American Homeowner Preservation

American Homeowner Preservation

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 foreclosures 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However, citing concerns about the Board and backers of AHP along with a challenged bond market the bond resolution was rescinded in February 2009.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 economy (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.

AHP Funding

AHP initially sought funding with tax exempt bonds issued by the Summit County 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.

AHP and The Transition To For-Profit

After the 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

How AHP Works

The American Homeowner Process works in a four part process:

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 mortgage 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.

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 reports, 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.

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 lease period with predetermined affordable lease payments. The lease payment will increase every year but will not exceed the homeowner's affordability. If the price of the lease 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 lease 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 foreclosure
• Equity stripping
• Forbearance
• Global financial crisis of 2008–2009
• HUD auction
• Loss mitigation
• Repossession
• Real estate trends
• Short sale (real estate)
• Tax taking - 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. [1]

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