Program Designed to Increase Homeownership in Detroit
On the heels of yesterday’s announcement from JPMorgan Chase that it had expanded its investment in Detroit’s economic recovery to reach $200 million by the end of 2022, the company today announced the award of $1.5 million to help fund a pilot program designed to transfer the ownership of single-family homes to low-income buyers in Detroit. The pilot program includes 188 homes owned by Cinnaire and managed by CHN Housing Partners with the goal to develop a successful model that can be applied across Detroit’s lease purchase portfolio.
“JPMorgan Chase is proud to partner with Cinnaire, CHN Housing Partners and Opportunity Resource Fund to make home ownership a reality for more Detroiters,” said September Hargrove, Head of Philanthropy for Detroit, JPMorgan Chase. “Beyond helping people achieve their lifelong dream of owning a home, programs like this have long-term positive impacts for families and neighborhoods.”
The three-year pilot involves 188 single-family affordable rental homes located on the East and Northwest sides of Detroit. The pilot run by Cinnaire, CHN and OppFund, will bring resources to residents, including HUD certified homeownership counseling, residential energy programs, and a mortgage product designed to assist low-to-moderate income individuals and families previously denied access to financing by traditional financial institutions. The pilot will also provide homeownership preparation through the evidence-based Equivalency Principle (a family will succeed as homeowners as long as the cost of homeownership does not exceed what they had previously paid in rent), offer homebuyer financial assistance, provide technical assistance and high-touch support for other non-profit organizations and access to wraparound services for residents.
“This pilot is an effective wealth building strategy that sets the stage for economic security for low-income families to secure lasting stability through investment in one’s self, home, and community,” said Lucius Vassar, Senior Vice President, Detroit Market Leader for Cinnaire. “JPMorgan Chase’s generous grant makes this pilot possible.”
In the past 15 years, more than 1,500 single-family homes were developed by non-profit organizations to deliver homeownership opportunities for low-income residents utilizing financing through the Low Income Housing Tax Credit Program. Today many of these non-profit organizations lack the staff or the financial capacity to transition residents from renting to owning.
The pilot leverages CHN’s nationally recognized expertise in creating a successful lease purchase model, a patient and deliberate pathway to homeownership for low-income families. CHN has developed over 2,200 properties with 1,300 families achieving homeownership in Cleveland, representing an 85- 90% transition rate from renting to owning. Five years after becoming homeowners, 99% of families are still in their homes.
CHN will conduct home buyer readiness assessments, personal coaching, and loan packaging to ensure the Equivalency Principle. Coaches will build a family-specific engagement plan that addresses deficiencies which might prevent them from purchasing their home. They will also prioritize enrolling residents in match savings programs. CHN manages the 188 homes.
“With funding from JPMorgan Chase, we are bringing the expertise we developed in Cleveland over the past 36 years to Detroit’s neighborhoods through this pilot,” said Kevin J. Nowak, incoming Executive Director of Cleveland-based CHN Housing Partners. “I’m thrilled to bring what my organization does best to my hometown,” he added. Nowak is a native of Detroit and a graduate of the University of Michigan.
OppFund will provide its own Fresh Opportunity Mortgage, a unique mortgage that traditional financial institutions would not be able to offer. This approach is needed because most residents will not qualify for conventional loans due to lower than average credit scores, as well as the small size of the loans. OppFund will address the unique underwriting needs, in particular achieving the Equivalency Principle, non-credit score lending, and on-time rental payments as a measure for the ability to repay the mortgage loan. OppFund will service the loans in-house using time-tested methods.
“OppFund is pleased to participate in this partnership to ensure homeownership opportunities become a reality for the many often left out of a primary way to build wealth in this country,” said Christine Coady Narayanan, president and CEO of OppFund. “We believe in the families, in our partners, and in Detroit, and we’re thankful to JP Morgan Chase,” she added.
About JPMorgan Chase
JPMorgan Chase & Co. is a leading global financial services firm with assets of $2.7 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.