Cohousing-L Mailing List: Affordability, Banks and Chicago... Wow!

[Munn Heydorn (munn]

Hi All;

I have subscribed to cohousing in digest form for a fair time now and really 
find it quite interesting and at a high, but practical level.  Fred Olson, I 
think, deserves stars... Here they are * * * * *, etc.  Hey, it's the best I 
can do.

---------some snipped and edited from Digest 234--------:

>Contents:

>Re: Affordability -- a new leaf <FWD from Nancy Wright> ("Fred H Olson  
WB0YQM" <fholson [at] maroon.tc.umn.edu>)
>Re: query: Chicago area (jruhela [at] merle.acns.nwu.edu (Joan Ruhela))
>Re: Affordability and banks (Rob Sandelin <robsan [at] microsoft.com>)
>Re: Affordability -- a new leaf <FWD> (dadams [at] world.std.com (David G 
>Adams))
>Re: Cohousing and local activism (Rob Sandelin <robsan [at] microsoft.com>)
>----------------------------------------------------------------------

The three topics in the subject here really hit home to me.  I work for a 
bank in the Chicago area (West suburban, more accurately) on affordable 
housing and other nonprofit related matters.  Incidently, this is me 
speaking for me period.

I'll refrain from quoting the various posts above or portions of them (Sorry 
if that confuses) but, I did want to make a couple of comments.

Generally speaking, banks are **VERY** (Read; many banks, believe it or not, 
are at least somewhat community minded and, in addition, the regulators and 
local activists push them) motivated to do loans related to affordable 
housing in low income areas and/or for low income persons.  In addition, 
banks want to make loans in general, that is their business.  However (OK, 
here it comes), many, probably most banks sell their mortgage loans which 
usually end up with FNMA or FHLMC or a **FEW** other intermediaries who 
package the loans, securitize them and sell the resulting securities 
publicly.  A simple reason for selling the loans is banks are funded by 
short term deposits (Money markets, 6 month to 5 year CDs, etc.... and very 
few CDs at the long end) and don't wish to run rate risk to the extent of 
long term mortgages.  

These two factors mean, I believe, that banks want to make those mortgages, 
especially to low income people or in low income areas but need to sell 
those loans so that they need to conform to the rules that the loan 
purchasers and, in turn, their markets, set up.  In some cases, the loan 
purchasers are somewhat flexible and in others, not so flexible.  The last 
thing the banks want to do is regulate design of buildings and the like.  I 
do agree with Rob Sandelin about a bank's concern for "legal ownership, 
insurance and market value vs loan value".  There is a concern for design 
and other matters to the  extent that they affect marketability, also as Rob 
mentioned, and potential sales value.  As an aside, in this area, I would 
bet 9 of 10 mortgage lending people would give you a very blank look if you 
mentioned cohousing... an educational hurdle to overcome.

The issue of affordability is a messy one and much depends on who is 
defining it and for whom they are defining it.  In my area, lots are almost 
impossible to come by at less than $50,000 so that new detached houses 
affordable by low income families are virtually impossible to build without 
subsidy.  Some of the groups I'm working with are looking at various 
alternatives, none of which jump out at you & say, "This is the way".  It 
may be that cohousing, land leases, higher density or other methods may help 
to provide answers but, bottom line is that X someones are going to 
subsidize Y lower income someone elses in some form to get something done.  
That isn't so radical as it sounds since middle and upper class homeowners 
are subsidized by income tax breaks for interest and real estate taxes.  

Rob mentions federal monies going to states & cities and I assume that he 
means Community Development Block Grant (CDBG) and HOME funding.  In our 
area a Homestead Program aimed at low income first time buyers which was 
initially funded by CDBG via the county and now by the Illinois Housing 
Development Authority for second mortgage funds and local banks and savings 
institutions as to first mortgage funds.  It actually seems to have worked 
reasonably well although the numbers are small.  I hope we can expand on the 
program in this area.  If anyone is interested in details, send me your 
snail address or maybe I can develop a mass email or post it if there is 
enough interest.

If you will bear with me a moment, two points:

(1) There is, to my knowledge, no group or list discussing affordable 
housing issues in general.  This list and a couple of usenet groups 
(alt.housing.nontrad, for example) are the only places where the subject 
comes up occasionally.  A group whose time has come, I believe and hope.  It 
would be interesting to have the perspectives of others on this list if 
anyone has opinions.  It would be particularly interesting to have the 
perspective of someone who has run a list such as this (Fred??).  Feel free 
to email me directly if you don't wish to clutter the list.  I would be glad 
to post a summary of responses if desired.

(2) I am the author of an Internet Guide for Nonprofits (45K +/-) with 
lists, gophers, WWWs and the like of interest to human service nonprofits.  
It's available at URL:
     
     http://www.ai.mit.edu/people/ellens/non.html

under my name.  If you don't have access to WWW & want it, please email me.

Thanks for your time.

Regards,

Munn 
Munn Heydorn        munn [at] interaccess.com
Voice: 1-708-221-4452