Case Studies on How Flexible Capital is Changing Affordable Housing Lending
In the 2010s, NHT grew its capacity to invest in affordable homeownership opportunities, inspired by the legacy of Institute for Community Economics (I.C.E). The following are a few examples of the kinds of loans we have made to support the homeownership dreams of dozens of families.
Yellow Springs Home, Inc.
In 2015, Yellow Springs Home, Inc. (YSH), a Community Land Trust in Yellow Springs, Ohio, approached NHT about a loan to support a property and homeowner in distress. The homeowner was already a CLT owner but had fallen into financial hardship and was struggling with hoarding and mental health issues. YSH wanted to exercise its option to purchase the home to prevent foreclosure, address cleanup and repairs, and resell to a new low-income homebuyer. The CLT had a waiting list of 51 households wanting a CLT home, and had they not stepped in, both the preservation of the home and wellbeing of homeowner were at risk. In the spirit of community support, YSH connected the homeowner with social services to ensure that they could find a new stable home.
The level of disrepair in the home meant the expenses would exceed the property value in the near term. This made it challenging to find a financial solution to repair the home and keep it as an affordable community asset. NHT was willing to make an acquisition and rehab loan of $100,000, knowing the value of repairing and keeping this home in the CLT would have for the community. In summer 2017, after repairs, a young couple who attended nearby Antioch College were announced as the new owners. They spent 100 hours of “sweat equity” buy-in to the CLT by landscaping their neighbors’ homes.
Durham CLT
In 2016, longtime I.C.E. borrower, Durham CLT, approached NHT about a property in a high-cost area where many homes were being purchased by private investors. The owner of this home was diagnosed with Alzheimer’s and needed to sell quickly to qualify for public healthcare. NHT made an $83,000 loan for Durham CLT to acquire and make capital improvements to the home. This loan was unique as NHT was able to move very fast and make a combination loan of a size too small for banks and many other CDFIs. Durham CLT sold the repaired home to a qualified buyer for $140,000 in an area where most comparable homes sold for close to $400,000. This was a key loan to preserve an affordable asset in a competitive housing market and create access to homeownership for a new household.
Northern California Land Trust
In 2021, NHT was approached by the Northern California Land Trust about a loan to purchase a home that was going through foreclosure sale. The Northern California Land Trust identified that as a critical loan to test new Homes for Homeowners, Not Corporations law. In 2020, California passed State Bill 1079, giving eligible bidders (including individuals, non-profits and tenant-buyers) a 45-day window to buy foreclosed homes after auction.
The home was days away from going to an investor, and NHT moved quickly to make the $600,000 loan to the CLT. The existing tenant, a known community leader in the Berkley public school system who created a COVID-19 food distribution program, was able to stay in her home, and eventually qualify to become a CLT owner in partnership with the Northern California Land Trust. This was a major win for a community where the median home price is well over $1,000,000 and it also proved the concept of the new state law.
Each of our homeownership loans has its own story and community impact, and over time we have scaled this lending into more formal loan products and programs. Next week we will share more about our innovative Amazon Homeownership Initiative, on track to develop 800 new affordable homes, and our Robert Wood Johnson initiative to provide enterprise loans for mid-sized CLTs.