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#2178589 - 05/17/18 07:07 PM Affordable Housing as CD Loan
CRAGoddess Offline
Junior Member
Joined: Nov 2001
Posts: 36
WV
File this under "What do you do?"

$2MM participation (we are not lead). Purchase of multi-family housing complex with 184 units. 100% of units are deemed affordable for low- and moderate-income persons under the Universal Living Wage Calculation of Housing Affordability. 50% of the units are below HUD FMR for the area. Current rents will stay in place. Complex is 95% occupied. Borrower tentatively plans to reconstruct 16 units that previously burned down, but this is not part of the loan proceeds and has no set date. There are no plans to increase rents. (Complex is NOT in LMI census tract.)

Since the loan proceeds will not construct the units, improve the units, add units, etc., and the complex has limited vacancy, would you report this as a community development loan? If so, what is the benefit of this loan for LMI persons since the units have always been affordable?

I always struggle with this scenario to prove any new benefit to LMI with this loan. (And BTW, we have the existing loan on the property to the seller. )
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Six consecutive "Outstanding" Large Bank CRA Ratings.... and counting.

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#2180747 - 06/05/18 04:01 PM Re: Affordable Housing as CD Loan CRAGoddess
InFairness, CRCM Online
Platinum Poster
InFairness, CRCM
Joined: Nov 2010
Posts: 692
USA
Does the financing of the acquisition ensure that the housing complex will stay affordable?
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Opinions are strictly my own, and have nothing to do with my employer.

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#2180750 - 06/05/18 04:25 PM Re: Affordable Housing as CD Loan CRAGoddess
Care4RCommunity Offline
100 Club
Care4RCommunity
Joined: Apr 2012
Posts: 106
NJ
I think that this is the subjective part of CRA performance that relies on how you tell the story behind the transaction. I completely understand your struggle. There may not be a new benefit to LMI with this new loan, but following the question from InFairness, perhaps there are favorable loan terms that are enticing the new owner to keep the rents at current levels.

I would be interested in hearing other members weigh in on this one.

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#2180887 - 06/06/18 04:05 PM Re: Affordable Housing as CD Loan CRAGoddess
InFairness, CRCM Online
Platinum Poster
InFairness, CRCM
Joined: Nov 2010
Posts: 692
USA
Care, that's what I was thinking with my question. Perhaps the benefit to the community is maintaining the stock of affordable housing instead of seeing it reduced by increased rents.
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Opinions are strictly my own, and have nothing to do with my employer.

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