Using Foreclosure Intervention to Increase Green Homes
This project also has a Changeshop where you can read more about its latest progress.
Go to Changeshop: Foreclosure Intervention Can Increase Green Homes.
We want to leverage the residential foreclosure crisis in such a way that not only can more people keep their homes, but the quantity of green homes in the community will actually increase.
The project has two main features. First, we will buy first mortgages on foreclosure-threatened homes at discounts lenders would suffer if the home were foreclosed on, and then refinance the owners at current low interest rates. The refinance package will include green retrofits.
Second, we will buy foreclosed homes at bulk rates, sustainably rehabilitate them and make them available to clients of public and nonprofit housing agencies as well as people displaced by foreclosure.
We will also offer foreclosure counseling to include low-fee short sale assistance and free home energy audits.
About You
About You
First Name
William
Last Name
Metzker
About Your Organization
Organization Name
Terradigm
Organization Website
Organization Phone
503-913-0098
Organization Address
10260 SW Greenburg Rd., Ste. 400, Portland, 97223
Organization Country
United States, OR, Washington County
Country where this project is creating social impact
United States, OR, Washington County
Is your organization a
Not registered
How long has your organization been operating?
1‐5 years
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Innovation
Entry Form title
Using Foreclosure Intervention to Increase Green Homes
Describe your project
We want to leverage the residential foreclosure crisis in such a way that not only can more people keep their homes, but the quantity of green homes in the community will actually increase.
The project has two main features. First, we will buy first mortgages on foreclosure-threatened homes at discounts lenders would suffer if the home were foreclosed on, and then refinance the owners at current low interest rates. The refinance package will include green retrofits.
Second, we will buy foreclosed homes at bulk rates, sustainably rehabilitate them and make them available to clients of public and nonprofit housing agencies as well as people displaced by foreclosure.
We will also offer foreclosure counseling to include low-fee short sale assistance and free home energy audits.
What stage is your project in?
Idea phase
What makes your project unique as it relates to the theme of this competition?
This project integrates and mitigates two social problems: The negative impact of foreclosures on people, communities and lending institutions, and the availablity of and access to sustainably-built homes. Green homes are healthier, more durable and cheaper to maintain than traditional homes, yet "green" carries an upfront building cost that prevents many from enjoying the lower-cost life cycle and health benefits.
Pre-foreclosure intervention through loan workout can be used to lower that cost, increase the quantity of green houses and keep financially-stressed owners in their homes. Homes already foreclosed can be sustainably rehabilitated and made available to displaced people and housing nonprofit clients who may otherwise be unable to afford them.
A private sector background in real estate finance, marketing and development gives us a unique perspective generally not available to housing nonprofits. Besides building infill subdivisions, our experience includes buying mortgages as well as servicing them for others.
Being a licensed brokerage offers several advantages. Our foreclosure counseling can include low-cost short sale assistance, which positively impacts the owners' credit rating. We can list our rehabbed homes in the local MLS. As a trade ally of the Energy Trust of Oregon (ETO), we can offer the benefits of a large network of green service providers and products, as well as the ETO's energy audit program.
Partnerships with other housing agencies can enhance the range and value of the collective services offered.
Share the story of the founder and what inspired the founder to start this project
During an Earthadvantage green building seminar, founder Bill Metzker suddenly thought, "We can do this." This epiphany had waited since the first Earth Day in 1970. He had long hoped to make a positive impact on the environment, but the combination of mounting data on worldwide environmental destruction and public apathy made any effort feel ineffectual. But with advances in green building techniques and materials,it suddenly looked as though change was possible.
At the same time, having lived through the savings and loan crisis in the 1990's, he was becoming ever more frustrated over the real estate meltdown and foreclosures and how little was being done to fight back. He had just set up his own brokerage for the sole purpose of foreclosure prevention, but competed poorly against foreclosure scammers and brokerages pushing short sales.
About the same time, a friend told him of her interest in Main Street, how historical preservation sustainably done might advance economic revitalization. Seeing her again at a Go Green Conference, discussing the issues again and learning of broad public and private efforts to incorprate sustainability into economic and community development, the earlier "we can do this" environmental epiphany merged with the foreclosure crisis. Lenders lose 30% and higher of principal in foreclosures. Buying threatened loans could keep owners in the home, save the lenders time and money, stop foreclosures and, with green retrofits, make a greener house. If you save the house, you can save the street, the neighborhood, and the community.
Social Impact
This Entry is about (Issues)
Who or what (i.e. youth, women, environment, etc.) benefits from your project, and why is your project critical?
Immediate beneficiaries are foreclosure-threatened owners in lower- to middle-income areas who will keep their homes. Their neighborhoods will stabilize and facilitate sustainable economic revitalization, whether urban renewal or NTHP Main Street.
These owners will also benefit from reduced energy costs. So will end users of post-foreclosure homes bought and sustainably rehabilitated with locally-produced solar panels and other products. These users will be clients, both buyers and renters, of local housing agencies who may otherwise have been unable to enjoy the health and energy benefits of green homes.
The neighborhoods will be those city planners have targeted for revitalization. Sustainably stabilizing housing will help this occur and may even prevent blight.
Please describe how your project has been successful and how that success is measured.
A significantly lower number of period-over-period foreclosed homes must be demonstrated, using MLS statistics. Second, the Energy Trust of Oregon should be able to show an increase in its log of energy-audited homes. Third, the Earthadvantage Insititute (a nonprofit focused on green building professionals) should be able to certify post-foreclosure homes that have been sustainably retrofitted in number and quality.
Public and nonprofit housing agency client families displaced by foreclosure may remain in their school district neighborhoods by moving into the rehabbed homes. First-time buyers will find green homes priced similarly to traditional homes. It's possible that clients of other agencies, such as women's shelters and those helping homeless families, may also use the homes.
At the end of five years, we will show conclusively that our initiative will have been instrumental in the local public and private effort to achieve economic vitality, environmental responsibility, and social equity. As many as 200 houses will have reduced their carbon footprints, made healthier and made available to people who may otherwise not have been able to afford them.
Portland Metro is winning national attention for its emphasis on sustainable development. By partnering with the various public and private stakeholders, we can "grease the skids" for sustainable economic progress going forward. The number of jobs the initiative creates should be countable, both because of the agency staff and the workers needed for a sustained, consistent construction effort.
How many people have been impacted by your project?
Fewer than 100
How many people could be impacted by your project in the next three years?
101‐1000
What barriers might hinder the success of your project and how do you plan to overcome them?
Locating funding for mortgage acquisition is essential. Most foreclosure remediation funding doesn't contemplate pre-foreclosure mortgage purchase. An added challenge is the nature of the funding. If it came in the form of grants, then we would have to locate a partner to house and service the mortgages. But the interest income would fund our operations. If, however, funding came in the form of loans, the funder would see return of principal and enjoy interest income--a novel form of funding. We may seek a partnership with a private investor if an innovative nonprofit funding source can't be located.
Enterprise Cascade, a nonprofit bank, may also be a resource.
How will your project evolve over the next three years?
We start with hard planning with city development and housing departments in order to prioritize neighborhoods, whether for blight prevention, urban renewal or Mainstreet preservation. We must also create collaborative partnerships with nonprofit agencies who already have a client base of both distressed owners and end users. Economical retrofit criteria for existing homes must be developed. Relationships with FNMA and other lender asset managers will be established.
Green rehabilitating of foreclosed properties will occur in year two, as financing is lined up. By year's end, we will add community development staffing to liaise with city and nonprofit planners to help sustainably revitalize the target neighborhoods. Year three will see a shift to community economic revitalization.
Sustainability
For each selection, please explain the financial and non-financial support from each
We anticipate national and local NGOs to provide significant support. Neighborworks America, for example, offers grants whose criteria match our mission. It provides top quality staff training as well. Local NGOs from the Energy Trust of Oregon to housing nonprofits can provide board support, planning and collaboration, as well as clients and services.
Banks, title companies and others have community development departments that traditionally support efforts similar to ours. We expect board and volunteer help from these groups as well as a share of grants they typically offer.
As a licensed brokerage, we will have customer base provided by the broker network we will brand. We will also have income from short sale fees. We also expect to work as a listing agent for asset managers. These sources of income should provide half or more of our operating income.
Financial support from city and county agencies will not be significant, given the current climate, but collaboration and board service from them will be extremely important. These groups work with developers for their own goals, and we expect to help and be helped.
From time to time, the national and state governments funnel projects and funding to nonprofits, cities, states and counties. For example, the State of Oregon has received $120 million through HUD's Neighborhood Stabilization Program. We should be a recipient of some of these funds.
How do you plan to grow and/or diversify your base of support in the next three years?
One of the more intriguing aspects of this initiative is its scalablity. It can work for a street, a school district, a neighborhood and an entire community. We intend to start with either a Washington or Multnomah county neighborhood, and then expand into the greater community. Because of our partnerships with public and nonprofit agencies and with pertinent businesses, the effort can be expanded and replicated as human resource finds a demand.
Key support will have to grow from the general public, and it will come with the success of the broker referral network, which will work like this: We will market our nonprofit work to the public and and identify the brokers in the network. We will brand only a few brokers, who must provide a high level of service transparently priced. In exchange for our branding, they will agree to pay us a referral fee from each of their listing transactions, which will flow from our cause marketing public campaign. As real estate sales in general grow, so will our support base.
We will also market foreclosed properties on a flat fee basis for lender clients. As we plan to buy in bulk for rehabilitating, so will we list properties in bulk, at bulk rates, for amenable lender REO asset managers.
Our late stage growth will depend on the private, public and nonprofit development groups then existing. Our ability to adapt will also be a factor. For example, if a microlending NGO can provide services, or conversely, we should be able to accomodate one another.
Collaboration
Please select your areas of intervention in the home improvement market
Financing, Green housing, Urban development.
Is your innovation addressing barriers in the home improvement/progressive housing market? If so, please describe in detail your mechanisms of intervention
The first barrier we attack is the upfront cost associated with green building. Green retrofits are included in refinance packages offered in our foreclosure prevention refinance package. Since lenders experience significant principal losses in short sales and foreclosures, we will offer to buy the mortgages at 20% to 30% (and higher) discounts, depending on the loan to value ratios, and refinance the owners, but with a green twist.
Second, by buying foreclosed properties at bulk rates, we can sustainably rehabilitate them and offer a finished product whose market approximates traditional homes'. By partnering with public and nonprofit housing agencies, we can make green homes available to first-time buyers and financially distressed people who are typically challenged by green buildings' upfront cost and may not otherwise enjoy the power energy cost and healthy lifestyle of sustainable houses.
But we also address the neagative impact of distressed properties on neighborhoods and economic revitalization. Not only do we bring acceptable principal writedown into the equation, but--as a licensed brokerage--we can offer foreclosure prevention other agencies cannot, as well as augment the services thiose agencies currently provide. Historically, economic growth is hampered without a stable housing market. We intend to help provide that.
Are you currently collaborating with private companies, or have you partnered with private companies in the past? With which companies?
We are currently a licensed real estate brokerage who intends to re-charter as a 501 (c)(3) nonprofit.
We will partner with at least two general building contractors who are Earthadvantage trained and are, as we, Energy Trust of Oregon trade allies.
We made need a one or more architects or engineers. Furthermore, ever broker in our network is an independent contractor, many working for brokerage firms.
Please describe in detail the nature of the partnership(s)
Our construction projects will vary from retrofits of a few thousand dollars to major rehabilitation to include photovoltaic systems and engineered landscaping. For the smaller projects, we will need to have several smaller contractors whom we can trust and offer consistent work to. For the larger projects, we will need to partner with reliable contractors who have the ability to draft a Scope of Work (plans and specifications) and can finish on time and within budget. In the alternative, we may need to partner with an architect or engineer who can draft the Scope of Work and provide third party oversight.
The independent broker network benefits from our cause-marketed and high service branding, and we benefit from them for funding.
Select the unit(s) with which the partnership was formed
Foundation of the company, Other (please specify).
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