CRA Note Exchange Helps Provide Vital Capital To Florida, South Carolina Habitat For Humanity Affiliates

Habitat for Humanity Affiliates in Florida and South Carolina will be able to build more affordable homes after the recent sale of mortgage notes on their behalf.

Leaders at CBC Mortgage Agency, a nationally chartered housing finance agency and a source of down payment assistance for first-time homebuyers, announced its CRA Note Exchange platform had completed the sale on Sept. 12.  

CRA Note Exchange enables the sale of Community Reinvestment Act-eligible loans through an online portal to free up capital for additional affordable home construction. Banks and other financial institutions can review, select and purchase loans in specific areas that support their CRA or other lending objectives.

The exchange was launched in 2018.

Habitat for Humanity is a global nonprofit housing organization working in local communities across all 50 states in the U.S. and in approximately 70 countries, according to the organization’s website

Habitat for Humanity Georgetown, SC, Executive Director Laura Gassler said in a statement that as long as an affiliate can get their paperwork in order, CRA Note Exchange is an easy way to generate additional capital for housing more people.

“After educating our board about the note-selling process, we started with a small sale of two notes, then felt comfortable enough to sell another three notes,” Gassler said.

Malinda Everson, executive director of Habitat for Humanity of St. Augustine/St. Johns, said in a statement that while the notes they hold can each bring in a few hundred dollars a month, the cash flow isn’t enough to cover the hundreds of thousands of dollars necessary for new affordable housing transactions.

“The CRA Note Exchange arranged the sale of a portion of our portfolio and gave us significant liquidity, enabling us to double our home building production. It was an excellent opportunity for growth,” Everson said.

CRA Note Exchange Senior Advisor Mark Tribuna said in a statement that they only collect a fee when the loans are successfully sold. He recently sat down with The Mortgage Note Editor Kimberley Haas to talk about their commitment to Habitat for Humanity.

Tribuna: Just a little bit about the Habitat structure, if you’re not familiar. If you are, please stop me. But Habitat International is sort of like a franchise or a franchise group, and there are approximately 1,200 affiliates under Habitat International. All the affiliates are the ones that really do the home construction.

After I worked a little bit with Habitat International as a contractor, and I got out of that position, I was introduced to Richard Ferguson and Miki Adams at CBC Mortgage Agency.

Now, CBC Mortgage Agency is an American Indian Tribal organization. And because they have that designation, they’re able to create down payment assistance and under agency guidelines provide that down payment assistance to borrowers.

They can fund up to a hundred percent for various borrowers using a predominantly FHA first and then a 3%, or three and a half percent down payment assistance second mortgage.

In order to sell those mortgages, CBC Mortgage Agency started the CRA Note Exchange, and they would post their down payment assistance loans up to the exchange in the hopes that banks on whatever scale, a local or national scale, would come in and buy those down payment assistance loans, and they would replenish their cash so that they could then go out and lend more funds to prospective borrowers.

When I was introduced to this concept, I said, “This is great. This is really what Habitat affiliates need so that they have the ability to post their loans for sale and have would-be buyers bid on those loans, accept those loans, and have us work them through the loan sale process. And ultimately sell the loan in the secondary market and the funds would go back to the affiliate.”

So we modified the exchange a little bit.

Haas: How does it make you feel to be able to do this for these organizations?

Tribuna: It’s great.

It’s not only the dollars and cents anymore, you know, having worn those, executive hats and running my own business where you’re focused on giving loans to deserving borrowers and things along those lines, but now you’re really helping an underserved population.

I really didn’t realize until I started working at Dallas Area Habitat for Humanity, how much these borrowers are just passed over by the General Mortgage Marketplace. They’re smaller loan amounts, they are harder loans to do.

Haas: You mentioned some of the challenges that these organizations face, partially because they’re smaller loans, you said typically between a hundred thousand and $200,000. So not that much compared to some other loans, obviously enough to buy the materials and get everything together to create a beautiful home for those people who are so deserving of them.

And you also mentioned that it might be a little bit of a harder loan to put through.

What are some of the other challenges that these organizations face when they go to lenders and what suggestions do you have from your position, Mark, maybe to some people who might be curious about it? Like what would you say to somebody who is like, “Well, I’d like to help them, too?”

Tribuna: My first thing would be if you do have the means to donate and sponsor a home you can do it on a corporate level, get a lot of great press and attention, but also have that good feeling of investing in an affordable home.

And eventually, a nice family will be able to move in and have a roof over their head and fulfill their dream of home ownership.

Other organizations have stepped up to help Habitat for Humanity this year.

Rocket Mortgage and U.S. Bank Foundation joined the Home is the Key campaign to increase awareness around the need for affordable housing and raise funds to help families achieve stability through shelter.

As partner companies, they made direct financial contributions to Habitat and informed their customers and employees about the importance of affordable homeownership throughout the month of April, according to a press release.

Through the Wells Fargo Builds program, the company is providing $7.75 million in grant funding to help local Habitat for Humanity affiliates increase the supply of affordable homes in 200 communities nationwide.

Company leaders announced an effort to support new home construction, renovation and repair of more than 350 affordable homes across the United States in May.

“Habitat for Humanity and Wells Fargo have a shared commitment to creating a world where everyone has a decent place to live,” Jonathan Reckford, CEO of Habitat for Humanity International, said in a statement at the time. “With the support of Wells Fargo this year, we will be able to help even more families achieve strength, stability and self-reliance through shelter and create stronger and more resilient communities. 

Wells Fargo and the Wells Fargo Foundation have donated more than $119 million to Habitat for Humanity International and local affiliates in support of affordable and sustainable housing since 2010, according to company leaders.

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