On February 28, 2024, MassHousing and the Massachusetts Housing Investment Corporation (MHIC) announced their partnership in launching and growing a new $50 million Equitable Developers Fund. This fund aims to diversify and accelerate Massachusetts’ housing delivery system by providing enterprise-level financing to active but underrepresented developers from socially and economically disadvantaged backgrounds. This fund marks a huge moment as it is the largest publicly led financing program in the country.
In Massachusetts, the median price for a single-family home was $570,000 in January 2024. According to the Massachusetts Association of Realtors, that increased 9.6% from the year before. With housing becoming an increasingly tough challenge in Boston, especially for those living in areas of gentrification, the collaboration with MHIC to launch the Equitable Developers Fund will “help unlock new opportunities for housing growth, while creating a path for more developers to participate in confronting the state’s housing challenges”, says MassHousing CEO Chrystal Korengay.
This funding is the first large step towards correcting and improving the housing situation, MHIC President and CEO Moddie Turay says, “Ultimately, we want to see more developers helping to solve the affordable housing crisis in Massachusetts”, allowing the community to have control over the affordability of their housing.
We have been seeing a growth in supporting tenants from disadvantaged communities to buy first-time homes, receiving support from both private and public Boston housing authorities. Boston Housing Authority (BHA) has created new programs to help residents towards first-time homeownership; Massachusetts Housing Partnership is administering the Homeowner Assistance Fund (Mass HAF) which continues to provide aid to homeowners behind on their mortgage payments due to COVID-19, providing $77 million in assistance to 3,569 households and paused 100 foreclosures since December 2021; MassDream’s downpayment and closing cost assistance program continues to fund 181 transactions in addition to 254 households since September; MHP’s partnership with the City of Boston to offer a new version of ONE Mortgage that reaches prospective homeowners with discounted 30-year-fixed interest rates and increased down payment assistance.
The Equitable Developers Fund aims to address disparities in capital access by providing developers with pre-development and growth capital through financial assistance and lines of credit. The hope is that by expanding the number and diversity of developers, the state’s overall production of affordable housing will accelerate.
This partnership between MassHousing, a state housing finance agency with more than $29 billion in total lending activity, and MHIC, a private, nonprofit housing and community development lender, represents MassHousing’s largest partnership with a Community Development Financial Institution (CDFI). It is the largest publicly led program that offers real growth opportunities for real estate developers from underrepresented communities. In addition to the $50 million in public funding, MHIC and Masshousing intend to increase their reach of the fund by raising an additional $25 million from private investors.
According to the Dorchester Reporter, Boston Housing Authority is seeing growth in their programs that seek to turn Section 8 tenants into new homeowners. One program of theirs includes a $75,000 grant that eligible home buyers can use as a downpayment to purchase a housing unit within city limits. The number of Section 8 voucher participants buying homes in Boston through this program is increasingly growing this year. Boston Housing Authority officials say they hope to see more qualified residents taking advantage of this opportunity next year.
Megan Ryan, BHA’s director of homeownership and mobility grant programs said, “BHA houses about 10 percent of the city of Boston population, so we are one of the largest housing providers and the sixth largest housing authority in the nation”, BHA is seen as “a great starting point for any Massachusetts first-time home buyer”, according to The Mortgage Reports.
With the help of BHA counselors, people can put this voucher towards a mortgage instead of rent, and begin the process of looking for a house to buy and eventually own. However, the problem is that many people who are Section 8 certificate holders do not realize they can take advantage of this grant program. This highlights the importance of BHA counselors and assistance programs in educating tenants who are eligible for this program.
Adding to the MassHousing and Massachusetts Housing Investment Corporation’s Equitable Developers Fund, Megan Ryan, Boston Housing Authority’s director of homeownership and mobility grant programs says, “This initiative is one part of Mayor Wu’s attempt to halt the displacement of longtime city residents from the neighborhoods. Families and neighborhoods are changing because of gentrification. Life-long residents of Dorchester and Mattapan are being driven out. They’re not able to afford to buy within the community without assistance programs.”
Many living in areas of Dorchester see the BHA program as a corrective and reparatory one in a city that has a notorious history of redlining Black people, by gatekeeping and blocking the rights of Black people to be able to own homes and get loans. Last year, a report by Grove Impact and the Initiative for a Competitive Inner City found that Black and Hispanic real estate developers made up less than 1 percent of the industry. Hence, these programs are being seen as a step towards the right direction in tackling Massachusetts’ housing crisis.
In addition to their grant program, BHA created a second program called the ‘Citywide Voucher Homeownership program’ that uses city funds to assist BHA residents looking to purchase houses inside Boston instead of being driven out by unaffordable prices. By partnering with the Mayor’s Office of Housing and collaborating with approved partner agencies, they can recommend first-generation homebuyers to participate in a lottery program to win monthly subsidies to put towards a mortgage. Ryan says that since last year’s launching of the home program, they have served 41 first-time homeowners.
With this increased financial assistance in the process of homeownership, developers have also agreed to preserve the availability of affordable housing in certain areas for low-income tenants in the future. LIHC Investment Group and Belveron Partners announced in 2020, after reaching a deal with the Boston Housing Authority and Masshousing to preserve 66 affordable apartments at the 122-unit mixed-income community- Mercantile Wharf.
In 2018, the provisions governing Mercantile Wharf expired, putting its affordability of apartments at risk since the vacant units could be re-rented at market rate. Instead of letting that happen, LIHC made a deal agreeing to a preservation plan to protect all eligible existing households at Mercantile Wharf in Boston’s North End neighborhood and ensure that those homes stay available for low-income tenants for at least the next 20 years.
The change of many housing authorities and corporations in increasing growth opportunities for underrepresented developers stands as a new beacon of hope for first-home buyers. The combination of the programs of financial assistance, funding, and housing preservation plans offers a golden ticket to homeownership that might otherwise be unattainable. It not only opens doors to affordable housing for low and moderate-income families but also contributes to the overall stability of the state’s housing market. The impact of these programs and agreements has immense potential to reshape the landscape of ownership, hopefully making it a more inclusive and achievable goal for those who have long aspired to own a home.
More information : https://www.masshousing.com/en/programs-outreach/equitable-business-development
