Note From Warren Davis

 

The focus for most advocates in our space is affordable housing, basically new construction single family or apartments.   The purchase market affordable or not is by far very, very small in comparison to the existing homeowner market.  Of the existing homeowner market we have a very small portion in comparison - luxury homes.  Most of the luxury stock are either renovated or or in very good shape. Then you have the segment of housing stock which is owned by the lower income brackets and they are still a small portion when compared to the middle class homeowner market (MCHM).  The MCHM represent the largest portion of housing stock by far and most of these homes are near or over 100 years old.  Most are in disrepair and very inefficient. The MCHM are the target of loan modifications, kind of a bankruptcy for the house.  The Village Network is focused on the MCHM, the largest by far of the housing stock, most of which have little to no equity and very old homes in disrepair. Is this an infrastructure issue not being addressed in the USA? 

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Way to many of the MCHM have gone to their bank to get a loan to address major repairs/improvements only to be turned down to lack of equity.  Lack of equity has never stopped the investors flipping homes. Those properties have no equity but they readily and easily get loans based on the properties Future Value or After Repair Value (ARV).  That is why we advocate to bring awareness to consumer renovation programs (CRPs) such HUD's FHA203K and Fannie Mae Home Style, which have always funded on ARV and have been doing so for 20+ years, still today virtually UNKNOWN!
 

We also advocate CRP's contribute to raising property values by recognizing their Value After Rehabilitation (VAR) as a COMP.

 

Scenario:

Investor buys a property for $50,000 puts in $100,000 and it appraise and sells for $250,000, Homeowner has a loan and payment based on $250,000.  The property creates value for $250,000 

Home Buyer buys same property for $50,000 puts in $100,000 and it appraises for $250,000, Home Buyer now Homeowner has a loan and payment based on $250,000.  The property creates value for $50,000 because rule says that was the sale. It lowers property values in area. But in the case of HUD end loan is federally insured for $250,000 so if owner forecloses the bank is taken care of.  
 

We advocate to hold true that CRPs are the "... primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization​..."

               U.S. Department of Housing and Urban Development
                Secretary Ben Carson

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Warren Davis

Founder Village Network, NFP

773-426-2896