The Challenge
In states across the Deep South, Low-Income Housing Tax Credit developers are incentivized to build or rehabilitate scattered-site single-family homes with lease-to-purchase options. If no residents or local nonprofits are able to purchase the properties, developers are able to convert them to market-rate housing.
Thousands of LIHTC developments in the region are nearing expiration. In some communities where they are located, one in four Black people live in poverty. Unable to purchase their home, thousands of families face the threat of displacement. HOPE’s innovative mortgage product is designed to prevent people from losing their homes when the tax credits expire and to help close the region’s 30% gap between Black and white homeownership.
How it Works
HOPE’s Securing Homeownership innovation builds on an existing in-house mortgage product that has had success creating pathways to homeownership for historically underserved homebuyers. The new bespoke product will offer down-payment assistance and require no private mortgage insurance. Loans are manually underwritten and borrowers are assessed based on their rental payment.
Starting with a pilot in the Mississippi Delta, HOPE will employ their innovation with “rent-to-buy” LIHTC developers and conduct proactive homebuyer education with renters. At the same time, they will promote their mortgage product regionally and nationally. HBCU students from Mississippi State Valley University and Delta Design Build Workshop will retrofit homes with energy upgrades. Data collection and research will show state and federal stakeholders the power of ensuring long-time renters have opportunities to build generational wealth through homeownership.
