Affordable Housing Revitalization through Home Ownership

Contributions by: Frank Demarais, Sarah Scruggs & Diane Richardson Spaite

 

For three decades Manna, Inc. has effectively, “…helped low and moderate income persons acquire quality housing, building assets for families through homeownership, revitalized distressed neighborhoods and in effort to preserve the racial and ethnic diversity” of the District of Columbia. Mission success occurs when Manna develops and builds affordable housing, with an emphasis on homeownership. The non-profit provides free high-quality financial literacy training/ homebuyer education services and fosters continued, multi-faceted post-settlement support for owners. Without partnership with government agencies, sister nonprofits and for-profit companies all of Manna’s efforts to advocate for public policies and affordable housing resources would be in vain.

Manna, Inc. assists each potential home owner with a counseling assessment followed appropriate home buyer education. Counseling and education are structured to inform home buyers of the fundamentals of qualifying for mortgage lending; choosing appropriate loans; property purchase options; and successful long-term ownership obligations. Potential owners are served based on their needs upon the point of contact. The Home Buyers Club program is recommended for those who need basic information and longer-term support on credit, income or other elements home purchasing. Individual assessments are offered for potential owners close to mortgage ready and interested in property. Manna provides resources for those Manna buyers and connects other potential owners to appropriate mortgage lenders.  In the last 30 years, the non-profit has developed over 1,000 homes ensuring every purchaser participated in the home buyer education process.    

When potential owners move from the Home Buyer’s Club to becoming home owners, Manna offers ongoing advice upon owner’s request.  The Home Buyer Club has an open door policy for all its meetings. Existing home buyers who have financial difficulty are always welcome. All Manna Home Buyer Club owners were contacted twice in the last 5 years with reminder list of items to review and a health checkup for the home owner for money savings options regarding loan, insurance and tax issues. Manna specifically mailed five year reminders to owners to prepare them for HPAP payments, beginning 5-years post purchase and DC real estate taxes, abated for lower income buyers for the 5-year period. Other affordable housing nonprofit organizations also performs similar outreach, including mailings by the Greater Washington Urban League affiliated HPAP community-based organizations. 

At the end of 2011, Manna reviewed all home buyers from its 30 year history and documented a less than 2% foreclosure rate, and the purchasers from 2002 – 2011 had zero foreclosures, in the worst real estate/ economic recession where even the standard Fannie Mae programs had foreclosures on over 5% of their originations from 2005-2007.  This achievement is attributed to Manna, Inc. requiring all home buyers receive home buyer education; fixed rate, fully disclosed mortgages and confirming their documented income. Manna’s professional services supporting 30 to 50 home owners annually is a part of significant baseline contributing to the overall health of the market. Through two recent campaigns: 2012 Own Now and the CityLIFT program, Manna has significantly increased its support of homebuyer hopefuls.

Over 90% of the Manna home buyers received DC Government down payment loans as part of their purchase.  The predominant program is the Home Purchasing Assistance Program (known as HPAP) for DC residents, but also included Employer-Assisted Housing program loans for DC Government Employees, and the Homestead Preservation Program.  Each of these loan programs requires 8 to 10 hours of face to face home buyer education, with additional support in the form of property inspections.

HPAP supports 250 to 400 new home owners, and other DC government homeownership programs support others.  This is in a real estate market that totals about 6,200 transactions last year, with about 2,000 under $400,000.  These programs provide about 10% of the buyers to the overall market and about 25% of the buyers to the under $400,000 market (market data from GCAAR Housing Reports posted on their website).

HPAP has partnered with over 13,000 DC residents as they move out of systems of dependency and ongoing subsidy, and currently generates $2 million in repayment every year. Even through the housing crisis, HPAP recipients have only a 2% foreclosure rate. HPAP is not money the District spends, but rather an investment the City makes in homes all across DC, an investment with infinite return. Homeownership offers a way for prepared families to build wealth through the equity in their home, helps reduce crime in neighborhoods, and improves children’s educational performance.

The impact is very specific to the neighborhoods where ownership happens, creating opportunities for longtime residents to stay in higher cost neighborhoods. Investment in new home owners statistically gives way to changing the citizen involvement pertaining to safety, school and overall quality of life in the neighborhood.  More significant is the impact on individual families, providing the only tangible wealth creation and a financial stabilizing tool for many.

As part of the one-time CityLIFT program, Manna was granted $7 million by Wells Fargo to lend as downpayment assistance. Over 1300 people came to the kickoff event in early October 2012 and 527 of those prequalified for a mortgage and left with downpayment reservations, while the others were scheduled for counseling appointments at Manna. Of the 527 with reservations, 198 were DC residents who made fewer than 80% of the Area Median Income, which, again, is the income group that HPAP serves.  Each week 20 new persons make contact about the LIFT program, which has allocated all of its funds, and all DC residents are directed to the HPAP program.

 Manna, Inc. believes firmly access to homeownership provides stable housing expenses to populations who have most impacted by steadily increased rent costs. Although home ownership involves costs such as ongoing maintenance and real estate taxes, the overall cost over time is still well below unpredictable rent increases. Therefore, families are empowered to plan for their housing expenses and contribute substantially to the overall health of their neighborhoods and the District.