Special to InsideRealEstateNews

Rick Garcia

Often it’s difficult to imagine that local, state and federal governments can work together as partners shaping a practical vision for how the future can look.

This week the metropolitan region’s leadership proved working together pays off by 56 local governments coming together to celebrate the U.S Department of Housing and Urban Development’s announcement of a $4.5 million regional sustainable planning grant award to the Denver Regional Council of Governments.  The funding supports a more sustainable and economically competitive Denver metro-region.

As part of nearly $100 million in new grants that HUD is making to communities across the country, these funds will ensure this region and 28 others across the country are connecting housing to jobs, providing transportation options for families, and generating the economic growth needed to win the future.

The awards come at an important moment, as communities continue to recover from the worst economic crisis since the Great Depression – a crisis that was decades in the making as families were forced to move further and further away from job centers simply to find a home they could afford.Families were severely impacted, spending 52 cents of every dollar they earn on housing and transportation combined.

Paving the way for the future

Addressing this crisis isn’t just about helping communities today.  We also had to help them plan for the challenges of tomorrow.

That’s why HUD forged a historic Partnership for Sustainable Communities with the U. S. Department of Transportation and Environmental Protection Agency, coordinating our efforts and targeting our resources, to boost economic development and ensure that all Americans can afford to live in communities with access to good jobs, schools and improved transportation options.

Last year, the partnership awarded $170 million to help support communities in planning for strong regional growth – and this week’s announcement brings the total investment around the country the past two years to $270 million

We estimate this year’s grants will create thousands of jobs nationwide and more than hundreds more local jobs in construction, retails, and service industries related to the sustainable efforts in the impacted areas.

Most exciting, we expect the $96 million investment to leverage $115 million in additional funding – getting private capital off the sidelines and into our economy.

That smart government approach is why, for the second year running, we were inundated with applications from every state – from central cities to rural areas and tribal governments.

DRCOG’s proposal brought together the right local partners and a vision for success. Now, the Denver metro-region joins 63 other regional governments throughout the country, as they prepare and build a future that will keep their region economically competitive and ripe for existing business growth and new investments.

Transit Oriented Development

The HUD grant assists DRCOG and its members along the planned construction of six new fixed-rail transit lines.  DRCOG plans for a region with greater access to job opportunities, lower combined transportation and housing costs, reduced consumption of fossil fuels, and ultimately the development of concentrated, mixed-use, pedestrian- and bicycle-friendly “urban centers” along transit lines that allow residents to easily access their daily needs. The planning process includes the Mile High Transit Opportunity Collaborative, Metro Denver Economic Development Corporation, the University of Colorado at Denver, PlaceMatters and FRESC: Good Jobs, Strong Communities to mention a few. The goal is to align investments, programs and policies to generate benefits beyond the transit lines themselves.

The anticipated benefits include focus on three transit corridors—part of the EAGLE P3, ultimate selection of three corridor Catalytic Projects that will generate the most value for sustainable development and then the creation of a pre-development, environmental review and policy model that can benefit all future FasTracks station sites’ sustainability goals.

Despite the 468 applications received this year for HUD sustainability grants—and the bipartisan support for these tools we’ve seen across the country—Congress did not fund another round of grant program in the coming year. However, with 143 sustainable planning grants already awarded to metro-regions representing, 75 percent of the nation’s population, we have a lot of work ahead aligning the three key federal agencies’ public investments with local governments sustainability planning.

DRCOG is the metro-region’s prime transportation and land use planning entity. With this modest grant, HUD’s, DOT’s and EPA’s future investments can yield big results for our economy – help address air quality standards and ensure that work force housing options exist. Frankly, it’s about government that is smart. That’s the approach Colorado is taking – and on behalf of the Obama Administration congratulations to DRCOG for its forward planning that will promote job creation and a sustainable future.

Rick Garcia is the executive director of HUD’s Region VIII, which includes Colorado.

Contact John Rebchook at JRCHOOK@gmail.com

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Rick Garcia

By Rick Garcia

During the early 1980s as many families lost their homes and jobs, state and local governments were forced to dramatically cut the assistance they could offer.

As a result, we saw a dramatic spike in the number of homeless men, women, and families. Today we are emerging from an even more severe recession and once again local governments face hard fiscal times.

And the Obama Administration is building on that progress for Colorado families. That’s why today, HUD Secretary Shaun Donovan announced $18.9 million in funding to help Colorado fight homelessness, part of nearly $1.5 billion to help more than 7,000 homelessness programs across the country.

These grants support a broad range of housing and services—what we call the “continuum of care”—from street outreach to the transitional and permanent homes that Individuals and families need to start rebuilding their lives.

While these funds will help us to speed the progress we’ve made, we already know the tools the Obama Administration is using to prevent and end homelessness are making a difference.

With the Recovery Act’s Homelessness Prevention and Rapid Re-housing Program—or HPRP—we have saved more than 1.2 million people from living on our nation’s streets – “fundamentally changing” the way communities respond to homelessness, according to the U.S. Conference of Mayors.

With innovative tools like HUD-VASH, which combines HUD’s Housing Choice Voucher rental assistance with VA’s case management and clinical services, we’ve housed more than 25,000 veterans – including more than 20 times as many veterans in the last two years as we had before President Obama took office.

And with the HEARTH Act President Obama signed into law, going forward Colorado communities will have increased flexibility to determine how best to use HUD funding to respond to homelessness – incorporating the successes and lessons of the last two years into this fight.

Most important of all is that for the first time, these funds aren’t just helping fight homelessness – but are actually part of a larger strategy to prevent and end homelessness.

Last year, the Obama Administration released Opening Doors – the first comprehensive federal strategic plan to prevent and end homelessness in our history. The culmination of a decade of bipartisan progress, the plan commits our country to ending chronic homelessness and homelessness among veterans in five years, while ending homelessness for families, youth, and children within a decade, and setting us on a path to end all homelessness.

And in today’s tight budget environment, that commitment is all the more critical. Indeed, over the last decade, we’ve seen that when localities combine housing with supportive services the results are fewer ambulance and police calls, fewer visits to the emergency room, and—just as importantly—real savings for taxpayers.

With these funds, President Obama’s commitment, and the partnership of local leaders, we can bring this proven model not just to Colorado, but to every community in the country – and put us on a path to ending the tragedy of homelessness once and for all.

Rick Garcia is a HUD Administrator for Region VIII, which includes Colorado.

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Rick Garcia

On Jan. 24, 2011, when the temperature fell as low as 21 degrees in Denver, 15,116 people were found homeless in Colorado.

The Colorado homeless population accounted for 2.4 percent of the 633,017 found homeless in the U.S. on that night, according to a HUD study released today.

Nationally, the number of homeless declined by 2.1 percent, while Colorado did slightly better, with a year-over-year decline of, a 2.3 percent.

These are among the key national and local finding of a new count on homelessness announced today by U.S. Housing and Urban Development Secretary Shaun Donovan. Donovan made the announcement at a meeting of the U.S. Interagency Council on Homelessness where he was joined by HHS Secretary Kathleen Sebelius and Labor Secretary Hilda Solis, in Washington, D.C.

Rick M. Garcia, HUD Administrator for Region VIII,  which includes Colorado, commented on the report from Denver.

“HUD’s annual “point in time” estimate of the number of homeless persons and families is based on data reported by more than 3,000 cities and counties,” Garcia said.  “While the number of homeless persons vary from community, these communities are reporting modest declines in homelessness in every category or subpopulation including individuals, families, veterans and those experiencing long-term or chronic homelessness.”

HUD reported that the Denver area had a total of 4,809 homeless in 2011. In other words, the Denver area accounts for 31.8 percent of the state’s total. Of the 4,809, 4,277 were sheltered and 532 were not. And 2,200 of them were individuals, while 2,609 of them were member of families.

In the Colorado Springs area, 1,024 homeless were found, with the remaining 9,283 spread throughout the state, according to HUD.

Despite the large numbers in Colorado and the nation, Donovan, who personally participated in the 2011 night-time count, was pleased the numbers went down.

“It’s remarkable that in the wake of the most serious economic crisis since the Great Depression, we’re witnessing an across-the-board drop in homelessness,” Donovan said. “This tells us that the Obama Administration’s homelessness strategy is working and the results spur us to continue working to end homelessness in America once and for all.”

Solis agreed.

“These numbers are a step in the right direction, especially for some of our more vulnerable populations such as veterans,” said Solis, who served as chair of the Interagency Council in 2011. “With many working families continuing to struggle, the President’s plan will allow us to redouble our efforts to end and prevent homelessness.”

On Jan. 24 of last year, local planners or “Continuums of Care” across the nation conducted a one-night count of their sheltered and unsheltered homeless populations.  These one-night ‘snapshot’ counts are then reported to HUD as part of state and local grant applications.  While the data reported to HUD does not directly determine the level of a community’s grant funding, these estimates, as well as full-year counts to be released later next year, are crucial in understanding the scope of homelessness and measuring progress in reducing it.

The Obama Administration’s strategic plan to end homelessness is called Opening Doors – a roadmap by 19 federal member agencies of the U.S. Interagency Council on Homelessness along with local and state partners in the public and private sectors. The plan puts the country on a path to end veterans and chronic homelessness by 2015; and to ending homelessness among children, family, and youth by 2020. The plan presents strategies building upon the lesson that mainstream housing, health, education, and human service programs must be fully engaged and coordinated to prevent and end homelessness.

“Over the last 18 months, we’ve seen unprecedented levels of collaboration within the federal government,” said U.S. Interagency Council on Homelessness Executive Director Barbara Poppe. “The federal government is partnering more effectively with states and local communities across the nation to align our efforts to make progress on the goals of Opening Doors.”

The reductions reported today are attributed in part to the impact of HUD’s $1.5 billion Homeless Prevention and Rapid Re-Housing Program, designed to assist individuals and families confronted by a sudden economic crisis.  Funded through the Recovery Act, HPRP spared more than one million persons from homelessness by offering them short-term rent assistance, security and utility deposits, and moving expenses.  The US Conference of Mayors has described HPRP as “fundamentally changing” the way communities respond to homelessness.

Contact John Rebchook at JRCHOOK@gmail.com

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What is a signing ceremony without politicians and officials holding the obligatory giant check?

Colorado on Tuesday received $4.5 million in a 2011 Sustainable Communities from the U.S. Department of Housing and Urban Development.

“The value of today’s funding to the Denver metro-region is to enhance our nine-counties’ ability to compete in a global economy and win the future,” said Rick M. Garcia, the Region VIII director for HUD, which includes Colorado.

Garcia spoke at a ceremony in Olde Town Arvada that also included U.S. Sen. Michael Bennet, U.S. Representatives Ed Perlmutter and Dianne DeGette, Gov. John Hickenlooperand a number of regional mayors and county commissioners.

Rep. Ed Perlmutter and HUD Region VIII Director Rick Garcia attended spoke at HUD's ceremony on Tuesday celebrating a $4.5 million transportation grant from HUD.

“This year we are especially proud that we had a particular focus on funding proposals that included more chambers of commerce and economic development corporations as core partners,” Garcia continued. “These grants will be leveraged with local funds more than doubling the investment and, helping to create new visions for how communities and regions plan for housing, transportation, workforce development and the quality of life of their residents for generations to come. When 52 percent of the average working family’s income is devoted to housing and transportation costs alone, we know that we have a responsibility to fix that and to provide housing and transportation options that can improve their quality of life and economic stability.”

Twenty seven communities and organizations will receive Community Challenge grants and 29 regional areas will receive Regional Planning grants. The goal of the Sustainable Communities grants is to help communities and regions improve their economic competitiveness by connecting housing with good jobs, quality schools and transportation.

“Our goal is to jointly, quickly, and efficiently connect our workers and families to education and employment opportunities. Regions, such as DRCOG (Denver Regional Council of Governors) embrace such sustainable development—connecting housing to jobs—you have a built-in competitive edge in attracting jobs and private investment,” Garcia said.

Bennet said that this can serve as a model for the country.

“The joint efforts by Colorado’s communities can be an example across the country,” Bennet said. “These resources will help the entire metro region develop comprehensive plans to mitigate traffic, urban sprawl, and pollution while leading to new job opportunities and economic development.”

Perlmutter congratulated DRCOG on what he called “this important grant award which is a testament to the importance of working together to revitalize our communities.  Smart and sustainable growth policies along transit corridors will help promote long-term economic development, jobs and energy efficiency.”

The core partners sharing this award include:

• Mile High Transit Opportunity Collaborative
• Reconnecting America
• Enterprise Community Partners
• Urban Land Conservancy
• Metro Denver Economic Development Corp.
• The Piton Foundation
• The National Renewable Energy Laboratory
•  Transit Alliance
• The University of Colorado
•  Denver PlaceMatters
• FRESC: Good Jobs, Strong Communities Regional Transportation District

Contact John Rebchook at JRCHOOK@gmail.com

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This HUD home in Denver is listed at $73,800. Homes like this can now be purchased for only $100 down.

Take a poll at the bottom of this blog.

It only takes a $100 downpayment for an owner-occupant to buy a HUD foreclosure in the Denver area.

Previously, it required a 3.5 percent downpayment. The $100 downpayment policy kicked off last Friday.

The new rule should boost the sale of homes owned by the U.S. Department of Housing and Urban Development, local experts said.

“I think it is going to have a huge impact,” said Jason Peck, of Coldwell Banker. He said the $100 downpayment had been previously offered, but HUD took it away about a year ago in the Denver area. The new program is in effect for the next 12 months, according to Denver’s HUD Homeownership Center.

Peck said he suspects one reason the $100 down payment is back is because nationally, HUD is bracing for another 40,000 homes to come on the market. A portion of those homes are distressed properties that were taken over by Bank of America when it purchased Countrywide Mortgage, he said. While he didn’t know how many more HUD homes will be available in the Denver area, one rule of thumb is that the Denver area has about 2 percent of the overall housing market. In that case, it could mean another 800 HUD homes could hit the market locally.

Not only will the new program be good for buyers who are cash-strapped, or don’t want to spend the money, but it also will help HUD liquidate its portfolio quicker, he said.

The program is available to owner-occupants only, not investors. Buyers using this program must get FHA-insured loans and must pay the full asking price for the home.

Peck said he also suspects that HUD felt it was selling too many of its foreclosures to investors, and this will help it return to its core mission of selling to owner-occupants.

“I think this is going to be a win-win for HUD and for buyers,” said Steve Scheer of Denver Realty Partners. “It’s going to help people who are short on cash and it is going to be good for HUD.This is really going to help first-time home buyers. I’ve been in a lot of HUD homes, while they often need some work, a lot of them are pretty nice.”

Katherine Jolliffe, a broker with 8z Real Estate, said most of the HUD foreclosures she sell are priced from about $60,000 to about $240,000.

“I’ve been doing HUD homes forever,” Jolliffe said. “I love selling HUD homes. I do a lot of them. It’s funny, we’ve been hearing for the past couple of years that we are going to see this huge increase in inventory. But our biggest problem right now is the lack of inventory.”

Lender Jocelyn Predovich believes $100 downpayments for HUD homes will open the door for a lot of buyers.

Janet Frederick, of Aspen Real Estate, also sells a lot of HUD homes. She typically is working on 15 to 20 HUD deals each months.  The $100 downpayment already is sparking more interest from buyers, she said.

“I’ve had about 10 phone calls today,” Frederick said. “I suspect this is going to help quite a bit.”

Jocelyn Predovich, president and CEO of Limetree Lending Group, also said that she is seeing interest in the program, and it will only grow as more people become aware of it.

“Already today, I’ve had a number of Realtors call me and send me emails about the program,” she said. “I’ve also had another five or six consumers contact me today. I think people are going to start to look at their data bases and contact people who might have had problems coming up with a 3.5 percent downpayment. I do think it is going to stimulate activity with buyers. Who can’t come up with $100, right?”

Contact John Rebchook at JRCHOOK@gmail.com

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Rick Garcia

U.S. Department of Housing and Urban Development Secretary Shaun Donovan today awarded $12.09 million to Colorado public housing authorities.

The Denver Housing Authority was the single biggest recipient, getting $5.73 million of the funding, which allows agencies to make major large-scale improvements to their public housing units. The Louisville Housing Authority received the smallest amount, $18,392. All told, 44 authorities in Colorado received  funding through HUD’s Capital Fund Program.

“HUD’s Capital Fund Program provides annual funding to all public housing authorities to build, repair, renovate and/or modernize the public housing in their communities,” said HUD Region VIII Administrator Rick Garcia. Region VIII includes Colorado. “The funding is essential and can be used to make vital improvements such as new roofs and energy-efficient upgrades, including geothermal systems and solar panel collectors that result in better utility cost management.”

Donovan said the needs exceed the funding.

“While this funding will certainly help housing authorities address long-standing capital improvements, it only scratches the surface in addressing the deep backlog we’re seeing across the country,” Donovan said.  “Housing authorities (across the country) need nearly $26 billion to keep these homes safe and decent for families, but given our budget realities, we must find other, innovative ways to confront the decline of our public housing stock. That’s why we introduced our new Rental Assistance Demonstration as part of our comprehensive strategy to keep these homes on firm financial footing.”

Sandra B. Henriquez, HUD Assistant Secretary for Public and Indian Housing, added, “Unless we transform the way we fund our public housing authorities, local managers will be increasingly forced to choose between repairing roofs, replacing plumbing, or worst of all, demolishing or selling their properties.  We simply can’t afford to let that happen.”

Contact John Rebchook at JRCHOOK@gmail.com

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“You can’t spell HUD without the “D,” for development, Garcia, administrator for Region VIII of HUD, which includes Colorado, told more than 50 economic development leaders, business people and a number of politicians.

Garcia hosted the conference that also included Alan Salazar, Chief Strategic Operations Officer for Gov. John Hickenlooper, and Ron Sims, HUD Deputy Secretary.

Few specifics about programs were given during the presentation, but afterward, Garcia mentioned to InsideRealEstateNews that $100 million in new economic development programs – often in conjunction with other federal agencies – will be unveiled shortly.

Sims, the No. 2 official at HUD, who recently announced he is retiring from the agency to spend more with his family in Washington State, echoed Garcia’s comments.

HUD looking to fund job-creation ideas

“There is money on the table for economic development,” Sims said.

He said that HUD will never tell the private sector what they should do and how they should do it, but will only share the agency’s goals. Then, it is up to HUD’s private sector partners to tell the agency how they planned to accomplish those goals.

Before being tapped by President Obama two years ago to join HUD, had been had served as three terms as the executive for King County, Washington, which includes 1.8 million residents and 39 cities.

There, he worked hand-in-hand with the heads of household names such as Microsoft, Starbucks, and Nordstrom. At one point, he quoted Bill Gates. Sims was so successful working with business leaders to keep them in King County and help them grow properly, that he joked sometimes people questioned his Democratic credentials. Sims, who also is a Baptist minister, quickly added that there was no doubt that he is a staunch Democrat, given his stances on social equality and justice and on protecting the environment and on green and sustainability issues.

Denver does it right

Sims lavished praise on Denver and Colorado.

He said John Hickenlooper, when he was Denver’s mayor, set an example for the rest of the country by working with politicians from surrounding cities and town, no matter their political affiliations.

“Denver is on everybody’s radar screen these days,” Sims said.  “Denver did it just right.”

Salazar, meanwhile, stood in for Hickenlooper, who was in Washington, D.C., attending a national conference, according to Garcia.

Economic ideas to be unveiled

Salazar noted that the Hickenlooper administration is about a week away from releasing findings from its grassroots, “bottom-to-top” effort to seek input on how to jumpstart and sustain the economy from all walks of people in all 64 counties in Colorado.

Rick Garcia, Alan Salzar and Ron Sims discuss economic development at a Denver forum.

“We held something like 55 or 56 town-hall meetings and received about 8,000 comments,” Salazar said.

Government needs to get out of the way

Sometimes it was not so much what the government should do, but what it should not do, he said.

“Sometimes people said the best thing the government can do is just get out of the way,” Salazar said.

Along the same lines, he said the Hickenlooper administration is reviewing all of Colorado’s regulations to make sure they are accomplishing their intent.

“Not all regulations are helpful to the economy,” Salazar said. However, he emphasized that it also is important to continue former Gov. Ritter’s groundwork to establish Colorado as a “great emerging states for clean energy,” as well as encouraging more natural gas exploration as a “cleaner” alternative energy source.

Those are all of the right moves, Sims said.

On a national level, he said young people increasingly want to live in cities that in addition to job opportunities are committed to a clean environment with plenty of parks and excellent schools.

“And this surprised me,” Sims said. “They want density. People don’t want to live in the big houses like they did in the past.”

Sims said other cities see Denver as a model on how it should be done.

“You are other peoples’ dream,” Sims said. “So get out there and rock!”

Video: Rick Garcia on HUD\’s economic development role

Contact John Rebchook at JRCHOOK@gmail.com

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Shown is a conceptual drawing of the South Lincoln Homes redevelopment.

U.S. Housing and Urban Development Secretary Shaun Donovan today awarded $22 million to revitalize the South Lincoln Homes public housing development.

The current 182 units will be redeveloped and replaced with 457 units of new public, low-income housing, and affordable homeownership units. South Lincoln is a 15.1-acre site bordered by West 11th and 12th avenues and Mariposa and Osage streets. It is in the La Alma/Lincoln Park neighborhood.

South Lincoln is a Denver Housing Authority development. The entire redevelopment is anticipated to cost $91.7 million, said Stella Madrid, community outreach officer for DHA. In addition to today’s $22 million grant, other financing sources will include tax credits purchased by private investors and bank, city and state funding, and leverage financing from community service programs, she said. Madrid said DHA expects to break ground in March 2012. “It is expected to be a five- to seven-year project and be completed in 2018,” Madrid said.

The grant funding announced today is part of $153 million awarded to eight public housing agencies across the country through HUD’s HOPE VI Revitalization Program to transform severely distressed public housing developments into mixed-income communities.

“No one can dispute the exceptional track record of HOPE VI to improve housing conditions for hundreds of communities and most importantly, thousands of families,” said Donovan. “As we move toward the next generation of neighborhood revitalization—one that links housing, education, transportation, healthcare, and other support services—we will always remember it all began with HOPE VI.”

Garcia lauds green aspects

The green and energy saving components of the revitalization are crucial, said Rick Garcia, the HUD Regional Administrator for Region VIII which includes Colorado.

“The competitive funding is a major opportunity for the Denver Housing Authority to continue to build on regional successes of our sustainable communities’ partnership with other federal agencies,” Garcia said.  “I commend DHA, not only, for strategically planning a revitalization project to transform the site into a green community, promoting a healthy lifestyle, access to transit, and employment opportunities, but also for their leadership in demonstrating to the entire metro-area that sustainability can be achieved while providing housing choices for low to moderate income residents in Denver.”

The eight housing authorities announced nationally today were selected among 36 public housing authorities that applied for fiscal year 2010 HOPE VI Revitalization funding. Six of the grantees will be funded from fiscal year 2010 HOPE VI appropriations; two awards will come from fiscal year 2011 funding. Later this year, HUD will conduct a competition to award $65 million in FY2011 funding to implement the Department’s new Choice Neighborhoods Program. HUD awarded high marks to applicants who plan to extend neighborhood transformation efforts beyond public housing linking housing interventions with early childhood education programs. The Obama Administration is challenging communities to build upon the HOPE VI lessons to employ a comprehensive approach to community transformation.

Choice Neighborhoods aims to transform neighborhoods of poverty into viable mixed-income neighborhoods with access to economic opportunities by revitalizing severely distressed public and assisted housing and then linking these neighborhoods to well-functioning services, effective schools, public transportation and jobs.

About Hope VI grant

Housing authorities are competitively selected for HOPE VI grants based on many factors including the effectiveness and project readiness of their revitalization plans.  HUD gives recipients the flexibility to develop revitalization plans that meet their local needs.  Among other criteria, grantees are selected based on:

• The capacity of their housing authority and its development team to administer and manage completion of the revitalization effort.
• The severity of physical distress of the development.
• The bility of the housing authority to supplement the HOPE VI grant with funding from other sources, private, state or local government.
• The ability to provide supportive services to displaced residents.
• The proposed green development and energy efficiency strategies.

Since 1993, HUD has awarded 260 HOPE VI Revitalization grants to 133 housing authorities– totaling nearly $6.3 billion. HUD began awarding HOPE VI grants following a 1992 report by the National Commission on Severely Distressed Public Housing that found approximately 86,000 public housing units in the U.S.

To see homes that are available for sale in this area, please visit this COhomefinder.com link.

Contact John Rebchook at JRCHOOK@gmail.com

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Brian Chappelle tells about 400 mortgage brokers that they will face an incredible number of regulatory changes. (Photos by Patrick Hester)

Vote on what you think about new regulations at the end of this blog.

The mortgage and residential real estate industries will continue to come under scrutiny by federal regulators and legislators, as they attempt to protect consumers and prevent another national housing and economic meltdown, a nationally known speaker last week told about 400 local mortgage brokers and bankers.

“The upshot is they are going to look at everything,” said Brian Chappelle, principal of Washington, D.C.- based Potomac Partners, a consulting firm specializing in mortgage and real estate issues. His clients, among others, include the National Association of Realtors.

“We are going to see a steady cascade of regulatory changes,” Chappelle said during a more than two-hour presentation at the Infinity Center in Glendale. Universal Lending and Land Title Guarantee, sponsors of InsideRealEstateNews, put on the event.

Peter Lansing, president of Universal Lending, warms up the crowd for Brian Chappelle.

Audience members represented people that make hundreds of millions of dollars in mortgage loans annually in the Denver area. Part of the talk by Chappelle, whose background on mortgage and real estate issues spans more than three decades, discussed how brokers will be compensated under new legislation, such as the Dodd-Frank Wall Street Reform and Protection Act.

But Chappelle also addressed big-picture issues, such the overall real estate mortgage market and what regulators hope to accomplish.

“Tough on crime”

Several times he said that policy makers and regulators want to be seen as “being tough on crime,” which means they will do whatever they can to try to protect consumers. “The goal is to create a level playing field,” Chappelle said.

For example, regulators want consumers to look at different mortgages that can easily be compared on an apple-to-apple basis. “Washington thinks the mortgage system is broken,” Chappelle said.

As part of the process, the government will be reviewing its role on every aspect of the real estate industry, he said.

Everything being evaluated

“Everything will be on the table,” Chappelle said. For example, in the very near future, Congress and the Obama Administration will decide if it is cost effective to allow homeowners to continue to deduct home mortgage interest payments at the current levels. Chappelle said he wouldn’t be surprised if they took some action, possibly eliminating the deduction for second homes or further limiting the amount of the deduction based the size of the loan or the income of the borrowers. There is talk that the government may require bigger down payments from borrowers, he said, possibly as high as 20 percent or even 30 percent. The government also will continue to grapple with what to do with Fannie Mae and Freddie Mac, he said.

“The government wants to make sure it is getting the biggest bang for its buck,” he said.

But it is not all bad news.

The Federal Housing Administration is in great shape, he said. It currently has $7 billion in reserves, he said.

“That is truly remarkable,” Chappelle said. In 2009, some skeptics were concerned that the FHA, which is self-sustaining, was in danger of needing a massive bailout. Now, that possibility appears extremely remote, he said.

Last year, about 1.5 million FHA-insured loans were made in the U.S. Of those, a mere 6,000 are in default. “That is 0.44 percent,” Chappelle said, far below historic default rates.

FICO scores high

Part of the reason is that some 46 percent of the borrowers last year who received FHA loans had FICO scores of 700 or above. Not even 10 percent of consumers receiving FHA loans last year had scores between 620 and 640, which used to be the bread-and-butter of FHA-insured loans, he noted. Lawrence Yun, the chief economist for the National Association of Realtors, in Denver recently made the case that banks have gone too far in reducing their risk by only lending to the most qualified borrowers who are unlikely to default.

As far as how mortgage brokers will be compensated in the future, it’s not all bad news, he said. For example, the government is not going to impose rules that would put a cap on income a mortgage broker could earn, he said.

Originators still will be allowed to be compensated based on a percentage of the total loan amount, under the Dodd-Frank Bill. One idea that had been floated was to pay brokers a flat fee. In other words, whether the loan amount was $50,000 or $500,000, the payment would have been the same.

However, the new rule will not allow an originator to be paid more for a loan because it carries a higher interest rate.  In the past, originators could be paid more on the so-called “yield-spread premium.”

One reason is because an analysis of subprime and alt-a loans made during the go-go days when the crisis was building, found 50 percent of borrowers saddled with things such as option-ARMs with unfavorable terms, could have qualified for prime loans at lower rates and better terms, he said.

The new rules, he noted, generally prohibit originators from “steering” consumers to a loan that is not in their interest. Also, mortgage brokers cannot be paid by both the consumer and the lender.

More rules and fine-tuning of regulations are inevitable, he said. For example, the recent and highly publicized “robo-signing” of foreclosure documents by major banks could lead to more regulations, he said.

“You need to work through these sea changes,” Chappelle said. “There are going to be a lot of new rules. The environment is volatile.”

On the other hand, he said with all of the changes, brokers and lenders that “understand the rules and follow the rules,” will prosper.

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The grants  form a foundation for the Obama Administration’s “Opening Doors” strategy, the nation’s first comprehensive plan to prevent and end homelessness.  Funding will be provided to partners in Colorado’s three Continuum of Care groups:

• Metropolitan Denver Homeless Initiative, $14,007,144.
• Colorado Springs and El Paso County,$1,691,400.
• Colorado Balance of State,$2,934,992.

Today’s announcement  comes a week before thousands of volunteers in nearly every city and county conduct a national one-night count of homeless persons and families. HUD’s “Let’s Make Everybody Count!” campaign that is intended to document trends in homelessness that are crucial to local planners’ efforts to prevent and end homelessness in their areas.

“There is a tremendous need on our streets and in our shelters among those experiencing both long-term homelessness as well as families confronting a sudden economic crisis,” said Donovan. “These grants are the life blood for thousands of local housing and service programs that are doing the heavy lifting to meet President Obama’s goal of ending homelessness.”

Barbara Poppe, Executive Director of the U.S. Interagency Council on Homelessness Executive Director, added: “Across federal agencies, we are aligning mainstream programs towards a goal to prevent and end homelessness. While we continue to strengthen public-private partnerships in Washington and across the country to meet this goal, today’s grants provide essential support to continue the progress and meet critical needs of those who experience the crisis of homelessness.”

National recap

In June, 19 federal agencies and offices that form the U.S. Interagency Council on Homelessness submitted to the President and Congress the nation’s first comprehensive strategy to prevent and end homelessness. The plan puts the country on a path to end veterans and chronic homelessness by 2015; and to ending homelessness among children, family, and youth by 2020.

Last September, HUD announced that it would renew funding through HUD’s Continuum of Care programs to existing local programs as quickly as possible to prevent any interruption in federal assistance.  HUD will award funds to new projects later in the year.

What programs provide

HUD’s Continuum of Care grants provide permanent and transitional housing to homeless persons as well as services including job training, health care, mental health counseling, substance abuse treatment and child care. Continuum of Care grants are awarded competitively to local programs to meet the needs of their homeless clients. These grants fund a wide variety of programs from street outreach and assessment programs to transitional and permanent housing for homeless persons and families.

HUD’s homeless assistance grants are reducing long-term or chronic homelessness in America. Based on the Department’s latest homeless assessment, chronic homelessness has declined since 2005 due to significant investments to produce thousands of units of permanent supportive housing for those who had been living on the streets.  While the total number of homeless persons in America dropped slightly between 2008 and 2009, the number of homeless families increased for the second consecutive year, almost certainly due to the ongoing effects of the recession.  In the last 10 days of January, volunteers from across the country will attempt to count the number of homeless persons living in shelters and on the streets as part of a national point-in-time count.

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