Attorneys

• Michael H. Syme

Related Practices

• Affordable Housing

Michael Syme presented “Homeownership Using Public Housing Capital Funds – The Housing Authority Perspective,” ABA Forum on Affordable Housing - Mixed-Finance Development:  Creating Successful Partnerships, New Orleans, LA, February 22-23, 2002. 

HOMEOWNERSHIP USING PUBLIC HOUSING CAPITAL FUNDS
THE HOUSING AUTHORITY PERSPECTIVE  

Michael H. Syme, Esquire
Cohen & Grigsby, P.C.
412.297.4965 

I. Housing Authority Goals
 A. Stabilization of Neighborhood
  1. Provide Long-Term Residents
 B. Provide Residents with New Opportunities/Options
 C. Develop an Economically Diverse Community
  1. Homeownership with Market Rate Rental Allows the Community to
   Reach Up to 80% of Area Median Income
  2. Allows Buyer to Accumulate Equity (wealth) and Realize It Upon Sale
 D. Intangibles
  1. Homeowners have a vested stake in the Community
  2. Self-policing of Property
  3. Community Wealth
  4. Long-Term Investment
  5. Self-Respect
II. Comparison with Rental Transaction
 A. Tenants

• Rental
  • Brooke Rent
    
  • Decreased income decreases rent
    
  • No maintenance responsibility
    
  • No common area maintenance
    
  • Eviction
    
  • Criminal activity is a breach 
• For-Sale
  
  • Monthly mortgage payment
  • Decrease income means financial hardship or default
  • Maintenance responsibility
  • Responsibility for property
  • Restrictive covenants
    
  • Insurance of property
  • Foreclosure 

 B. Differing Complexities in Transaction
  1. No Regulatory & Operating Agreement, Ground Lease or Management
   Agreement
  2. Developer Fee – Why Build for-Sale Units?
  3. Selling a Home vs. Renting an Apartment
  4. Reserves vs. Money for Improvements and Repairs
  5. Party Walls
III. Sources of Funds
 A. Private Funding
 B. Federal Home Loan Bank (1998 grantees and beyond)
 C. Redevelopment Authorities
 D. Housing Authorities
  1. HOPE VI Grants
  2. Capital Funds
  3. Development Funds
 E. Lower Transactional Costs
 F. Homeownership Leverages Fewer Dollars Per Unit
IV. Second Mortgage  --  "The Little Engine that Could"
 A. Term
 B. Resale Restrictions
 C. Allows Lower Income Buyers to Purchase
 D. Buyers Initial Obligation
  1. Transfer Tax
  2. Title Issues
  3. Escrows (taxes and insurance)
  4. Closing Costs
V. Resident Training (long-term necessity)
 A. Homebuyer Training
 B. Financial Counseling
 C. Post-Closing
  1. Financial Counseling
 D. Homeownership Association
  1. Support Network
  2. Training
  3. Financial Counseling
  4. Waste of Money for Low