Encouraging homeownership with a faith-based organization

Abstract

Faith-based organizations usually have deep roots in the communities in which they serve. Because homeownership provides stability for children, generates wealth for families and creates community stakeholders, it leads to healthier communities. This effective practice provides tips on how faith-based organizations can promote home ownership in their communities, and is adapted from materials provided by the United States Department of Housing and Urban Development. A listing of Internet resources is provided.

Issue

Oftentimes homeownership seems out of reach for many low and moderate-income families. But the value of what seems like an independent undertaking extends to entire communities. When faith-based organizations know what role they can play in encouraging homeownership, they can help build stronger, healthier towns and cities.

Action

According to materials provided by the U.S. Department of Housing and Urban Development, the following effective practices in the areas of preparation, acquisition and maintenance can be used among faith-based organizations to encourage home ownership:

PREPARATION

1. Speak out about the benefits of home ownership.

Faith leaders are often influential in their communities. They can point out that home ownership increases the wealth and stability of families and communities. And they can help their members overcome their apprehension with knowledge and information. Since homeownership requires a planned, disciplined, course of financial action, teaching and reinforcing the basic lessons of financial stewardship helps develop the necessary tools for successfully reaching ownership goals. Faith leaders can invite successful home buyers from their organization to talk about how they succeeded. Hearing firsthand accounts from those who have been in similar situations can be an inspiration.

2. Create relationships and partnerships to educate potential homeowners.

Families are sometimes frustrated or intimidated by the standards for requiring a home mortgage. For some, it can take a year or more of counseling and/or mentoring to overcome these hurdles and become eligible for a mortgage loan. Whether out of a basement office or a weekly gathering, faith communities can create relationships — for example between experienced homeowners and potential home buyers — to help local families understand how to prepare to buy a home. For those in need of mentoring to reach their goals, the creation of support groups provides an important resource for fellowship and guidance.

Classroom-style training seminars are very helpful and are offered by a number of sources. These can be held at the faith-based organization's facility. There are also Internet resources that offer self-directed support.
Homebuyers and Savings Clubs provide a more intimate setting for personalized support. With the help of a leader, small groups of 8-12 meet on a regular schedule to learn about budgeting, saving, money management and the homeownership process, as well as to share successes and challenges. For faith-based organizations, these clubs are an excellent way to promote financial literacy. By becoming trained facilitators or training other facilitators, setting up club sites, and starting new clubs, faith leaders can further the goal of homeownership.
For those with very difficult debt and credit challenges, long-term, one-on-one counseling may be the best approach. Many of the same homebuyer training organizations that offer other types of training provide this option as well.
At the local level, many large and small banks, realtors, credit unions, and other organizations offer home buyer training materials and volunteers. Check in your community for these partnership opportunities.

3. Encourage families to save for a down payment.

Many families can't take advantage of special mortgage products, even those intended for low and moderate-income families, or new homeowners, because they don't have even the minimum amount for a down payment and closing costs. Faith communities can educate families on the importance of savings, develop programs that encourage saving on a regular basis, and even establish partnerships with financial institutions that make regular saving easier.

The federal government offers grants for programs to help organizations set up savings programs that offer matching dollars to the savings of eligible participants. The Individual Development Account (IDA) program requires mandatory budgeting and financial counseling participation to maintain program eligibility for the matching dollars.
Faith organizations and congregations can raise funds to create their own IDA matching funds. They can also recruit participants for existing programs and support them through the process.
If the IDA program is not possible, faith-based organizations can explore collaborating with local banks and credit unions to set up free savings accounts for program participants. This idea could easily be coordinated through a Homebuyers or Savers Club Activity.

4. Help families improve their credit ratings.

Poor credit decisions in the past are often the greatest roadblock for potential homeowners. Form a partnership with credit counseling organizations to help community members repair their credit record, and help them learn financial stewardship. The results will be more careful decisions on using credit and an improved credit record. Even though there are many mortgage products that allow a great deal of flexibility in qualifying applicants for home loans, the area of sound credit and a good record of paying bills regularly and on time is still critical to qualifying for a loan.

5. Teach young people about financial responsibility.

Consider undertaking educational programs to expose younger members to the basic concepts of household finance, so that they are better prepared to take control of their financial future. Teaching the lessons of financial literacy and responsibility cannot start too soon. Faith-based organizations and leaders can:

Create lessons and activities that teach about personal responsibility and financial stewardship.
Set up savings clubs for kids in partnerships with a local bank or other organization.
Develop "play money" games for kids to help them understand how to use money and what is involved in running a household. Reward them with prizes of real money for an activity of their choice.
Set up a "bank" for church youth in which young people take on the responsibility for running the operation and making decisions about risk and responsibility.

6. Hold an open house for home ownership.

Many families, young and old, do not understand a mortgage and the home-buying process, and sometimes fear the financial obligation homeownership requires. This can prevent homeowners from even considering this important life decision. Faith communities can break down these barriers by holding an "open house," inviting nonprofit organizations and other housing industry leaders to meet their congregants and other families in the community. Bringing together mortgage lenders, real estate agents, credit counselors, and even home improvement contractors under one roof and in a familiar environment can make the prospect of homeownership less intimidating.

The process of finding a suitable home takes time, energy and a clear understanding of the home buyer's needs. Faith-based organizations can work with realtors and home buyer training programs to help potential owners understand how to analyze their needs and identify the types of home features — such as location, size, potential maintenance demands, and of course cost — that best serve their needs.
Faith-based organizations can develop relationships with realtors or realtor organizations that are willing to collaborate. Once these relationships have been established, a process can be developed to match the right realtor with people who are ready to buy a home.
The American Bankers Association Center for Community Development can help connect organizations with local large and small banks to explore collaboration.

ACQUISITION

7. Put your faith to work with hammer and nails.

The Department of Housing and Urban Development (HUD) has programs offering approved organizations the opportunity to purchase certain vacant properties at significant discounts. These properties often need substantial rehabilitation — but when complete, a low or moderate-income family can buy a house they could not otherwise afford.

HUD offers qualified nonprofits with an opportunity to purchase HUD Real Estate Owned properties (REOs) at a substantial discount (up to 30 percent in HUD revitalization zones). After rehabilitation, participating nonprofits can then sell the property to qualified low- to medium-income buyers.
HUD also offers police officers and teachers the opportunity to purchase its Real Estate Owned properties at a 50 percent discount in specific revitalized zones.
In many communities Habitat for Humanity collaborates with existing community development and/or faith organizations in selecting the sites for their efforts.

8. Encourage professionals within the faith community to mentor families.

Faith-based organizations can mobilize human resources from within their membership to help in the homeownership process. Enlisting members who are bankers, lawyers, realtors, accountants, counselors, and other professionals allows these individuals to employ their skills for the good of the community.

Make mentoring a family a requirement for successful graduates of the home buyer training provided. Create a culture of "each one teaches one."
Create a mentoring ministry that trains individuals to facilitate homebuyer and saving clubs. They would also be the people families could call if they have questions or encounter obstacles as they work through the preparation and/or once they have succeeded in purchasing a home.
Service clubs, fraternities, sororities, and professional organizations often look for opportunities to serve. Seek them out to create mentoring programs for aspiring homebuyers who are in need of extra support.

MAINTENANCE

9. Help your neighbor by going the "extra mile."

Many homes fall into disrepair for a variety of reasons. In particular, the elderly may be in need of physical assistance to do regular home maintenance such as painting, plumbing, and yard work. These needs present faith-based organizations with opportunities to assist the homeowner and beautify the community. Additionally, those individuals and families new to homeownership often need assistance in developing the knowledge and skills required to keep their homes in good repair since there is no longer a landlord to call on when problems arise. Faith-based organizations can:

Partner with local skilled trade training programs to invite instructors and students to help with home maintenance training.
Create a home repair ministry by recruiting skilled trades people from congregations and other organizations.
Consider setting up a home repair "business" where people pay a small fee and have access to congregants, retirees and/or partners who will do or help them do minor repairs and landscaping as well as provide advice about common home maintenance tasks.
Work with contractors or construction companies and suppliers to acquire common home repair tools and supplies. Homeowners who have gone through a home maintenance program have the opportunity to "borrow" the tools or buy discounted supplies from the program.
Partner with retailers who do in-store training and demonstrations on routine home maintenance and tool skills.
Create a home repair day or weekend. Volunteers come together at a specific area or home and do home repairs and landscaping to transform a home or several homes in one day. Often contractors will offer skilled workers to act as supervisors for untrained volunteers.
Create a low or no-interest minor home repair revolving loan fund. Owners can borrow small amounts from the fund to help them meet code compliance, emergency, or other repairs. Community Development Block Grant programs of local governments already have programs for this activity. Many local community development corporations provide this service as well.

10. Help homeowners keep their homes.

Faith-based organizations are often the best "early warning" system when families are facing financial difficulty. Faith-based organizations can encourage members to contact a credit counseling agency, their mortgage lender, or someone in the faith organization, before problems get out of control. There are resources available to help families who are delinquent in their mortgage payments from losing their homes to foreclosure.

Although many financial institutions offer helpful "no down payment" mortgage options, they do not create an equity base for new homeowners. This is a precarious situation for new homeowners, especially those with low and moderate incomes. No equity means they will have no place to turn for funds to continue to invest in and improve their homes.

Faith based organizations can help by:

Considering setting up a savings program for new homeowners that homeowners can access strictly for home maintenance and improvements. When owners make their mortgage payment, they also make a payment to the fund. In this way, especially if there is a way to subsidize their savings, they are effectively creating a resource to avoid situations where owners may sacrifice their mortgage payment in order to take care of an urgent repair.
Providing education about the law and foreclosure prevention. See the HUD website for more information.

Posted On

May 9, 2003

Resources

On the Internet

Crown Financial Ministries http://www.crown.org/

Neighborhood Reinvestment Corporation - NeighborWorks http://www.nw.org/network/home.asp

Fannie Mae http://www.fanniemae.com/homebuyers/homepath/index.jhtml

Ginnie Mae http://www.ginniemae.gov/ypth/

HUD Nonprofit program frequently asked questions http://www.hud.gov/offices/hsg/sfh/np/faqs_np.cfm (Information about eligibility for purchasing Real Estate Owned properties)

H Street Community Development Corporation (HSCDC) http://www.hstreetcdc.org/ (Information on homebuyers and savings clubs)

IDA Network http://www.idanetwork.org/ (Information on Individual Development Accounts)

Beyond Housing Neighborhood Housing Service http://www.BeyondHousing.org/

Interfaith Community Council http://www.interfaithinc.org/

Michigan Neighborhood Partnerships http://www.mnpartnership.org/

National Federation of Community Development Credit Unions http://www.natfed.org/i4a/pages/index.cfm?pageid=1

United States Department of Labor http://wtw.doleta.gov/financial.asp

National Foundation for Credit Counseling http://www.nfcc.org/

Consumer Credit Counseling Service http://www.cccsoc.org/

DebtAdvice.org http://www.debtadvice.org/

Jumpstart Coalition for Personal Financial Literacy http://www.jumpstart.org/

American Savings Education Counseling http://www.asec.org/

The National Association of Realtors http://www.realtor.org/rodesign.nsf/pages/HomePage?OpenDocument

Realtor.com http://www.realtor.com/Default.asp?poe=realtor

Housing Assistance Council http://www.ruralhome.org/

Federal Housing Finance Board http://www.fhfb.gov/

The Center for Religion and Civic Culture http://www.usc.edu/dept/LAS/religion_online/welfare/ (Information about mentoring programs)

Habitat for Humanity http://www.habitatforhumanity.org

National Association of Homebuilders http://www.nahb.org/

National Consumer Law Center http://www.consumerlaw.org/ (Foreclosure information)

Minnesota Housing Finance Agency http://www.mhfa.state.mn.us/homes/homes_foreclosure.htm (Foreclosure prevention)

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