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Innovations in Homeownership Contest

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HOME Rochester
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Information About Innovation:
  Title:  HOME Rochester
  Contest Category:  Innovative strategies to address REOs in the community - 2008
  Summary:  HOME Rochester is a collaborative treatment of foreclosed and vacant properties located in the City of Rochester. Through HOME Rochester, vacant properties are purchased and held by a non-profit corporation, renovated to a standard and high level of specification, and sold to first time low income buyers. Construction managers and sales agents are community based non-profits. Subsidy is used to make homes affordable. Buyers receive pre and post purchase counseling.
  Description:  HOME Rochester is a production system for turning foreclosed and vacant single family properties into renovated and affordable homes for first time buyers. Foreclosed properties are purchased from HUD and the City of Rochester. The HUD homes are purchased at a discount and must be located in a designated revitalization area. The properties are held by a non-profit Housing Development Fund Corporation (HDFC)during renovations. Once renovations are complete the homes are sold to eligible low income buyers.

Financing for the program is provided through a loan pool. JPMorgan Chase is the lead lender and has just closed on the fourth pool of financing for the program. A total of $57,000,000 in construction financing has been closed. The current pool is $16,000,000. These fund are used to purchase and fund renovations. The pool participants are banks and non-profit lenders. The loan has a blended below market interest rate. The loan is secured by a loss reserve funded by the City of Rochester. An interest reserve, funded by the local United Way, is used to pay participating lenders monthly interest on borrowed funds.

Each home is renovated to a 10 year standard specification that includes (for most homes) a new roof, new kitchen and bathrooms, new furnace, new hot water heater and updated mechanicals. The home buyers are protected by a one year warrantee on workmanship and major systems.

There is central project management including property management, financial management, construction oversight and managing the purchase and sale of the property. In addition, HOME Rochester uses community based non-profit corporations to provide construction management and sales for individual properties. The CMs are charged with developing specifications for a house, bidding the construction, managing the construction and selling the completed house. The CMs receive a fee for these services.

Central project and fiscal management is provided by the Greater Rochester Housing Partnership (GRHP) under contract to the HDFC. GRHP is a non-profit financial intermediary servicing Rochester and the seven surrounding counties. It is 16 years old and its mission is to preserve and create affordable housing by providing financial and administrative tools to developers and builders of affordable housing. GRHP secures subsidy for each home sale. The subsidy is used both to write down the cost of HOME Rochester renovated houses to fair market value (Rochester has a weak real estate market) and to make the homes affordable to eligible buyers. GRHP obtains subsidy from the City and from state sources as well as from FHLB for this purpose.

Buyers must be below 80% of AMI and must complete prepurchase counseling. Mortgages must be at a fixed rate and meet specific ratios. Our lowest income buyers may be eligible for additional subsidy to write down the fixed interest rate. All buyers are required to attend post purchasing counseling after buying a HOME Rochester house. Buyer eligibility is determined by the City and the City funds the required counseling.
Projected Annual Operating Cost:
   GRHP recieves an operating subsidy from the City and HFDC of $186,000 a year. The remainder of the operating expense for the program is provided by GRHP form earnigs on loans to developers and builders of affordable housing. The total operating cost for HOME Rochester is estimated at $375,000.
Specific Outcomes or Results in Calender Year 2008:
   In 2007, HOME Rochester sold 98 fully renovated homes to eligible buyers. All of the homes had once been vacant foreclosed structures. Since this housing production model was developed in 2001, over 400 properties have renovated.

HOME Rochester is clustered in neighborhoods. Over the years our properties have had a significant impact not only on the lives of individual buyers but on the neighborhoods in which the houses are located. Market prices on the streets with HOME Rochester invested have increased in an otherwise stagnant market.

Buyers are given some of the tools they need to be successful owners including pre and post purchase counseling and conventional fixed rate mortgage loans.

The program uses public sources of financing to leverage private construction ($57,000,000) and mortgage financing (average of $58,000 per property). Properties are placed back on the tax roles with an increased assessment.
  Web Site (optional):  http://homerochester.org and grhp.org
Information About Organization:
  Name:  Greater Rochester Housing Partnership
  Address 2:  183 East Main Street, suite 900
  City, State, Zip:  Rochester, NY  14604
  501c3 Non-Profit:  yes
  Contact Name:  Jean Lowe
  Contact E-Mail:  jlowe@grhp.org
  Contact Phone:  585/423-6321
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