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NSP Interview with Federal Reserve Bank of Dallas

City of Grand Prairie
TOTAL FUNDS: $2,267,290

Link to full article (December 2011, Federal Reserve Bank of Dallas highlights "Neighborhood Stabilization Program Activities in Texas)

Activities
45 percent of funds: Foreclosed Home Purchase Assistance Grant Program: Assisted 61 households in purchasing foreclosed single-family homes by providing up to $20,000 (as a grant) for closing costs and down payment assistance and rehabilitation work. Funds could cover up to 50 percent of down payment. Ten of the 61 households were under 50 percent of AMI.
45 percent of funds: Foreclosed Home Acquisition and Resale Program: Purchased 17 foreclosed homes; rehabilitated and sold 14 of them at a 20 percent discount to qualified government and school district employees working in Grand Prairie. Discount comes from down payment and closing costs assistance and fees and discounts to the house’s selling price. One home is currently under contract to be sold to a government employee. The remaining two foreclosed properties are in the rehabilitation phase and will be sold within 60 days. So far this activity has provided a homeownership opportunity to four households who are under 50 percent of AMI. The city has partnered extensively, working with a number of lenders (for example, WR Starkey Mortgage, SWBC Mortgage, Bank of America, Wells Fargo, DHI Mortgage), Dallas County Home Loan Counseling Center, Consumer Credit Counseling Service of Greater Dallas, and many real estate agents, general contractors, home inspectors, title companies and home warranty companies. The city is also teaming with Tarrant County Housing Partnership to hold face-to-face postpurchase counseling workshops.
10 percent of funds: Program Administration
Q&A: Insights from the Grantee
Dallas Fed: What have been your biggest successes?
City of Grand Prairie:
  1. Enabling 75 families to buy homes, including government employees. These are people who will take good care of their properties, which will increase the value of their houses and their neighbors’, thereby stabilizing their communities and helping the city.
  2. Taking 75 foreclosed properties off of the market.
  3. The National Association of Housing and Redevelopment Officials awarded us a community development merit award for our NSP work. For details, see www.nahro.org/awards-agency.
  4. 4. Our Neighborhood Stabilization Program is also featured on the HUD NSP Resource Exchange website, which showcases photos of NSP projects completed by the city of Grand Prairie.
Dallas Fed: What have been your biggest challenges?
City of Grand Prairie:
  1. Communication with HUD was difficult at first.
  2. We had to immediately implement NSP within a short time frame—18 months—and a lot of HUD training came late.
  3. With our Foreclosed Home Acquisition and Resale Program, we knew from experience not to over-improve houses. If neighboring houses were valued at $130,000 and we acquired a house for $110,000, then we knew that we should put not much more than $20,000 into the house. Otherwise, we wouldn’t get the money back on our investment.
  4. Educating real estate agents and lenders on what NSP was and how it worked. Now that they understand the program, it’s been great working with them.
Dallas Fed: Have you been engaging financial institutions or servicers in undertaking your NSP?
City of Grand Prairie: At the beginning it was hard working with them, but now that we’re over
two years into the program, they have jumped on board. It was late in the
process, but they have enabled us to buy some properties in bulk, have
a first look at some of their properties and receive special discounts. For
example, we received a 10 percent discount when we bought five or more
real estate owned (REO) properties and closed them within an agreed-upon
time frame.
Dallas Fed: Has NSP helped stabilize neighborhoods in your city?
City of Grand Prairie: Yes. With NSP we were able to take 75 homes off of the foreclosure list. We helped increase the values of homes, as seen by their prepurchase versus postpurchase market values, and we could have done more if we had more funds.
Dallas Fed: What aspects, if any, of the NSP requirements have made NSP difficult to administer or use?
City of Grand Prairie: The red tape.
Dallas Fed: Do you have a strategy to continue neighborhood stabilization efforts after NSP ends?
City of Grand Prairie: Once our acquisition and resale funds dry up, we will continue NSP through the program income it has generated. Outside of NSP, we have been working with HUD on a REO program. HUD had five REO properties occupied by households displaced by Hurricane Katrina. They offered to sell us the properties at 50 percent off of their appraised values if we offered the households the right to buy these properties. If these households did not qualify, then we would give them a rental voucher. We did acquire the five properties and have sold four of them. We are trying to administer this program like NSP so that we will generate program income, which will enable us to continue providing housing for low-income households.
Dallas Fed: What lessons learned would you like to share?
City of Grand Prairie: Learn all you can about real estate—market values, market assessment, etc.—because it’s critical to your success.
Dallas Fed: Is there anything else you would like to add?
City of Grand Prairie: A council or a board that backs your efforts is critical to success. The approval and the support of the Grand Prairie city council, mayor and the city manager’s office was crucial to our success in enabling us to use NSP funds to stabilize the property values and increase tax revenues for the city.
Websites:

Grand Prairie Neighborhood Stabilization Program

and

Stabilization Program Resource Exchange

Last updated: 1/18/2012 9:01:57 AM