NeighborWorks Montana, a statewide housing nonprofit organization, was awarded $1.75 million from the U.S. Department of Treasury’s Community Development Financial Institutions (CDFI) Fund. NeighborWorks Montana will use the money to expand a popular lending program and increase its impact on communities throughout the state.
The organization also will use the CDFI funds to support its 20+ Community Second and multifamily lending programs, to help purchase real estate for low-income housing developments and to help expand its Resident Owned Community programs.
“CDFI has committed a significant amount of money to Montana this year,” said Sheila Rice, executive director of NeighborWorks Montana. “We are proud to have received the largest CDFI grant in the state and will put the funds to good use helping Montanans become homeowners.”
The infusion of CDFI money will be especially welcome to potential homebuyers. When one borrower, Traci Clark, was shopping for a Helena home in 2013, she was told that she would have to live in the Helena Valley. That would have meant a long commute to her job with the Department of Health and Human Services and to her daughter’s school in the city of Helena. The loans for which the single mom qualified came with an added cost of expensive mortgage insurance if she wanted to live in the city.
Then, Clark heard about NeighborWorks Montana’s new 20+ loan product. With this loan, Clark was able to buy a home within the city limits. “I could not have bought my home in Helena without this loan,” said Clark, who received the first 20+ loan in Montana. “Now, I have a low, monthly mortgage payment and don’t have the expense of a long daily commute thanks to NeighborWorks.”
Following a series of regulatory changes in 2012-2013, NeighborWorks recognized that Montana residents needed a new program to fill a lending hole. The 20+ product was created to provide 20 percent of the financing as a second mortgage for homes in Great Falls, Missoula, Helena, Bozeman and Billings.
More than 100 borrowers have used NeighborWorks’ 20+ loans since the product was launched in 2013. The loans are made to individuals and families who want to live in one of Montana’s major cities, but want to avoid mortgage insurance premiums, which could be as much as $150 per month.
“The 20+ loans have been extremely helpful to borrowers,” said Maureen Rude, director of operations for NeighborWorks Montana. “These new homeowners don’t have to have expensive mortgage insurance. They can buy in town and have an affordable monthly payment.”
NeighborborWorks is extremely proud that it has never had “a single delinquency nor late payment” from the clients who have taken advantage of the 20+ loan,” Rude said. “The popularity of the product demonstrates how it filled a large financing gap. The $1.75 million from the CDFI Fund will go a long way toward helping us continue to fill the needs of Montana’s future homebuyers.”
“These loans are not ‘handouts,’ ” Clark said. “I just couldn’t get a leg up and over into home ownership. I’m not poor enough; I’m not wealthy enough. I work hard like most Montanans I know and I wanted to participate in the dream of home ownership. This is a smart way to help people get into a home. The second mortgage allowed me to access conventional funding which is a cost savings in the long run. The 20+ program opened options to the types of properties I was allowed to look at and didn’t just leave me with an option of a rural home because that is sometimes the only way people in the middle can find program assistance.”
NeighborWorks Montana was certified as a CDFI in 2007 and has received more than $4.5 million in CDFI financial assistance funds since 2009. The nonprofit works with a network of homebuyer education and homeownership specialists around the state, and provides loan and a matched-savings account programs. It creates opportunities for families and individuals to live in affordable homes in strong communities. Although NeighborWorks’ headquarters is in Great Falls, it also has offices in Helena and Missoula.
The CDFI Fund plays an important role in generating economic growth and opportunity across the U.S. By offering tailored resources and innovative programs that invest federal dollars alongside private sector capital, the CDFI Fund serves mission-driven financial institutions that take a market-based approach to supporting economically disadvantaged communities. The CDFI Fund awarded $202 million in financial assistance grants and loans in 2015 to 195 CDFIs. The announcement capped the 20th anniversary celebration of the creation of the CDFI Fund and the CDFI Program.
The awards “highlight how much the CDFI Program has contributed in its 20-year history towards building a strong network of CDFIs across the country,” said Annie Donovan, CDFI Fund director. “These important community partners are not only on the frontlines of economically distressed communities providing needed capital and credit, they are building a more inclusive economy which benefits the nations as a whole.”