Batiste, chairman of the board at NAREB, believes HAP is different than the rest of the programs established throughout the country to address the issues of foreclosure mitigation, disaster recovery and neighborhood blight because it utilizes a community-based approach.
The program will offer mortgage products through the HAP asset management platform for families who are rebuilding their credit and confidence, Batiste said. He added that HAP also offers a lease-to-own option for families rather than just a renting choice as they recover from the economic downturn, which is what many other programs are currently doing.
“Our program encourages homeownership for the families who are ready and able to purchase a home,” Batiste said. “We feel that NAREB has the solution that will help empower homeowners while retaining their dignity, whether or not they choose to remain in their homes.”
