Cleveland Nonprofit Launches Low Dollar Mortgage Wing to Boost Homeownership in Low Income East Side Neighborhoods
CLEVELAND, Ohio – A Cleveland nonprofit that provides and builds housing for low-income residents has formed a new wing to provide smaller mortgages to potential homebuyers who historically have been unable to secure a mortgage. such loans from large banks.
CHN Housing Partners formed the loan subsidiary Housing Capital CHN in 2019, but it is now marketing its first mortgages. There is no income restriction for a program that the nonprofit calls “The Believe Mortgage,” but it generally aims to lend $ 70,000 or less to those with low or moderate income.
The hope is that those who want to live in areas of Cuyahoga and Lorain counties with lower land values can buy good homes. Supporters said the inability of many residents, who are often people of color or who have credit problems, to obtain lower dollar mortgages from major banks has acted as a barrier for many neighborhoods that do not. have not yet recovered from the 2008 housing crisis.
“What we wanted to do with CHN Housing Capital was really help bring the American dream of homeownership to more people in our community,” said CHN CEO Kevin Nowak.
Nowak said the goal was to lend $ 12 million in mortgages over three years. This translates to just under 50 homes the first year and more per year the next two. The program is privately funded, although Cuyahoga County and Cuyahoga Land Bank contributed $ 1.1 million in loan loss reserves.
CHN Housing Capital has also started accepting applications for two separate but related programs. One is for home repair loans for anywhere in the county, paid by $ 1.92 million from Cuyahoga County. Of this amount, $ 1 million originally came from the Department of Housing and Urban Development’s Community Development Block Grants program.
The other is for down payment assistance, with money allocated by Cleveland and the county. In the county, buyers in 51 communities can claim money from a pot of nearly $ 680,000. In Cleveland, which has contributed $ 575,000 in local dollars, the program will begin for homes in the Circle North area of the Glenville neighborhood of Cleveland, one of many areas selected for investment under the Initiative. transformation of the mayor’s district.
The announcement of the mortgage and low dollar lending wing comes at a time when housing demand is at its peak. The combination of the Federal Reserve lowering interest rates during the pandemic and the interest of potential buyers looking for more space has led to a hot housing market. Realtors have said it is not uncommon for homes to sell within days of being put on the market for tens of thousands of dollars above asking price.
This has not been the case for much of the east side of Cleveland and the suburbs on the east side, according to data compiled by Frank Ford of the Thriving Communities Institute at the Western Reserve Land Conservancy. In Cleveland, median home selling prices on the West Side last year nearly matched a previous high in 2005. On the East Side, median prices were only 44% of a previous high, also in 2005. .
“We have an entire area of the city of Cleveland that lost all of that value in 2008 and hasn’t seen most of it come back,” said Tania Menesse, CEO of Cleveland Neighborhood Progress and former director of community development of the city.
Menesse, who also sits on the advisory board of CHN Housing Capital, said small mortgages were key to rehabilitating Cleveland’s housing stock.
Scourge, vacancy and crime have traditionally been cited as reasons why many areas of the East Side continue to lag behind other parts of the city. But advocates have also pointed to the lack of funding available for residents who want to buy a good home in these areas as another point of contention.
Ford released a report in November that found three major banks with ‘community benefit agreements’, which aim to invest in areas that need it most, seemed unable or unwilling to issue mortgages for 50%. $ 000 or less. According to the report, those three banks – KeyBank of Cleveland, Fifth Third Bank of Cincinnati, and Huntington Bank of Columbus – lent 21 combined mortgages of $ 50,000 and under in 2019, according to the report.
“What hurt Glenville was… we couldn’t get the loans. Gutters, roofs, porches and businesses are collapsing, ”said Councilor Kevin Conwell, whose neighborhood includes the Glenville neighborhood. He said the difficulty for many black residents to obtain mortgages has kept them from having more wealth in the community.
Nowak, who worked for KeyBank’s subsidiary Key Community Development Corporation before joining CHN Housing Partners in 2016, said taking on such small mortgages was generally not profitable for banks due to federal regulations and fees. However, CHN Housing Capital’s ability to provide alternative lending options may fill this gap, he said.
Money for mortgages comes from several financial institutions and organizations, including the Huntington Bank.
Nowak said that CHN Housing Capital will look at different factors of a candidate’s credit history compared to the big banks, providing more opportunities to get a mortgage. The aim is to provide opportunities for residents who would not otherwise have them, he said.
“My parents mortgaged our house so they could send me and my sister to college. And that’s what put me on the path I am today, ”he said. “And so many in our community cannot have the same experience when it could and should be available to them.”
Conwell had yet to hear about CHN’s new program when he spoke to cleveland.com and The Plain Dealer last week. But he said it seemed like an exciting prospect for his constituents, and said he was ready to disseminate information and hold briefings.
Sean Richardson, president of the Greater Cleveland area of the Huntington Bank, said in a statement that “CHN Housing Partners is a great example of how innovative nonprofits can develop unique tools to help people in our community to make their dream of homeownership come true.
CHN Housing Partners, formed in 1981, is best known as a developer and owner of thousands of properties for people in need of low-rental housing. The nonprofit works with needy residents of northeastern Ohio, Detroit, Pittsburgh and western New York.
It also has contracts with the City of Cleveland and Cuyahoga County to distribute rent assistance funds from three federal stimulus bills passed by Congress during the coronavirus pandemic.