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October 14, 2009
2009 Wachovia NEXT Awards for Opportunity Finance Are Awarded to Two CDFIs
    by Robert Kropp

The New Hampshire Community Loan Fund and the Federation of Appalachian Housing Enterprises are awarded a total of $8.25 million in low-cost loans and unrestricted grants.

The Wachovia NEXT Awards for Opportunity Finance, which since 2007 have provided Community Development Financial Institutions (CDFIs) with financial awards that combine unrestricted grant dollars with unsecured below-market loans, announced award recipients for 2009.

The award program is scheduled to continue through 2011. The awards are presented by Opportunity Finance Network (OFN), a network of 170 financial intermediaries that have originated more than $19.8 billion in financing in non-conforming urban, rural, and Native communities through 2007, and are funded through OFN by the Wachovia Foundation and the John D. and Catherine T. MacArthur Foundation.

The recipients of the 2009 awards are the New Hampshire Community Loan Fund, which will receive a a $5 million low-cost loan and a $500,000 unrestricted grant, and the Federation of Appalachian Housing Enterprises (FAHE). FAHE will receive a $2.5 million low-cost loan and a $250,000 unrestricted grant.

The New Hampshire Community Loan Fund is one of more than 800 CDFIs certified by the Community Development Financial Institutions Fund. Since 1984, it has made more than 1,400 loans to low-income people, totaling more than $100 million, and leveraging more than $348 million, to build housing, created jobs, and support such services as child care and community facilities.

The Community Loan Fund was selected for its expansion of a financing program for manufactured housing mortgage loans. Juliana Eades, president of the Community Loan Fund, said, "About 8.5 million Americans live in manufactured housing. In 2002 we set out to prove that loans with traditional underwriting standards and home appraisals would work in this market. In seven years our program has loaned over $18 million, and our cumulative loss rate is 0.53%."

The program is designed to help residents of manufactured housing communities to purchase the land on which their homes are located. Its success rate has encouraged traditional lenders to provide advantageous mortgage loans to buyers of manufactured housing.

"Local banks have bought pools of our loans, and last year two local banks began offering traditional mortgages, backed by Fannie Mae," Eades said.

FAHE, the largest provider of community investment capital in Central Appalachia, provided $41 million in direct financing in 2008, and its members produced 3,800 housing units. FAHE was selected for its strategies to eliminate the substandard housing conditions that are prevalent in Central Appalachia. The organization's goal is to produce 8,000 housing units annually by 2015.

Jim King, president and CEO of FAHE, said, "In our region there are over 100,000 substandard homes. Affordable housing and community development are tactics of choice for driving deeper cultural changes in the region."

FAHE created an equity fund that utilizes the Low Income Housing Tax Credit (LIHTC) program to develop multifamily housing in a rural region traditionally underserved by LIHTCs.

"Our multifamily development compact delivers low-income housing tax credits through equity funds that offer competitive returns to private equity investors," King said.

The 2008 recipient of the $5.5 million Wachovia Next award was the Illinois Facilities Fund (IFF), which is using the funds to double its core lending and real estate businesses, expand its financial solutions, and build a public policy department over the next five years.

Homewise, located in New Mexico, received the 2.75 million award in 2008. Homewise, which has made loans to more than 1,200 households to help them buy and improve their homes, is using its award to expand geographically and to replicate its housing model in cooperation with other CDFIs.

In announcing the 2009 awards, Mark Pinsky, president and CEO of OFN, said, "The awards are particularly important this year. Against the backdrop of the last few years of tight credit, the pain caused by irresponsible lending, and the recession, our awardees are beacons of opportunity."

The mission of CDFIs is to promote economic revitalization and community development in areas that are underserved by traditional financial institutions. Types of CDFIs include banks, credit unions, loan funds, venture capital funds, and community development corporations. Nationwide, there are more than 1,000 CDFIs, with a collective $25 billion in assets.

In June, Treasury Secretary Timothy Geithner announced $90 million in financial assistance awards for 59 CDFIs in 26 states and Puerto Rico, to support new economic recovery projects for development and investment in local communities.

The CDFI Fund has estimated that CDFI awardees leverage each financial assistance award dollar with $27 in private sector dollars.


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