The U.S. is in the middle of an affordable housing crisis. An estimated 12 million renter and homeowner households now pay more than 50% of their annual incomes for housing, according to the Department of Housing and Urban Development, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.
That’s because median national rents have been rising much faster than wages and there are few builders focused on affordable housing units.
Recognizing this problem, The Mortgage Collaborative, the nation’s only independent mortgage cooperative, launched its Affordable Lending Outreach Pilot Program with Fannie Mae last year, and has extended the program this year. The program helps lender members with outreach and affordable lending initiatives for low to moderate income (LMI) borrowers and manufactured housing, using educational resources and materials provided by Fannie Mae.
“There’s a lot of focus in the industry on the lack of supply of affordable lending,” said Jim Park, CEO and Founder of The Mortgage Collaborative. “Our Affordable Lending Outreach Pilot Program with Fannie Mae helps lenders to target and reach borrowers in those demographics, and helps provide solutions for the communities our lenders serve.”
The pilot program kicked off in Nashville with five lenders who already had programs around LMI and manufactured housing. Lenders have the freedom to tackle the problem as they see fit and each one approached the program differently. Some chose to expand educational events with nonprofit organizations while others enhanced partnerships with community groups or trained targeted populations. One lender partnered with Goodwill Industries to educate their employees on affordable lending options, while another increased their outreach to those looking for manufactured homes.
“The Affordable Lending Outreach Program through TMC and Fannie Mae has been a great program for us,” said Evan Zuverink, CRA officer and community lending manager at First Commonwealth Bank. “With the matching funds and support provided through the program, along with the flexibility to allocate the funds in ways that are best suited to the communities we serve, we’re able to help even more people in need of affordable housing.”
After its successful launch, The Mortgage Collaborative has expanded the program this year to include more lenders and increased its matching funds. The pilot program started in 2017 with five lender members participating and has doubled to 10 this year. The 2018 program also more than doubled the one-for-one matching fund to $50,000.
WHERE THE NEED IS GREATEST
With affordable options continuing to dwindle, lenders have a significant opportunity to grow their business in the LMI and manufactured housing segments, and TMC member companies are taking on the challenge. iEmergent, a forecasting and analytics firm that joined The Mortgage Collaborative earlier this year, detailed the locations with the largest LMI and manufactured housing segments.
Not surprisingly, states with the highest home prices figured prominently on the list.
- California accounts for 10.2% of the nation’s dollars spent on manufactured homes, with an average loan size of $165,286.
- Washington, at No. 3 on that list, has an average loan size of $186,885 for manufactured housing.
- Other states with high average loan sizes include Oregon with $177,889 and Colorado with $138,449.
- Although it doesn’t have the largest loan size, Texas accounts for the greatest number of manufactured home loans in the country at 12.3% of the total.
Drilling down to metro areas, the Seattle-Tacoma-Bellevue metro topped the list with an average manufactured home loan size of $210,112. The Portland-Vancouver-Hillsboro metro was not far behind with $207,484.
When it comes to loans to LMI borrowers, the biggest loan sizes shift from the West Coast to the East Coast, with the Washington, D.C., metro area hitting $256,816 in average loan size, with Boston and New York close behind.
The need for affordable housing — and the opportunity for lenders to meet that need — is truly nationwide.