Article Archives: National
Investments in Habitat for Humanity Loans
Krambo Corporation is a San Francisco-based registered broker-dealer (a Financial Industry Regulatory Authority/Securities Investor Protection Corporation (FINRA/SIPC) member) that privately places securities with institutional investors. In 2009, Krambo began arranging opportunities for investors to purchase either whole home mortgage loans from nonprofit Habitat for Humanity (HFH) affiliates or securities backed by those loans.
These loans and securities are frequently purchased by banks seeking earnings and Community Reinvestment Act consideration. HFH affiliates use cash from the sale of the loans or the securities to build more affordable housing. The affiliates typically retain servicing rights along with the right and obligation to replace a loan in severe default with a comparable but current loan or to repurchase the nonperforming loan.
HFH has about 1,500 affiliates operating in all 50 states, building affordable homes and working with lower-income families to prepare them for home ownership. The affiliates then provide purchase mortgage financing to those families at 0 percent interest. Based on 5,294 sales in 2009, The Wall Street Journal recently ranked the HFH network the eighth-largest homebuilder in the United States.
Since 2009, when it began offering this service to HFH affiliates, Krambo has arranged the placement of loans or securities for four HFH affiliates in two states; Krambo has 10 more HFH placements in process in three additional states. For HFH affiliates, these transactions yield a high percentage of the face amount of the mortgages. For bankers, they offer earning assets that have the potential to provide Community Reinvestment Act consideration.
For more information, visit Krambo’s Web site or e-mail Merrill Burns or call (415) 281-4100.
[Community Developments Investments, July 2011]
Bank and Community Partners Increase Opportunities for Charter Schools
Three new charter school financing programs have recently been announced.
- JPMorgan Chase plans to partner with community organizations to help stimulate the growth of charter schools. Chase will provide much-needed financing for the development of school facilities by partnering with nonprofit community organizations such as the Reinvestment Fund (TRF), of Philadelphia, Pennsylvania; the Low Income Investment Fund (LIIF), of San Francisco, California; and NCB Capital Impact, of Arlington, Virginia. The initiative combines grants, debt financing, and New Markets Tax Credits (NMTC) to enable charter schools to acquire and improve facilities. Of the $325 million committed by Chase, $50 million will be in grants to Community Development Financial Institutions (CDFIs) active in funding charter school projects. The CDFIs can then use the grants as permanent equity and leverage the money to fund high-performing charter schools. Approximately $175 million in debt and $100 million in NMTCs also will be allocated for charter school facility projects.
- NCB Capital Impact has created an $80 million fund to support charter schools around the country. In December 2010, the Alliance for College-Ready Public Schools, a California charter school network, was the first loan fund recipient. The financing is helping Alliance open a new high school for 550 students.
- TRF is providing $50 million to finance real estate projects for established charter schools that are acquiring, renovating, or expanding facilities. The projects will be located in TRF’s footprint—Pennsylvania, New Jersey, Maryland, Delaware, and Washington, D.C.—and will meet eligibility requirements for the NMTC Program.
To learn more about these partnerships and other opportunities, visit the JPMorgan Chase, NCB Capital Impact, and TRF Web sites.
[Community Developments Investments, Spring 2011]