Inspiring New Financing Creates a Path to Homeownership for Underserved Communities
How can homeownership be more accessible, affordable, and equitable for all? Communities of color and low wealth borrowers face many barriers to homeownership. As a member of the Equitable Homeownership Collaborative (EHC), established by Housing Partnership Network (HPN), Fahe’s JustChoice Lending joins eight other mission-driven community development financial institutions (CDFIs) to create and launch innovative and scalable solutions to this challenge.
Starting this year, a new pilot mortgage product–Inspire 100–was developed to serve this market. The new mortgage product was “brought to you by CDFIs and created by CDFIs,” says Janel Lawson, senior vice president of Single Family Lending at JustChoice Lending. “Everybody was at the table stating what they wanted and didn’t want the product to look like.”
Since February 2024 JustChoice Lending has been offering the Inspire 100 mortgage in the states which Fahe serves. Inspire 100 features: no mortgage insurance required, to increase the affordability factor of the product; a 30-year conventional fixed rate mortgage; and flexible underwriting guidelines.
“We offer borrowers the three best products that they qualify for,” says Lawson. “It’s good to have this product to offer in the mix.” Fahe’s JustChoice Lending is also in discussions with Native lenders who serve borrowers that do not live on tribal lands.
As part of this initiative, Fahe also provides a liquidity strategy for national CDFIs. Fahe purchases Inspire 100 mortgages from CDFIs, allowing the CDFI to replace the capital that they used to fund the loan, so that they can go on to serve the next borrower.
“In some CDFIs with the revenue they earn from each loan they may pull that money together and create a Down Payment Assistance fund, or they may use it to support their operations to maybe expand their staff and continue to support more borrowers,” said Lawson. “At the end of the day, it’s helping CDFIs create some self-sufficiency as well.”
The EHC recently launched a website to expand awareness of the work of the collaborative. “The new website showcases CDFIs that share the same passion of moving homeownership in the right direction,” said Lawson. “The EHC hopes other CDFIs will join us and more funders and investors will support the work.”
“Ultimately, the aspiration of the Inspire 100 program is that it be a standard product that the GSEs adopt,” added Lawson. “We would like for it to be a CDFI-specific product that we can sell to Fannie and Freddie because they have more risk and capacity to carry the volume that we would like to achieve. It could give the CDFIs a little bit of a competitive edge when it comes to other mortgage providers, while serving borrowers who may not otherwise afford a mortgage.”
“For now, we want to continue to grow the program and add more CDFIs to the correspondent channel so that we can produce more and continue to collect data to show our current secondary market provider SelfHelp–and hopefully GSEs on down the road–that the loans perform. We also are collecting data about where the product kind of falls short for some borrowers so that we can continue to improve the product,” added Lawson.