Equity America
The mission of Equity America is to create and provide affordable housing solutions while focusing on community development. We strive to be the catalyst for community development by not only helping with housing assistance, but to provide opportunities for those who would not have the economic resources to do so otherwise.
We will work closely with the families on a case by case basis to help them take charge of their economic situation through counseling, and creation of accounts to help them towards a more equitable future.
PREMISE
Housing prices are falling in virtually all markets. Increasingly there are units available at prices low
and moderate income people can afford. Neighborhoods desperately need homeowners to take
over the vacant stock which is dragging down values and becoming attractive to investors looking
for cheap rentals. Nonprofits have the opportunity to raise capital, expertise to buy, renovate, and
re-sell single family homes. But where are the buyers?
Many market prices may be hitting bottom and before long they will begin edging back up. It will
never cost less, in subsidy terms, to help low-income families buy their first home, as prices have
dropped. Now is the right time to help the next generation of buyers. Effective planning will produce
a dynamic guide for both public and private institutions to enable residents of a community to enjoy
prosperous, healthy and fulfilling lives, live in safe and vital neighborhoods, and be confident that
the actions they take today will enhance the quality of life they will enjoy in the future.
The following summary is meant to provide an understanding of Equity America, its concepts and
philosophies and the approach which make up the foundation the organization is built on. It is
hoped the summary will help in determining the feasibility and possibilities of success when
assessing whether to participate with the organization and support it’s efforts in providing
affordability in rental housing, the transition to homeownership and the critical support needed to
sustain home ownership success using proven strategies of financial management.
INTRODUCTION
To introduce the concept of a “Community Development Housing Model” you must illustrate the
convergence of the public-private worlds into the public-private partnership. Traditionally, the
private sector has focused on profitable markets, the public sector solving market failures, and the
nonprofit sector engaging citizens in meeting social needs. Recent trends, however, are
increasingly blurring the social and economic roles that businesses, government agencies, and
nonprofits are playing.
For the nonprofit sector, pressures are growing to fill gaps in public service delivery, ensuring that
citizens can get the services they need even when government is unwilling or unable to provide it.
In providing essential services, nonprofit leaders are striving for sustainability to ensure that they
will continue to be able to meet the needs of those they serve.
The concept where non profit agencies play a more enhanced role of offering home purchasing
alternatives to their community is a critical one. The local agency is familiar with the housing needs
of the community and are most likely familiar with homebuyer assistance programs. Public
Housing Authorities administrate programs that provide rental assistance to families and are aware
of families that may fit well in a homeownership program. Banks as well as Government
Sponsored Enterprises (GSE’s) are seeking new ways to relieve the pressure of the real-estate
owned (REO) inventory on the housing market. Aware of these factors, a unique collaboration of
community stakeholders have come together to introduce an initiative known as “Do More Than
Dream”.
The initiative provides support to the valuable efforts of locally operated community and faith based
organizations (Housing Centers) and Local Public Housing Authorities (PHA’s) as well as
Participating Jurisdictions (PJ’s) wishing to initiate and promote housing affordability and the use of
financial management programs in their communities. This collaboration introduces new
techniques and a fresh new approach in offering needed affordable housing services and the
administration of financial planning activities to the communities of America.
ABOUT US
Equity America was formed to assist in the development of locally operated organizations that offer
assistance to low and moderate income families in their pursuit to obtain homeownership and
financial sustainability. The organization offers a turnkey operating system and the services
necessary to make it easy for a network of participating organizations to be part of the solution by
serving as originators of fair and competitive housing and financial planning services in there
communities.
This collaboration of community stakeholders addresses the need to bring homeownership within
reach of families with income barriers and enhances their ability to achieve financial self-sufficiency
by offering access to supportive programs in a more efficient and economical manner than if each
organization accumulated their own independent resources.
OPEN DOORS HOUSING CENTERS
Equity America acts as a “Lead Agency” to engage in the activity of providing locally operated
organizations known as “Open Doors Housing Centers” numerous tools and services that enhance
their ability to assist families in obtaining home ownership by making the everyday tasks of
originating financial and real estate services easier and more efficient.
Equity America extends it’s developed programs and services to organizations who presently offer
support to affordability in housing as well as those organizations who wish to do so. This growing
“Housing Center Network” enhances the ability of families to obtain home ownership by providing
them access to a locally operated independent agency in their own community with the tools
necessary to accomplish their home ownership goals.
In order to build the needed productive capacity, Open Doors Housing Center’s are expected to
broadly employ the use of information technology in the form of decision tools and individualized
assistance platforms. The development and integration of information technologies are designed to
support the efficiency to the center and enable them to initiate the home buyer process with ease.
STRATEGIC ALLIANCES
Public Housing Authorities
The Do More Than Dream Initiative is designed to create a more efficient response for the
local Public Housing Authority (PHA) to meet the challenges found in supporting families
they serve who seek the ability to transition into homeownership after a lease period. The
innovative solution provides HUD assisted renters with the tools necessary to develop
savings programs, access alternative financing programs and the skills that lead to
economic self-sufficiency.
As a result of their participation in the program, many families will increase earned income
and financial literacy, reduce or eliminate debt and make progress toward achieving
economic independence , and for the first time explore the possibilities of homeownership.
Most PHA’s have had little opportunity over the past decade to develop new housing; most
efforts have been targeted at the modernization of existing stock. As a result, PHA’s often
lack in-house development experience, particularly as it relates to development of
homeownership units.
The Do More Than Dream Initiative provides the vehicle for attracting experienced
non-profit and private sector partners to support the activities that impact Public Housing
Authorities and the communities they serve the most, the often complex housing
development, home financing and financial planning activities needed to provide an
organized pathway to homeownership and financial sustainability to the families the serve.
Banking Community
Do More Than Dream offers alternative pathways to homeownership that offer many
benefits to both homeowners and the broader financial community. Banks and mortgage
servicers are holding growing inventories of foreclosed properties and are searching for
suitable and innovative solutions to move these properties as quickly as possible out of
their REO backlogs. Some banks have developed an affordable housing or
homeownership component as a piece of their broader REO disposition strategy.
The initiative uses the existing strength of a community development or community
relations department within a bank to help build an effective connection with community
entities interested in acquiring REO properties for their rental and homeownership
initiatives.
Ideally, many banks develop these strategies along with their asset disposition
units. Banks see that nonprofit entities, housing finance agencies, and local governments
can leverage their resources and provide access to grants, subsidies, below-market
financing, or loan programs.
Because nonprofit partners are familiar with key community leaders and programs, they
may have access to public financial resources to obtain various subsidies vital for their
property acquisition strategy. Non profit housing organizations access rehabilitation
financing, down payment and closing cost assistance to enhance their ability to offer
affordable loan products to potential purchasers in their home-buyer counseling programs.
An affordable rental housing or homeownership strategy can be one aspect of a bank’s
broader REO disposition strategy. Reaching out to nonprofit partners can expand the pool
of potential REO buyers. Nonprofits that offer services such as homeownership education
and savings programs typically have a pipeline of qualified potential borrowers who are
interested in becoming homeowners but may have been previously priced out of the
market. Nonprofits also manage affordable rental properties, and some even offer leaseto-
own programs as an alternative.
Government Agencies
Do More Than Dream looks at the conversion of foreclosed homes to rental housing and
for renters to become owners through lease-to-own plans as one way to relieve the
pressure of the real-estate owned (REO) inventory on the housing market. The
Department of Housing and Urban Development, the Treasury Department, and the
Federal Housing Finance Agency (FHFA) are seeking new ways to sell single
family REO properties held by the FHA, Fannie Mae, and Freddie Mac.
The initiative envisions bulk sales of REO properties in specified geographic areas through
a joint venture or some other structure that would make use of the capital and
management expertise of various parties. The approach will reduce the REO
portfolios of FHA and the government sponsored enterprises (GSE’s) in a cost effective
way, address repair and rehabilitation needs, respond to local economic and real estate
market conditions, and support neighborhood and home price stabilization efforts.
CONCEPTS AND PHILOSOPHIES
From the very outset, the goal of Equity America has been to deliver affordability in residential
housing with the all the crucial attributes needed to maintain safe neighborhoods in geographical
areas adversely affected by income barriers and whether environments.
Non profit organizations have been integral to extending home affordability support to underserved
populations and communities for some time. Research suggests that these organizations improve
the performance of the market in many ways. Research has also shown how community
organizations could leverage these advantages and better develop their role as a partner to
financial institutions and affordable housing developers.
Community organizations have ample opportunity to develop more sophisticated business models
that are more integrated with the mortgage and housing development markets and could attract
more sustainable revenues.
History suggests that community as well as faith based organizations could develop and sustain
this line of business, but not without a series of challenges centering on issues involving
organizational culture, market knowledge, and scale of operation. From this analysis of challenges,
two lessons emerge.
Lesson 1:
The financial services / housing developer service provider model, as practiced by the
private sector, is not the appropriate model for the vast majority of community
organizations.
Most organizations do not have the scale and focus of operations or the market knowledge
to become full-service providers of financial services on a sustainable basis, although
some clearly are trying and some will be successful. However, the step from being a
housing counselor to a financial service provider is large and probably not a sustainable
one without considerable changes in operations.
Lesson 2:
Community organizations can and should find new ways to retool their existing work to
emphasize their value and interface more effectively with the financial services and home
developer market.
An enhanced counseling model can better serve their homebuyers and perhaps attain a
more sustainable revenue stream by developing better models that nonprofit counseling
programs can use to change their relationships with financial service partners to a feebased
system.
Solutions
The non profit community could build on the productive capacity of a developed hybrid
business model that can combine the strengths of traditional non-profit counselors with the
entrepreneurial drive and sophistication of for-profit mortgage and financial service
providers (the “hub-and-spoke” model).
The capacity of existing nonprofit counselors can be nurtured by broadly employing the
use of information technology in the form of decision tools and individualized assistance for
community organizations that are considering the financial services / housing developer
model. Whether a full-service or hybrid, decision tools are developed that can help
community organizations through the key considerations of becoming a financial and
housing construction service provider.
Providing access to these tools more widely to the nonprofit community would help them
consider their current situation and the context in which they operate by diffusing the
model based on budgets solely provided for by grant participation to a model based on a
hybrid grant / fee-based system. In addition, these tools should and can be assessed and
updated regularly as the business models for enhanced counseling and hybrids evolve.
HOMEOWNERSHIP PLATFORM
Now, a unique platform enables collaboration and cooperation between critical community
stakeholders. The platform allows these stakeholders to work together and offer the tools
necessary to develop various components used in the homeownership process and the extension
of financial services designed to make it affordable. Ultimately, the platform is meant to address
the need to bring homeownership within reach of low to moderate income households and
enhance their ability to achieve financial self-sufficiency.
The following introduces a full cycle home purchasing program with enhanced counseling and
homeowner preservation policies to help borrowers hold on to their investment and help
neighborhoods maintain their value.
Rental Housing Placement and Management
Equity America has developed a program that emphasizes placing families in managed
rental housing and immediately enroll the tenant in a program that promotes accelerated
debt reduction, individualized savings programs and initiates the home purchasing
process. Families are encouraged to use personalized case management to promote
financial self-sufficiency and transition into homeownership.
The organization seeks out both non profit and for profit housing developers and public
housing authorities (PHA’s) which are motivated to place program eligible families in the
housing they manage and own. Program eligible is defined after an initial financial analysis
determines criteria and current financial circumstances of the applicant.
Property Acquisition Strategy
In response to the fluctuations of home values in the marketplace and our mission to
continue to make homeownership a reality for families, the organization has introduced a
proactive strategy with housing developers, financial institutions and government agencies
to undertake property disposition initiatives.
The initiatives evaluate and purchase below market and real estate owned (REO)
properties at a discount and facilitate an expeditious disposition of the property that allows
the servicer to avoid certain holding costs (e.g., avoidance of real estate sales
commission, property management expenses, taxes, insurance, property deterioration due
to vandalism. The strategy provides access to a competitive price range inventory of
existing houses and lot sites and in turn are made available to low and moderate-income
families through a unique alternative purchasing program.
Alternative Home Purchase Programs
Equity America brings together public sector resources and cooperation from banks and
other financial institutions to create ways to meet the home financing needs of low to
moderate income families throughout the communities of America. An alternative purchase
program provides fare and equal access for the emerging market homebuyer; families who
don’t fit conventional home purchasing models and haven’t been served adequately by the
conventional lending markets.
The lease-purchase initiative help buyers move into houses by supporting the use of public
and private funding sources by non profit developers to acquire or construct housing, and
lease them to eligible families. Agencies identify “tenant purchasers”, renters who take part
in homeownership counseling, debt reduction and financial management services during
the rental period. The program seeks secondary markets, where the loans are purchased,
and in turn the tenants can assume the mortgage within a six (6) to twenty four (24) month
time frame when they meet predefined requirements.
The exciting partnership brings housing providers and participating families together in a
unique lease-to-own program and brings homeownership within reach of low income
households. The tenant typically develops a long term commitment to their neighborhood
and community because they have the opportunity to purchase the home after a lease
period. Tenants look forward to becoming long term residents of the community and
assume most of the property maintenance responsibility, just as the homeowner would.
Mortgage Loan Development
The purpose in developing a specialized mortgage loan product is to enhance the ability of
families to exercise options afforded them through a lease option agreement. By
coordinating the assistance used in government payment guarantees with those of public
and private resources, the unique financing model provides participating families the
flexibility to secure a mortgage by the use of federal mortgage payment guarantees. This
loan structure is used to service the debt on a 15-year second mortgage. As a result, the
homebuyer increases their borrowing capacity.
Financial Planning and Case Management
Using proven strategies of financial management has the power to greatly simplify and
benefit the lives of homebuyers and tenants alike by achieving freedom from debt and
building equity and wealth. Providing that support may be the most critical step in the
tenant to homebuyer transition process.
Equity America offers a unique companion to those organizations administrating first time
homebuyer counseling programs as well as Public Housing Authorities interested in
offering effective home purchasing tools to the families they serve, no matter where they
are in the homeownership process.
Existing agencies providing housing programs as well organizations wishing to initiate a
program on homeownership now have access to the tools necessary to offer a
financial analysis and provide a specific financial plan for homebuyers and tenants alike.
The platform ensures a continued pathway to homeownership and identifies debt
elimination and wealth creation strategies. Centralized servicing provides for technical
assistance and third party administration in support of the program.
CONCLUSION
While the organization will continue to pursue policy solutions to affordable housing, this response
is a critical and complementary component to the organization’s comprehensive approach to
financial solutions and other real estate services under the banner of Equity America. The Equity
America solution is an efficient and transparent process. Most lenders don’t want to even bother
with cumbersome and less standardized procedures.
But with Equity America, the path is clear and the process is visible from beginning to end allowing
collaboration with confidence, standardization with results and the enhanced opportunity to
leverage existing funds by optimizing subsidies and investments and saving families money
throughout the home buying process.
Right now, a collaborative network is being born and Equity America is in the center of it. For the
first time, public, non profit and private organizations can work together seamlessly to achieve their
common goals.
An evolution is taking place, as Equity America’s proven strategies are being introduced through a
new business model that is faster, clearer and more cost effective than ever before and will
continue to evolve and stay at the forefront so that the low and moderate income homebuyer can
get the service they deserve.
Managing today’s money is truly the best way to create a better tomorrow. Let’s bring together
mission driven originators and neighborhood stakeholders to give homebuyers a process they can
believe in, not just an “American Dream”. Let’s provide a clear pathway to homeownership and the
financial planning that produces results. “Let’s Do More Than Dream”
Thank you for the opportunity to share with you this unique concept in supporting the
commendable activities of all local affordable housing organizations and their pursuit to provide
affordability in housing. We invite you to learn more about how these solutions may enhance your
organization’s ability to provide a pathway to homeownership in the community you serve.
