August 1998 ----- -----------------Volume 8, Issue 4


 Table of Contents

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 Affordable Housing; Despite Successes, A Crisis Still Looms

 At our 15th Anniversary Reception, we took time to acknowledge the parties that made a two building, 31 unit community ownership project work. We invited the participants to the front of the hall to accept a plaque and then we asked them to stay up front for a group photo. We handed out 8 plaques to the groups involved; two recipients could not attend. We needed a wide angle lens to get everybody in the group picture. In addition to celebrating and expressing our gratitude, we wanted to graphically illustrate how many players were necessary to preserve affordable housing in these 31 apartments. [The section listing all the honorees is at the end of this article. ]

In the course of the completion of work on these 31 units over the past few months, a couple of studies have been released that should remind us that the affordable housing problem is percolating towards a crisis. In a June 16th 1998 New York Times article, Jason DeParle reports that "paying the rent" is a major problem to a record number of families in this country. He cited a Center on Budget and Policy Priorities (www.cbpp.org) report which indicated that nationally 4.4 million families spent more than half their income on rent and utilities in 1995. He also noted that HUD had issued a report in April that showed similar economic data. This report "Rental Housing Assistance -- The Crisis Continues: the 1997 Report to Congress on Worst Case Housing Needs" states that 5.3 million households with very low incomes including growing number of working poor and suburban as well as urban families have a desperate need for housing assistance because of unfavorable rents and substandard living conditions. The HUD study reports that while the American economy is booming, the boom is not reaching low income families in need of affordable housing. It also reports that there are fewer low rent apartments that are available to families with low incomes. The difference between available affordable apartments and families in need has continued to grow while the federal government since 1995 has not provided new section 8 rental subsidy units. (See the Section 8 article on page 3 for information on the current budget and new Section 8 money.)

Bringing the information to a local level, HUD has broken out information on the NY area which shows that there are 408,000 families in the metropolitan area that have incomes less than 50% of the area median income ($25,100) and pay more than half their income in rent or live in severely substandard housing. 360,000 of those households live in New York City.

On December 11, 1997, President Clinton visited Charlotte Street and marveled at the re-building of the area. He was quoted saying that "There is nothing that can be done for any neighborhood that people will not do for themselves. But people who are willing to do for themselves deserve a hand up, they deserve a partner, they deserve a government committed to giving them the tools they need to succeed." Despite the good words, it appears that the federal part of this partnership is trying to sneak out of the housing business. That can't be allowed to happen.

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UNHP Forum Follow-Up

As was witnessed at our 2 spring housing forums, there are many people in the private and non-profit sector who want to do something about affordable housing. We must continue working to save specific buildings while working for an affordable housing policy. In an environment where there is less money and commitment to do this, we need to be both creative with limited resources when we can be (See Fannie Mae article) and we need to be vocal when we see problems or opportunities in policy or planning.

As a result of our affordable housing forums, we are preparing a listing of recommendations that we feel will help groups like ours achieve our mission of preservation and creation of affordable housing. We will be finalizing those recommendations and issuing them in the fall.

(At our 15th Anniversary Celebration, the Community Ownership Award was presented to the participants in the Tremont-Anthony project. Presentations were made to the NW Bronx Coalition for its organizing work and its Weatherization Program grant; Chase Community Development for participating in the PLP and the Chase Housing Opportunities Program for the loan to help bridge the acquisition costs; the City of New York's Department of Housing Preservation and Development; Senator Alfonse D'Amato for his assistance in conversations with Freddie Mac; Freddie Mac, the seller; Dougert, the manager and general contractor; the Sisters of Charity of St. Vincent De Paul for lending UNHP the funds necessary to meet the project's reserve funding requirements; Steve Groarke for his construction assistance and Guillermo Franco for his on-site and financial work.)

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 Fannie Mae Announcement: $25 million in Mini-Loans are here: Let's start spending the money

On Friday morning, June 26th, Fordham University hosted a press conference to announce of the $25 million loan program set up to support small apartment buildings in the Bronx.

The local press coverage was great with articles in the BronxTimes, The Norwood News and The Daily News. BronxNet and the new Bronx News TV Station covered the announcement. Thus far more than 35 people have called requesting more information.

Fannie Mae, the nation's largest source of home mortgage funds and one of the largest investors in multifamily mortgages, is conducting a new $25 million Mini Loan Program (MLP) to help maintain the supply of affordable rental units in small apartment buildings in the Bronx. The program will provide funds for acquisition, rehabilitation or refinancing of apartment buildings with 5 to 25 units. Cash out is allowed to reimburse borrowers for documented rehabilitation performed in the 12 months prior to application.

The Mini Loan Program targets properties that require from $100,000 to $750,000 in financing. Properties with higher than 25 units are still qualified but the maximum loan is limited to $750,000. All loans shall be 30 years, fixed rate (7.9% or 8.0%), fully amortizing instruments. Each loan will be credit enhanced, by the lenders (CPC - Community Preservation Corporation, The Chase Community Development Group, and Republic National Bank), with 75% top loss mortgage insurance (MI) from the New York City Residential Mortgage Insurance Corporation (REMIC). Each pool of credit enhanced MLP loans, will be swapped for an individual Mortgaged Back Security (MBS) equal to the size of the pool. NYC Pension Funds will commit to purchase Fannie Mae MLP MSB from MLP lenders at the rate Fannie Mae MBS trade in the open market, plus a hedging premium for their forward commitment.

Underwriting Criteria

Maximum LTV 80%
Minimum DSC 1.20%
Minimum Vacancy 5% (21+ units)
        7% (5-20 units)
        10% for commercial

Maintenance & Operation (M&O)

$3,500 per unit per year minimum

Management Fees

6.50% included in the M & O

Reserves

3% of Gross Income. Operating Reserve is included in the M&O allowance and submitted in monthly installments with debt service. Replacement Reserve is also included in the M&O allowance.

Commercial Income

Up to 20% of Gross Income

Guaranty Fees

25bp (base point)

Borrower Recourse

None, except as required by lender

Documentation

Fannie Mae loan documents are not required if Seller/Servicer loan documents are acceptable to Fannie Mae.

UNHP is sponsoring an informational meeting on the Fannie Mae Mini Loan Program (MLP) on Tuesday, August 18th at 4PM at 2751 Grand Concourse, Bronx, New York, 10468. People interested about the program and/or the workshop should contact Danny Ouk at (718) 933-3101. If you are interested in finding out more information about our company in general, you can visit the Mini Loan Program Page on our web site.

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 Section 8: Restoration and New Money Battle is Still Going On

The National Low Income Housing Coalition reports that the Congressional Conference committee on HUD appropriations will be taking up the HUD budget in August. They are circulating a letter in hopes of getting organizations around the country to sign on a letter to the Congressional Conference committee. The NLIHC web site is: http://www.nlihc.org

NLIHC reports that the House bill refunds the $2.3 billion in section 8 funds rescinded earlier this spring to fund disaster relief. The House bill provides 17,000 new welfare to work housing vouchers; the Senate bill discontinued the 90 days rule whereby returned section 8 certificates must be held for 90 days before re-issuance. NLIHC reports that approximately 30-40,000 families are kept from section 8 due to this 90 days delay.

Now is the time to take a few minutes to contact federal representatives about federal housing priorities: a) allocation of money for new section 8 vouchers and b) restoration of the $2.3 billion taken from the section 8 reserves:

Several people got written responses from Senator Moynihan and Representative Engel on their recent letters. We urge people to keep calling and writing. The contacts are:

Senator D'Amato (202) 224-6542; and Senator Moynihan (202) 224-4451, US Senate, Washington, D.C. 20510.

Congressperson _____________, House of Representatives, Washington, D.C. 20515.


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