HUD, Stabilization Trust Bolster First Look Program

6594_donovan_215x215 HUD, Stabilization Trust Bolster First Look Program The U.S. Department of Housing and Urban Development (HUD) has signed a deal with the nation's top lenders and servicers to offer selected state and local governments, and nonprofit organizations a ‘first look’ or right of first refusal to purchase foreclosed homes before making these properties available to private investors. The agreement was announced Wednesday by HUD Secretary Shaun Donovan.

The institutions participating in the National First Look Program represent approximately 75% of the real estate owned (REO) marketplace. Participating servicers include Bank of America, Chase, Citi, Deutsche Bank, GMAC, Nationstar Mortgage, Ocwen Financial Corp., Saxon Mortgage Services, U.S. Bank and Wells Fargo. The program also includes Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

‘This groundbreaking agreement will help rebuild neighborhoods that have been struggling with blight and declining home values due to foreclosures,’ says Donovan.

The program represents a partnership agreement between HUD and the National Community Stabilization Trust (Stabilization Trust). In collaboration with national servicers and the government-sponsored enterprises, the First Look Program is intended to give communities participating in HUD's Neighborhood Stabilization Program (NSP) a brief exclusive opportunity to purchase REOs in certain neighborhoods so these homes can be rehabilitated, rented, resold or demolished.

‘The Stabilization Trust is delighted to be working with HUD Secretary Donovan on the National First Look Program,’ says Craig Nickerson, president of the Stabilization Trust. ‘By serving as the operations "engine' behind the First Look Program, the Stabilization Trust can facilitate the transfer of more foreclosed property for participating financial institutions to local community buyers, thereby accelerating the road to neighborhood recovery.’

The announcement will standardize the acquisition process for NSP grantees, HUD says.
NSP grantees will be immediately notified when a property located within the defined boundaries of NSP target areas becomes available. The grantees will have 24 to 48 hours to express interest in pursuing a specific property. The institutions will also provide NSP purchasers with the opportunity to purchase REO properties at a discount from their appraised value, reflecting the cost savings of a quick sale.

In the event that no NSP grantee exercises its preference to purchase an REO property during the First Look period, the financial institution will follow its normal process to sell the home on the open market.

Saxon, which has partnered with NSP grantees over the past year, says it is pleased to extend the relationship through the Stabilization Trust's First Look two-year partnership, according to CEO Anthony Meola.

"This program provides an avenue for us to extend ownership to an organization or individual committed to furthering neighborhood stability,’ Meola says.

Currently, the FHA offers a complementary pilot program in which NSP grantees receive an exclusive option to purchase so-called HUD Homes at a discount prior to those homes being made available to the investor community.



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