American Homeowner Preservation
Encyclopedia
American Homeowner Preservation Inc. (also known as AHP) was established in October 2007 as non-profit organization focused on helping homeowners at risk of foreclosure stay in their homes. The California
based group believed that prices on the West Coast still had a long way to drop, so efforts were focused in Ohio
. Thus, in May 2008, an office was opened in Cincinnati. In August 2008, AHP received their 501(c)(3) designation as a nonprofit from the Internal Revenue Service. Envisioning that AHP would be financed with tax exempt bonds, AHP sought the assistance of the Summit County Port Authority. Summit County
Port Authority unanimously passed an inducement resolution contemplating the issuance of 12.5 million dollars in tax-exempt bonds. In the present foreclosure crisis, Ohio
has traditionally been one of the states with the largest amount of foreclosure
s and sheriff sales according to Realty Trac, the leading source in foreclosure and REO real estate. However, citing concerns about the Board and backers of AHP along with a challenged bond market the bond resolution was rescinded in February 2009. American Homeowner Preservation transitioned into a for-profit organization in July 2009, seeking to match investors with homeowners at risk of losing their homes.
(which was declining) and she fell behind on her mortgage
payments. Facing foreclosure, Emily’s lender indicated a willingness to accept a short sale
offer. A short sale is the process by which a loan holder accepts less than the principal sum owed on a loan for one reason or another. Often, the process is done in real estate
so that lenders can recoup some of the value on an existing loan rather than foreclosing on a home and receiving far less.
Desperate to stay in her home with her three children, Emily came up with an idea: if only she could find someone to purchase her home on a short sale and lease
it back to. Emily would be able to stay in her home and her investor
would have a stable rental real estate investment
. While Emily was unable to find an investor among her friends and family willing to help her situation, the idea for AHP was born.
Port Authority. In September 2008, SCPA voted unanimously to induce up to 12.5 million in bonds to fund AHP. AHP proceeded to market their program in the greater Akron region and—by year-end—close to 300 families had signed purchase contracts to sell their homes to AHP.
However, the Port Authority then became anxious. Among other concerns, SCPA was concerned with Emily having a foreclosure on her record and one with one of AHP's consultants, BTC. BTC stands for Beat the Creditor, an organization ran by CEO Jorge Newbery
. Newbery
has tremendous experience battling with mortgage
companies and creditors as a result of taking on high-profile distress situations and creating solutions. BTC’s strategy of creating leverage
to generate big discounts from lenders and creditors is uniquely essential to the success of AHP’s model. These discounts are crucial to the AHP model. In February 2009, the Summit County Port Authority ultimately rescinded AHP’s bond resolution.
was rejected by the Summit County Port Authority, American Homeowner Preservation sought new ways to fund its endeavors. Jorge Newbery
transitioned from a Consultant to American Homeowner Preservation Inc. to Director of American Homeowner Preservation LLC, a for-profit which took over the nonprofit AHP’s mission. Instead of using bond funding to purchase homeowners homes, the program now matches investors to purchase the homes on short sale
. 1
related issues: a homeowner is in default of their mortgage, a homeowner is in foreclosure, a homeowner is facing a sheriff sale, a homeowner owes more on their home than it is actually worth. An AHP negotiator will then work with the homeowner to obtain all necessary information that will be needed to contact their lender such as their loan number, address and other pertinent information. Homeowners will then sign an authorization
form granting American Homeowner Preservation the ability to speak to their lender on their behalf.
, home appraisals and requesting a broker appraisal opinion). Supporting documentation will also show why the homeowner is having trouble affording their present mortgage
payments. Negotiating with a mortgage
lender can sometimes be a long process that may involve several counter offers.
The investor and homeowner will sign recorded lease and option agreements so that all parties know their rights.
period, the homeowner may repurchase their home from their investor. The option price that the homeowner may repurchase their home at it agreed upon prior to the short sale.
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
based group believed that prices on the West Coast still had a long way to drop, so efforts were focused in Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
. Thus, in May 2008, an office was opened in Cincinnati. In August 2008, AHP received their 501(c)(3) designation as a nonprofit from the Internal Revenue Service. Envisioning that AHP would be financed with tax exempt bonds, AHP sought the assistance of the Summit County Port Authority. Summit County
Summit County, Ohio
Summit County is an urban county located in the state of Ohio, United States. As of the 2000 census, the population was 542,899. In the 2010 Census the population was 541,781. Its county seat is Akron...
Port Authority unanimously passed an inducement resolution contemplating the issuance of 12.5 million dollars in tax-exempt bonds. In the present foreclosure crisis, Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
has traditionally been one of the states with the largest amount of foreclosure
Foreclosure
Foreclosure is the legal process by which a mortgage lender , or other lien holder, obtains a termination of a mortgage borrower 's equitable right of redemption, either by court order or by operation of law...
s and sheriff sales according to Realty Trac, the leading source in foreclosure and REO real estate. However, citing concerns about the Board and backers of AHP along with a challenged bond market the bond resolution was rescinded in February 2009. American Homeowner Preservation transitioned into a for-profit organization in July 2009, seeking to match investors with homeowners at risk of losing their homes.
Creation of American Homeowner Preservation
AHP was created in 2007 as the result of personal crisis: AHP founder Emily Gomez endured a significant income decrease. As a member of the mortgage industry, her income was dependent on the economyEconomy of North America
The economy of North America comprises more than 528 million people in its 23 sovereign states and 15 dependent territories...
(which was declining) and she fell behind on her mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
payments. Facing foreclosure, Emily’s lender indicated a willingness to accept a short sale
Short sale (real estate)
A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real...
offer. A short sale is the process by which a loan holder accepts less than the principal sum owed on a loan for one reason or another. Often, the process is done in real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
so that lenders can recoup some of the value on an existing loan rather than foreclosing on a home and receiving far less.
Desperate to stay in her home with her three children, Emily came up with an idea: if only she could find someone to purchase her home on a short sale and lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
it back to. Emily would be able to stay in her home and her investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
would have a stable rental real estate investment
Real estate investing
Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development...
. While Emily was unable to find an investor among her friends and family willing to help her situation, the idea for AHP was born.
AHP Funding
AHP initially sought funding with tax exempt bonds issued by the Summit CountySummit County, Ohio
Summit County is an urban county located in the state of Ohio, United States. As of the 2000 census, the population was 542,899. In the 2010 Census the population was 541,781. Its county seat is Akron...
Port Authority. In September 2008, SCPA voted unanimously to induce up to 12.5 million in bonds to fund AHP. AHP proceeded to market their program in the greater Akron region and—by year-end—close to 300 families had signed purchase contracts to sell their homes to AHP.
However, the Port Authority then became anxious. Among other concerns, SCPA was concerned with Emily having a foreclosure on her record and one with one of AHP's consultants, BTC. BTC stands for Beat the Creditor, an organization ran by CEO Jorge Newbery
Jorge P Newbery
Jorge P. Newbery is a Californian-born entrepreneur who is at the forefront of the campaign to rescue homeowners from the current housing crisis. As Director of American Homeowner Preservation LLC, a Cincinnati-based foreclosure prevention firm, Newbery works to keep distressed homeowners in their...
. Newbery
Jorge P Newbery
Jorge P. Newbery is a Californian-born entrepreneur who is at the forefront of the campaign to rescue homeowners from the current housing crisis. As Director of American Homeowner Preservation LLC, a Cincinnati-based foreclosure prevention firm, Newbery works to keep distressed homeowners in their...
has tremendous experience battling with mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
companies and creditors as a result of taking on high-profile distress situations and creating solutions. BTC’s strategy of creating leverage
Leverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...
to generate big discounts from lenders and creditors is uniquely essential to the success of AHP’s model. These discounts are crucial to the AHP model. In February 2009, the Summit County Port Authority ultimately rescinded AHP’s bond resolution.
AHP and The Transition To For-Profit
After the bond resolutionBond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
was rejected by the Summit County Port Authority, American Homeowner Preservation sought new ways to fund its endeavors. Jorge Newbery
Jorge P Newbery
Jorge P. Newbery is a Californian-born entrepreneur who is at the forefront of the campaign to rescue homeowners from the current housing crisis. As Director of American Homeowner Preservation LLC, a Cincinnati-based foreclosure prevention firm, Newbery works to keep distressed homeowners in their...
transitioned from a Consultant to American Homeowner Preservation Inc. to Director of American Homeowner Preservation LLC, a for-profit which took over the nonprofit AHP’s mission. Instead of using bond funding to purchase homeowners homes, the program now matches investors to purchase the homes on short sale
Short sale (real estate)
A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real...
. 1
Step One: The Homeowner Contacts AHP
In the first part of the AHP process, a homeowner applies to AHP either by calling them or contacting them through their website. A homeowner may reach out to AHP for any of the following mortgageMortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
related issues: a homeowner is in default of their mortgage, a homeowner is in foreclosure, a homeowner is facing a sheriff sale, a homeowner owes more on their home than it is actually worth. An AHP negotiator will then work with the homeowner to obtain all necessary information that will be needed to contact their lender such as their loan number, address and other pertinent information. Homeowners will then sign an authorization
Authorization
Authorization is the function of specifying access rights to resources, which is related to information security and computer security in general and to access control in particular. More formally, "to authorize" is to define access policy...
form granting American Homeowner Preservation the ability to speak to their lender on their behalf.
Step Two: AHP Works With The Lender
After gathering all necessary information and documents from the homeowner, an AHP negotiator will work with the lender to negotiate a short sale offer. This will involve submitting offers for the home with supporting documentation (such as comprabable property reportsComparables
Comparables is a real estate appraisal term referring to properties with characteristics that are similar to a subject property whose value is being sought...
, home appraisals and requesting a broker appraisal opinion). Supporting documentation will also show why the homeowner is having trouble affording their present mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
payments. Negotiating with a mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
lender can sometimes be a long process that may involve several counter offers.
Step Three: Approval From Lender
At some point in successful negotiations, AHP may have an approval for a short sale. When this is the case, AHP will be granted permission to purchase the home at an agreed upon price. Once this has happened, AHP will offer the home to affiliate investors who agree to the following terms:- The homeowner has a five year leaseLeaseA lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
period with predetermined affordable leaseLeaseA lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
payments. The leaseLeaseA lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
payment will increase every year but will not exceed the homeowner's affordability. If the price of the leaseLeaseA lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
does go beyond the homeowner's affordability (set at 33% of their income), the excess portion of the lease payment will be added to the homeowner's option price. - The homeowner is granted a recorded option to repurchase their home at a predetermined price within the five year period. The homeowner can repurchase at any time.
- If the lease period ends and the homeowner has not repurchased the home or the homeowner chooses to vacate the property at any point of the five year lease, the investor will be instructed to sell their home. The investor will receive the option price (plus any unpaid lease payments) and the homeowner will receive any net seller proceeds in excess of the option price.
The investor and homeowner will sign recorded lease and option agreements so that all parties know their rights.
Step Four: Repurchase
AHP provides counseling to maximize the likelihood that the family will be able to repurchase their home. At any point during the five year leaseLease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
period, the homeowner may repurchase their home from their investor. The option price that the homeowner may repurchase their home at it agreed upon prior to the short sale.
Social Media Outlets
See also
- Deed in lieu of foreclosureDeed in lieu of foreclosureA Deed in lieu of foreclosure is a deed instrument in which a mortgagor conveys all interest in a real property to the mortgagee to satisfy a loan that is in default and avoid foreclosure proceedings....
- Equity strippingEquity strippingEquity stripping, also known as equity skimming, is a type of foreclosure rescue scheme. Often considered a form of predatory lending, equity stripping became increasingly widespread in the early 2000s. In an equity stripping scheme an investor buys the property from a homeowner facing foreclosure...
- ForbearanceForbearanceIn the context of a mortgage process, forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.”...
- Global financial crisis of 2008–2009
- HUD auctionHUD auctionA HUD auction is a form of foreclosure auction except the original lender was a federal agency instead of a private lender. The United States Department of Housing and Urban Development , is the insurer of loans made through a variety of government programs, particularly FHA loans...
- Loss mitigationLoss mitigationLoss mitigation is used to describe a third party helping a homeowner, a division within a bank that mitigates the loss of the bank, or a firm that handles the process of negotiation between a homeowner and the homeowner's lender. Loss mitigation works to negotiate mortgage terms for the homeowner...
- RepossessionRepossessionRepossession is generally used to refer to a financial institution taking back an object that was either used as collateral or rented or leased in a transaction. Repossession is a "self-help" type of action in which the party having right of ownership of the property in question takes the property...
- Real estate trendsReal estate trendsReal estate trends is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change...
- Short sale (real estate)Short sale (real estate)A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real...
- Tax takingTax takingTax taking is a form of forced sale by taxation authorities in lieu of unpaid taxes.- Auction for Tax Bills :Richland County, South Carolina is a typical tax deed county. If the taxes are unpaid for five years then the tax bill will be sold at an auction...
- Tax Sales, Tax Auctions, Tax Foreclosures - Vacant property
Further reading
- Rhodes, Trevor. American Foreclosure: Everything U Need to Know... about Preventing & Buying. 348 pages. McGraw-Hill, April, 2008. ISBN 0-07-159058-7
- Neighborhood Strategies for Addressing Foreclosure. http://americancityandcounty.com/news/office-urban-affairs-city-foreclosure-help-20090522/index.html
Press Coverage
- American Homeowner Preservation Recognizes Outstanding Employee Denisse Bays--Money Watch 2011
- American Homeowner Preservation Buying Pools of Defaulted Mortgages and REOs--Shame the Banks 2011
- Bonds To Assist In Paying For Homes--Akron Beacon Journal Sep 20, 2008
- A Plan From Rob Fredericks--New York Times Oct 30, 2008
- Help For Struggling Homeowners Central--New York Times Oct 31, 2008
- VIDEO: Summit County Homeowners Using New Plan from WKYC Cleveland
- VIDEO: Akron Foreclosure Plan Comes Under Fire from WKYC Cleveland
- Cash For Clunkers Mortgages Announced
- Short Sale Cash for Clunkers Launches Through Cincinnati Company
- Investors to the Rescue of Troubled Homeowners
- AHP to Help Local Akron Man Stay In Home--WKYC
- When The Right to Rent Meets Principle Reduction -- Reuters