Announcing the MicroMortgage Marketplace – Small Dollar Lending that Increases Homeownership

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MicroMortgage Team in Louisville, KY: Lupe Hernandez (HCA), Tammy Sparks (Fahe), Sarah Strochak (Urban), Laura Meadows (Fahe), Alanna McCargo (Urban), Gabe del Rio (HCA)

Innovative pilots and partnerships are important steps in establishing the long-term availability of programs that provide access to homeownership and wealth-building to underserved communities.  Fahe is proud to collaborate with the Homeownership Council of America (HCA) and research partner the Urban Institute to launch a new pilot demonstration project that tests the ability of small-dollar mortgages to build the American Dream of homeownership for low-to moderate-income families.  Known as the MicroMortgage Marketplace, the pilot will be available initially in Louisville, KY and Southern Indiana.

The MicroMortgage Marketplace focuses on offering mortgages under $100,000, an amount typically not handled by traditional lenders.  The program also offers underwriting flexibility, simplifies the loan process, and reduces many of the fees and costs in the process. “Many first-time homebuyers and low- and middle-income families need to purchase low-cost properties to be able to move out of rental housing and into homeownership,” said Laura Meadows, Fahe’s Executive Vice President of Lending. “The monthly cost of homeownership is often lower than the monthly cost to rent. But affordable, low-cost properties can be hard to access because of the limited availability of mortgages under $100,000.”

Research by the Urban Institute also suggests small-dollar mortgages will help narrow the persistent racial homeownership and wealth gaps.  There are a significant number of homes available under $100,000 in low-cost markets, many that also include sizeable Black renter populations. By expanding access to small-dollar mortgages more people of color gain access to affordable and sustainable homeownership. 

Fahe is underwriting, funding, and servicing the loans through the MicroMortgage Marketplace while HCA will manage product development, market testing and capital partnerships, and create distribution channels that can scale across the country. A grant from the Access Ventures’ Reconstruct Challenge, funded this pilot demonstration project.

The knowledge gained through the pilot phase of the MicroMortgage Marketplace will allow all parties to learn what changes, if any, are needed to bring the program to scale.  The program can also become a valuable case study for policy makers on the effects of such programs.  Fahe has a long track record of forging public-private partnerships and launching innovative pilot programs to expand essential services, such as the USDA Direct 502 Packaging Program which started as a pilot in 2009 and became a permanent program in 2016.  The program was set in motion to test the feasibility of utilizing non-profit partners to increase the number individuals and families who were to achieve homeownership while helping to reduce the workload of a shrinking USDA Rural Development staff.

We are proud to work with partners such as the Homeownership Council of America and the Urban Institute to potentially expand the accessibility of homeownership to more individuals and families across the country. Homeownership is essential to wealth building and financial stability of families in persistent poverty areas and many urban centers who have been excluded due to financial disinvestment and exclusionary practices.  With the MicroMortgage Marketplace were looking to ensure that more families have the opportunity to change their lives through homeownership and build the American Dream.

The full press release on the MicroMortgage Marketplace can be found here: https://www.newswire.com/news/micromortgage-marketplace-launches-in-support-of-small-dollar-home-21180593

Aaron Phelps
Aaron Phelps
Aaron collects stories from Fahe Members and the people they help in order to present the needs of Appalachia to the public through written word and video. In his free time he nerds it up by playing RPGs, writing fantasy stories, and playing drums.

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