Community Loan Fund to receive 2009 Wachovia NEXT Award

Concord nonprofit honored for “breakthrough strategies” on behalf of low-wealth and low-income people and places

CONCORD, NH (Oct. 13, 2009) – The New Hampshire Community Loan Fund has been named recipient of the most prestigious honor in its field, the Wachovia NEXT Award for Opportunity Finance.

The Community Loan Fund was selected by the Opportunity Finance Network (OFN) for providing fair, fixed-rate mortgage loans to help people in New Hampshire's resident-owned communities build value in their manufactured homes. The Concord-based nonprofit’s prize includes a $500,000 grant and a $5-million low-cost loan.

The Kentucky-based Federation of Appalachian Housing Enterprises (FAHE) was also a NEXT awardee, with a grant and loan totaling $2.75 million. The award amounts are based on each organization’s asset size.

The two will be honored on Wednesday, October 28 at the OFN Conference in Charlotte, North Carolina.

In announcing the awards this morning, OFN President & CEO Mark Pinsky said the two community development financial institutions (CDFIs) were chosen for their track record of excellent past performance and extraordinary potential for breakthrough achievements.

Pinsky said the “breakthrough strategies” of the two awardees “have the potential to create transformational changes right now that benefit low-wealth and low-income people and places.”

“The Awards are particularly important this year,” Pinsky said. “Against the backdrop of the past few years of tight credit, the pain caused by irresponsible lending, and a recession, our awardees are beacons of opportunity. Through this crisis and looking forward, CDFIs will play increasingly important roles in financial markets and in the lives of many Americans.”

Community Loan Fund President Juliana Eades said: “The Wachovia NEXT Award is not just tremendous affirmation of our work. The $5-million loan will allow us to keep expanding our lending amid the current market contractions and uncertainty.”

“We hope that not too many years down the road, millions of families across the U.S. are no longer penalized by unfair financing when they purchase a manufactured home,” she said.

Many families living in manufactured homes have low incomes, and their house is their largest investment. But families whose manufactured homes sit on rented land, usually in parks, find that their houses don’t grow in value like they would if the families controlled the land beneath them.

Twenty-six years ago the Community Loan Fund started helping park residents form cooperatives to buy their parks – the land and the infrastructure – and manage them.

There are now 93 resident-owned communities in New Hampshire, home to more than 5,000 families. The strategy has successfully prevented families from being displaced and possibly homeless due to park closures. It addressed environmental problems in some parks. And resident-ownership stabilized rents in those parks.

But land ownership alone didn’t improve home values. Owners of manufactured homes were locked into unfavorable financing. The loans with which they purchased their homes were not mortgages, but personal property loans, like those for cars or boats.

Compared to conventional residential mortgages, they paid higher interest rates and higher down payments. Loan terms were shorter and contained prepayment penalties. Lenders put limits on the age of the homes they’d finance, and values were determined by depreciation schedules.

In 2002, the Community Loan Fund started to demonstrate that mainstream-type lending would work for manufactured homes in resident-owned communities. It began making fixed-rate purchase, refinance and home equity loans; offered 5- to 25-year terms; allowed 5 percent down without private mortgage insurance, and used traditional underwriting standards and home appraisals.

“We had two goals,” says Eades. “One was to demonstrate to conventional lenders that these mortgages were as attractive and stable as what they were used to offering. The other, by bringing those lenders into the market, was to create a stable and dependable source of credit for these homes so they could keep their value.”

In seven years the Community Loan Fund has written nearly $18 million in cooperative home loans, with a cumulative loss rate of one half of 1 percent (0.53%).

Conventional lenders have watched the Community Loan Fund’s results. Local banks have bought pools of their cooperative home loans. Last year, St. Mary’s Bank and Merrimack County Savings Bank began offering traditional mortgages backed by Fannie Mae in pre-approved resident-owned communities. Five communities have qualified so far, and more are in the pipeline.

“Long term, we hope Fannie Mae will expand its role in this market,” said Eades.

In 2008, the Community Loan Fund and some national partners launched a national nonprofit, ROC USA to spread its strategy across the country. In ROC USA’s first year, eight communities in seven states outside of New Hampshire have converted to resident-ownership.

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The New Hampshire Community Loan Fund is a non-profit financial organization that turns investments into fixed-rate loans and education to create opportunity and transform the lives of people across New Hampshire. We collaborate with a wide range of business, nonprofit and government partners to provide the fair loans and support people need to own homes, have quality jobs and child care, and become financially independent.

Established in 1983, the Community Loan Fund was one of the first community development financial institutions in the nation, and has received industry awards and recognition for social impact, financial strength and performance. For more information, visit www.communityloanfund.org or call (800) 432-4110.