Challenges Facing Nonprofit Developers

In a recent interview with Multi Housing News, Thomas Deyo, deputy director of NeighborWorks America's National Real Estate Programs, discussed the high cost of capital and other challenges facing nonprofit community development organizations. View video below. If you are having trouble with the player, view it here: http://bit.ly/97oZlU.

NeighborWorks Passes One Million Volunteer Hours Mark

NeighborWorks organizations around the country helped generate more than one million volunteer hours in the last five years, building stronger, vibrant, and more connected communities. Combined through the five years, ending with September 30, 2010, volunteers partnering with NeighborWorks organizations put in more than 1.14 million hours, including more than 322,000 hours this year, the largest number reported by member organizations of the Community Building and Organizing Program (CB&O) at NeighborWorks America.

Learn more and view examples that illustrate the success of community building and organizing.

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.”