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Susan M. Ifill, Chief Executive Officer, Neighborhood Housing Services of New York City
Challenge: Low- and moderate-income New York City residents are getting pushed out of the neighborhoods where their families have lived for decades. The increasing dislocation is particularly acute among black and Hispanic residents, who urgently need help with financing, upkeep and foreclosure prevention.
Real estate prices in New York City have skyrocketed in recent years, forcing residents out of the communities where their families have lived for decades. Between 2000 and 2012, the median value of a single-family home in New York City increased from $225,000 to $450,000, according to a city comptroller report. The median sale price for a home in all five boroughs averaged $540,000, a 5.2 percent increase from 2014 to 2015, according to the New York real estate board. Black and Hispanic residents are particularly vulnerable to the displacement caused by these rising real estate prices.
The spike in prices has attracted investors who view real estate throughout the city as a source of commercial profit. Many have secured financing to purchase substantial quantities of New York City real estate in cash, including single-family homes in low- and moderate-income communities. Such investments eliminate key opportunities for families who rely on wages to obtain the mortgage financing needed to purchase property as a home — not as a commercial asset. An index of single-family mortgages in New York City declined from a baseline measure of 100 in 2004 to 40 in 2012, while mortgage lending in low- and moderate-income census tracts declined by 65 percent, according to the New York University's Furman Center for Real Estate and Urban Policy.
To meet New York City's affordable housing challenge, Neighborhood Housing Services of New York City (NHSNYC) offers integrated homeownership services that help low- and moderate-income families. We assist them with the means to purchase their first home sustainably, prevent foreclosure, finance critical home repairs and better understand their insurance needs and coverage options. One of NHSNYC's most effective programs is providing clients with affordable capital to achieve their homeownership goals, often structured as forgivable loans.
Since 2004, NHSNYC has successfully served as fiscal administrator for the New York City Department of Housing Preservation and Development's HomeFirst program. Through this work, we originate forgivable loans for down payment assistance to first-time home buyers who earn 80 percent or less of the area median income, which cannot exceed $15,000 or 6 percent of their property's purchase price. NHSNYC has enabled 2,480 New York City residents to become homeowners by providing $36.2 million in down payment assistance, which leveraged over $642.5 million in mortgages from our network of bank partners.
In 2013, we significantly expanded this work after NeighborWorks America selected NHSNYC to administer the Wells Fargo CityLIFT initiative throughout New York City's metropolitan area. Through our efforts, we received $9.5 million to originate forgivable loans of $30,000 for down payment assistance to income-eligible families who were purchasing homes in Brooklyn or the Bronx. We also collaborated with another non-profit organization to provide forgivable loans of $15,000 for down payment assistance to families in Newark and Jersey City. By administering this initiative, NHSNYC enabled 351 families — including 280 New York City residents — to achieve homeownership and leveraged $88 million in mortgages from our bank partners.
NHSNYC recognizes the impact of offering forgivable loans in helping to address long-standing disparities in wealth that affect black and Hispanic families, which often far exceed inequality of annual income. According to 2013 data analyzed by the Pew Research, home equity comprised 59 percent of the total wealth accumulated by black families and 66 percent by Hispanic families. In addition, a 2013 Brandeis University report found that the differential in years of homeownership accounted for 27 percent of a $152,000 wealth disparity between white and black families. Forgivable loans represent a uniquely effective strategy for enabling black and Hispanic families to acquire or preserve homeownership as an essential step toward accumulating wealth.
During 2014 and 2015, 67 percent of the 380 clients who received forgivable loans for down payment assistance through NHSNYC's successful administration of the HomeFirst program and CityLIFT initiative were either black or Hispanic — 36 percent and 31 percent, respectively. We credit the involvement of community residents who guide our work as board members in helping to promote key services, including forgivable loans for down payment assistance among low- and moderate-income residents in the communities of color.
In July 2015, the New York City Council awarded NHSNYC $2 million to help more low- and moderate-income families finance critical home repair projects — such as fixing a leaking roof or replacing a broken boiler. NHSNYC disburses the funds as forgivable loans that cannot exceed $20,000 to families who earn 120 percent or less of the average median income. Recipients will repay our loans in full if they sell their homes within five years of completing a specific repair project or refinance their mortgage with a cash-payout. NHSNYC will then forgive 20 percent of the total loan balance in each of the next five years. As a result of this work, NHSNYC will help more low- and moderate-income families complete essential repair projects that preserve homeownership, without the financial burden of a loan they cannot afford to repay.
