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197-TNG Radio – I Survived Real Estate 2010 10-23-10

Friday, October 22nd, 2010

I Survived Real Estate 2010

I Survived Real Estate 2010


 

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September 17th, 2010, The Norris Group returns with its award winning event I Survived Real Estate 2010. The video also now available on The Norris Group website.

The Norris Group has assembled an incredible line up of industry experts to discuss the state of REO from the inside. Topics will include regulatory intervention and aftermath, bulk buying, myths and facts, and opportunities emerging for real estate professionals. 100 percent of the proceeds support the Orange County affiliate of Susan G. Komen for the Cure. This event would not be possible without generous help from the following platinum partners: Foreclosure Radar and Sean O’Toole, the San Diego Creative Real Estate Investors Association and Bill Tan, Investors Workshops and Shawn Watkins and Angel Bronsgeest, Invest Club for Women and Iris Veneracion and Bobby Alexander, Claudia Buys Houses, The Business Press, Frye Wiles, MVT Productions, and White House Catering.

This week The Norris Group Real Estate Radio Show is broadcasting I Survived Real Estate 2010.

Investors buy about 1/3 of Freddie Mac’s properties. Freddie Mac does not offer financing for most of those investor purchases, but Fannie Mae does. Fannie Mae has a program called Home Path. Many investors can qualify for Home Path financing on rehab properties. The financing on the rehab program includes the cost of repair. It is somewhat similar to the 203K loan. The problem Bruce has experienced with these programs is they don’t offer enough financing to significantly help investors. Bruce is usually only offered about $4,000 for rehab financing.

It is hard to pull a pool of properties together in a way that is just as attractive for an investor as finding one good property.

Inventory levels are increasing. Freddie Mac started this year with 45,000 properties in inventory, but today we have about 70,000. 55% of those properties are in the redemption, eviction and prelist phase. That phase is taking longer now. Approximately 55% of Freddie’s properties are becoming occupied. Freddie has about 15,000 homes on the market, and the rest are in the closing process.

As inventory levels increase, and as the 90-day strategies fail, then Freddie might move to a ballroom or online auction. However, if a property has had sale fallouts or could use significant improvement, then it may be relisted. Freddie’s goal is to figure out what selling strategy will have the best recovery rate. On day 75 of the listing, Freddie gives the broker a two week notice, and then moves onto the auction process.

Fannie Mae has a web-based portal for investors who desire to qualify for bulk purchases. You must provide information about yourself, provide your tax I.D. number, and allow Fannie Mae to do a background check on you. Once you qualify, you are given access to the web-based portal. This portal contains listings of properties, and it allows investors to submit a bid. This portal is for the larger pools. The properties in the pool are located across the country.

Bruce believes that tax payers could be saved a lot of money if properties were sold to investors rather than being given to NSP programs. Sarah Letts suggests that those investors go to the auctions.

In the last 12 month, Fannie Mae sold 30,000 properties to owner occupants during the first look period, and 5,000 properties to people using NSP funds.

Tommy Williams was the person who suggested that Bruce should read The World Is Flat. One of the most significant quotes in the book says, “No institution will go through fundamental changes, unless it believes it is in deep trouble and must do something different to survive.” Tommy believes that no other country in the world provides us with the same amount of opportunity as the free enterprise system of the U.S. That opportunity is built upon the initiative of the individual. We need to focus on turning that individual initiative loose. When you restrict individuals from making free market decisions, there are greater repercussions.

Tommy believes in the auction process. The stock market is like an auction, and everybody agrees with that auction every day. What if tomorrow morning, the DOW Jones said, “If Microsoft doesn’t bring us 25 dollars, we won’t sell”? It wouldn’t work. This is the problem we are dealing with in our current housing problem. Three years ago, the market told us that we had to rethink what houses were worth. Unfortunately, we have found out how accurate the market was worth. Tommy Williams believes that Sean O’Toole’s estimates are accurate, but he wises it wasn’t true. Tommy believes we have a long road ahead of us before we reach real market value. The quicker we get to that value, the better.

“Unfortunately, it has been too long since America had a leader ready to call on our nation to do something hard. To give something up, not to get something more, and to sacrifice for a great national cause for the future, rather than live for today.” – The World Is Flat

Tommy believes that if a politician actually had the courage to stand up and tell America the truth, the citizens would elect that person instantly. Unfortunately, we have been given so much bs that we aren’t accustomed to politicians being honest.

A crisis is a terrible thing to waste. We’ve had two in the last decade – 9/11 and the current financial crisis. Bruce has been to baseball games where everyone stood up after the 9/11 crisis. When we have a crisis, we can make changes, but we have to have someone that we can support in the government.

Thornberg is worried about where our fiscal debt is going. We are borrowing $1.3 trillion this year. We do not currently have that much debt, because most of it is in social security. Our net debt represents about 50% of the economy right now. That seems high, but Christopher doesn’t believe that is actually extremely high. However, if you are borrowing $1.3 trillion per year, that debt percentage will quickly turn into a number over 95%. Unlike Japan, we are a nation relying on external capital. If we keep borrowing, there will come a time where the world bond market will say “enough is enough”.

Thornberg does not believe that household, and local debt is that bad. We do not have that big of a debt problem. Our pensions are in trouble, but other than that, Christopher thinks we are fine. Consumer debt spiked in proportion to asset values. It also fell significantly when the asset bubble popped, and Americans realized they had too much debt. Most of American debt is in mortgage debt from Fannie and Freddie. Non-mortgage debt didn’t really rise at all. Overall, that debt is not too significant.

Stock investments have nothing to do with GDP. When we spend stock profits, that money does not get counted into GDP. When you pay taxes on your stock portfolio, those taxes are recorded in GDP statistics, but then they have to subtract your capital gains income from the total.

Thornberg is worried about where our fiscal debt is going, but he is not sure at what point he would say “enough is enough”. We’ve never had an unmanageable amount of debt, but we’ve also never had a government that is so unwilling to acknowledge the reality of our problem. The government claims it wants to fix the deficit, but it won’t raise taxes. Thornberg is a proponent of paying taxes, and he thinks all the Bush tax cuts should be taken out. He doesn’t enjoy paying taxes, but if the citizens of the U.S. actually have to pay, then we will finally stop the government from spending it. We have developed the delusion that the Federal debt is not our debt. If the government is borrowing $1.3 trillion dollars, a lot of that money will come from the citizens. It would take $4,500 from every citizen to pay that debt.

Thornberg does not believe that deleveraging is deflationary, because leveraging is not inflationary. In the middle of the leveraging binge, Alan Greenspan was worried about deflation. When you pay debt off instead of spend, you can decrease demand somewhat. Reducing demand can reduce the velocity of money, which can cause deflationary pressure. That is why Greenspan went through quantitative easing, and he did a pretty good job.

If you have a willing buyer and seller that come to a fair price together, then you have market value. That definition of market value will never be able to stop a real estate bubble. The Norris Group built homes in Rosamond. In Rosamond, the market should have been $150,000, but Bruce was selling those homes for $280,000. In the commercial world, the appraisal has multiple pieces. You have to calculate for comps, cost of building and income generated. Bruce asks Joseph Magdziarz if he thinks we should change the structure of how we come to the proper value. Joseph believes the definition does need to be looked at. During the boom, California prices escalated quickly, but rental prices didn’t change much. So prices changed a lot, but the underlying value didn’t. Unfortunately, the government created too much artificial demand in the market, and that helped cause the market. We created programs for people who couldn’t afford a home.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Thank you for being a Gold Sponsor for I Survived Real Estate 2010: Adrenaline Athletics, Benton Investment Group, Community RE-Invest Group, Delmae Properties, Elite Auctions, Entrust California, Everlast Photography, Inland Empire Investors Forum, Keystone CPA, Landwood Title, Las Brisas Escrow, Leivas Financial Services, Mike Cantu, North San Diego Real Estate Investors Association, Northern California Real Estate Investors Association, Personal Real Estate Investor Magazine, Realty 411 Magazine, San Jose Real Estate Investor Association, Rick and LeeAnne Rossiter, San Jose Real Estate Investor Association, Starz Photography, Summit Solutions, Tony Alvarez, Wealth Point, and Westin South Coast Plaza.

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190-TNG Radio – Peter Wayman 9-4-10

Friday, September 3rd, 2010

Andrew-Waite

Peter Wayman

Senior REO Sales Director for Freddie Mac


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September 17th, 2010, The Norris Group returns with its award winning event I Survived Real Estate 2010. The Norris Group has assembled an incredible line up of industry experts to discuss the state of REO from the inside. Topics will include regulatory intervention and aftermath, bulk buying, myths and facts, and opportunities emerging for real estate professionals. 100 percent of the proceeds support the Orange County affiliate of Susan G. Komen for the Cure. This event would not be possible without generous help from the following platinum partners: Foreclosure Radar and Sean O’Toole, the San Diego Creative Real Estate Investors Association and Bill Tan, Investors Workshops and Shawn Watkins and Angel Bronsgeest, Invest Club for Women and Iris Veneracion and Bobby Alexander, Claudia Buys Houses, The Business Press, Frye Wiles, MVT Productions, and White House Catering.

This week Bruce is joined by Peter Wayman. Peter is the Senior REO Sales Director for Freddie Mac. He oversees the design of sales strategies and how those strategies are applied across the REO portfolio. His group oversees the retail sales process, auctions and investor sales. Peter is responsible for the Affordable Housing Strategy: selling homes to organizations engaged in neighborhood stabilization. Peter came to Freddie Mac with 32 years of executive relocation experience. In that position, he has won national awards and is in the hall of fame.

The major product offered by the relocation industry has been the purchase of the transferee’s home. Peter is accustomed to valuing and selling on a cost plus basis. He does not have to foreclose and evict transferees, but he does have to call executives of companies and tell them the value of their homes. The relocation industry operates globally.

Freddie Mac’s primary method for selling homes is to put them in the hands of great brokers. Also, special incentives are offered to owner occupants to encourage purchasing. Freddie Mac’s focus is to make home buying possible, and to do that by positioning their homes fairly for owner occupants. To effectively use this strategy, homes must be conditioned for financing, buyer’s closing costs must be addressed, and home warrantee programs are offered as well. Freddie is biased towards getting owner occupants into homes.

History shows that if an owner occupant lives in a house, their occupancy improves their neighborhood. Freddie Mac is concerned with neighborhood stabilization. When owner occupants invest their money into a house, they connect more with the community and have more pride in their community.

In 2009, Freddie Mac ended the year with 71% of its homes going to owner occupants. This year, we are slightly under that percentage. We are in a prime selling season now, and Freddie Mac is finishing one of their special programs for owner occupants.

The ratio of 70:30 for owner occupants to other types of owners is considered acceptable by Freddie Mac. Freddie realizes that some of their properties are not currently suitable for occupants. Freddie puts the Neighborhood Stabilization funds into the hands of an NSP grantee for properties in bad condition. The NSP grantee uses the funds to renovate the home, add green energy options to it, and then sell it to an affordable buyer. These homes often receive $30,000 in renovations, which is not something that many private investors can do. Most of these funds are targeting extremely hard hit areas and some homes are even being considered for tear down.

Not all investors do a bad job of renovating properties, but Freddie Mac has to deal with a wide scope of investors. Freddie Mac considers responsible investors to be a viable option for getting rid of inventory.

NSP funds are delivered from a city or county. The largest portions of the funds come from the federal government, but state governments, land banks, and non-profit associations are also engaged in neighborhood stabilization. Freddie Mac is open to working with all of these companies.

Companies with NSP funds have an advantage when looking for properties owned by Freddie Mac. Freddie Mac uses an NCST (National Community Stabilization Trust), which provides access to grantees with NSP funds. The NCST works with a large number of grantees and servicers. It creates an interchange which shows all of the servicer’s properties on a google-type map. The grantees may then look to see if there are properties being offered in their designated census tracks for neighborhood stabilization. They then immediately have the opportunity to ask the servicer for a home’s price. All of this happens during the pre-list phase of moving REO inventory, so grantees have the opportunity to view properties while Freddie Mac is still valuing the properties.

Some cities have had trouble spending their funds for damaged properties. This may be due to the difference in reaction time when compared to a private investor. Some of the NSP-1 funds had to be committed as of today, but there are also NSP-2 and NSP-3 funds. Each grantee takes a different approach on assembling their programs. Some of them got started more quickly than others.

Freddie Mac has been heavily involved in the modification process and in foreclosure alternatives. Peter believes those two tools are becoming much more effective, because the servicers and Freddie Mac are developing more effective automation. Also, staff training has improved, and the real estate community is becoming more educated. All of these things have helped make modifications and foreclosure alternatives more effective.

Banks are beginning to address serious delinquencies. At the end of the 4th quarter of 2009, serious delinquencies peaked at 4.13 percent of all mortgages. This percentage has been coming down for 5 months in a row.

We are also seeing the REO inventory increasing. In January 2009, we had 21,000 REO homes, and in January 2010, we had 45,000. At the end of July 1st, we had 62,000 REOs. That 62,000 represents inventory in redemption, eviction, pre-list, listed, sold and going into closing. Generally speaking, over 50 percent of REO inventory is in redemption, eviction, and pre-list. That number is currently closer to 55 percent.

Peter believes it has been proven that losses are lessened by modifications. The sooner you address the problem, the lower the costs are in the process. A foreclosure should be considered a last resort.

Modifications had a 60 percent failure rate. Peter believes that as the modification process has gone to using written verification and careful coaching, the failure rate has gone down.

In September, Peter will be a part of the I Survived Real Estate 2010 panel. He will be speaking in front of about 400 eager investors, who will be trying to figure out how to get their share of Freddie Mac’s properties, and possibly even get a chance at a bulk purchase.

Peter is very excited to work with this charity program. Freddie Mac has to be primarily concerned with getting rid of properties at the lowest cost to the tax payer. Freddie Mac has discovered that nothing works better than listing properties with a great real estate broker, exposing it to the entire market, having a property priced and conditioned right, and allowing that exposure to drive a retail sale within 90 to 120 days. This focus tends to work extremely well. There are some assets that do not sell within that time frame. When assests don’t sell well, Freddie Mac turns to ballroom auctions and online auctions, and finally to bulk sales for investors. Investor bulk sales are not perceived as having the highest potential recovery rate. Less than 0.5 percent goes through bulk investor sales. Freddie Mac is currently developing a better strategy for bulk sales. There should be more bulk sale activity in the future.

Some states have different real estate problems, and there are some problems that necessitate different solutions. In Florida, Freddie Mac has a waver on REO condo requirements, so Florida condos make great candidates for bulk sales. Properties with Chinese drywall, low values, no insurance options, no occupancy certificates, or environmental problems will be more likely to end up in a bulk sale. Lots of investors contact Freddie Mac asking to buy all the $200,000 properties in California and Arizona. Peter responds to those investors saying, “You mean all those properties that I get multiple offers on within the first two weeks of being listed on the market?” Freddie Mac does not need investors to buy those properties.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Thank you for being a Gold Sponsor for I Survived Real Estate 2010: Adrenaline Athletics, Benton Investment Group, Community RE-Invest Group, Delmae Properties, Elite Auctions, Entrust California, Everlast Photography, Inland Empire Investors Forum, Keystone CPA, Landwood Title, Las Brisas Escrow, Leivas Financial Services, Mike Cantu, North San Diego Real Estate Investors Association, Northern California Real Estate Investors Association, Personal Real Estate Investor Magazine, Realty 411 Magazine, San Jose Real Estate Investor Association, Rick and LeeAnne Rossiter, San Jose Real Estate Investor Association, Starz Photography, Summit Solutions, Tony Alvarez, Wealth Point, and Westin South Coast Plaza.

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The Norris Group Real Estate News Roundup 7/12/10

Monday, July 12th, 2010

Today’s News Synopsis:

A study from Wells Fargo suggests that California may not experience a double dip in the real estate market. FICO Inc reports 25.5 percent of customers  now have a credit score of 599 or below. HUD is offering a 10 percent discount on its REO properties for non-profit buyers. Orange County housing inventory has inflated by 48% since the beginning of the year.

In The News

Orange County Register – “Homebuilders face ’slow climb’ to recovery” (7-11-10)

“It’s a challenging market, no doubt about it. But builders can find a way to sell homes as long as they pay close attention to their potential buyers. We’ve never subscribed to the idea that the same floor plan and the same marketing campaign will be effective in every situation. It just doesn’t work that way. Builders need to understand exactly what price point, what square footage, what location and what product type will speak to the buyers in a given community. When you understand all those elements, your homes will sell. Take the live-work model, which many builders have struggled with. Earlier this year we opened a live-work community in Stanton, with prices starting at $350,000. So far we have sold all but four units.”

Orange County Register – “Short sales up 74% in region” (7-11-10)

“Riverside County had 3,444 short sales this year, the second-highest number in the region. That’s up 116% from 2009, when the county had 1,593 short sales. San Bernardino County short sales increased 96.7%, to 2,089. During the first five months of 2009, the county had 1,062 short sales.”

Orange County Register – “Tips for the first-time homebuyer” (7-10-10)

“Be prepared. You will be asked for the amount and source of your income; the same for funds for down payment and closing costs; your credit and debt obligations; and permission to run a credit report. Gather your most recent federal tax returns; W2s or 1099s, depending on how you are paid; most recent pay stubs, if salaried; and your most recent statements for bank, investment or retirement accounts. If there are recent large and unusual deposits, be ready to explain where the money came from.”

Sacramento Bee – “Wells Fargo: Housing double-dip not likely in California” (7-12-10)

“San Francisco-based Wells Fargo Bank just released its new California Economic Outlook, saying widespread fears of a derailed housing recovery aren’t likely to materialize in California.”

MSNBC - “Gov’t tries to recoup some Fannie, Freddie losses” (7-12-10)

“The regulatory agency said it has issued 64 subpoenas seeking loan files and other documents to determine whether the sellers of those securities made any false statements or omissions. Fannie and Freddie had tried to do so themselves but have faced resistance in getting the loan documents, said the agency, which was given subpoena power two years ago.”

San Francisco Chronicle – “More consumer credit scores dip to new lows” (7-12-10)

“Figures provided by FICO Inc. show that 25.5 percent of consumers – nearly 43.4 million people – now have a credit score of 599 or below, marking them as poor loan risks. It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. And it could be years before this group can restore their scores, even if they had strong credit histories in the past.”

Housing Wire – “HUD Gives Nonprofits, Governments 10% Discount on REO” (7-12-10)

“The Department of Housing and Urban and Development (HUD) will give state and local governments and nonprofits participating in the Neighborhood Stabilization Program (NSP) preference to buy its REO at 10% below the appraised value.”

Orange County Register – “Corona del Mar homes hardest to sell” (7-12-10)

“‘Hardest’ market to sell a home in terms of ‘market time’ (supply of homes for sale vs. new purchase deals inked in past month) is Corona Del Mar. Its market time was 15.3 months to theoretically sell all for-sale homes at the current buying pace. A year ago, this town was at 8.3 months.”

Orange County Register – “‘Unrealistic’ sellers flood O.C. home market” (7-12-10)

“Orange County housing inventory has inflated by 48% since the beginning of the year on the backs of unrealistic sellers. … The bottom line: sellers really need to take a hard look in the mirror and ask whether or not they really can drop to the realistic fair market value of their home. If not, they need to stop wasting everybody’s time and pull their home off of the market.”

Orange County Register – “O.C.’s distressed home market grows by 29%” (7-12-10)

“The active distressed inventory has increased from 2,555 homes at the beginning of the year to 3,307, levels not seen since May of 2009. The distressed inventory now represents 31% of the current active inventory. Last year at this time, there were 2,766 distressed homes on the market, 541 fewer than today.”

Realty Times – “Three Levels of Lead Generation” (7-12-10)

“you should have 6 pictures that show off the house to prospective buyers in under a minute and these should include: 1. The front of the house (try to skip the double garage doors!) 2. The Living Room or Area 3. The Kitchen (2 shots of the kitchen focusing on different aspects from different angles if possible) 4. The master bedroom 5. The master bathroom (put the toilet seat down!) 6. The backyard or area”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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167-TNG Radio – City of Riverside 3-27-10

Friday, March 26th, 2010

Deanna Lorsen

Deanna Lorsen, Development Director with The City of Riverside

(Full Bio)

Scott Barber

Scott Barber, Code Enforcement
Director with The City of Riverside

(Full Bio)

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This week Bruce is joined once again by Deanna Lorson and Scott Barber. Deanna is the Development Director for the city of Riverside. Her job includes redevelopment, economic development, marketing, housing and neighborhoods, arts and culture, and capital projects. Deanna previously worked for the County of Riverside as the managing director of the Development Agency. Scott Barber is the Community Development Director for the city of Riverside. His job involves building safety and code enforcement. Scott has been involved in the creation of new, innovative programs for financial systems.

You may be calling on a case file that is out in the field with the officer. During that sort of situation, Scott won’t be able to answer your questions. If a lender calls for his bill, Scott will give you the bill and suspend daily penalties for 10 days. The buyer will have to pay for the fines already there, but the city will work with the buyer on getting the house rehabilitated. As long as you are making an effort to rehabilitate the property, you won’t have trouble.

The investor’s goal is to get something fixed as quickly and as well as possible, so that he or she can sell it for a profit. The city and the investor have the same goal. The problem comes in from perception, because the investor perceives property inspection as threatening. The city must make it clear that defying the rules will not be tolerated. Recently, some people in the financial industry challenged the city’s constitutional right to fine unkempt properties, but the city won. Scott lives in Riverside, and he cares about it, so he will not allow it to deteriorate.

Riverside recently rebuilt the Fox Theatre in downtown. The city used multiple funding sources to pay for its redevelopment. The performing center itself was not paid through redevelopment funds; It was paid for by a bond issuance. Redevelopment funds must be made in redevelopment project areas for specific reasons outlined in state law. The city financial officer was responsible for the bond issuance. This issuance was done before Deanna began working for the city. This bond involved a long term, fixed rate loan for the city’s capital improvement. You could compare it to having a trust deed against the future progress of the city. The decision to take on these loans is approved by the City Council.

Riverside city has a down payment assistance program. Five years ago, there was little activity in this program because prices were so high, but now that prices have declined, this program has played a significant role in encouraging long term home ownership in Riverside. This program is funded with redevelopment funds and some Federal funds. Rental assistance is primarily given from the county. However, Riverside city did receive one Federal grant for preventing homelessness. The name of the Federal program for down payment assistance is named The Home Investment Partnership. This assistance comes in the form of a “silent second”. This means the homeowner gets the maximum fixed rate mortgage that they can afford, and then the city helps pay for the gap between their mortgage amount and the home price.

There are projects that Scott handles which get his attention more quickly, and get dealt with more quickly as well. If you are involved in a project which provides a large number of jobs to the city, or if you are in danger of causing a large loss in jobs, then you can receive a discount for your utility expenses. If your project is a new development, then you get “fast track” authorization. This gives you priority treatment through planning, building and safety, and through inspections.

Riverside is one of the leaders in the Green movement for energy conservation. The city is providing a program for investors who make certain environmentally friendly changes to their investments, and Bruce thinks that investors will respond to this. Riverside is the first city to be labeled an “Emerald City” in California.

The fact that Riverside has its own resources saves it from a lot of expenses. There are many Inland Empire areas who are serviced by Edison for energy, and MWD for water. The forefathers in Riverside secured water rights for Riverside that are unmatched. The public utility programs in Riverside make energy use much cheaper for its citizens. Riverside has had a planning committee since 1915. This city has always been fortunate to have people in charge who were thoughtful of the future.

Riverside’s community surveys show that we are still having some population growth, but Scott is uncertain how accurate that information is. However, a census should be taken soon, and that will be more informative.

In 2007, the city of Riverside took a 20-year planning ahead mentality towards growth.

The city is divided into 7 equally populated wards, which are basically districts. Each ward elects a member of city council, and those wards represent the city’s governing body. The wards that receive the most redevelopment attention are those that have the most economically damaging problems.

There was a set of apartment units in Riverside which were in bad condition, but those units got fixed and eventually won an award. If someone has damaged property, they can come to the city to receive funds for repairs. The city is required to spend 20 percent of redevelopment funds on affordable housing, and part of that money goes towards new construction. However, there are very strict rules regarding what kind of projects are eligible for funding. These projects must be for long-term affordable housing.

There are 3 significant building projects in Riverside which had to be stopped after they had already begun. One of them was near Lowes. It was a condominium program, but the FDIC completely tore it down. They are currently marketing that property for development. The problem was that it sat in a raw lumber state for too long, which caused problems for the wood structure. There are two in the west side of the city, which involves a large home development. This project will not be dealt with for a while because there are 4 different banks involved in it. This is actually fairly contained damage, but the County of Riverside probably has more trouble than the city.

Thank you Deanna Lorson and Scott Barber for being a part of the TNG Radio Show.

California’s budget problem has affected Riverside’s spending. The state has decided to use some of the city’s redevelopment budget to help with the budget gap. Riverside is currently expected to pay $17 million, by May 10th of this year, to help California’s budget. Riverside’s total redevelopment budget is about $50 million, so that $17 million is a significant portion.

One year ago, a court case determined that the state could not use redevelopment funds to fix the state’s budget. Right now, the state has attorneys looking for a way to challenge that decision.

The entire budget for redevelopment comes from tax collection. Property taxes have declined in Riverside. Because Riverside is an older city, it did not experience a dramatic decline in redevelopment funds. Overall, the city has experienced a 10 percent decline in property tax revenue.

On vacant properties, it can be typical for power meters to be gone. The city might have it removed if it presents a safety standard, or it might be stolen. Some people regularly look for abandoned properties to steal from. Early in the code enforcement process, Scott’s staff will record a notice of pendency. This allows investors to have records of these homes. The city’s goal is to get homes rehabilitated and reoccupied, so the city will work with investors. The city may even do on-site inspections with you, if you truly need it.

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166-TNG Radio – City of Riverside 3-20-10

Friday, March 19th, 2010

Deanna Lorsen

Deanna Lorsen, Development Director with The City of Riverside

(Full Bio)

Scott Barber

Scott Barber, Code Enforcement
Director with The City of Riverside

(Full Bio)

 stream

itunes

download

rss

Bruce Norris is joined this week by the Development Director for the City of Riverside, Deanna Lorsen, and the Code Enforcement Director for the City of Riverside, Scott Barber. Bruce, Deanna, and Scott discuss what their jobs look like on a daily basis, their core job functions, the state of the Neighborhood Stabilization Program (NSP), how Riverside has been dealing with the funds, how Riverside works with a private trust, the type of inventory Riverside is focusing on, and much more.

California has undergone a huge shift from a massive construction boom to becoming a foreclosure heaven. This transition has been difficult for Scott. He had to reduce his work force by 34 percent. He has moved some of his valuable employees to code enforcement from planning and building safety. These people are dealing with problems related to foreclosures and abandoned properties. His work used to be evenly spread between the areas of planning, building, and code enforcement, but now his work is mostly focused on code enforcement, and building has become a very minor part of his work schedule.

When the focus of Scott’s work shifted, he had to train many of his employees for different types of work. There are certain aspects of being a code enforcement officer, which you need to be prepared for, especially when you are inspecting abandoned properties. When you are a building inspector, you are accustomed to going to a job site where someone is waiting for you with plans and instructions, but when you got to an abandoned house, there might be someone waiting for you, but they won’t be waiting with a set of plans.

The process on foreclosed properties is very paper intensive. These jobs include a lot lender communication and follow up notices. Because of all the paper records that go into these jobs, Scott’s team never loses in court.

In 2008, the National Stabilization Program was created. Riverside city received $6.6 million and Riverside County received over $45 million. This money was used very differently between the county and the city. The city focused on existing single family foreclosures. Riverside city worked on getting these foreclosed homes rehabbed and sold. The county is more focused on partnering with large developers making track homes. The county covers 7,200 square miles, so they have a much larger focus. Riverside city has the ability to pay attention to individual neighborhoods.

Riverside’s $6.6 million was allowed to be leveraged. Riverside leveraged its money by adding in another $5 million from the redevelopment funds. Then, Riverside gained a letter of credit from a bank for $20 million.

Riverside’s focus is on houses that the market will not take care, such as homes that need substantial rehabilitation. The city of Riverside also tries to focus on areas of high foreclosure density. Scott is responsible for determining which places should receive the most attention. When neighborhoods look bad, they encourage other problems to occur, so Scott’s work makes a strong impact on neighborhoods.

Even through prices have decreased, it is still hard for Riverside to buy homes. It is not easy to find out who owns a “for sale” property, and it is not easy to get a deal from the owner. Deanna has had a lot of success when working with the National Community Stabilization Trust, which is a nonprofit group who works with banks to gain inventory. This company was made specifically to deal with foreclosed properties. The banks allow this company to know where the inventory is, and then the Trust gives the city a list of eligible properties. Some weeks Deanna might receive a dozen offers, and other weeks she may not receive any.

Not all the homes that Riverside city is offered will meet the city’s standards for purchasing. Riverside focuses on buying homes that will most likely not be bought by investors or anyone else.

Once the buying process starts on a home, an inspector goes to the home and makes plans for getting the house rehabbed. The inspector then works with the contractors on doing the inspections. Scott thinks that Riverside’s staff collaboration gives the staff a huge advantage over other jurisdictions.

The city of Riverside is not allowed to make a profit on the homes it sells. This restriction limits the city’s ability to buy certain homes, because it is not good for the city to sell a home at a value lower than the average asking price of the neighborhood. If the city sells for 15 percent lower than everyone else, then other appraisals will be affected by that sale.

25 percent of Riverside’s funds produce affordable homes for families with low income. For these people, Riverside targets small unit properties, and then works with a non profit company to make the housing affordable over the long term.

The city also looks into homes that need to be demolished. Once the land is made empty, Riverside partners with a nonprofit organization to build an affordable home there. Riverside partners with the private sector at every stage of home development. The city partners with private rehabilitators and brokers, which helps to produce jobs.

There is always money that comes out of sales. When this happens, the money is reused to buy new homes. However, after five years, any money the city has received from these home sales will go back to the Federal Government.

The money Riverside received for buying homes has provided the city with many opportunities. For one, it has provided jobs to Scott and his staff. Also, there are some properties that Deanna would never have been able to take care of without extra financing. The ability to repair severely damaged homes helps not only its buyer, but also its neighborhood’s value.

There is a domino effect for neighborhoods that see improvement or damage. A large number of foreclosures in a neighborhood will cause devaluation and more foreclosures. On the other hand, increasing a homes value does the opposite.

Riverside’s Municipal Code Section 611 states that when a house becomes vacant, you must maintain it and offer it for sale or rent. If this rule is not obeyed, daily fines will be accrued. These fines encourage banks to take care of the properties.

Bruce asks Scott how he notifies a lender about a property that has become a problem. When Section 611 became active, Scott received so many complaints about unmaintained properties that his staff was not been able to keep up with them. A regular case load for an officer is 100 to 120 active cases. When this program first started, the officers were carrying over 300 cases. All they could do is respond to the calls they received.

Scott has seen so many foreclosed homes that he can now spot a foreclosed home just by driving through a neighborhood. Foreclosed homes often have brown lawns, stuff on the front porch, and evidence of a break in. This look of foreclosure is the problem that Riverside wants to address.

The fines for unkempt properties apply to all parties involved in the foreclosure. This means that owner occupants, the investor intending to buy the property, and the bank that may eventually own the property can be fined for an unkempt home. Some of the calls Scott receives about unkempt properties come from neighbors to those properties, and some from departments of other cities.

Pools on unoccupied lands are a major concern for Scott. When someone calls Scott about their concerns for a pool on a foreclosed home, he has someone get to that home that day. Scott is concerned about someone drowning in an unoccupied pool. Unfortunately, Riverside has received a lot of rain, so Scott has been very busy with getting pools re-pumped.

Lenders can be hard to get in contact with, but Scott’s staff is typically very good at finding them. However, while the party responsible for the home is being found, Scott hires someone to board-up unkempt homes. After 180 days, the city can declare an unkempt property a public nuisance, and then the city has more options available for getting rid of such problems.

Scott has never had a case in which he could not find someone with some sort of financial involvement in a property. However, loan securitization has made it more difficult. Scott’s staff uses an online tax and title service to search for people involved in unkempt homes.

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