NY organization helps families ‘fill the gaps’ when other assistance stops

When a tornado, hurricane or other disaster strikes, there is typically a rush of media attention and emergency assistance. But then, the spotlight shifts and families are left to struggle to fill the “gaps” that remain, on their own.

That’s what happened when Tropical Storm Irene hit the Eastern Coast on Aug. 29, 2011, and flood waters poured out of the Adirondack Mountains through the tiny town of Keene, in northern New York. The area was declared a disaster zone, and even after federal funds and private donations poured in, many families and businesses were still fighting to “stay afloat” months later. Fortunately, Housing Assistance Program of Essex County (HAPEC), which is celebrating its 10th year as a member of the NeighborWorks network, considers filling gaps to be its core mission.

Consider the story of Russ and Angie. The flood waters seriously damaged the stone foundation and first floor of the front section of their modest home, and the back addition with the bedrooms for their two preschool-aged children was destroyed.

The family of four moved temporarily onto the grounds of a local summer camp, while they began repairs using funds from FEMA (Federal Emergency Management Agency), community donations and their own retirement savings. However, although they were able to move back into their home in March of 2012, they didn’t have enough money to rebuild their children’s bedrooms, forcing the family to “double-up” in cramped quarters. Government assistance had dried up, and “donor fatigue” had set in, even among their friends. “Our family is at the end of our rope emotionally,” Russ wrote in one email to HAPEC, describing their plight.

A team from Habitat for Humanity joined HAPEC to help
re-build the family home of Russ and Angie.

That’s when HAPEC stepped in. With the help of a NeighborWorks America emergency-assistance grant, the organization helped the family pay off its outstanding loans, prepped the site for the re-build and recruited a Habitat for Humanity team to construct the new shell. Russ and Angie finished the walls and flooring. The finishing touch, again provided by HAPEC, was a wood-pellet stove for heating.

“Given what they had been through, and the exhaustion of their personal savings, Russ and Angie would not have been able to complete this work on their own for quite some time,” says Bruce Misarski, community development director for HAPEC. “Now, their house is ‘whole’ again, and they have bedrooms for their kids.”

HAPEC was founded in 1976 as the first local organization qualified to receive and administer HUD Section 8 rental assistance, which had just been authorized by Congress two years before. Today, HAPEC defines its focus much more broadly: to “alleviate economic distress, enhance personal dignity and cultivate self-reliance” in a rural county where employment mostly depends on low-wage, seasonal tourism and the household median income is 18 percent below the national average.

HAPEC services range from assistance with homebuyer education, to home repairs, to partnerships for the development of affordable multi-family housing. An impact assessment conducted for HAPEC and published in 2011 found that in one year, the organization:

• Created nearly 92 jobs – one of every 200 jobs in Essex County alone.
• Assisted 35 families in purchasing their first home.
• Helped 57 homeowners rehab their existing houses.
• Issued 650 rental-assistance vouchers.
• Managed 25 apartments for senior citizens.
• Provided foreclosure counseling for 44 families.

Alan Hipps, executive director, points to two keys that are instrumental to his organization’s success: effective fundraising – more than $2.5 million a year – and creative partnerships with other institutions, such as Habitat for Humanity and NeighborWorks America. “Our mission is simple, but ambitious: We strive to recognize community development and housing needs, advocate change and respond to opportunities.”

Joining forces: Habitat and NeighborWorks in Michigan

NeighborWorks America recently announced that Habitat for Humanity of Michigan is now part of our network of chartered members. This is an exciting opportunity for two nationally recognized affordable housing organizations to expand services in a state that has suffered greatly in recent years.  To bring you more of the story, Alexandra Chaikin, online media project manager at NeighborWorks America, interviewed Sandra Pearson, president and CEO for Habitat for Humanity Michigan.

Sandy Pearson, president and CEO
Habitat for Humanity Michigan

What does Habitat for Humanity of Michigan do?

We serve 75 local chapters of Habitat operating in all 83 counties of Michigan. We offer families and individuals access to services like financial capability, homebuyer education and debt management. In 2009, we became a full service company offering mortgage origination, servicing and collections; and we are a licensed lender. This gives us a platform that will allow us to work with financial institutions in new ways to help them meet their goals to serve people who don’t qualify for conventional mortgage products and, ultimately, the goal for us is to provide financing for low-income people who want to buy a home, but who cannot qualify for traditional mortgages. The ability to work with financial institutions and investors in new ways to bring more capital to all that we do allows us to take families who want to be homeowners further down the path to achieving their goals.

How did you first hear about NeighborWorks America?

My first experience with NeighborWorks was when I worked at Michigan State Housing Development Housing Development Authority. When families were ready to buy a house, I helped get them financing. There were only three places that could serve nontraditional applicants with lowest incomes: Habitat for Humanity, the USDA 502 direct program and a NeighborWorks affiliate in Toledo, Ohio which had a loan pool. That program in Toledo actually inspired the statewide loan fund program I’m working to fund here in Michigan.

You went to an organization in Ohio to help people in Michigan?

I will go anywhere. I’m working with a company in California right now. If I can’t get it in Michigan, I’ll go someplace else.

What are the advantages of becoming a member of the NeighborWorks network?

This is a huge personal goal for me. One of my initial goals was becoming a chartered NeighborWorks member because we could really partner to help more families. We can refer clients to each other, provide more financing options and do more in areas like financial capability, homebuyer education and debt management.

Habitat for Humanity's Women Build program helps women
learn construction skills and build homes and communities. 

When you have Habitat for Humanity and NeighborWorks America, the two largest national affordable housing organizations, working together, the possibilities are beyond what you could imagine. It’s going to be the biggest thing I’ve ever been involved in in 20 years of affordable housing.

Can you say more about the loan fund you’re developing?

Capital is scarce these days and particularly so here in Michigan, so we’re interested in closing the gap between need and availability. Habitat for Humanity Michigan has established a structure for the Habitat for Humanity Michigan fund. The goal is a $20 million mortgage purchase loan pool, which I’m working now to get funded. We will establish a revolving loan fund that financial institutions and other capital investors may invest in to bring more capital to finance mortgages and home repairs. Funds will directly benefit individuals and bring more capital to allow affiliates to partner with more families in more ways than ever. Staffing for the loan fund is statewide which frees local staff and volunteers to focus on what they do best.  Basically the fund is tapping into a network of community development experts and private sources of funding to allow more efficiencies statewide and therefore help a greater number of people.
I’m also working on program with the state housing finance agency and a state bank to create a sort of secondary market for the loans. This will increase organization’s cash flow and their ability to relend to other families. I anticipate that the loan fund will happen by June of this year.

Who will benefit from this loan fund?

 Loans will go directly to anyone served by NeighborWorks America, Habitat for Humanity Michigan or the USDA 502 direct program. Since Habitat for Humanity Michigan serves all 88 counties of the state, the benefits essentially are open to anyone who qualifies and comes to us or to NeighborWorks America or the USDA 502 direct program. There is potential for this to expand to other states.

Any closing thoughts?

Millard Fuller, Habitat's founder said “The poor do not need charity; they need capital. A hand up and not a hand out.” In my mind, this partnership works toward that statement – a catalyst to bring capital to more people.

Communities Find Success with Nontraditional Forms of Homeownership

This thought piece was originally published August 7, 2012 on the Bipartisan Policy Center's website. The questions were: Do alternative forms of homeownership, such as shared equity models and rent-to-own programs, present viable alternatives for future homeownership? Can they be taken to scale in a way that can encourage stabilization of neighborhoods and housing markets?

By Eileen Fitzgerald
Chief Executive Officer
NeighborWorks America

NeighborWorks believes that community stabilization requires a comprehensive approach to housing opportunities, which employs strategies that support traditional and nontraditional forms of homeownership, as well as rental options. This approach includes providing affordable inventory and low-cost accessible mortgage financing.

We certainly support alternative forms of homeownership, like shared equity and rent-to-own, as part of the strategy. Alternative homeownership models benefit people and communities. For generations, families with the resources to do so have lent money so their children can buy homes prior to inheriting wealth. This is an informal shared equity model which can overcome the inheritance gap. Formalized shared equity models or lease-to-own programs provide a way for people with less privileged social networks to achieve homeownership, and provide for long-term affordability, benefiting future generations. Done correctly these models not only provide an affordable homeownership option, they come along with education and support to make sure they are a sustainable arrangement for residents.

A number of NeighborWorks organizations have had success with shared equity and lease-to-own models. For instance, Durham Community Land Trustees and Champlain Housing Trust in Vermont have effectively used the land trust model to build homeownership opportunities for lower income families. Beyond Housing in St. Louis, Missouri has had success with its lease-to-own program.

There are new opportunities for scaling up nontraditional homeownership approaches that face challenges, but are worth exploring. Sometimes these strategies are resource intensive, so it is important to develop the organizational and external (legal, financing) infrastructure necessary for success. Local market conditions can also dictate what resources are needed to achieve success. For instance, one of the best places to use shared equity is a community with an inclusionary housing requirement, as is currently happening in an Austin, Texas program run by Habitat for Humanity. In those communities, little or no additional capital is needed to undertake the model.

In closing, we believe the best way to further community stabilization is through multiple strategies, which support many different forms of homeownership, as well as rental housing. All of those elements of a successful approach require flexible resources that can sustain plans tailored to the needs and resources available in each community.