Program areas at NFC
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 2022, NFC closed 190 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 2022 was $10,819,004. 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 2022, 190 loans (not including second mortgages, Project Reinvest, NFC Neighborhood Reinvest, or NeighborhoodLIFT loans) 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 190 loans, 60 loans were made to borrowers that have low-mod income in low-mod income and/or NFC investment area census tracts; 13 were made to borrowers with low-mod income, but not in low-mod income and/or NFC investment area census tract, 88 loans were made to borrowers that are low-mod income and/or NFC investment area census tract but do not have low-mod income, the other 29 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 2022, 84.7% of loans closed were to either low-mod borrowers, low-mod income and/or NFC investment area census tract or both. In 2022, 18% of the loans closed were to communities of color borrowers.Nearly all residential mortgage loans closed through NFC are to owner occupants. The number of home purchase loans closed in 2022 was 39. NFC closed 21 second mortgages, 50 home improvement loans, 23 refinance loans; for down payment assistance deferred and forgivable loans 29 NFC down payment loans and 10 Journey to Homeownership (J2H) loans (8 of 10 were NFC borrowers). Additionally, in 2022, 76.92% of the home purchase loans closed were to first time home buyers.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 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. This included doubling the percentage of African American households from 5.1% in 2021 to 10.8% in 2022.
At NFC Properties LLC, our goal is to provide safe, affordable, quality housing to owner occupants. In 2022 NFC Properties LLC acquired 13 properties. Of those 13 properties, 1 was an existing home requiring extensive rehabilitation and 12 were infill lots within the City of Des Moines for new construction in primarily low and moderate income census tracts. During 2022, 8 units in NFC Properties LLC housing inventory completed rehabilitation, and 6 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.
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 $58,168,934 through December 31, 2022.In 2022, NFC closed $3,614,747 in forgivable property rehabilitation loans and $86,500 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.
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 2022, NFC through our partner organizations provided home buyer education to 97.44% of home buyers, and budget and credit counseling and education to 40% of existing homeowners. In total, 31.58% 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 $30,137,687 respectively, through December 31, 2022. 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 $5,000,000 through December 31, 2022. 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 $148,000, and cumulative contributions from the City of Windsor Heights have totaled $75,000.