Friday, April 5, 2013

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.