Neighborhood Finance Corporation

NEIGHBORHOOD FINANCE CORPORATION'S (NFC) PRIMARY MISSION IS NEIGHBORHOOD REVITALIZATION, ACHIEVED THROUGH SUSTAINABLE HOMEOWNERSHIP AND RENOVATION LENDING FUNDED BY LOCAL FINANCIAL INSTITUTIONS, PAIRED WITH FORGIVABLE LOANS FUNDED BY LOCAL GOVERNMENTS. AS ECONOMIC AND ENVIRONMENTAL CHALLENGES ARISE, NFC'S RELEVANCE HAS ONLY INCREASED. NFC CONTINUES TO LAUNCH NEW PROGRAMS TO ADDRESS HOUSING AFFORDABILITY CHALLENGES. THE ADDITIONAL PROGRAMS INCLUDE, THE NEIGHBORHOOD REINVEST DOWN PAYMENT ASSISTANCE PROGRAM; EDUCATION, OUTREACH, AND DOWN PAYMENT ASSISTANCE FOR AFRICAN AMERICAN HOMEBUYERS THROUGH JOURNEY TO HOMEOWNERSHIP; AND ENERGY ADVANTAGE TO INCREASE RESILIENCE AND DECREASE ENERGY COSTS FOR HOMEBUYERS AND HOMEOWNERS.

LOAN ORIGINATION: NEIGHBORHOOD REVITALIZATION IS THE KEY MISSION OF NFC. THIS IS ACCOMPLISHED BY PROVIDING A LOAN FOR REPAYMENT AS WELL AS A FORGIVABLE LOAN FOR EACH QUALIFIED TRANSACTION. THE FORGIVABLE LOAN IS AT 0% INTEREST WITH NO PAYMENTS AND GENERALLY FORGIVEN OVER 5 YEARS. IN ADDITION, PURCHASE AND SOME REFINANCE LOANS HAVE A SECOND MORTGAGE AT A 2% INTEREST RATE FOR 10 YEARS INSTEAD OF REQUIRING PRIVATE MORTGAGE INSURANCE FOR BORROWERS WITH LESS THAN 20% EQUITY. NFC'S LOANS WORK TOGETHER TO PROVIDE A MORTGAGE THAT REDUCES THE BARRIERS OF DOWNPAYMENT AND EQUITY WHILE COMPLETING NEEDED RENOVATIONS OF THE PROPERTY.IN 2023, NFC CLOSED 165 LOANS. CLIENTS WERE SERVED THROUGH OUR PURCHASE, SECOND MORTGAGE, REFINANCE AND HOME IMPROVEMENT LOAN PRODUCTS AS WELL AS PROJECT REINVEST DEFERRED LOANS, NEIGHBORHOODLIFT LOANS, AND FORGIVABLE LOANS FOR DOWN PAYMENT ASSISTANCE. THE TOTAL DOLLAR AMOUNT OF REPAYABLE LOANS CLOSED IN 2023 WAS $8,568,025. PURCHASE LOAN, SECOND MORTGAGE, REFINANCE AND HOME IMPROVEMENT TRANSACTIONS WERE COMPLETED IN AREAS OF POLK COUNTY AND CEDAR RAPIDS THAT ARE IDENTIFIED AS AREAS FOR REVITALIZATION. THE NEIGHBORHOODS ARE TYPICALLY LOW TO MODERATE (LOW-MOD) INCOME CENSUS TRACTS. IN 2023, 164 PRIMARY LOANS (NOT INCLUDING SECOND MORTGAGES, NFC NEIGHBORHOOD REINVEST, NEIGHBORHOODLIFT , JOURNEY TO HOMEOWNERSHIP, ENERGY ADVANTAGE DEFERRED, POLK COUNTY DOWN PAYMENT ASSISTANCE, OR POLK COUNTY LARGE RENOVATION LOANS) WERE CLOSED, WHILE 119 CLOSED WERE MADE TO BORROWERS THAT WERE IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT AND/OR LOW-MOD INCOME FOR POLK COUNTY, IOWA AND CEDAR RAPIDS, IOWA. OF THESE 164 LOANS, 33 LOANS WERE MADE TO BORROWERS THAT HAVE LOW-MOD INCOME AND ARE IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACTS; 25 WERE MADE TO BORROWERS WITH LOW-MOD INCOME, BUT NOT IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACTS; 61 LOANS WERE MADE TO BORROWERS IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACTS, BUT DO NOT HAVE LOW-MOD INCOME; THE OTHER 45 LOANS CLOSED WERE MADE TO BORROWERS THAT ARE NOT LOW OR MODERATE INCOME OR IN A LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT. IN 2023, 72.6% OF LOANS CLOSED WERE TO EITHER LOW-MOD BORROWERS, LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT OR BOTH. IN 2023, 86.84% OF HOME PURCHASE LOANS CLOSED WERE TO FIRST TIME HOME BUYERS.NEARLY ALL RESIDENTIAL MORTGAGE LOANS CLOSED THROUGH NFC ARE TO OWNER OCCUPANTS. THE NUMBER OF HOME PURCHASE LOANS CLOSED IN 2023 WAS 38. NFC CLOSED 18 SECOND MORTGAGES, 123 HOME IMPROVEMENT LOANS, 3 REFINANCE LOANS, 42 ENERGY ADVANTAGE DEFERRED LOANS, 35 POLK COUNTY LARGE RENOVATION LOANS (2 OF 35 WERE NFC BORROWERS), AND 177 DOWN PAYMENT ASSISTANCE DEFERRED AND FORGIVABLE LOANS (31 NFC DOWN PAYMENT LOANS, 9 JOURNEY TO HOMEOWNERSHIP (J2H) LOANS (5 OF 9 WERE NFC BORROWERS), AND 137 POLK COUNTY DOWN PAYMENT ASSISTANCE LOANS (12 OF 137 WERE NFC BORROWERS)). IN 2023, 27% OF ALL LOANS CLOSED WERE TO COMMUNITIES OF COLOR BORROWERS.NFC LAUNCHED A DOWN PAYMENT PROGRAM SPECIFICALLY FOR NFC BORROWERS IN 2019. IT IS CALLED NEIGHBORHOOD REINVEST, AND PROVIDES A $10,500 0% INTEREST 30 YEAR DEFERRED LOAN TO HOMEBUYERS EARNING BELOW 100% OF THE AREA MEDIAN INCOME. NEIGHBORHOOD REINVEST WAS CREATED TO OVERCOME A PRIMARY BARRIER TO HOMEOWNERSHIP FOR LOW AND MODERATE INCOME HOUSEHOLDS. THE DEFERRED LOAN CAN BE USED TOWARDS DOWN PAYMENT AND CLOSING COSTS ASSISTANCE FOR ELIGIBLE HOMEBUYERS WHO PURCHASE A HOME UTILIZING NFC FINANCING IN NFC 'S LENDING AREAS IN POLK COUNTY, IOWA AND CEDAR RAPIDS, IOWA. THE LOAN IS STRUCTURED AS A 'SOFT SECOND' MORTGAGE LOAN THAT IS DEFERRED UNTIL THERE IS A CASH-OUT REFINANCE OR THE HOME IS SOLD OR 30 YEARS, WHICHEVER OCCURS FIRST. IN RESPONSE TO THE AUGUST 10, 2020, DERECHO IN IOWA, NFC WORKED WITH LOCAL GOVERNMENTS AND OTHER NONPROFITS, INCLUDING EAST CENTRAL IOWA COUNCIL OF GOVERNMENTS (ECICOG) THAT RECEIVED THE FUNDING, IN LINN COUNTY, IOWA TO DEVELOP THE PROVIDING ASSISTANCE TO COMMUNITY HOMEOWNERS (PATCH) PROGRAM TO PROVIDE FORGIVABLE LOAN FUNDS TO LOW AND MODERATE INCOME HOMEOWNERS THAT NEEDED STORM-RELATED REPAIRS WHERE THE COST WAS NOT COVERED BY INSURANCE OR OTHER FUNDING SOURCES. NFC ORIGINATED AND CLOSED THE FORGIVABLE LOANS, AND MANAGED THE HOME REPAIRS FOR A PORTION OF THE PATCH HOMEOWNERS. IN 2022, NFC LAUNCHED THE JOURNEY TO HOMEOWNERSHIP (J2H) PROGRAM. J2H PROVIDES EDUCATIONAL TOOLS AND RESOURCES TO SUPPORT AFRICAN AMERICANS LOOKING TO BECOME HOMEOWNERS. THE CORE PART OF THE J2H INITIATIVE IS A DOWN PAYMENT ASSISTANCE PROGRAM. NFC INCREASED OUR LENDING TO COMMUNITIES OF COLOR FROM 15% OF TOTAL BORROWERS IN 2021 TO 18% IN 2022 TO 27% IN 2023. THIS INCLUDED DOUBLING THE PERCENTAGE OF AFRICAN AMERICAN HOUSEHOLDS FROM 5.1% IN 2021 TO 10.8% IN 2022, PLUS A FURTHER INCREASE TO 12.1% IN 2023. THESE 2023 INCREASES WERE DUE IN LARGE PART TO THE NEW LOAN PRODUCTS LAUNCHED BY NFC IN 2023.IN 2023, NFC LAUNCHED THE POLK COUNTY DOWN PAYMENT ASSISTANCE PROGRAM. THE POLK COUNTY DPA INCREASES HOMEOWNERSHIP OPPORTUNITIES FOR HOUSEHOLDS EARNING LESS THAN 80% OF THE AREA MEDIAN INCOME. THE GOAL IS TO CREATE SUSTAINABLE HOMEOWNERSHIP WHICH RESULTS IN WEALTH BUILDING, HOUSING STABILITY AND STRONGER NEIGHBORHOODS. NFC CLOSED 137 POLK COUNTY DPA LOANS IN 2023, WITH 46% GOING TO COMMUNITIES OF COLOR.IN ADDITION, IN 2023, NFC LAUNCHED THE POLK COUNTY LARGE RENOVATION GAP FUNDING PROGRAM. HOMEOWNERS WITH HOUSEHOLD INCOMES BELOW 80% OF THE POLK COUNTY AREA MEDIAN INCOME LIMIT ARE ELIGIBLE FOR A DEFERRED LOAN TO GO TOWARDS REPAIRS TO THEIR HOME. THE GOAL IS TO CREATE SUSTAINABLE AND SAFE LIVING CONDITIONS FOR EXISTING HOMEOWNERS WHO MAY NOT OTHERWISE QUALIFY TO MAKE REPAIRS ON THEIR OWN DUE TO INCOME OR CREDIT. IN 2023, NFC CLOSED 35 POLK COUNTY LARGE RENOVATION LOANS.LASTLY, IN 2023, NFC LAUNCHED THE ENERGY ADVANTAGE PROGRAM, WHICH OFFERS A DEFERRED LOAN TO NFC BORROWERS WHO ARE ADDING OR REPLACING ENERGY EFFICIENT APPLIANCES AND/OR PRODUCTS IN THEIR HOME. ENERGY ADVANTAGE LOANS ARE OFFERED IN CEDAR RAPIDS AND POLK COUNTY, AND FUNDED BY LOCAL GOVERNMENTS. NFC CLOSED 42 ENERGY ADVANTAGE LOANS IN 2023.

THE HOME BUYER EDUCATION SERVICES ARE OFFERED IN POLK AND LINN COUNTIES THROUGH SERVICE AGREEMENTS WITH LOCAL NONPROFIT HUD APPROVED HOUSING COUNSELING AGENCIES. THESE SERVICES ARE OFFERED IN AN INDIVIDUAL, CLASSROOM, AND ONLINE FORMAT. NFC REFERS HOME BUYERS FOR HOME BUYER EDUCATION AND EXISTING HOMEOWNERS FOR FINANCIAL/DEBT MANAGEMENT AND BUDGETING. DURING 2023, NFC, THROUGH OUR PARTNER ORGANIZATIONS, PROVIDED HOME BUYER EDUCATION TO 94.74% OF HOME BUYERS, AND BUDGET AND CREDIT COUNSELING AND EDUCATION TO 9% OF EXISTING HOMEOWNERS. IN TOTAL, 28.66% OF NFC BORROWERS RECEIVED EDUCATION AND/OR COUNSELING THROUGH OUR PARTNER AGENCIES. EDUCATION WAS COMPLETED THROUGH HUD APPROVED HOUSING COUNSELING AGENCIES IN DES MOINES AND CEDAR RAPIDS, IOWA, OR THROUGH HUD APPROVED ONLINE PLATFORMS.NFC HAS AGREEMENTS WITH THE CITY OF DES MOINES (THE CITY) AND POLK COUNTY (THE COUNTY), WHEREIN THE CITY AND THE COUNTY AGREED TO CONTRIBUTE MONEY FOR THE SPECIFIC PURPOSE OF FUNDING NEIGHBORHOOD HOUSING REVITALIZATION PROGRAMS. UNDER THE AGREEMENTS, CUMULATIVE CONTRIBUTIONS BY THE CITY AND COUNTY HAVE TOTALED $31,537,687 AND $31,285,687 RESPECTIVELY, THROUGH DECEMBER 31, 2023. DURING 2022, THE CITY AND THE COUNTY EXTENDED THEIR AGREEMENT UNTIL JUNE 2027. THE CITY AND THE COUNTY WILL EACH CONTRIBUTE AT LEAST $1,000,000 ANNUALLY THROUGH THE YEAR 2027. NFC CEDAR RAPIDS LLC HAS AN AGREEMENT WITH THE CITY OF CEDAR RAPIDS, WHEREIN THE CITY OF CEDAR RAPIDS AGREED TO CONTRIBUTE MONEY FOR THE EXPRESS PURPOSE OF FUNDING NEIGHBORHOOD HOUSING REVITALIZATION PROGRAMS WITHIN THE CITY OF CEDAR RAPIDS. UNDER THE AGREEMENT, CUMULATIVE CONTRIBUTIONS BY THE CITY OF CEDAR RAPIDS HAVE TOTALED $5,500,000 THROUGH DECEMBER 31, 2023. THE CITY OF CEDAR RAPIDS WILL CONTRIBUTE AT LEAST $500,000 ANNUALLY THROUGH THE YEAR 2023.NFC HAS AGREEMENTS WITH THE CITY OF WEST DES MOINES, CITY OF URBANDALE, AND CITY OF WINDSOR HEIGHTS, WHEREIN THEY EACH AGREED TO CONTRIBUTE MONEY FOR THE SPECIFIC PURPOSE OF FUNDING NEIGHBORHOOD HOUSING REVITALIZATION PROGRAMS. UNDER THE AGREEMENTS, CUMULATIVE CONTRIBUTIONS BY THE CITY OF WEST DES MOINES HAVE TOTALED $1,600,000, CUMULATIVE CONTRIBUTIONS BY THE CITY OF URBANDALE HAVE TOTALED $222,000, AND CUMULATIVE CONTRIBUTIONS FROM THE CITY OF WINDSOR HEIGHTS HAVE TOTALED $75,000.

FORGIVABLE LOAN: AS STATED IN LOAN ORIGINATION DESCRIPTION, EACH TRANSACTION THAT NFC PROVIDES TO OUR BORROWERS INCLUDES A FORGIVABLE LOAN FOR PROPERTY REHABILITATION. THE FORGIVABLE LOAN IS A 0% INTEREST RATE LOAN FOR EITHER 5 OR 10 YEARS. A 5 YEAR FORGIVABLE LOAN IS GRANTED ON ALL SINGLE FAMILY DWELLING TRANSACTIONS. A 10 YEAR FORGIVABLE LOAN IS GRANTED ON ALL TRANSACTIONS THAT ARE DOWNSIZING A MULTI-FAMILY DWELLING BACK TO A SINGLE FAMILY DWELLING. THERE IS NO REPAYMENT REQUIRED ON THE FORGIVABLE LOAN AS LONG AS THE BORROWER IS RESIDING IN THE HOME. THE FORGIVEN AMOUNT IS REPORTED TO THE BORROWER ON FORM 1099C EACH YEAR UNTIL THE ENTIRE AMOUNT IS FORGIVEN. SINCE INCEPTION, NFC HAS AWARDED FORGIVABLE LOANS TOTALING $59,621,909 THROUGH DECEMBER 31, 2023.IN 2023, NFC CLOSED $4,738,942 IN FORGIVABLE PROPERTY REHABILITATION LOANS AND $153,500 IN CLOSING COSTS FORGIVABLE LOANS.ALL NFC LOANS FOR HOME PURCHASE ARE EVALUATED. IN POLK COUNTY, THIS ROLE IS PROVIDED BY A FULL-TIME RENOVATION COORDINATOR THAT IS ON THE NFC STAFF. IN CEDAR RAPIDS, THIS IS PROVIDED BY A CITY EMPLOYEE. IN BOTH LOCATIONS, THE RENOVATION COORDINATOR MAKES SURE ALL CODE VIOLATIONS AT THE PROPERTY ARE ADDRESSED THROUGH THE HOMEOWNER'S PROPERTY REHABILITATION PROJECTS. THE RENOVATION COORDINATOR REVIEWS ALL BIDS FOR COST REASONABLENESS AND PROVIDES AUTHORIZATION FOR PAYOUT ONCE THE PROPERTY REHABILITATION PROJECT IS PROPERLY COMPLETED AND MEETS THE BORROWER'S SATISFACTION. THE RENOVATION COORDINATOR NOTIFIES NFC WHEN THE PROJECT IS COMPLETED AND VERIFIES THAT IT WAS DONE IN A WORKMAN-LIKE MANNER.ADDITIONALLY, THESE PROPERTY REHABILITATION PROJECTS IMPROVE THE VALUE OF THE HOMES IN THESE NEIGHBORHOODS. THIS CAN LEAD TO INCREASED VALUES FOR OTHER HOMES IN THESE NEIGHBORHOODS.

AT NFC PROPERTIES LLC, OUR GOAL IS TO PROVIDE SAFE, AFFORDABLE, QUALITY HOUSING TO OWNER OCCUPANTS. IN 2023 NFC PROPERTIES LLC ACQUIRED 9 PROPERTIES. OF THOSE 9 PROPERTIES, 0 WERE AN EXISTING HOMES AND 9 WERE INFILL LOTS WITHIN THE CITY OF DES MOINES FOR NEW CONSTRUCTION IN PRIMARILY LOW AND MODERATE INCOME CENSUS TRACTS. DURING 2023, 13 UNITS IN NFC PROPERTIES LLC HOUSING INVENTORY COMPLETED REHABILITATION, AND 12 OF THE INVENTORY UNITS WERE SOLD. NFC PROPERTIES LLC FOCUSES ON ENERGY EFFICIENCY BY ADDING HIGH EFFICIENCY FURNACE AND A/C, VINYL LOW-E WINDOWS, AND BLOWN CELLULOSE INSULATION. THIS HELPS ENSURE THAT THE HOME STAYS AFFORDABLE FOR THE FUTURE HOMEBUYER.