In 2024, NeighborWorks Capital launched a new lending program to deploy low-cost, long-term capital to NeighborWorks network organizations to empower them to expand their homeownership initiatives in communities of color. Wells Fargo provided $8.5 million for the launch of this program, and network organizations were selected for funding through a competitive invitation-only application process.
NeighborWorks Capital received 18 applications from organizations in 15 states, totaling over $17.5 million in funding requests and far exceeding the $8.5 available. Ten network organizations were selected based on several factors, including their historical single-family production levels in communities of color, their demonstrated commitment to reducing the racial homeownership gap, the expected impact of the proposed activities and the organization’s financial strength.
This month, NeighborWorks Capital shared the stories of the first two loan recipients in this program: Atlanta Neighborhood Development Partnership and Affordable Homes of South Texas.
Atlanta Neighborhood Development Partnership (ANDP)
ANDP will use the $1 million loan to expand its efforts to acquire, rehab and/or build new single-family homes for sale to low-to-moderate income
buyers in communities of color. The funds will expand their capital pool used for home production in place of construction debt and will save the organization an average of $14,000 per home in borrowing and other costs. They also plan to use the funds to acquire homes from a large investor owner of single-family rental properties to create new affordable homeownership opportunities.
The organization plans to build and rehab 428 homes over the seven-year loan term, with 84% of homeowners from communities of color.
Their target geography is home to 600,000 households and 1.7 million residents, of whom 65% are Black, and one in three have an annual income of less than $35,000. Within the Atlanta Metro region, ANDP will primarily focus on Fulton, Cobb, Gwinnett, Clayton and DeKalb Counties. Data indicates that 93% of their prior homebuyers are still in their homes today and those that have lived in their homes for five or more years have seen $135,000 in average wealth creation.
ANDP’s mission is to develop, finance, and advocate for affordable housing at scale that promotes racial equity and healthy communities where families thrive. From 2021 to 2023, they built and/or rehabbed an average of 46 homes annually and are one of the highest producers of single-family homes in the NeighborWorks network.
Affordable Homes of South Texas, Inc. (AHSTI)
AHSTI will use the $500,000 loan to support its homeownership production and preservation efforts. The funds will be used to acquire a parcel of land in Harlingen, Texas, from the local housing authority to develop 105 single-family homes. ASHTI will provide homeownership courses, first mortgages and second mortgages that will be proportionally forgiven over a 15-year period.
AHSTI develops, finances and advocates for affordable housing opportunities for low-income, working families who would otherwise not qualify for conventional home financing. The nonprofit has a 48-year history of creating safe, affordable housing, providing affordable homes to over 4,600 families, with 242 units of housing built, rehabbed and/or replaced from 2021 to 2023.
The Rio Grande Valley is AHSTI’s primary service area. Located just north of the U.S.–Mexico border and comprising predominantly Latino/Hispanic populations, the region faces significant challenges accessing affordable housing and achieving homeownership. With poverty rates well above the national average, traditional homeownership is inaccessible for many, particularly within communities of color and underserved regions.
There is a high demand for affordable and safe housing in the Rio Grande Valley area as many residents lack credit histories and face difficulties obtaining traditional mortgages. This limited access to financing is a major barrier to homeownership. The organization uses a unique system that includes homeownership classes and opportunities to repair credit. AHSTI’s mortgage loan underwriting process focuses less on credit score, and more on other indicators such as rent, car loan, phone and other bill payment history, as well as length of employment.
Affordable Homes of South Texas was previously awarded a loan from NeighborWorks Capital through a competitive application process for the Strategic Growth Fund loan program in 2016.
NeighborWorks Capital is pleased to support the organizations through its Homeownership for Communities of Color lending program, said Lanie Wasserman, senior loan officer and lead lender for the program. “We are grateful to be able to provide low-cost capital to leverage the outstanding work that the selected NeighborWorks organizations are doing to increase homeownership and build generational wealth in communities of color.”
Due to the high volume of applications and strong demand for this program, NeighborWorks Capital is currently working to secure additional capital to support even more NeighborWorks network organizations in their work.
This blog post first appeared on NeighborWorks Capital’s website. NeighborWorks Capital is a national nonprofit Community Development Financial Institution (CDFI) serving NeighborWorks network organizations.
