CDFIs and Affordable Housing

Presentation to the North Carolina Affordable Housing Conference: “Housing

Works”Donna Fabiani | September 17, 2010

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CDFIs and Affordable Housing

What is a Community Development Financial Institution (CDFI)?

Who is Opportunity Finance Network?

CDFI Industry

CDFIs and Affordable Housing

Bank-CDFI Relationships

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What is a Community Development Financial Institution (CDFI)?

Mission-driven financial institutions serving low-to moderate income communitiesServe customers that cannot meet strict collateral or underwriting requirementsProvide innovative financing products as well as technical assistanceCreate economic opportunity in the form of

New jobs Affordable housing units Community services Financial services for the underbanked and

unbanked

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What is a CDFI?

Four CDFI Institution Types Community development banks Community development credit unions Community development loan funds Community development venture capital

funds

Financing Sectors Affordable Housing Development and

Individual Homeownership Nonprofits and Community Facilities Business and Microenterprise Consumer

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Who Is Opportunity Finance Network?

A Network of 182 opportunity finance institutions or CDFIs serving low-income and low-wealth urban, rural, and Native communities in all 50 states

Mission: Lead the opportunity finance system to scale through capital formation, policy, and capacity development

Finance CDFIs, Rate CDFIs, Policy, Knowledge SharingOpportunity Finance Network Members have provided more than $23.5 billion in cumulative financing in their markets through 2008

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CDFI IndustryU.S. Treasury has certified 900 CDFIs

568 loan funds 203 credit unions 104 banks and bank holding companiesSource: CDFI Fund, as of August 31, 2010

Data available for 495 CDFIs $29.4 billion in assets $20.4 billion in direct financing outstanding Loan Funds are capitalized primarily by bank

debt; credit unions and banks by deposits.Source: FY 2008 CDFI Data Project Data

CDFI Industry

$ Portfolio Outstanding by Sector

Source: FY 2008 CDFI Data Project

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Other

Micro

Housing

Consumer

Community services

Business

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

11%

1%

40%

8%

4%

37%

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CDFI Industry In FY 2008 CDFIs Financed the construction or renovation of

60,205 units of affordable housing Provided 16,405 responsible mortgages to

first-time and other home buyers Financed and assisted businesses that created

or maintained 35,624 jobsSource: FY 2008 CDFI Data Project

Cumulatively, OFN Members Financed 630,000 units of affordable housing

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CDFIs and Affordable Housing200 CDFIs with $8 billion outstandingFinancing for housing developers Predevelopment Acquisition Construction Renovation Working Capital Bridge loans

Financing for individuals Home-purchase mortgages for low-income

and first-time homebuyers Down payment assistance Rehab Loans

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CDFIs and Affordable HousingManufactured housing park conversions

REO purchases and resale

Technical assistance to developers

First-time homebuyer training & counseling

Federal housing policy

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CDFIs and Affordable Housing20 Certified CDFIs in North CarolinaNC Housing CDFIs include Latino Community Credit Union, Durham NC Community Development Initiative,

Raleigh Self-Help Ventures Fund and Credit Union,

Durham

National CDFIs Lending in North Carolina Housing Assistance Council Institute for Community Economics Revolving

Loan Fund National Housing Trust Community

Development Fund Rural LISC

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CDFI-Bank Partnerships

CDFIs are good investment partners Active lenders Performing lenders: Mitigate risks by investing

in multiple projects, providing technical assistance

Know and are known by LMI communities Proven track record

CDFIs’ Roles Co-lend with banks Participate with banks Take subordinate position to bank

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CDFI –Bank Partnerships

Net charge-off rates compare favorably to FDIC insured financial institutions

CDFI Delinquency Rates are typically higher than FDIC insured financial institutions

Source: Q4 2009 CDFI Market Conditions Report

CDFI Industry (Annualized) 1.78%FDIC-Insured Institution Industry

2.49%

CDFI Industry % > 90 days (does not include additional nonaccruals)

6.60%

% Noncurrent Loans & Leases (>=90 Days Past Due or in Nonaccrual)

5.37%

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CDFI – Bank Partnerships Demand for CDFI Housing Development financing is trending upward

53% received more financing applications in 2ndQ 2010 than in 2ndQ 2009

CDFIs’ Housing Development loan originations are trending upward

37% reported increase in originations in 2ndQ 2010 over year

Housing CDFIs are capital-constrained

Could have deployed $55 million more in last quarter

Need estimated $400 million in new debt and equity capital in next 12 months

CARS™ Ratings may be available

For more information on CDFIs

www.opportunityfinance.net CDFIs Side by Side CDFI Market Conditions Report CDFI Data Project Report

www.opportunityfinance.net/conference

Donna Fabiani, dfabiani@opportunityfinance.net

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