Cleveland Organization Aims To Increase Homeownership

A for-sale sign in residential Newburgh Heights [Lisa Ryan / ideastream]

A Cleveland nonprofit plans to offer residential loans in an effort to boost the number of homeowners in Cuyahoga County.

CHN Housing Partners is trying to establish a community development financial institution (CDFI), which works like a bank to offer mortgages to low- and moderate-income residents.

Executive Director Kevin Nowak says his group, which works on affordable housing issues, is trying to address the problem of “mortgage deserts.”

Often, traditional banks won’t grant a loan, based on the borrower’s credit score or debt-to-income ratio. Banks also are hesitant to offer mortgages if the home is worth less than $50,000, because the mortgage might not be profitable for the bank. These restrictions for traditional bank mortgages can cause what Nowak calls “mortgage deserts.”

“What you’ll see is that, particularly in areas on Cleveland’s East Side and in inner-ring suburbs, you see a significant lack to no mortgage activity,” Nowak says. “And many times those areas also mimic the areas that were redlined areas back in prior decades.”

According to 2017 data from the U.S. Census, 59 percent of people in Cuyahoga County own their own home, compared to 64 percent nationally.

CHN plans to start making loans in the spring of 2020 and plans to offer up to $16 million dollars in loans by 2022.

Once the CDFI originates the fixed-rate loans, a traditional bank may buy the mortgage and work with the homeowner more directly.

Having more homeowners can create stability for neighborhoods that otherwise don’t see investment from residents or businesses, Nowak says.

“Not only do you create greater housing stability, not only do you create a greater sense of community, but then also you help the families to build wealth through homeownership, which is the single greatest wealth-building vehicle in the United States,” he said.

Homeownership can also have ripple effects in education, Nowak says, because if children are moving frequently, their grades suffer.

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