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Thomas Neary | Americans Underwater
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Thomas Neary | Americans Underwater

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  • 1. LIFELINE EXECUTIVE SUMMARY LIFELINE ONE SOLUTION FOR SINGLE FAMILY DISTRESS Tom Neary, CEO April 21, 2012 2012 NCRC ANNUAL CONFERENCE WASHINGTON, DC
  • 2. LIFELINE EXECUTIVE SUMMARY PROBLEM / OPPORTUNITY SYSTEMIC BREAKDOWN OF U.S. HOUSING MARKET •  7-10 million homes in distress •  Hundreds of billions of dollars in non-performing loans NEGATIVE EQUITY HOMEOWNERS •  Unable to sell and move downmarket •  Facing inadequate supply of rental property TROUBLED BANKS •  Time, effort, and expense in loss mitigation •  Need to sell assets GOVERNMENT INTERVENTION •  Public commitment and political will to dispose of assets OPPORTUNITY TO •  Achieve a socially responsible outcome driven by private capital •  Acquire distressed, single family homes at scale •  Generate rental income + capital appreciation •  Achieve positive community impact while minimizing the financial impact to all parties involved – do good, do wellPage 2
  • 3. LIFELINE EXECUTIVE SUMMARY SOLUTION SCALABLE PLATFORM TO ACQUIRE DISTRESSED HOMES IN PRE-FORECLOSURE AND RENT THEM BACK TO EXISTING OCCUPANTS FORECLOSURE AVOIDANCE SOLUTION FOR DISTRESSED OWNERS •  Reduces losses for borrower and lender •  Potential rebuilding of finances •  Minimizes negative impact on community •  No eviction / relocation, or social / family upheaval •  Reduces the number of unnecessary foreclosures CONSERVATIVE STRATEGY SOLUTION FOR LENDERS •  Generates rental income •  Focused on banks, government agencies, •  Future capital appreciation fulfillment agents and its potential status as SOCIALLY RESPONSIBLE a minority-owned business (MBE) •  Aligns interests of homeowners, lenders, investors and PROACTIVE PROPERTY MANAGEMENT taxpayers •  Delivers world-class rental experience •  Private capital working to avoid family distress •  Property management is in-house, a critical part of the •  A situation where social responsibility enhances solution financial results and lowers risk •  Preserves property value •  Benefits the community •  Maximizes rental profitabilityPage 3
  • 4. LIFELINE EXECUTIVE SUMMARY SOLUTION PROCESS PROPRIETARY OPERATING STRATEGY TARGET POOLS RELATIONSHIPS ACQUIRE HOMES WITH •  Distressed single-family homes •  Starter homes, clean title, •  Banks •  Unique short-sale process no liens •  Government agencies •  Formula-based pricing •  Occupant willing and able to •  Servicers •  Conversion to rental for become Lifeline tenant •  Fulfillment agents existing occupant MARKETS FROM •  Major markets •  Bulk pools at government •  Infill neighborhoods agencies, banks •  Positive price dynamics GENERATE INITIAL GEOGRAPHIC FOCUS •  Current rental income •  Areas outlying Chicago •  Capital appreciationPage 4
  • 5. LIFELINE EXECUTIVE SUMMARY ACQUISITION ECONOMICS LIFELINE BANK ACQUISITION FORECLOSURE 100% 60–70% OF CURRENT optimistic foreclosure APPRAISAL selling price DISCOUNT CAPITAL GAIN TO INVESTORS 4% vicinity spillover LIFELINE OFFER 6% broker fees LIFELINE APPROX. OFFER 70-80% APPROX. 20% foreclosure administrative costs 65–80% OF FORECLOSURE COMMENCEMENT (on $250K home) OF APPRAISAL APPRAISAL BASIS FOR SETTING NET THE RENTAL RATE 30–40% NET 30-40% OF APPRAISAL OF FORECLOSURE COMPARATIVE NET YIELDS COMMENCEMENT TO LENDER APPRAISAL Data summarized from FRB Boston & MIT-Harvard studies LENDERS HOMEOWNERS INVESTORS TAXPAYERS Avoid foreclosure Avoid foreclosure Receive rental income Avoid subsidizing Avoid negative brand image Avoid eviction Benefit from recovering foreclosure avoidance Clean up balance sheets Recover and possibly regain property values Avoid local tax base erosion home ownershipPage 5
  • 6. LIFELINE EXECUTIVE SUMMARY ADDRESSABLE MARKET •  7–10 million distressed sales over time, nationwide •  1–2 million qualify for Lifeline’s short-sale program •  Lifeline has a scalable operating platform readily deployed on a national basis •  Initial deployment: infill neighborhoods outside the city of Chicago Source: RealtyTrac January, 2012Page 6
  • 7. LIFELINE EXECUTIVE SUMMARY LIFELINE INVESTMENT LIFECYCLE LIFELINE LIFELINE LIFELINE INVESTMENT PROPERTY INVESTMENT MANAGEMENT MANAGEMENT MANAGEMENT QUALIFY QUALIFY QUALIFY CLOSE MANAGE DISPOSE LENDER HOME OCCUPANT FULFILLMENT AGENTPage 7
  • 8. LIFELINE EXECUTIVE SUMMARY DISCLAIMER This document is strictly for discussion purposes and is not a solicitation for investment in Lifeline, nor shall it be construed as such by any party. The information contained in this document is provided on a confidential basis to selected entities. It must not be copied or disclosed to anyone except to personnel and professional advisors of the recipient on a need-to-know basis. The information contained in this document does not purport to be complete or current or to cover all the information or risk factors that a recipient may need in order to make an investment. Each recipient should conduct its own independent investigation and assessment, and make such additional inquiries as it deems necessary or appropriate rather than relying on the information in this document. All information contained in this document is subject to and qualified in its entirety to the offering document and subscription documentation relative to the investments discussed therein. Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs. Such data may not include unknown risks, and makes forward looking statements. Actual results may differ from those contemplated in such forward-looking statements. Targeted returns are not necessarily indicative of future performance.Page 8
  • 9. LIFELINE EXECUTIVE SUMMARY

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