“If you make an announcement to the crowd, you can be charged with a misdemeanor,” says the auctioneer.

Matt Warner, program director for Hello Housing, never thought that choosing a career in affordable housing could land him in jail. “Well, I need to let everyone know that if they buy this home, they are subject to the City’s affordability restrictions. So what are my options?”

“You can talk to each bidder individually.”

Matt surveys the room full of hungry bidders, looks at his watch, and starts moving through the crowd. “Hi, I’m Matt Warner and I’m here on behalf of the City of Novato. Are you familiar with the restrictions that you’ll be subject to if you buy this home?”, casually waving a huge stack of legal documents.

This was Wednesday morning, but it was actually the previous Friday when Matt received a late afternoon phone call that forced him to spring into action. It was a resident in one of the affordable homeownership developments Hello Housing manages on behalf of this city located north of San Francisco, California. She was calling to alert Matt that her neighbor’s 2-bedroom, 2-bathroom home had received a foreclosure notice and was scheduled to be listed for auction the very next week.

This was the first Matt was hearing of the situation, but the team at Hello Housing had learned to act quickly and creatively to save homes that are part of the city’s “below market rate” (BMR) program. Hello Housing had been awarded several years of grant funding from the Cornerstone Partnership, a program of Capital Impact Partners designed to promote affordable and inclusive housing nationwide. This funding has allowed Hello Housing to grow its capacity to “steward” this type of BMR home on behalf of many North California cities.

“With housing prices on the rise once again, preserving these homes is important to maintaining diverse, healthy, and affordable communities where people of all incomes can live and work. And, with the high cost of new development and the loss of public subsidies, the most cost-effective way to offer affordable homeownership for working families is to preserve existing homes rather than build new ones,” says Rachel Silver, director of the Cornerstone Partnership. “Yet, many cities and municipalities don’t have the infrastructure to do this, and that makes programs like Hello Housing so critical.”

Matt thanked the neighbor, took a deep breath, and began making calls.

First, he called Hans, the program manager with the City, to see if they had received any notices. Unsurprisingly, the answer was no. The combination of stale addresses for the defunct redevelopment agency, combined with banks not following proper notification procedures, means that the City is often given no advance notice of a below-market-rate-home at risk of being lost to foreclosure.

Next, Matt called the trustee to confirm the auction date and to see if there was a published opening bid. “The minimum bid price will be available 24 hours before the auction,” said a pre-recorded message.

Next, he tried to call the owner with no luck. He dispatched Hello Housing’s local realty partner to go knock on the door. Ideally, there would be a way to stop the auction to buy some time to hatch a plan.

Then, he called the title company to place a rush order on a preliminary title report so he could learn whether there were any outstanding liens on the home.

Next, he called the homeowners association (HOA) to see if the owner had a balance due. The City had adopted a policy that would bring any HOA back dues current if they were to buy back a BMR home at auction.

All of these pieces of information falling into place would help Matt prepare an analysis to be presented to City staff by no later than mid-day Tuesday for the City to have enough time to cut cashier’s checks by Wednesday morning. Because the owner was unreachable, there was no way to learn whether the home was in need of major rehab, or whether the owner still resided in the home, making them eligible for some relocation assistance. So, the team decided to include conservative numbers in the feasibility analysis.

This was the fourth home at risk of foreclosure and default encountered by Hello Housing since they began working with Novato 10 months previous, and sadly, it’s a still-too-common scene across the country as a result of the prolonged impact of the housing recession.

Organizations that can help cities manage affordable housing investments for low- to moderate-income families not only bridge that gap, but also create a sustainable future. They help buyers purchase their first home, stay in their home, and potentially utilize the benefits of participation in a BMR program to enter the conventional homebuyer market.

As part of its larger efforts to stimulate affordable and inclusive housing efforts, Capital Impact’s Cornerstone Partnership works to build the capacity of innovative organizations in this space.

Since 2011, the Social Innovation Fund (SIF), a program of the Corporation for National and Community Service, has awarded Cornerstone $4 million to further this grant-making intermediary work. The SIF model requires dollar-for-dollar matching funds at the intermediary and sub-grantee levels, so as a result, Cornerstone’s 10 sub-grants to organizations like Hello Housing have leveraged a total of $10.5 million to scale long-term affordable homeownership programs.

It is just that type of capacity building that has helped Hello Housing build a track record of success. Beginning with the first home that Novato nearly lost, Hello Housing has helped them build a detailed “City Buy-Back” process. By creating a clear road map and a spreadsheet template detailing all the possible costs to buy back and resell a BMR home, the process enables everyone to act swiftly and efficiently to gather the information and resources needed in preserving the home.

With a new house on the brink of being lost, Matt had put the process into action once again.

“We are ready to begin the auction. Opening bid is set at $90,000” says the auctioneer.

Matt looks around the room. The crowd has thinned out dramatically after he shared the restrictions—“$91,000” says Matt, holding up his paddle. The room is silent. After asking the room several times for other bids, the auctioneer says, “The bid sits with me at $95,000.” Matt quickly realizes that the opening bid was not the price the bank was willing to accept. So, a bidding war ensues between Matt and the auctioneer until Matt bids $131,000. The auctioneer announces that Matt’s was the winning bid and hands him a pile of paperwork.

Matt calls Hans to let him know they are the new, new owners of an old BMR. He then texts the Hello Housing team, “WE GOT IT!”

The Hello Housing team wastes no time and convenes Thursday morning around the conference table to start mapping out the next steps that it will take to ready the home for sale to a new family.

Matt takes a moment to reflect back on the last 48 hours.

“While it’s unusual for these scenarios to pop up like this, I am thankful that I work with a great team, and great partners at the City, who will jump at a moment’s notice. I’m also grateful we have the support of the Cornerstone Partnership who helps make this all possible. It is a testament to the passion we all have in ensuring affordable housing for those who need it most.”

All pictures © 2015 Hello Housing