Cohousing-L Mailing List: Affordability - Once More

[Munn Heydorn (munn]

Hi;

**IF** a cohousing group was committed to the idea of some portion of their 
units being affordable for lower than middle income folks, I think there are 
some ways to help do that; probably with the cooperation of a local 
nonprofit involved in housing matters (For example, Habitat for Humanity) or 
with the local housing authority if they are of fairly adventurous mind.  
Using CDBG or HOME funding, HUD money usually available through the county, 
city or state, I think you may be able to get funding for a second mortgage 
program with either a deferable payment or partly forgivable debt.  Some 
organization, probably either a nonprofit, governmental entity or housing 
authority would have to screen the purchasers, close and hold the second 
mortgages and a local bank(s) would need to cooperate with an unusual first.

Essentially, DuPage County, Illinois has done that through a nonprofit home 
ownership center on scattered single family homes using a first mortgage by 
banks for 80% and a second of 15-17% by using CDBG funds (Phase I) or 
Illinois Housing Development Authority (Phase II).  The seconds have low 
interest and no payments due for a period of years; in the last case, 
payments start when the first is retired or, the second mortgage is due upon 
sale of the house.  The bank first mortgages were made without points and at 
a slightly lower than market interest rate and no mortgage insurance.  It 
seems to me that there is no reason that the same thing couldn't be done in 
one locality such as a town or a subdivision or a cohousing development.  An 
outstanding question would be the costs of doing such transactions for a 
small number of total purchases.  Here we did about 17 deals in the first 
phase and, I assume, the second will be about that number also.  

Another possibility for similar funding would be the use of land leases for 
the appropriate affected lots with no or low rental payments and/or some 
sort of payment deferral feature.

Obviously, each or any of the above would be an incremental effect.  But, 
perhaps, combined with sweat equity, allowing smaller housing units and/or 
lots, and other measures, the reality of extending purchase opportunities to 
lower income levels folks may be possible.  I suppose it will make for a 
complicated transaction in total and some minimum number of affected units 
may be necessary for economies of scale.
Regards,
Munn

Munn Heydorn, First National Bank of Chicago 
120 East Wesley
Wheaton, Illinois 60187
1-708-221-4452
munn [at] interaccess.com (preferred)  OR  commre [at] aol.com
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