MAPS – Oklahoma City’s Metropolitan Area Projects



LesLe Database Sample Record with Fields:

1. Record Last Update Date:

November-30, 2001December 31, 2001

2. Federal Reserve District:

Philadelphia

3. Program Name:

Neighborhood Ownership Recovery Mortgage Assistance Loan Program (NORMAL)

4. Program Start Date:

June 2000

5. Category(ies) (Housing, Banking, Poverty, Infrastructure, Small Bus. …):

Housing

6. Key Words:

Predatory lending; home-refinance loans; home ownership.

7. Program Lead:

Neighborhood Housing Services of Chicago, Inc. (NHSC)

8. Contact Name, Address, Phone Number and E-mail:

James Wheaton, 747 North May Street, Chicago, IL 60622, (312) 491-5101; jwheaton@

9. Project Web Link:



10. Related Web Links (Federal Reserve and Others):

pubs/brochure.htm





a/capubs/tbriefs.html

11. Program Partners:

Financial institutions; City of Chicago; legal-assistance and other attorneys.

12. Program Location:

Chicago

13. Program Geography (Intnl, Natl, Multi-state, state, Regional, Local):

Local

14. Project Results:

During the past five yearsThrough the end of 2001, NHSC has had counseled more than 3,000 home owners, of whom about half 50 percent have beenwere able to keep their homes with NHSC’s assistance. Of the 3,000 owners, , with approximately 30 percent receiving renegotiated-payment plansobtained loan work-outs with their existing lenders or loans with their existing lenders or loans from an NHSC foreclosure-prevention pool that provides loans of up to $10,000, enabling owners to to reinstate their mortgages.

The 3,000 owners include 18 who obtained loans totaling $1.1 million through NORMAL, an anti-predatory lending initiative started by NHSC From inception in June 2000 to August 2001, NHSC closed 18 NORMAL loans totaling $1.1 million. There have been no defaults and no delinquencies as of August 2001.Each of the 18 loans was made after NHSC obtained a negotiated settlement with existing ’s negotiations with lenders. A negotiated settlement is an essential component of the NORMAL program. have reduced loan-payoff amounts by a range of $5000 to $60,000.

NHSC’s negotiations with lenders have reduced loan-payoff amounts by a range of $5,000 to $60,000.

15. Lessons Learned (up to 5?):

• NHSC believes that the “solution” to predatory lending must be a three-part strategy involving consumer education, legislative or regulatory measures, and financial programs such as NORMAL.

• NHSC staff said that replicability of the NORMAL program would depends on a lender or lenders willing to participate in a loan pool and a nonprofit organization that has the capacity to provide counseling and intervention services and can originate and package properly documented loans for later sale to a participating lender.

16. Project Description: (up to 3 pages of text):

In 1996, Neighborhood Housing Services of Chicago, Inc. (NHSC), a community development financial institution, developed a foreclosure-intervention program to respond to a wave of foreclosures on properties with FHA-insured and other mortgage loans. Starting in 1998, NHSC began seeing a pattern of loans in which home equity was rapidly being depleted by refinancings that included fees in excess of 10 percent of the loan amount. The loans, located throughout Chicago, were originated by sub-prime lenders through mortgage brokers. NHSC became concerned that a proliferation of such loans could undermine its 25 years’ work in developing affordable housing and preparing low- and moderate-income people for home ownership. Therefore, iIt developed NORMAL as a tool to maintain the viability of Chicago’s neighborhoods.

NORMAL’s purpose is to provide counseling and intervention to preserve home ownership and access to more affordable loans. NORMAL focuses on owner-occupants of one- to four-unit residential buildings in Chicago who meet one of three criteria. The owners:: (1) They have purchased or refinanced a house in the past three years with financing terms that appear overpriced for the customer’s credit history,; (2) they’ve have negotiated refinancings that involve such characteristics as “flipping” (repeated refinancings in a short time), equity-stripping, or excessive and unreasonable fees,; or (3) they’ve have contracted for home improvements that were not completed or were substandard.

NHSC’s assistance consists of three main elements: analyzing owners’ loans, counseling owners, and negotiating with existing lenders. NHSC staff members and assisting attorneys attempt to negotiate a payment plan or a reduced- payoff amount with lenders or servicers and help owners obtain conventional refinance loans. Twenty of NHSC’s 120 staff members are engaged full-time or part-time in some aspect of the initiative. NHSC staff spends up to 55 hours per case working with owners and attorneys, negotiating with loan servicers and lenders, and providing post-NORMAL loan credit counseling.

NHSC staff members sometimes refer an owner to NORMAL’s loan committee. NORMAL loan applications are not taken on request. NORMAL has become the centerpiece of an NHSC home-ownership preservation initiative that also includes foreclosure-intervention counseling and strategies, financial education, pre-purchase and refinance counseling, and ongoing individual and group education about credit.

Residents become aware of availability of NHSC assistance through a public-awareness campaign conducted by the city of Chicago, referrals from attorneys, and a network of block clubs, community organizations, and church groups.

NHSC, Chicago-area lenders, and the city of Chicago worked together to develop a pilot program for NORMAL pilot program, which was launched in June 2000. Sixteen financial institutions committed $2.2 million to a NORMAL loan pool, while the city of Chicago committed $1.2 million for operational expenses and a loan-loss reserve equal to 6 percent of loan originations.

In May and June 2000, the 16 financial institutions participating in the NORMAL loan pool signed a participation agreement with NHSC. Participants also include the city of Chicago and the Neighborhood Reinvestment Corporation. The participants made commitments totaling $2.2 million, in the form of 22 shares in the NORMAL loan pool, at $100,000 per share. NHSC makes a monthly capital call to the participants, which then fund NORMAL loans on the basis of each participant’s number of shares.

Each NORMAL loan is fully participated to the investing lenders, on the basis of the number of shares to which each committed, at the time of the capital calls. NHSC originates and closes NORMAL loans through NHSC’s nonprofit residential-mortgage licensee, Neighborhood Lending Services, Inc. (NLS). NHSC uses NLS, using two lines of credit made available by lenders for NHSC’s various lending programs, and then permanently funds each loan through the monthly capital calls to NORMAL participants. The NORMAL loan committee, which meets monthly, consists of representatives of five institutions and the city’s department of housing.

NHSC conducts a credit and title investigation, appraisal, property inspection, and income verification, according to standard lending practice. In addition, it compiles a case study for the NORMAL loan committee that describes the sequence of events resulting in the borrower’s present situation. LTV is flexible but generally is 100 percent or less of appraised value. The maximum debt-to-income ratio is 45 percent. Borrower’s household income must be less than 120 percent of area median income.

NHSC obtains a first-mortgage lien on the borrower's residence. Occasionally, NHSC also makes a subordinate loan for house repairs and receives a second lien. The first-mortgage loans are made for 30 years at fixed- rates by NLS NHSC’s nonprofit residential-mortgage licensee, Neighborhood Lending Services, Inc. (NLS), with an interest rate of 50 basis points over Fannie Mae’s 60-day rate. NHSC charges the borrower a $15 application fee,; a 1 percent loan origination fee or $500 (whichever is greater);, and customary title and recording fees at closing.

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3. Program Name: MAPS – Oklahoma City’s Metropolitan Area Projects

Neighborhood Ownership Recovery Mortgage Assistance Loan Program (NORMAL)

MAPS is a $300 million-plus downtown development plan building new facilities for visitors and residents, and addressing several long-term needs for meeting planners. Substantial renovations were made to existing facilities including a convention center and a concert hall. New destination facilities were also created including a multi-purpose 20,000 seat arena, a 15,000 seat baseball park, a downtown canal, and a library/learning center. This is a public infrastructure investment in the city on a scale not seen since its founding.

NORMAL is a foreclosure-intervention program to respond to a wave of foreclosures on properties with FHA-insured and other mortgage loans.

Federal Reserve District(s): Kansas City

Program Location: Oklahoma City, OK Program Geography: Local

4. Program Start Year: 20001993 Program End Year: On-Going2003

Lessons Learned Highlightss:

1. Have a Predatory lending solutions must include financial intervention.

2. vision and a project champion

3. Bundle projects to enhance community buy-in

4. Replicability depends lender willingness and nonprofit capacity.Good planning is key

5. Show results early and demonstrate quality and transparent oversight

Project Description:

On December 14, 1993, Oklahoma City officially launched a downtown development plan, the Metropolitan Area Projects (MAPS) plan, ultimately leading to some $350 million in city revenues (including at least $50 million in investment income) being spent on infrastructure. On that date, 54% of voters agreed to one-cent sales tax for five years that would raise approximately $50 million a year for five years. A second vote – approved by 68% of voters in 1998 extended the tax for six months to raise additional funds to cover some cost overruns and future operating expenses.

MAPS consists of nine distinct components. Seven are fully operational. The Library and Learning Center is now scheduled for completion in the fall of 2003. The last project - a set of dams and locks to convert the North Canadian River into a seven-mile long series of navigable lakes – is also expected to be concluded by the end of 2003.

| | |Approximate |Date |

| |Project |Cost in $Mill.l. |Operational |

|1 |Oklahoma City Fairgrounds renovations |14.0 |Fall, 1997 |

|2 |New 15,000 seat AAA baseball park |34.2 |Spring, 1998 |

|3 |Bus trolley system |5.3 |June, 1999 |

|4 |Mile long Bricktown Canal |25.7 |July, 1999 |

| | |Approximate |Date |

| |Project |Cost in $Mill. |Operational |

|5 |Convention Center renovation |63.1 |August, 1999 |

|6 |Civic Center Music Hall renovation |52.8 |September, 2001 |

|7 |New 20,000 seat multi-purpose arena |85.7 |April, 2002 |

|8 |New Library and Learning Center |21.5 |Fall, 2003* |

|9 |North Canadian River project |54.3** |2003* |

| | Total |356.6 | |

356.

357. * Estimated completion dates.

** Includes $15 million in federal funds.

Project Results:

Construction is now finishing on the last of the MAPS projects. All have been fully funded and the city still has resources set aside for operations and maintenance.

The public infrastructure has been accompanied by an estimated $600 million in private development downtown. This includes an art museum, a large up-scale hotel, numerous dining and entertainment facilities in the Bricktown area, and nearly 300 units of upscale housing in the adjacent Deep Deuce area. Downtown development is also underway on a large retail and entertainment center, a major corporate office, and another hotel. Additional housing and hotel rooms are in the planning stage.

Some of the private development would undoubtedly occurred without the MAPS investment. But certainly, that private investment would have been much smaller in scope and much slower to develop. An additional result of the project is renewed vitality in the city as well as improvement in the image of the community by both residents and outsiders.

Lessons Learned:

• Have a vision and a project champion. In the years immediately before the MAPS election, area voters twice approved one-cent sales taxes to provide incentives for the location of big employers to the area. In each case, however, the project located elsewhere. Recognizing that citizens were will to accept tax increases for development, and that the stagnant economy – especially in the downtown area – needed development, an inclusive group of Oklahoma City leaders developed a wish list of projects that would enhance the city. That list was pared to the nine projects that were ultimately developed. Ron Norick, the mayor at that time, was instrumental in getting the leaders to coalesce around the projects and agree that an all or nothing approach be brought to the electorate. The mayor served as a cheerleader and project champion during the campaign. He also continued this role during the first two years when taxes were being levied and a consulting firm was being paid to coordinate the development but citizens saw no physical evidence of development. Being able to contain expectations while at the same time articulating a vision was essential to maintaining public support.

• Bundle projects to enhance community buy-in. There were two main concerns that led to the all or nothing bundling of the nine projects. One was that several individual projects might be voted down leaving certain supporters disenfranchised and unwilling to support those projects which did receive voter approval. A second was that unless the entire package was adopted, there wouldn’t be enough critical mass to make a difference in the city. The mayor was able to keep his coalition united. Indeed, when public sentiment seemed to go sour as cost overruns threatened the completion of MAPS and the NHL rejected Oklahoma City as a site for league expansion in 1997, the mayor agreed not to run for reelection and instead focused on winning voter approval of the six-month extension.

• Good planning is key. MAPS hasMAPS have both a private architectural/engineering firm serving as program coordinator and a mandated 21-member citizen oversight board appointed shortly after voters approved the projects. The board led the led the one-year long public review process for the MAPS Master Plan which the city council approved in early 1995. The board continues to review project components and financing, making recommendations to the City Council. Day to day operations are handled by the MAPS office which is staffed by city employees. Earmarking the use tax increments for project maintenance and repair expenses was also an additional sign of good planning as so often these important expenses are forgotten and infrastructure is left to decay..

• Show results early and demonstrate quality and transparent oversight. As mentioned earlier, during the first two years, taxes were being levied and a consulting firm was being paid to coordinate the development but citizens saw no physical evidence of development. This is one drawback with needing all of the money in hand proceeding to spend (which does not occur with debt financing). Still, once individual components began, the staggered start time for projects let people experience a string of groundbreakings. That citizens could sit in the baseball park and stroll along the canal in 1998 and 1999 had to have made these residents more tolerant of construction delays for the Civic Center Music Hall and the Library and Learning Center. Public confidence in the city’s ability to administer large development projects even led the citizens in November of 2002 to approve a $500 million “MAPS for Kids” sales tax devoted to school infrastructure modeled after the original MAPS.

•

Show results early and demonstrate quality and transparent oversight. As mentioned earlier, during the first two years, taxes were being levied and a consulting firm was being paid to coordinate the development but citizens saw no physical evidence of development. This is one drawback with needing all of the money in hand proceeding to spend (which does not occur with debt financing). Still, once individual components began, the staggered start time for projects let people experience a string of groundbreakings. That citizens could sit in the baseball park and stroll along the canal in 1998 and 1999 had to have made these residents more tolerant of construction delays for the Civic Center Music Hall and the Library and Learning Center. Public confidence in the city’s ability to administer large development projects even led the citizens in November of 2002 to approve a $500 million “MAPS for Kids” sales tax devoted to school infrastructure modeled after the original MAPS.

In 1996, Neighborhood Housing Services of Chicago, Inc. (NHSC), a community development financial institution, developed a foreclosure-intervention program to respond to a wave of foreclosures on properties with FHA-insured and other mortgage loans. Starting in 1998, NHSC began seeing a pattern of loans in which home equity was rapidly being depleted by refinancings that included fees in excess of 10 percent of the loan amount. The loans, located throughout Chicago, were originated by sub-prime lenders through mortgage brokers. NHSC became concerned that a proliferation of such loans could undermine its 25 years’ work in developing affordable housing and preparing low- and moderate-income people for home ownership. Therefore, it developed NORMAL as a tool to maintain the viability of Chicago’s neighborhoods.

NORMAL’s purpose is to provide counseling and intervention to preserve home ownership and access to more affordable loans. NORMAL focuses on owner-occupants of one- to four-unit residential buildings in Chicago who meet one of three criteria. The owners: (1) have purchased or refinanced a house in the past three years with financing terms that appear overpriced for the customer’s credit history, (2) have negotiated refinancings that involve such characteristics as “flipping” (repeated refinancings in a short time), equity-stripping, or excessive and unreasonable fees, or (3) have contracted for home improvements that were not completed or were substandard.

NHSC’s assistance consists of three main elements: analyzing owners’ loans, counseling owners, and negotiating with existing lenders. NHSC staff members and assisting attorneys attempt to negotiate a payment plan or a reduced-payoff amount with lenders or servicers and help owners obtain conventional refinance loans. Twenty of NHSC’s 120 staff members are engaged full-time or part-time in some aspect of the initiative. NHSC staff spends up to 55 hours per case working with owners and attorneys, negotiating with loan servicers and lenders, and providing post-NORMAL loan credit counseling.

NORMAL has become the centerpiece of an NHSC home-ownership preservation initiative that also includes foreclosure-intervention counseling and strategies, financial education, pre-purchase and refinance counseling, and ongoing individual and group education about credit.

Residents become aware of availability of NHSC assistance through a public-awareness campaign conducted by the city of Chicago, referrals from attorneys, and a network of block clubs, community organizations, and church groups.

NHSC, Chicago-area lenders, and the city of Chicago worked together to develop a pilot program for NORMAL, which was launched in June 2000. Sixteen financial institutions committed $2.2 million to a NORMAL loan pool, while the city of Chicago committed $1.2 million for operational expenses and a loan-loss reserve equal to 6 percent of loan originations.

In May and June 2000, the 16 financial institutions participating in the NORMAL loan pool signed a participation agreement with NHSC. Participants also include the city of Chicago and the Neighborhood Reinvestment Corporation. The participants made commitments totaling $2.2 million, in the form of 22 shares in the NORMAL loan pool, at $100,000 per share.

Each NORMAL loan is fully participated to the investing lenders, on the basis of the number of shares to which each committed, at the time of the capital calls. NHSC originates and closes NORMAL loans through NHSC’s nonprofit residential-mortgage licensee, Neighborhood Lending Services, Inc. (NLS). NHSC uses two lines of credit made available by lenders for NHSC’s various lending programs and then permanently funds each loan through the monthly capital calls to NORMAL participants. The NORMAL loan committee, which meets monthly, consists of representatives of five institutions and the city’s department of housing.

NHSC conducts a credit and title investigation, appraisal, property inspection, and income verification, according to standard lending practice. In addition, it compiles a case study for the NORMAL loan committee that describes the sequence of events resulting in the borrower’s present situation. LTV is flexible but generally is 100 percent or less of appraised value. The maximum debt-to-income ratio is 45 percent. Borrower’s household income must be less than 120 percent of area median income.

NHSC obtains a first-mortgage lien on the borrower's residence. Occasionally, NHSC also makes a subordinate loan for house repairs and receives a second lien. The first-mortgage loans are made for 30 years at fixed rates by NLS, with an interest rate of 50 basis points over Fannie Mae’s 60-day rate. NHSC charges the borrower a $15 application fee, a 1 percent loan origination fee or $500 (whichever is greater), and title and recording fees at closing.

14. Project Results:

Through the end of 2001, NHSC had counseled more than 3,000 homeowners, of whom about half were able to keep their homes with NHSC’s assistance. Of the 3,000 owners, approximately 30 percent obtained loan work-outs with their existing lenders or loans from an NHSC foreclosure-prevention pool that provides loans of up to $10,000, enabling owners to reinstate their mortgages.

The 3,000 owners include 18 who obtained loans totaling $1.1 million through NORMAL, an anti-predatory lending initiative started by NHSC in June 2000. Each of the 18 loans was made after NHSC obtained a negotiated settlement with existing lenders. A negotiated settlement is an essential component of the NORMAL program.

NHSC’s negotiations with lenders have reduced loan-payoff amounts by a range of $5,000 to $60,000.

Lessons Learned:

• Predatory lending solutions must include financial intervention. NHSC believes that the “solution” to predatory lending must be a three-part strategy involving consumer education, legislative or regulatory measures, and financial programs such as NORMAL.

• Replicability depends lender willingness and nonprofit capacity. NHSC staff said that replicability of the NORMAL program depends on a lender or lenders willing to participate in a loan pool and a nonprofit organization that has the capacity to provide counseling and intervention services and can originate and package properly documented loans for later sale to a participating lender.

7. Program Lead:

Neighborhood Housing Services of Chicago, Inc. (NHSC)City of Oklahoma City

11. Program Partners:

Financial institutions; City of Chicago; legal-assistance and other attorneys.Frankfurt-Short-Bruza Associates (serving as program coordinator) and other private sector developers

8. Contact Name, Address, Phone Number and E-mail:

James WheatonEric Wenger eric.wenger@

200 N Walkerjwheaton@

747 North May Street (312405) 491297-51013461

ChicagoCity of Oklahoma City, IL 60622

Oklahoma City, OK 73102

Project Web Link:



10. Related Web Links:

none



resources/predlend

a/capubs/tbriefs.html

Category: Key Words:

Public infrastructureCommunity Facilities, Public Infrastructure Public infrastructure, urban,

downtown development, planning

Record Last Update Date:

DJuneecember 831, 20013

This document was obtained from the Federal Reserve Bank of Chicago Website at cedric/lesle/index.cfm. The Federal Reserve System attempts to verify the information presented, but cannot guarantee the accuracy of any information nor does the inclusion of any particular project or program represent an endorsement by the Federal Reserve System. The views expressed herein do not necessarily represent the views of the Federal Reserve System. For additional terms and conditions that apply the use of this and other information obtained from the Federal Reserve Bank of Chicago Website please review the Privacy Policy and Legal Disclaimer found at the Website address listed above.5. Category:

Housing

6. Key Words:

Predatory lending; home-refinance loans; home ownership.

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