From the desk of the executive director: Center to launch housing lending pilot

Small Towns

Affordable housing plays an instrumental role in rural community vibrancy and local economic development. Homeownership increases family and community stability, supports local businesses, and boosts local schools.

Our mission as a community-based lender is to create an economy that works for everyone who calls rural America home.

To fulfill that mission, the Center for Rural Affairs plans to begin offering single family housing and homeownership loans in rural Nebraska by leveraging our existing business lending capacity.

We started exploring how we could support rural housing in 2019. Thanks to a recent grant award of $557,000 from the Community Development Financial Institutions (CDFI) Fund at the Department of Treasury, we will move toward a pilot lending phase in the coming months.

Homeownership is a key strategy to help low- and middle-income families build assets and take a step toward financial stability.

Rural areas tend to have fewer quality housing options available compared to urban communities. Small towns suffer from low home vacancy rates, aging housing stock, insufficient rehabilitation, and lack of new home construction.

Home prices in the rural Midwest remain modest compared to many other areas of the U.S. Even with modest home prices, homeownership remains a dream for hardworking families who struggle with stagnant wages and lack of access to traditional mortgages.

Furthermore, the rate of homeownership by minorities nationwide remains significantly lower than their white neighbors. In Nebraska, the homeownership rate for Latino residents is 42 percent compared to 70 percent for non-Latino white residents.

We strive to address these challenges by offering housing loans that increase homeownership opportunities for low- and middle-income and minority residents in rural Nebraska.

We’re not alone. Other community lenders have joined this arena. The MicroMortgage Marketplace, a new partnership launched this summer in Kentucky and southern Indiana, is making mortgages of up to $100,000 to borrowers with a credit score of 640 or better at interest rates of 4.5 percent.

The coronavirus-induced economic recession has further highlighted the need for community-based lenders in the mortgage market. Major mortgage lenders have raised the bar for new loans. One recent news report indicated that JPMorgan Chase will make mortgages only to new customers with minimum credit scores of 700 and down payments of 20 percent or higher.

Many low-income, low-asset borrowers will be left out of homeownership if there are not alternative paths to buying a house.

We will offer that alternative. Together, we will create a strong rural economy where everyone has the opportunity to build a quality life for their families.