Homeownership Development

The Housing Partnership Fund began making homeownership production loans in 2004. To be eligible for Fund financing, homes must be affordable to families whose incomes are 120 percent or less of their area's median income. Detached, attached, and condominium structures are all eligible.

We offer two lending products:

Homeownership Predevelopment Loans
Predevelopment loans provide preacquisition capital to help borrowers determine the feasibility of projects and to enable them to reach closing. These loans are repaid from the proceeds of acquisition financing.

Homeownership Development Acquisition Loans
Development acquisition loans provide ready capital for the acquisition of sites or buildings that are intended for affordable homes. In addition to acquisition costs, these funds may be used for site and lot development costs, as well as for the refinancing of predevelopment costs expended prior to acquisition. Designed primarily as affordable subordinate capital, the Fund has also taken senior lien positions on smaller projects. Development acquisition loans are repaid from the proceeds of construction financing, or from the sale of finished lots. The Fund typically does not act as a lender during the home construction period.

In underwriting a proposed loan, the Fund examines the borrower's capacity and history with projects of the type proposed. We review market and pricing assumptions, which usually require a professional market study. To the extent that construction financing is prospective, we examine contingency plans. Because all lending is recourse to the Network member, we also examine the financial condition of the borrower and/or the parent.

Neighborhood Redevelopment Acquisition & Bridge Loans
This variant on the Homeownership Development Acquisition loan program supports Network members who are acquiring foreclosed homes as a means of stabilizing communities hard hit by the current financial crisis. Organizations are acquiring both single- and multi-family homes in volume, using equity provided by the federal Neighborhood Stabilization Program (NSP), leveraged by private financing.

The Fund provides capital both to acquire homes, and to bridge to draws of NSP funds which have been approved for this purpose. We have recently closed an acquisition facility for $1 million with the Atlanta Neighborhood Development Partnership, and have approved another $1 million bridge facility for closing before the end of 2009. Working in partnership with the National Community Trust’s REO Capital Fund, we expect to substantially increase our lending of this type in 2010.

For more information, contact Matt Perrenod.