City of Madison, Wisconsin | Legislative Information Center
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File #: 26476    Version: 1 Name: CDD Director and EDD Director to approve requests for short sales and sign off on loan write offs for owner-occupied homes for up to $50,000.00 per property when are insufficient funds to cover the repayment.
Type: Resolution Status: Passed
File created: 5/23/2012 In control: BOARD OF ESTIMATES (ended 4/2017)
On agenda: 7/3/2012 Final action: 7/3/2012
Enactment date: 7/5/2012 Enactment #: RES-12-00488
Title: Authorizing the Community Development Division (CDD) Director and Economic Development Division (EDD) Director to approve requests for short sales and sign off on loan write offs for owner-occupied homes for up to $50,000.00 per property when there are insufficient funds to cover the repayment.
Sponsors: Tim Bruer, Lauren Cnare, Matthew J. Phair, Satya V. Rhodes-Conway
Attachments: 1. Resolution Memo for short sale policy 2.pdf
Fiscal Note
The City of Madison has a variety of loan programs, administered primarily by the City's Community Development Division (CDD) and Economic Development Division (EDD), that provide financial assistance to residents to enable the purchase and/or rehabilitation of residential properties. CDD estimates that the City currently has approximately $20 million invested in owner-occupied properties, with individual loans ranging from $1,200 to $128,223; the average loan balance is $21,000. The vast majority of funding for the loans is derived from Federal HUD and other grant monies.

While CDD estimates that the foreclosure rate in which City funds are invested is below 2% (in 2011, CDD estimates total write off amounts of approximately $155,000 due to foreclosure actions), in the event of a bank foreclosure on a residential property, the City is likely to lose its investment. The loss of these funds means that these proceeds are not available for re-investment in other projects.

For distressed properties, a short sale allows for a negotiated settlement among the City, private lending institutions, and homeowners, which may preclude a foreclosure and allow the City to recover some of its investment. CDD estimates that there have been 5 requests for short sales over the past three years.

The Resolution provides a more efficient City process to address short sale requests. No appropriation or expenditure is required to implement the process.
Title
Authorizing the Community Development Division (CDD) Director and Economic Development Division (EDD) Director to approve requests for short sales and sign off on loan write offs for owner-occupied homes for up to $50,000.00 per property when there are insufficient funds to cover the repayment.
Body
WHEREAS, City of Madison housing programs offer down payment and closing costs and rehabilitation assistance to home buyers and owners in the form of deferred payment and installment loans. These loans are secur...

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