Blog RSS

Mortgage desert' gets helping hand By Stan Bullard

Cleveland Housing Network is outgrowing its name, but not its mission of using quality affordable housing to help build strong low-income families and vibrant neighborhoods.

The new name, effective Thursday, Sept. 14, is CHN Housing Partners, which the Cleveland-based nonprofit's board and staff leaders believe incorporates the larger scope of activities it plans and in some cases has already undertaken. It also builds on the organization's reputation burnished by working since 1981 with low-income people on a panoply of housing-related initiatives from lease-purchase housing to energy conservation.

A major initiative for CHN is need-driven in many Cleveland and suburban neighborhoods in the wake of tighter lending standards for banks providing home mortgages under federal regulations created after the housing bust and Great Recession.

Rob Curry, CHN executive director, said, "There are absolute mortgage deserts out there. We want to create mortgage products that, before and after purchase, move the needle for families with low incomes. It's one of the riskiest types of loans and costs lenders as much for smaller mortgages as large ones."

As a result, CHN is studying forming a Community Development Financial Institution (CDFI) under federal law that would allow it to provide loans to low-income homeowners who would not meet traditional bank lending standards, such as high credit ratings, but satisfy other criteria. CDFIs are common and typically are focused on economic development rather than home lending.

"We're known as a tough landlord, so when someone misses a (rent) payment they will hear from us," Curry said of CHN's lease-purchase programs, and that close monitoring and after-the-deal counseling would be brought to bear on the lending program.

A source of funds for loans could be found under community benefit agreements bank regulators have required lenders to provide in mergers such as KeyCorp's purchase of First Niagara and others. Lining up such support is a key first step.

A criteria to qualify as a CDFI, said Michael Griffin, CHN board president, is having a track record for providing loans. That means CHN needs to assemble the staff for the effort to handle mortgage applications and underwriting before getting the designation, he said. CHN's board has authorized the effort, but Kevin Nowak, CHN general counsel, said it may be a year before it can actually win the designation.

"We're at a collective roll-up-your sleeves level," Curry said.

The other reason for the name change is that CHN, traditionally associated with rehabilitating single-family homes it sells to low-income buyers through a lease-purchase, increasingly is undertaking full-blown construction and redevelopment projects of multimillion-dollar scale, often with other nonprofits that provide continued services to residents.

One example is Hough Heritage Senior Housing, a 60-unit apartment building for independent senior citizens at 1844 E. 97th St., that went in on a site that is part of Boca Raton, Fla.-based Finch Group's Upper Chester, which neighbors Finch's Innova market-rate apartments near the Cleveland Clinic. Another is focused on providing housing for the chronically homeless along with services called Emerald that has constructed nine buildings in locations scattered among Cleveland neighborhoods from MidTown to Detroit-Shoreway.

"We also work with nonprofits who own housing and need to recapitalize it," Curry said. A big example of that is the $5 million renovation and updating of the Westerly Apartments, a pioneering senior citizen complex at 14300 Detroit Ave. developed in 1963 by a special-purpose nonprofit, Lakewood Senior Citizens Inc. Two buildings have been renovated, and a third is about to start.

Another major initiative is being part of the Enterprise Community Partners and Cuyahoga County-led Housing First Coalition effort to reduce chronic homelessness in the county. CHN has played the role of developer for the nine Emerald Alliance permanent supportive housing complexes for the effort, each costing more than $10 million to construct and incorporating more than 60 suites. CHN worked to build community consensus, secure city approvals for the projects and oversee contractors who build them. The Eden nonprofit provides services to assist homeless people with social services and manages the operations with a goal of helping clients land jobs and their own housing.

Kate Monter Durban, CHN assistant director, said the effort has decreased chronic homelessness by 85%.

All the efforts stem from experience CHN gathered in its lease-purchase program, which provides new or renovated houses for low-income families on a lease basis that they may buy after 15 years. Throughout that time, CHN provides financial and other counseling to help long-term tenants make it as homeowners.

"This is a labor of love for us," Durban said.

CHN has produced 2,000 such units, and 1,600 are now resident-owned. All told, CHN has developed 6,000 homes in the region.

Those real estate and construction skills are leveraged with professional consultants to undertake the projects of scale. Over the years, CHN has expanded services as they relate to its mission to incorporate areas such as foreclosure prevention counseling, financial stability and youth counseling.

When possible, it provides services such as home weatherization and heating and cooling services, as well as construction with its own staff. That has resulted in the growth of an organization with 170 staffers, most in maintenance, but also about a dozen each in accounting and real estate development.

"We use the services that are robust," Curry said, and produce more income such as the major developments to subsidize those that produce little extra revenue. That means its budget is about $50 million annually, which includes the cost of construction materials. Just 3% of its funds come from fundraising.

"We're an entrepreneurial nonprofit," Durban said, operated with a business focus on meeting human needs associated with housing.

All those tasks created expertise that CHN is increasingly taken outside the area, Nowak said, such as assisting in ironing out problems with lease-to-own programs supported by the affordable housing tax credit in Detroit and renovating older low-income buildings in Toledo and Massillon.

Cleveland could cause confusion in such out-of-town contexts, but the C in CHN's new name keeps that connection.


See Full Article