Rehabilitation Review Committee

MINUTES OF THE REHAB REVIEW COMMITTEE MEETING MARCH 10, 2010 8:45 AM Members Present: Chairman Rodney Bowie, Alderman Tucker Braddock, Joe East, Jim Troeger, Jim Roberts, Kevin Lin, and Susan Goldman Others Present: Karen Resch, MetLife Home Loans; Denise Blake, Wayne Sharkey, and Linda Lee Smith Chairman Rodney Bowie called the meeting to order at 8:48 AM. Motion was made by Tucker Braddock and seconded by Jim Roberts to accept the minutes of the February 17, 2009 meeting. The motion carried unanimously. New Business At the last meeting the committee wanted more discussion on reverse mortgages. Karen Resch of MetLife Home Loans came to talk to the committee on reverse mortgages. Susan Goldman gave a brief synopsis on what the rehab/lead program entails. Recently several elderly homeowners either have reverse mortgages or want to take out a reverse mortgage in the future, and this committee is not sure how it affects the CD’s standings. Karen Resch handed out brochures and gave a brief overview to the committee members on the benefits of reverse mortgages. She said it allows a person to stay in their own home, take out the equity and receive proceeds to pay for their needs with no repayment necessary until they no longer live in their home. It’s a government insured loan program; the loan is not due and payable until the last occupant no longer resides in the home. The owner retains full title and full ownership. Credit scores and income are not considered, proceeds are tax-free and not considered income, and if there is a deficit it is forgiven. An appraisal is done and HUD notes certain code items if it’s not insurable. These code issues will need to be addressed by a licensed contractor. The borrower can get into the reverse mortgage program, have the items fixed, and that amount will be held in an escrow account for 9 months for completion of those items. Ms. Resch told the committee that the City’s mortgage would be in third place because of FHA, so you can’t have another mortgage, and many lenders do not want to subordinate. Wayne Sharkey said that the Community Development’s function is to bring the house up to code with respect to rehab and lead safety. The CD office needs to determine how they can process potential applications if the work has already been done through the reverse mortgage to bring the house up to code compliant levels. The City’s rehab 1 program would be a duplicate program. A lien can’t be attached to the property because the City would be in third place. One consideration may be a payment plan but you can’t put a mortgage on the house. This committee is also concerned with declining equity and where in this program the City would stand any chance of recouping its money. Mr. Sharkey stated that the City’s Rehab/Lead Programs were designed for people that had no other options. If the reverse mortgage is in play, it seems they have another option. This is like a duplicate program. Wayne Sharkey explained to Karen Resch that senior loans are presently at 0% loan up to $30,000 for code correction and then lien is placed on the property for 30 years or sale or transfer of the property. The question is how to work it with reverse mortgages. After the original code correction has been done with a reverse mortgage, it is not monitored again for the next 30 years. So there are some questions if CD can provide loans for seniors with reverse mortgages; another option might be to do an elderly furnace repair/replacement program, or simply a grant program with no payback. Ms. Resch will speak with her account rep and ask how this could be worded with the City’s rehab programs to be acceptable. Ms. Resch will get back to the committee. Tucker Braddock asked for suspension of the rules and Jim Roberts seconded it. All were in favor. Wayne Sharkey explained to the committee that Denise Blake had a great idea to get rehab and lead information to the local schools. The Haitian and Spanish outreach workers have been doing a good job bringing in applications. They are seeing a lot of applications with delinquent mortgages. At the next meeting there needs to be more discussion on applications with delinquent mortgages. The mortgage has to be current, but nothing is written in the Policies and Procedures regarding that. When reviewing new applicants, they need to be current at the time of application and when projects are ready to go out to bid. This topic is tabled until the next meeting. Old Business Motion was made by Tucker Braddock, seconded by Rodney Bowie to use age 62 as the criteria in the future for the elderly status, which was previously, age 65. Motion carried unanimously. Mr. Sharkey said that he didn’t have the language detailing the acceptance/denial on properties with reverse mortgages. This topic is to be put off until Karen Resch from MetLife has more information for the committee, at which time the committee will make a decision. New Applications Mr. Sharkey told the committee that there were quite a few new property applications to be approved for the Lead and Rehab Programs. They all meet the eligibility 2 requirements, including eligibility funding for lead and rehab and paid taxes. Motion was made by Rodney Bowie and seconded by Joe East to approve the list of new applications. Motion carried unanimously. Max. Rehab Max. Lead RLP0910 Owner/Occupied 1 unit $30,000 $13,000 RLP0911 Owner/Occupied 1 unit $30,000 $13,000 RLP0912 Owner/Occupied 1 unit $30,000 $13,000 LP0913 Investor 3 units $39,000 RLP0914 Owner/Occupied 1 unit $30,000 $13,000 RLP0915 Owner/Occupied 1 unit $30,000 $13,000 RLP0916 Owner/Occupied 1 unit $30,000 $13,000 LP0917 Owner/Occupied 1 unit $13,000 Rehab application #09-16 which has negative equity and therefore does not meet the program requirements. Recommendation is for denial. Jim Troeger made a motion to deny Application #09-16 for rehab because it has negative equity and Rodney Bowie seconded the motion. The motion carried unanimously. Joe East made a motion to adjourn and Rodney Bowie seconded the motion. The motion carried unanimously. The meeting adjourned at 10:09 AM. 3