Reports and Studies

Highlights of 17 grant applications for a special $5 million, mixed-income demonstration program that explored approaches for serving households with incomes less than 30 percent of the area median ("extremely low income" or "ELI" households) in mixed-income communities. Also included are working conclusions from experience to date with the mixed-income demonstration program. Complete info »

Homeownership has always been a strong component of housing and housing policy in the United States. Owning a home is considered an important social and economic indicator, as well as a symbol of having a stake in society and contributing to the stability to the community. The system for producing housing units suitable for homeownership, and for financing home mortgages, has changed dramatically in recent decades. Technology and innovations have increased speed, efficiency and volume, resulting in more families finding mortgage financing than ever before and new homes being produced in record numbers. While homeownership rates are near all-time highs, particular demographic and economic populations, as well as distressed areas, lag behind. Despite greater access to mortgage credit for most families and communities, increased risks, and higher costs of credit, are being shouldered by consumers.

This paper attempts to provide an overview of U.S. housing policies related to homeownership, an analysis of the barriers to homeownership, and background on pressing federal policies, programs, and regulations that could be refined to better support homeownership. As the Millennial Housing Commission considers recommendations regarding federal homeownership policy, several issues are paramount:

1. What more can the federal government do to encourage and support homeownership?

2. What can the federal government do to encourage innovations in the mortgage market, while adequately protecting consumers?

3. What can the federal government do to help ensure that mortgage borrowers understand the rights and responsibilities of homeownership and are prepared to assume them?

4. What can the federal government do to encourage the production and preservation of homes affordable to those with lower-incomes?

Buying a home is typically the largest and most complicated financial commitment most households ever make. Would-be first-time buyers face many barriers to qualify for a conventionally-priced mortgage, including an inability to afford monthly payments, lacking sufficient savings for a downpayment and closing costs, having high debts or an unstable income. Even if they qualify, potential buyers may be hampered by a lack of affordable homes in a desirable area, or even information on how to buy a home or negotiate the best deal. Veiled or overt discriminatory practices still employed by some in the real estate and financial industries also conspire against some potential homebuyers. In combination, these hurdles, especially among low-income and minority populations, keep homeownership, and its ancillary social and economic benefits, out of reach.

Policy makers and practitioners should understand the risks and implications of expanding homeownership to lower-income families. Unlike in the rental housing market, individual families must be able to successfully maintain their homes and their mortgages. Individual households need to have the capacity to stay current on their loans and to undertake needed repairs and upkeep. When families fail at homeownership, entire neighborhoods can be affected in addition to the substantial losses individual households must endure. To the extent that expanding homeownership to low- and very-low income people is a priority, correlated issues of access banking services, personal financial management and education policy must be considered.

Based on interviews with leading practitioners, focus groups and other research, a series of policy changes are explored. Generally, policy prescriptions can be grouped into three categories:

1.) Expanding the reach of mortgage markets for sustainable homeownership;

2.) Educating and protecting consumers engaged in mortgage and home equity markets; and

3.) Producing and preserving units suitable for affordable homeownership. Complete info »

Based on recommendations from a group of NeighborWorks organization (NWO) directors, Neighborhood Reinvestment initiated the Campaign for Home Ownership in 1993. That campaign provided NWOs with both funding and technical assistance to expand homeownership opportunities in the communities they serve. Based on the experiences of organizations involved with that campaign, Neighborhood Reinvestment staff distilled a model homeownership assistance strategy they call Full-Cycle Lending. This model includes six components: partnership building, pre-purchase home-buyer education, flexible loan products, property services, post-purchase counseling and neighborhood impact. Based on the success of this first five-year Campaign, Neighborhood Reinvestment supported a second five-year campaign called the Campaign for Home Ownership 2002.

In 1998 Congress authorized $25 million for a NeighborWorks Home Ownership Pilot program designed to leverage additional local support and test new strategies for assisting first-time home buyers. In less than four months, the Neighborhood Reinvestment Home Ownership Campaign staff developed and implemented specific program guidelines for the distribution of funds to local NWOs. These guidelines allowed NWOs great flexibility in the use of Pilot funds including using the funds for upgrading computers, hiring staff, developing marketing plans and programs, capitalizing loan funds, providing down payment assistance as well as other uses.

Campaign staff developed guidelines for three funding categories, A, B, and C, designed to respond to the different needs of NWOs. Category A grants (up to $500,000) were to assist NWOs that were already assisting 30 or more home buyers a year increase the number of home buyers assisted. Category B grants (up to $500,000) were to assist NWOs that were already assisting a large number of new home buyers enhance the positive impacts of home ownership on their target areas by undertaking other neighborhood improvement activities as well as increasing the number of home buyers assisted. Category C grants (up to $50,000) were to assist NWOs that were assisting a relatively low number of new home buyers build their capacities to do so. A total of 35 Category A grants were made, nine Category B grants and 40 Category C grants.

To assist Campaign and Pilot sites in achieving their goals, Neighborhood Reinvestment provides several types of technical assistance. The semi-annual Neighborhood Reinvestment Training Institute offers a variety of courses on developing homeownership promotion programs and home-owner education methods. Neighborhood Reinvestment has also developed an extensive array of marketing materials that can be used by Campaign and Pilot organizations. Finally, Neighborhood Reinvestment Campaign and field staff assist participating organizations with special challenges as they arise.

This report is the second of three reports evaluating the outcomes, implementation process and impacts of the Pilot. The outcome evaluation was designed to document the results of the Pilot including the number of persons trained and/or counseled, the number of new home owners assisted, and the value of housing units purchased, built or rehabilitated with the assistance of the Pilot organizations. This evaluation is based on information provided to Neighborhood Reinvestment by participating NWOs. The process evaluation was designed to document and evaluate the efforts of Neighborhood Reinvestment and participating NWOs in planning and implementing the Pilot programs. This part of the evaluation is based on interviews conducted in two rounds of site visits to eight Category A and B Pilot programs -- once in the fall of 1999 and once in the spring and summer of 2001. Finally, the impact evaluation was designed to assess the influence of the Pilot on the participating NWOs and their clients. The evaluation is based on interviews with NWO staff and focus groups of new home owners assisted in the eight sites visited. Complete info »

Residential property management is easiest to do well and profitably when a large number of units are concentrated in a small number of properties located in close proximity. Many managers of residential rental property consider 150 to 200 units a minimum threshold for undertaking the management of a property. Many managers of affordable housing throughout New England and elsewhere, however, are operating without these advantages: their portfolios are modest in size; individual properties typically have less than 50 units and are often scattered over a large geographic area.

Economies of scale can prove elusive for small properties or small portfolios. It is difficult to deploy management staff to administer and maintain properties over large geographic regions. Finally, many rural communities in New England have faced declining populations and softening real estate markets in recent years, creating further obstacles to profitable property management.

We visited seven property management firms, both non-profit and for-profit, who are widely regarded as doing good work even in difficult environments to learn how some property managers faced these challenges successfully. They have portfolios that range in size from 65 to 2,000 units and from one to 65 entities. (An entity is any building or number of buildings that have the same ownership structure. All but one of the organizations manage less than 1,000 units. We also spoke with four firms in other parts of the country that face similar challenges. We found that while it may not always be possible to turn a profit, a well-run company can sustain high-quality affordable housing even in the face of these challenges.

This article will highlight some of the successful strategies we observed are significant in managing small, rural or scattered properties. Complete info »

This paper examines social entrepreneurship from a community-development perspective. The target audience is community-development nonprofit organizations. The paper begins by contextualizing social entrepreneurship in community development and creating an analytical framework in which to think about efforts of organizations to integrate entrepreneurial and businesslike thinking. The paper presents key findings regarding both earned-income activities and strategic alliances as options for these organizations, as well as 10 key issues that arose as factors that impact their successful implementation. Information was gathered through a literature review, 29 interviews of practitioners, policymakers and academics and a survey of 59 community-development nonprofit organizations. Complete info »

Nonprofit organizations seeking to provide affordable housing in their communities need access to capital to pay operating costs, provide down-payment and closing-cost assistance, capitalize revolving loan funds, and develop rental housing. They also need to build and strengthen their capacity to offer programming, to train new staff as old ones leave, and to learn new strategies for creating and maintaining affordable housing.

The HFA community is also seeking partners who can assist them in meeting a similar mission but have both local expertise and a national presence to share experience and support. They are also looking for partners with a good track record in both production and impact. The NeighborWorks network is uniguely situated to provide that in many states.

This paper highlights a variety of ways that NeighborWorks organizations and state housing finance agencies (HFAs) are partnering to provide financial and technical assistance to affordable housing efforts. Complete info »

While the overall homeownership rate in the United States is at an all-time high, the gap between the ownership rates of low-income and higher-income households remains wide. In addition, homeownership rates in urban, low-income and minority communities lag behind. Lower-income families are constrained a lack of information about how to buy a home, by their inability to provide sufficient, stable income streams for debt service, by their lack of initial equity, and by their inability to find an home of adequate quality in a desirable location. This paper explores each of these constraints, or gaps, and potential solutions for each. We find addressing each of these gaps involves trade-offs, yet targeting the appropriate strategy for particular markets and populations may be able to help families become home owners. Information gaps are best addressed by programs that provide home buyer counseling and education. Federal funding and incentives for such programs have been declining throughout the last decade, however. Unless new homebuyers are well-prepared and supported, none of the sophisticated development and financial strategies will be successful. Income and wealth gaps are closely linked; bridging a wealth gap for a buyer, for example, may increase the buyer's income gap. While there are several strategies that seek to bridge these twin barriers, the most promising among them is the second mortgage. The supply gap is most pressing in faster-growing coastal cities, but is becoming a more significant constraint to homeownership nationally. Unfortunately, reliance on filtering and other traditional mechanisms for creating affordable homeownership opportunities has not proven effective in recent years. Serious consideration should be paid to new production programs and policies that can enhance the supply of affordable owner-occupied units in targeted areas. Overall, a menu of strategies exists, each being appropriate for targeted households in a given housing market context. More attention needs to be focused on this menu, rather than a one-size fits all strategy. Complete info »

The issue of how people can age in place in a safe, healthy and dignified manner is a front-burner issue, especially for the poor, frail elderly who live in communities served by the NeighborWorks network and by other community-based housing and health-care entities. The Southern District office of Neighborhood Reinvestment convened practitioners in the fields of housing, healthcare and supportive services to address this issue. Complete info »

This paper explores the use of public schools as tools for community and economic development. As major place-based infrastructure and an integral part of the community fabric, public schools can have a profound impact on the social, economic and physical character of a neighborhood. Addressing public schools, therefore, is a good point of entry for community-based developers to place their work in a comprehensive community-development context. The paper examines ways in which community-based developers can learn from, as well as contribute to, current community-based efforts, particularly in disinvested urban areas, to reinforce the link between public schools and neighborhoods. Furthermore, the paper considers the policy implications of including public schools in comprehensive development strategies, and argues that reinforcing the link between public schools and neighborhoods is not only good education policy, but also good community-development policy and practice. Complete info »

Edited proceedings of the Neighborhood Reinvestment Corporation Symposium, NeighborWorks Training Institute, April 18, 2001, Chicago. Hosted by the NeighborWorks Multifamily Initiative.

The five papers that follow were written by five lead presenters at the symposium and distributed in advance to symposium participants to provide a framework for each panel discussion. Reports of the panel discussions are also provided, which includes many valuable insights offered by audience members as well as panelists. Complete info »