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Across the 240 community-based organizations that are chartered members of the national NeighborWorks network, a growing number of programs offer commercial loans as a direct way to support entrepreneurs. With this inaugural edition of Beyond Housing, NeighborWorks showcases five stories from around the country that are testaments to the enormous impact that access to affordable capital for commercial enterprise can provide. From a $7,000 loan to a bi-lingual day care provider on Long Island, to a $35-million vision for a revitalized community in Kentucky, these stories reflect the diversity that has always fueled the strength of America's communities.

Author(s)/Creator(s): Christine Vidmar
The negative impacts of foreclosure on communities are far reaching. Although little formal data exists on this subject, local news accounts and reports from local officials paint a multifaceted picture. Not only are people losing homes, but also communities are suffering economically, physically and socially. This report mainly focuses on areas that are hardest hit: metropolitan areas and their suburbs. We have identified the following seven impact areas for foreclosure.

Author(s)/Creator(s): Jesse Mintz-Roth
This paper inventories strategies for maintaining affordable housing toward perpetuity in hot markets in an increasing number of locales. Long-term affordable housing strategies answer the call to make affordable housing resources last longer as federal funding for affordable housing diminishes, rental affordability programs expire, and owners prematurely buy their way out of affordable mortgages. The need is especially acute in hot-market cities, like New York City, that have seen large development programs end without any adequate replacements. The strategies span rental and homeownership delivery mechanisms, subsidy and equity sharing, cooperatives and community governance, land regulation, extending existing termed programs, and amassing funds to sustain affordable housing, with a focus on producing long-term affordable units through inclusionary zoning. Interviews with national policymakers and experienced affordable and mixed-income housing developers bring new light to the success of these mechanisms. This study finds that neither relying on inclusionary zoning nor extending affordable housing programs should be considered a replacement for federal subsidies. Innovating new programs means setting numbers of units produced against longevity, affordability and occupants' capacity to generate equity. Recommendations are given first in terms of challenges, tensions, trade-offs and new questions that these strategies create, and then to specific actors in the policymaking arena. Nonprofits should focus on monitoring long-term affordability and accountability. Municipalities and local governments should better regulate sources and uses of housing trust funds, focus on helping fund first-time homebuyers, consider input from local developers, consider long-term inclusionary zoning regulation, and monitor productivity and long-term regulation. Policymakers and researchers should consider why potential homebuyers have selected riskier subprime mortgage products over more secure equitysharing products and might want to better advertise equity-sharing options. Finally, New York City should expand its voluntary inclusionary program to more neighborhoods and better track its production and longevity.

Author(s)/Creator(s): Cassi L. Pittman
By looking beyond the financial characteristics of borrowers, this research brings to light the social factors that influence a borrower's choice of a lender and mortgage product. Previous research has indicated that distinct channels exist that funnel borrowers into lower or higher cost loan products (Apgar, Bendimerad, and Essene 2007). But little is known as to how borrowers seek out or are directed to such channels. A particular concern that this paper hopes to address is why black borrowers disproportionately have higher priced products. Some research indicates that even when credit worthiness is controlled for, blacks are overrepresented in the subprime sector and in higher-cost products (Bocian, Ernst, and Li 2006). Through in-depth interviews with 32 borrowers, this research (1) highlights how borrowers seek mortgage credit and evaluate their mortgage options, and (2) demonstrates how borrowers make use of their social networks (friends and family) when making their decisions. The preliminary findings indicate that borrowers' preferences and subsequent demands for mortgage products were shaped by the informal and formal advice they received. Those borrowers who consulted the most diverse sources of information had loans with lower interest rates. Those borrowers who received advice only from family and friends did not fare as well as those who received help from credit counselors. Thus, arguably, their loan outcomes varied not just based on if they consulted others, but especially whom they consulted. When given the right advice, potential homebuyers make better decisions in choosing both a lender and a loan.

In an effort to provide an overview of best practices around foreclosure intervention efforts, interviews were conducted with lenders and loan servicers that have been actively engaged in efforts to support foreclosure intervention services and partnerships with independent, third-party counseling agencies. Most agree that in order to better serve homeowners experiencing mortgage delinquency, increased effort should be made not only to reach those borrowers but also at the same time to provide them with access to quality information and counseling services as well as appropriate workout solutions delivered consistently and thoughtfully. This is an industry that has rapidly grown and experienced substantial innovation in the last several years. Servicers and nonprofit service providers committed to reducing foreclosure rates understand the importance of building relationships with each other in order to serve their customer -- the homeowner -- and most strategies undertaken are the result of efforts that require partnership.

Author(s)/Creator(s): Alejandra Medina Louden, Angela Cardenas
The Congressional Hispanic Caucus Institute (CHCI), in partnership with NeighborWorks America, conducted a series of focus groups to gather information from Latino-serving institutions nationwide about best practices to prevent Latino foreclosure. The principal objective of this project was to identify the causes of foreclosure among Latinos and to present potential proactive solutions to the problem. Special emphasis was placed on identifying specific lending products and underwriting guidelines that best meet the needs of Latino borrowers. Focus group participants consistently expressed the need for flexible loan underwriting and products to meet the unique needs of the Latino community, such as nonstandard means for determining income, alternative credit use, down-payment assistance and verified cash income. The tightening of credit in response to increased foreclosures threatens the availability of loan products that are particularly useful to Latino borrowers. The abuse of flexible products, not the products themselves, was cited by participants as the cause of problems. Abusive practices mentioned included overstating income to qualify for a home rather than verifying undocumented earned income or placing borrowers in products whose future payments they cannot afford. Among other circumstances, the unique needs of Latino borrowers are caused by cultural factors. Latino communities depend on social networks and referrals to gain information and often identify real estate agents as their first point of contact and trusted advisor for all matters relating to homeownership. The reliance in Latino communities on informal networks makes them more vulnerable to unethical and predatory behavior, and oftentimes means that the client does not get adequate or appropriate assistance. Trained housing counseling professionals can objectively meet the needs of the Latino borrower. To ensure that the needs of Latino clients are met and the integrity of the homebuying industry is upheld, collaborative solutions to foreclosure must be sought. Partnership among housing counseling agencies and real estate agents, mortgage brokers and lenders is essential to support sustainable homeownership in Latino communities. Recommendations: - Lenders should be encouraged to continue the use of flexible underwriting methods coupled with homeownership education provided by a trained professional. - Leaders in the Latino housing community should facilitate communication between real estate professionals and housing counseling organizations to discuss how counseling can help homebuyers obtain and maintain homeownership. - The development of a system that allows professionals and consumers to anonymously report unethical acts is necessary to protect consumers.

Author(s)/Creator(s): Rochelle Nawrocki Gorey
Foreclosures have been increasing across the nation, reaching record levels in 2006 and 2007, with elevated levels of foreclosure likely for several more years. Responses to the rise in foreclosure have been decidedly local. Local governments and local nonprofits working on the ground have developed unique solutions to help keep families from losing their homes and neighborhoods from becoming blighted by foreclosed properties. These efforts have generally been small, and few have reached a national scale. This report summarizes lessons from five successful foreclosure prevention programs that may be instructive for national and local replication. While each program is unique, together these five leading strategies provide examples of innovative practices that can be adopted by other organizations and other communities.

Author(s)/Creator(s): Renu Madan
This study aims to describe outcome measurement and to explore to whom outcomes matter, how outcomes are measured, and the costs and benefits of undertaking outcome measurement at the level of a community development organization (CDO). Several funders in community development began requiring outcome reporting in 2005. Outcome measurement is a way to produce important evidence about long-term outcomes in a manner that may be useful both for funders and CDOs. Its process includes articulating an organization's longterm goals, identifying indicators to evaluate progress toward those goals, implementing a system to track the indicators, analyzing the findings, and reporting results to stakeholders. Outcome measurement is distinguished from performance measurement, which focuses on immediate outputs or short-term outcomes. Also, outcome measurement does not aim to meet the standards of academic research. This study found consensus among funders and CDOs that the benefits of outcome measurement are well worth its costs. Implementing outcome measurement provides the most value to CDOs if the process allows sufficient flexibility and if CDOs are committed to the effort required. Primary benefits for CDOs consist of enhanced strategic planning and management, better positioning with respect to competition for funding, and better communication and community relations. The study recommends that funders and intermediaries increase transparency about their objectives to CDOs in order to mitigate confusion and mistrust. Funders are also cautioned against valuing outcome information ahead of other considerations. The study further recommends collaboration among outcome measurement experts and funders to create consensus around terminology and reporting requirements.

NeighborWorks organizations from the Black Hills of South Dakota to Jacksonville, Florida, and from Inglewood, California to Burlington, Vermont are transforming communities through community building and organizing. By training residents to participate in and lead the development of their neighborhoods, these community development organizations have created models for sustainable community revitalization. By bringing individuals together and building their public participation and leadership skills, these organizations have generated millions of dollars of investment and inspired hope. During this past year, the 32 organizations participating in the NeighborWorks Community Building and Organizing (CB&O) Initiative have recorded 40,000 incidents of resident engagement in their communities, and attracted $39.8 million in new investment. For every dollar these organizations have spent on community building and organizing staff, another $35 has been invested in their communities as a result. Communities across the United States are stronger because of the work of the organizations that have participated in the CB&O Initiative during its first year.

Author(s)/Creator(s): Doug Foster, Mark Duda
The period between 1995 and 2005 was a tumultuous one for low- and moderate-income (LMI) households seeking to purchase their first home. A booming housing market, stagnant incomes, and low interest rates taken together have presented both opportunities and challenges for these households. Meanwhile, regional disparities have increased markedly due to the different rates of price appreciation across housing markets. The upshot of these regional disparities is that LMI households can achieve homeownership without significant subsidies in some places, while in other places multiple layers of grants and concessionary financing, in combination with other policy tools, are the only hope for such families to ever achieve homeownership. The severe erosion of housing affordability in many markets has undermined the ability of government and nonprofit organizations to promote homeownership attainment by blunting the effectiveness of their traditional policy approaches. The response to this situation is a two-stage process. First, the nature of affordability challenges must be understood at the market level, and metropolitan-level housing markets must be accurately classified based on the difficulty that low- and moderate-income households face in becoming homeowners in each place. Second, organizations operating in each market must have access to the right tools to help their clients become owners; the approach must be accurately matched to the affordability regime in the market(s) in which they operate. This paper addresses the first issue. It develops a housing market typology based on affordability into which markets can be sorted, and to which homeownership policy approaches can be matched. The paper unfolds in several steps. It begins by deconstructing housing affordability into three elements -- house prices, incomes and mortgage costs -- and reviewing recent changes in each. It then looks at the performance of house price indexes over the past decade, explaining why they tend to show only small affordability declines despite substantial changes in house price. Following this, the paper examines affordability conditions for low- and moderate-income families in 127 housing markets using two measures: the change in affordability-index values and the gap between the maximum mortgage a household can afford and the amount required to purchase a modest home. Based on these results, we develop an affordability-based typology of market types that can be linked to policy interventions designed to promote homeownership attainment in each type of market.

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