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Home Funders
Founders, Partners, and Collaborators
Why Support Home Funders
Investment Terms
Management and Administration

Home Funders

Home Funders was launched in the fall of 2003 with the goal of raising $26 million to create 1,000 housing units for very low income families and 3,000 mixed income units over 10 years.
What types of housing projects will Home Funders invest in?
  Home Funders supports innovative rental projects that house extremely low-income families in a mixed-income housing environment. We are tapping into the creativity of the local affordable housing community to bring forward good projects.
What makes Home Funders unique?
  Home Funders is housing families earning about $28,900 annually or less - 30% of area median income or below in Massachusetts. That's a family where both parents work minimum wage jobs or where a single parent with three kids makes $14.45 per hour.

Home Funders integrates family units into mixed income housing, rather than creating blocks of low-income housing.

Home Funders is tapping the power and scale of the investors' endowments to drive significant change in the housing finance system.

The Fund represents a new philanthropic strategy: rather than small-scale grants to individual projects, the Fund is working closely with municipalities, the State, developers and existing financing programs to demonstrate that with the right mix of resources, focus and will, solutions are possible.

Why is Home Funders focusing on very low-income and homeless families?

A 2011 report by the Joint Center for Housing Studies at Harvard University found that nationally, housing starts intended for the rental market declined from 300,000 units annually in 1995 to just 100,000 in 2009. Moreover, the stock of low-cost rental units is declining, with 12% lost between 1999 and 2009. By 2009, the supply gap between the number of ELI renter households and the number of units had grown to 6.8 million.

A large portion of extremely low income families face the worst case housing burden scenario – that is, they pay more than 50% of their income towards housing costs. These families are also at great risk of becoming homeless. In Massachusetts, 200,743 low-income renter households face worst case housing burdens; 24% of these households, or 48,178 households, are families with children.

Despite the tremendous need, each year, only a handful of permanent housing units are created for very low-income and homeless families with incomes less than 30% of median income (families of four earning $28,900 annually or less).

Why is Home Funders creating a new housing pool?
  Home Funders is making the local affordable housing finance system more responsive to the state’s lowest income families. Creation of a specific loan pool targeted to families earning less than 30% of area median income is spurring the development of very low-income housing units. Rather than “"reinventing the wheel," however, Home Funders is using the existing housing finance infrastructure in order to streamline and minimize bureaucracy. 
Does giving to Home Funders get the public sector “off the hook”?
  On the contrary, Home Funders does what the private market is best at – creating incentives in the marketplace to achieve certain objectives; in this case, creating housing for very low income families. Home Funders resources are only available to projects in communities where there is a commitment from the local city to allocate public resources.

On the contrary, Home Funders does what the private market is best at – creating incentives in the marketplace to achieve certain objectives; in this case, creating housing for very low income families. Home Funders resources are only available to projects in communities where there is a commitment from the local city to allocate public resources. By offering new money into the system in the form of low interest loan funds, which are valuable to developers, Home Funders is encouraging the public sector and the private housing delivery system to respond with projects that provide housing for those who need it most.

How does Home Funders support families?
  Home Funders provides grants to support services that help formerly homeless and other very low-income families successfully transition to their permanent housing units. These grants can also be used for a variety of one-time expenses that may be critical to helping individual families remain in their housing. Click here to see how to apply for a service grant.
FOUNDERS, Partners and collaborators
Which funders have signed on to Home Funders so far?  
  Those participating in the development of this initiative are listed on our Founders and Partners page.
Why did the Home Funders decide to use intermediaries and why were CEDAC and MHP selected?
  The fund chose to utilize existing capacity in the housing system rather than creating a new entity or layering more bureaucracy. After extensive interviews to determine the best intermediaries for the Fund, Home Funders choose CEDAC and MHP. Both organizations have an excellent track record in underwriting and portfolio management and complement one another. CEDAC provides technical assistance and early project financing and is able to encourage developers to incorporate extremely low-income housing at a project’s conceptual stage, while MHP provides long term permanent financing. Both organizations are experienced in managing investor or other funds and possess the judgment, flexibility and innovation to manage such a multi-purpose fund as Home Funders. Both have been in the affordable housing lending business for over 20 years and have impressively low loss rates.
What is Home Funders impact?  
  Home Funders is greatly enhancing Massachusetts' existing housing resources by adding a new $26 million targeted pool of funds that is increasing the supply of housing available to extremely low income and homeless families; focusing attention on the affordable housing crisis and its impact on the state's most vulnerable families; and leveraging resources from the public sector.

The fund is well on the way to creating 1,000 very affordable units, and creating or preserving another 3,000 units. To date we have funded 2,444 units with 817 for very low income families.

How much has been raised to date?
  Over $21 million in loans is in circulation and we are in conversation with several other local and national funders. The majority of funding has been in the form of Program Related Investments (PRIs) offered by private foundations. We are seeking additional partners to bring the Fund to a total of $26 million.
why support home funders
Why should a funder give or lend to Home Funders instead of directly to CEDAC or MHP or to a nonprofit housing developer?
  By being a part of a large group of private funders, collectively we have a more significant impact and a stronger voice to influence public funders and policymakers. In addition, pooling the funds spreads the risk among the investors and simplifies administration and tracking of the investments. By being a part of Home Funders, funders are also part of a national model – a new way for private philanthropy to impact homelessness and affordable housing. Together, we can demonstrate that a solution with tangible, local results is possible.
Does Home Funders accept grants?
  Yes! Home Funders needs grant funding and investments of all sizes. In total, Home Funders is seeking $26 million in loans/program related investments (PRIs) and grants to support loan funding, public education, services to families and administration. Loan funds are currently supported by both PRIs and grants.
How do I contact Home Funders?
  To learn more about investing in Home Funders, click here to contact us.
investment terms
What is the rate and term of the investment?
  The Fund requires that investors lend PRI funds at 1% interest. The minimum term is 10 years but Home Funders strongly encourages 20-year loans because they reduce the cost for developers, which in turn increases affordability for families.
How does the money flow?
  Investors lend money to the LLC, which pools funds and re-lends them to the intermediaries, CEDAC and MHP. These skilled intermediaries underwrite projects that meet the goals of the Home Funders and lend the funds to these projects at rates and terms compatible with the investors’ intentions.  
When do investors receive their interest payments?
  In general, interest is paid to the investors annually. However, depending on the loan product and the investor's wishes, interest may be deferred until the end of the loan period or in the case of predevelopment of acquisition loans, until the project is complete.
When and how will investors' principal be repaid?
  Investors will receive their principal at the end of their 10 to 20 year term. Project loan terms will mirror investment terms and the intermediaries will manage the investment of funds so they are returned when due.
What if one of the housing projects doesn't materialize and there is a loss?
  This is highly unlikely given the strong track records of CEDAC and MHP. CEDAC and MHP have very sophisticated underwriting procedures that mitigate risk. Their excellent long term success rate is also due to their continual monitoring and advising of projects throughout the development process and through permanent financing.

At the same time, the loan funds are pooled to mitigate the risk to investors of any loss. Projects in predevelopment stage receive relatively small loans that are funded at specific milestones to reduce risk. Acquisition or permanent funding is secured by the property, and the intermediaries would recover a significant portion of the funds through proceeds of the property sale. Finally, Home Funders has raised a loan loss reserve to cover any small loss so that investors can have the full amount of principal repaid.

To view the "Home Funders Program Evaluation 2009", click here.

management and administration
Who manages the LLC?
  An elected LLC Management Board made up of Home Funder investors make policy decisions. The day-to-day management of the fund is handled through Home Funders’ Executive Director.  
What is the role of the Home Funders Management Board?
  The Management Board is responsible for setting policy, approving annual budgets, hiring the Executive Director, and monitoring and evaluating the intermediaries and the initiative. The Board also plays a strong role in recruiting new members and encouraging outreach and public education regarding Home Funders and the issues of family housing and homelessness.
How will Home Funders be administered?
  Home Funders has its own Limited Liability Corporation (LLC) for the distribution of all loans, which are governed by the funders that make PRI investments. All grant funds are administered through a donor advised fund at The Boston Foundation. Two intermediaries, Community Economic Development Assistance Corporation and the Massachusetts Housing Partnership, make loans to projects.  
Why did Home Funders create a Limited Liability Corporation (LLC)?
  The LLC provides a vehicle that lowers risk for all investors, simplifies administration of the fund, and codifies the agreements among the funders regarding their obligations to each other and to the goals of the fund, how decisions are made and how the funds flow. The LLC also provides a long-term, stable mechanism to insure the success of the program over its 20 year life.