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Stepping Stones Research Briefing May 11, 2007 Presentation by Oramenta F. Newsome

Wealth Creation for Female Headed Households Through Soft Second Mortgages for First Time Homebuyers. Stepping Stones Research Briefing May 11, 2007 Presentation by Oramenta F. Newsome Local Initiatives Support Corporation (LISC) – Washington, DC.

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Stepping Stones Research Briefing May 11, 2007 Presentation by Oramenta F. Newsome

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  1. Wealth Creation for Female Headed Households Through Soft Second Mortgages for First Time Homebuyers Stepping Stones Research Briefing May 11, 2007 Presentation by Oramenta F. Newsome Local Initiatives Support Corporation (LISC) – Washington, DC

  2. Soft Second Mortgages for First Time Homebuyers • Time 1997-1998 • Program Partners: • Source of Mortgage Funding: Federal Home Loan Bank of Atlanta • Conduit for Funding: First Union (now Wachovia) • Implementation: Local Initiatives Support Corporation – Washington, DC

  3. Soft Second Mortgage • Zero percent, non-amortizing, 5 year forgivable loan • $7,500 per homebuyer

  4. Homes Purchased • All homes developed and sold by non-profits • Condominiums and new homes in 12 neighborhoods • 40% in Shaw and Brookland • Condominiums and Rowhouses • 1 to 4 bedrooms • 62% of the homes purchased were purchased by female headed households

  5. Buyer Profile • 63 households received soft-second mortgages • 9 homes sold, 54 presently own their homes • Annual Income at the Time of Purchase - $10,300 to $50,000 • Two buyers had been homeless • 62% of the buyers were female headed households • Net worth of buyer was less than $10,000 • Service Occupations • Administrative Assistants/Reception • Hairstylists • File Clerks • Nursing Aides • Security Guards

  6. Survey • Research conducted in 2005 • Survey: 21 responded (38%) out of 54 homeowners • Survey methods: • Mail • Meeting with the Brooklander Condominium Association

  7. Survey Results Significant Wealth Creation by 2005 • Average equity was $113,000 • Nine Households realized $200,000 in equity • Total Equity $5,765,000 • In 2006 • Home price increase of 3% (19% for Ward 2) since 2005 • Average equity $116,000 • Up to $134,000 in Ward 2

  8. Survey Results • Half of survey respondents refinanced to lower monthly payments • Long term District of Columbia residents • Average duration of 29 years • More than ½ of respondents 7 years later have annual incomes of over $41,000

  9. In-Person Interviews • Belonging; Freedom; Security • Clean Credit; Saving Money; Long Term Finances • Value of Pre and Purchase Counseling • Financial Peace of Mind Testimonials Homebuyer TC “I believe you have to be active in your community, but it can take a long time to see the fruits of your labor.” Homebuyer PS “I went in and found one neighbor very ill after noticing she hadn’t taken in the papers for a couple of days.”

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