NeighborWorks Homeownership Efforts Get a Boost from $15 Million in CDFI Funds

Efforts to increase sustainable homeownership got a boost recently when 25 members of the NeighborWorks network received nearly $15 million as part of grants made by the U.S. Treasury department’s Community Development Financial Institution program.

Combined with grants from NeighborWorks America, local governments, foundations and the private sector, these NeighborWorks organizations and others affiliates in the network plan to continue making sustainable, affordable homeownership available in communities across the U.S.

Roy Nash, president and CEO of NeighborWorks Waco said, “CDFI funds are a major tool in our work to safely increase homeownership in our market. Being able to help homeowners secure a low-cost, fixed-rate mortgage and a home that is right for their needs is part of what these grants do and do very successfully.”

In addition to the twenty five grant recipients in this latest round of financing, there are 47 additional NeighborWorks organizations with certified CDFI operations. NeighborWorks organizations use these recent CDFI grants and prior grants to foster sustainable housing in a variety of ways, including:

• providing down payment assistance to qualified first-time homebuyers who have successfully completed homeownership education classes
• underwriting the cost of homeownership education classes
• providing capital to support the construction and project management of affordable homes for sale.

Learn more, including the names and location of the award recipients.

What's Next for Financing Affordable Rental Housing?

By Thomas P. Deyo, director, Real Estate Programs, NeighborWorks America and Frances Ferguson, senior manager, Real Estate Programs, NeighborWorks America

The development of affordable rental housing has always been difficult, but the past few years have been especially challenging for developers as the tools—mainly the Low Income Housing Tax Credit—that they’ve relied on the past 25 years or more have begun to show their age and not kept up with market realities.

What’s needed is a new way of thinking for additional financing of affordable rental housing that mirrors the private sector development market; one that creates stronger nonprofit developers, while not abandoning the mission focused reason that nonprofit developers exist: to create and sustain affordable rental housing for those most in need.

The LIHTC, the “golden ticket” for financing most of the affordable rental housing stock in the U.S. over the past few decades, has become less valuable and available as the biggest investors in the credit have largely pulled out of the market.

While a few market areas are seeing a resurgence of tax credit investors, the problems that started in 2008 with less demand and lower LIHTC prices are expected to continue in 2011 in many markets.

This situation forces developers to scramble to fill their project financing gaps either by reducing development fees (which weaken already thinly capitalized developers) and pursuing increasingly complicated, time consuming, and inefficient and more expensive multilayered financing packages or by simply not developing the affordable rental housing that their communities need.

The latter is of grave concern as affordable housing remains a present need as economies weaken and more people need housing within their means.

Continue reading this article, What's Next for Financing Affordable Rental Housing?

Tight Credit May Hamper Efforts to Stabilize Communities Post-Foreclosure

Nonprofit community development corporations working to stabilize communities in the wake of the national foreclosure crisis share a deepening apprehension that tight mortgage credit standards will hamper their ability to sell newly rehabilitated, formerly foreclosed properties, according to a snapshot survey conducted at a recent meeting during the NeighborWorks Training Institute in Philadelphia.

Twenty-four nonprofits accounting for as much as $740 million in Neighborhood Stabilization Program funds attended the one-day seminar and many said that without more rational mortgage underwriting standards from the nation’s lenders, homes that could be put back into productive, long-term ownership status may sit vacant.

“The concern is real and it is across the board,” said Thomas P. Deyo, deputy director of National Initiatives and Applied Research at NeighborWorks America. “A handful of nonprofits have forged effective relationships with local and regional first mortgage lenders, but the majority of nonprofit real estate businesses that are in these communities never anticipated that the credit market would be so tough for their homebuyers.”

Many of the nonprofits attending the seminar also have homeownership education programs and have worked with homebuyers to ensure that they understand the mortgage process and the responsibilities of homeownership. Based on a review of the homeowners who have fallen into foreclosure the past few years and are receiving foreclosure prevention counseling, only a small minority ever had homeownership education or counseling.

“The fact is that homebuyers who go through these programs are excellent mortgage risks,” said Patrick Morrissy, executive director, Housing and Neighborhood Development Services, Inc., in Orange, N.J. “We want these homes sold to a buyer who can keep the home for the long-term, but mortgage financing – while not impossible -- has become increasingly difficult for low- and moderate-income homebuyers to obtain.”

Deyo noted that mortgage rates are at an all-time low and home prices around the country have largely stabilized, creating an excellent environment to foster long-term, sustainable homeownership.

“Lenders are right to be prudent with credit to avoid the kind of crisis from which the housing market now is emerging,” said Deyo. “But the pendulum has swung a bit too far, and to make revitalized neighborhoods a reality, it has to swing a little bit back the other way.”

NeighborWorks Expansion Grants Help Asian Americans for Equality to Open New Brooklyn Office

NeighborWorks CEO Eileen Fitzgerald helped to mark the opening of Asian American's for Equality's new site in Brooklyn, made possible by a $300,000 expansion grant from NeighborWorks America. With the new office, AAFE now has a physical presence in each of New York City's three major Asian American hubs.

“Although we serve any client who visits us, AAFE’s goal has always been to respond to the needs of the Asian community in New York,” said Christopher Kui, executive director of AAFE. “This goal pushed us to expand beyond Chinatown to Flushing, Queens almost ten years ago, and now again to Sunset Park in Brooklyn.”

“NeighborWorks America is pleased to support AAFE’s expansion into Sunset Park so the organization can better serve Brooklyn and Brooklyn’s Asian communities. We are confident that AAFE’s programs at the new Sunset Park location will empower families and build strong communities for future generations, and we look forward to AAFE’s continued success,” said Fitzgerald.

“As a national funder, NeighborWorks recognizes AAFE’s excellence. AAFE continues to effectively combine comprehensive services to individuals and families with strong advocacy on behalf of the Asian American community. Their new office in Brooklyn brings new resources in difficult economic times to a vibrant, emerging neighborhood.” said Deborah Boatright, northeast district director of NeighborWorks America.

AAFE Brooklyn will offer services in English, Chinese, Cantonese, Mandarin and Spanish from its well established lines of business including homeownership promotion, preservation and lending; foreclosure prevention services; small business lending and economic development; and citizenship and immigration services.

Over 100 guests were on hand at the September 17th ribbon cutting, including NYC Comptroller John Liu, the first citywide Asian American elected official, and Commissioner Fatima Shama from the Mayor’s Office on Immigrant Affairs as well as many other local elected officials and community organizations.

Community Stabilization Efforts Get a Needed Boost

By Sarah Greenberg
Senior Manager, Community Stabilization
NeighborWorks America

The foreclosure crisis has created a glut of vacant and abandoned properties that are piling up in some communities, dragging down property values and inviting vandalism and crime.

That’s why I’m so pleased to see community stabilization efforts receiving a substantial boost from the U.S. Department of Housing and Urban Development (HUD), with an additional $1 billion in Neighborhood Stabilization Program (NSP) funding and the announcement of the historic “First Look” program partnership with the National Community Stabilization Trust.

As with the first two rounds of NSP funding, the third round will enable state and local governments and their nonprofit partners to purchase foreclosed properties and rehabilitate or redevelop them for rental or resale to low- to middle-income households.

It has been frustrating to see these efforts thwarted by speculators and investors, who in many cases are just looking for a quick investment opportunity. They may purchase the property and perform minimal cosmetic improvements, but they won’t necessarily bring it up to appropriate health and safety codes or to the standard of other properties in the neighborhood. Some are simply letting the properties sit vacant, waiting for the market to eventually come back so they can flip them for a profit.

Local governments and nonprofit organizations with NSP funds have been outbid by these private investors, but the First Look partnership that HUD Secretary Shaun Donovan announced on September 1st will help local communities get a leg up.

The First Look program gives localities first dibs on foreclosed properties, helping to ensure that communities can acquire those properties that are strategically important to their neighborhood stabilization efforts. Major banks such as Wells Fargo and Bank of America have signed onto this partnership, which gives neighborhood groups up to 48 hours to evaluate properties and decide whether they are interested in acquiring them, before they are listed for sale and offered to the private market.

First Look is not so much about leveling the playing field as it is about strengthening local responses in communities hard-hit by the foreclosure crisis. When NSP grantees purchase foreclosed properties, they take a more holistic approach to rehabilitation, with long-term sustainability as the goal. They ensure the housing units are energy efficient and affordable. They offer subsidies to lower income families to help them afford higher quality housing options. They provide homeownership counseling and responsible mortgage products to help prevent future foreclosures.

Learn more about NSP3 funding and the First Look program. At NeighborWorks America, we are supporting the federal government’s efforts by providing resources, training, and technical assistance to nonprofit organizations and their public and private partners working with Neighborhood Stabilization Program funding. Learn more about our efforts at http://www.stablecommunities.org/.