Macomb County progressed in the implementation of its NSP during fall 2009.  It continued to evaluate client applicability from the large number of applications received at program inception.  Of the 356 applications received, determinations were made on 252 and determinations are forthcoming on the remainder shortly.  There has been a distinct fall off in the number of eligible applicants who qualify for mortgages.  The County had, in October, qualified 81 applicants for mortgages.  This number only rose by 7, to 88 for this report.  Clearly the number of eligible families is a concern that will be addressed.  The County will increase program marketing either directly or through its lending partners to ensure sufficient numbers of qualified applicants. 

To date, 18 foreclosed homes were purchased with repairs either complete or underway.  This is a lengthy process, which ends with habitable units and worry-free occupancy for the long-term.  Clients and private sector partners, however, are daunted by what is, in effect a mish mash overlay of various and often conflicting requirements established by the lending community, by FHA and FNMA, and by the NSP.   As a result, there has been a dearth of bankable applicants and production has suffered.  Staff is evaluating the process to determine where efficiencies can be obtained without jeopardizing NSP objectives.  Several potential solutions are now being tested and a brief description follows:

• We have found it difficult to perform all pre-work required to close loans within the 30 days expected by sellers, buyers, and the lending community.  This is due to the need to document purchase discount (obtain appraisals) and ensure unit habitability (obtain repair, lead and municipal occupancy inspections). 
• We have found that the market supports higher than the discounted value for properties imposed by the NSP, an many of our clients have simply been outbid.  This happens in lower-end market as well as our higher end markets; the former because prices have bottomed out and buyers see value, the latter due to large scale investor activity buying multiple properties for cash.  The NSP buyer has difficulty competing.  It is noteworthy that There were 42 buyers actively looking for properties at the end of December.  Some of them have been looking for several months without success.  We have approached three lenders to see if they would offer a right of first refusal to NSP clients on foreclosed properties in their inventories.  All have indicated that they would, but it is too early to see if this bears fruit.
• In October we reported mortgage broker difficulty in obtaining end financing for mortgages.  This problem still exists with some parties, but progress is occurring.   
• In October we reported that there was no activity in the 3 target communities.  Some progress has occurred since then, with two properties purchased in both Mt. Clemens and Eastpointe.  None have been acquired in Center Line.  This is still a serious concern, with strategy development underway.  Some, including possible redevelopment activity and/or initiation of a renter program, will require community input and approval by the County's Board of Commissioners.  Updates will be provided in the April report. 
• An amendment to the County's Action Plan, showing the increased demolition budget of $750,000 for the City of Mt. Clemens, was submitted and approved by HUD. 

Additional efforts have occurred to improve administrative capability.  These include:

• Hiring a part-time college intern to assist in administration.  This individual works up to 20 hours per week and has enabled staff to speed application and contract processing.
• The addition of two fee rehabilitation inspectors to assist staff in quickly reviewing properties, reporting defects on properties being purchased through the program.  This will facilitate preparation of bid specs and repair contracts for those homes.  In addition, we have been able to time simultaneous lead, rehab, and municipal occupancy (when applicable) and, on occasion, appraisal inspections.  This reduces the lead time necessary to close the NSP loan.   

The biggest remaining obstacles are 1) meeting the September 2010 deadline for fund obligation and 2) meeting the 25% requirement to assist families < 50% Area Median Income.  As mentioned the County is considering a change to its program that would allow it to speed fund obligation and several ideas are being considered at this point.  A status evaluation follows:

• The first would be implementing a redevelopment activity in one of our target communities.  If properly designed, a redevelopment activity could quickly obligate funds (thereby meeting the deadline) and, more important, have a significant stabilizing effect on the community.  We are in discussions with community leaders to determine the feasibility of this approach.  If it is, we will issue a Request for Proposals and expedite implementation to ensure project obligation by the deadline. 
• If redevelopment is not feasible, the County may issue a Request for Proposals for private for profit and non-profit developers to implement owner and rental programs.  A developer would have the capacity to acquire multiple properties at once, therefore competing with investors and obligating funds quickly.  This option is particularly promising in terms of attaining the 25% set aside for families < 50% AMI. 
• These two ideas would supplement the modifications (already mentioned) to the basic homebuyer program.  We believe that these changes, if successful, could fundamentally change the public perception of the program and would entice more realtors, lenders and, ultimately, buyers into participation.
• Demolition activity will commence in the winter 2010 and we hope that it will significantly improve the quality of life in the affected communities. 

Costs incurred for program implementation, virtually all for staffing and related office expenses.  Added part-time (20 hrs per week) college intern to assist staff in administration.   This arrangement has worked very well.  No costs were incurred for marketing or planning during the quarter.   It is possible that marketing may be undertaken during the winter. 

Continued progress made in assisting households < 50% AMI.  To date 3 households have been assisted with homes purchased and repairs completed.  Several others are in process but have not progressed to the point that they can be reported.  We expect progress to slow, however, as the number of qualified applicants appears to be diminishing.  The County is considering various strategies to address what could become a shortfall in achieving program objectives, including redevelopment activities under eligibility category e, and awarding contracts to developer partners with capacity to address this need.

This activity will consist of three components: 1) a Down Payment Mortgage, to reduce the purchase price on a foreclosed property; 2) a Housing Rehabilitation Mortgage, if required to meet State Building code, as defined previously, and 3) Soft Costs. The DPM and HRM will be secured by second and third mortgages on the property. Homebuyers seeking NSP assistance will complete an application and submit documentation to the Macomb County Planning and Economic Development Department. The following process will be followed: * Establish applicant eligibility, considering income and assets. The County will calculate income using IRS Form 1040 Adjusted Gross Income Method. Applicant incomes must fall below 120 percent of area median income. The applicant cannot have current liquid assets exceeding $50,000.00, and cannot currently own a home. * Local partners, including HUD-approved counseling agencies and local lenders, will also evaluate the applicant's credit-worthiness. The applicant must complete at least 8 hours of homebuyer counseling from a HUD-approved housing counseling agency. The applicant must also be approved by a lender for a fixed rate loan, at or near the best available conventional rate, including FHA-insured mortgages and MSHDA mortgages, for a term not to exceed 40 years. * The lender must provide a written statement consenting to placing DPM and HRM (as defined previously), payable to the County of Macomb, on any property that the first mortgage would be used to purchase. * Based on the amount of loan pre-approved, the applicant will receive a list of potential vacant foreclosed single family properties, including HUD-owned properties, from lists of tax and mortgage foreclosures, the HUD website, local records and neighborhood research. The applicant may also identify a foreclosed, abandoned property of his/her choosing for purchase. * All properties will have been pre-negotiated to be available for sale at a discount from their current appraised value. The average purchase discount required from the seller will be 15% from the current market appraised value (CMAV), with few exceptions made in extraordinary instances. In no instance would the discount fall below 5% of CMAV. * The NSP DPM will reduce interest rates, mortgage principal, and pay reasonable closing costs, thereby achieving the long-term affordability objective, including as an objective, Private Mortgage Insurance fees. * Housing units acquired through the program may require rehabilitation in order to make them decent, safe, habitable and in compliance with the State's Building Code (see above definitions). The County will therefore provide a HRM for eligible Rehabilitation Costs secured by a lien on the property. * The total of NSP assistance will not exceed the greater of $50,000 or 49% of hard costs. The maximum Hard Costs for a home receiving NSP assistance is $226,100. County Staff will assist the homebuyer in: application preparation, determining applicant eligibility, property inspections, cost estimates, contractor bid process, preparing construction contract, an inspection to ensure contract compliance. (These are considered Soft Costs (see County definitions above), and will not be repaid by the NSP beneficiary). For housing related activities, include: * tenure of beneficiaries--rental or homeownership; the NSP will assist households that do not currently own homes and intend, after purchase, to own and occupy their homes indefinitely. * duration or term of assistance; both the DPM and HRM will be effective while the homebuyer owns and occupies the property, and will be repayable upon default if within 15 years of purchase. They will be forgiven if the owner owns and occupies the property as its principal residence for 15-years after purchase. Specifics for a rental program have not been determined due to the priority for homebuyer assistance. * a description of how the design of the activity will ensure continued affordability. Affordability was a key consideration in the design of the Macomb County NSP as indicated by the following: * both the DPM and the HRM carry no interest and are not payable until default occurs. They are completely forgiven if the homebuyer uses the home as its principle residence for at least 15 years. This policy is intended to encourage long-term residence by the assisted homebuyer. * The DPM is intended to insure that 20% of the purchase price is not lender-financed, thereby eliminating the need for Private Mortgage Insurance (PMI) and the fees associated with it. * The rehabilitation loan, moreover, allows the buyer the option of installing energy-saving improvements, including windows, insulation, HVAC systems, refrigerators and stoves. This will help the family lower operating costs, thereby encouraging long-term affordability. For acquisition activities, include: * discount rate An overall purchase discount of 15% will be charged pursuant to NSP regulation J. The County will ensure a minimum 5% discount on select properties, if warranted, but will achieve the overall discount rate through corresponding increased discounts on other loans. For financing activities, include: * range of interest rates Both the DPM and the HRM are no interest and payment is deferred until the time of Mortgage Default. Both are completely forgiven after 15 years.

This activity will be made available anywhere within the 21 community jurisdiction of the Urban County of Macomb.

Progress continues although at a slower rate than desired, with 3 homes completed (acquired and repaired with occupancy obtained by the purchasing family) during the reporting period.  There are a number of other cases still in process and many of these should be reported as completions in the April report.  Strategies are required, and are being developed, to address the anticipated commitment deficit and enable Macomb County to achieve its NSP objectives.  Actions taken include extensive consultations with peer communities to evaluate shared problems, with lenders to obtain private sector input, and with HUD to refine possible solutions to the problems encountered. 

Since DRGR has disallowed the addresses of properties completed during the reporting period, and purchased by families > 50% AMI,  they are listed here: 

46230 Sawyer Lane, Macomb Township, Macomb County, MI, 48044

53563 Katarina, Chesterfield Township, Macomb County, MI  48047

324 Harrington Rd., Mt. Clemens, Macomb County, MI   48043

The County performed necessary preparation to implement its demolition program during the last quarter.  It met with the 3 communities that will be principally affected by this activity to develop uniform procedures to meet both program and local requirements, issued requests for proposals for demolition contractors and for an inspector to evaluate properties for hazardous substances.  Two demolition contractors and one inspection firm were selected to undertake this work.  Eleven properties have been identified for demolition, but none has occurred to date.  Demolition will begin during winter 2010. 

The County performed necessary preparation to implement its demolition program during the last quarter.  It met with the 3 communities that will be principally affected by this activity to develop uniform procedures to meet both program and local requirements, issued requests for proposals for demolition contractors and for an inspector to evaluate properties for hazardous substances.  Two demolition contractors and one inspection firm were selected to undertake this work.  Eleven properties have been identified for demolition, but none has occurred to date.  Demolition will begin during winter 2010. 

The County performed necessary preparation to implement its demolition program during the last quarter.  It met with the 3 communities that will be principally affected by this activity to develop uniform procedures to meet both program and local requirements, issued requests for proposals for demolition contractors and for an inspector to evaluate properties for hazardous substances.  Two demolition contractors and one inspection firm were selected to undertake this work.  Eleven properties have been identified for demolition, but none has occurred to date.  Demolition will begin during winter 2010.