Economic Development

Newest Tool for YNDC: Revitalize Home Mortgage

YOUNGSTOWN, Ohio – The impact of home ownership on a community is hard to overstate.

Kids who grow up in a house their parents own are more likely to stay in school until 17, score higher in math and reading and are twice as likely to enroll in college.

A 2014 study found that homeowners are 2.5% more likely to have good health than renters, a number that jumps to 3.1% when adjusted for demographic, socioeconomic and housing characteristics. Being a homeowner increases one’s sense of control, reducing the risk of mental health issues.

In areas with higher rates of homeownership, crime rates drop. A 2010 study found that between 2002 and 2007, a 1% increase in foreclosure rates resulted in an expected increase in burglaries of 10%.

“There are studies that show how it affects educational achievement, work achievement, general family stability,” says Tiffany Sokol, chief lending officer for Revitalize Home Mortgage.

“Because of that, it impacts so many other things in the lives of the people we serve,” she says. “Home-ownership is one of the most important things we do and it plays a key role in the revitalization of the neighborhoods.”

Sokol also serves as housing director for Youngstown Neighborhood Development Corp.

In the 2015 American Community survey by the U.S. Census Bureau, 55.9% of houses in Youngstown were owner-occupied, with 44.1% occupied by renters.

“It stabilizes the community,” says June Johnson, the Community Reinvestment Act compliance assistant coordinator for Home Savings Bank and a member of the YNDC board. “Renters don’t have the equity in the home. Homeowners are going to take care of that property. They’re going to keep up with payments. They’ll stay in a property for the long term.”

Because of those figures, the community development corporation is launching Revitalize Home Mortgage, offering home loans to those who don’t meet traditional banks’ criteria. RHM is a separate organization from YNDC, Sokol notes.

Revitalize Home Mortgage has roots in a program YNDC ran in 2012 to provide mortgages to first-time homebuyers. Supported by the Ohio Housing Finance Agency, Home Savings Bank, the Raymond John Wean Foundation and the city of Youngstown, the program provided 24 mortgages that year, Sokol says.

“Especially after the housing crisis, banks really tightened up their standards for who could get loans,” she says. “It made a lot of families we were working with unable to get bank financing, who may have been able to get financing before. We were rehabbing all of these houses and had them for sale. But people couldn’t get financed.”

Beyond simply providing financing, the program extended post-purchase counseling, home maintenance education and helped buyers set up reserve accounts to create rainy day funds to a help pay for any unanticipated issues with the house.

Those features carried over to Revitalize Home Mortgage, including the reserve fund, which requires homeowners to set aside $100 each month. To gain access to the money, owners must bring in receipts or estimates for Revitalize to approve.

“It’s their money. We just restrict it so they can address any emergencies,” she says. “We’re helping people build wealth beyond the home itself. If they don’t tap into that money for the life of the mortgage, all that money is there for them once they pay off the house.”

While YNDC’s initial program ended five years ago, the need for home ownership – and the people who wanted it – remains a pressing need in the areas the agency works, which led to the creation of Revitalize.

“They needed to create an organization to lend money to folks who would not be able to come to a bank and qualify for a loan,” says Tim Whitney, vice president of residential mortgage lending at Home Savings. “That was the genesis of Revitalize. But the challenge is you need money.”

The current program is funded by grants from the city of Youngstown and the Wean Foundation that total $700,000. Revitalize is also pursuing Community Development Fund Institution certification, which would allow the organization to receive more funds from the U.S. Treasury, Sokol says. Home Savings will service the loans.

While YNDC had some experience in providing these mortgages, it looked to other organizations as well when it formally created a lending agency. Looking at the nearly 1,110 certified Community Development Fund Institutions, including 24 in Ohio, provided some guidance, Sokol says, as did a few talks with Village Capital in Cleveland. Although that organization doesn’t offer mortgages, YNDC gleaned information about how to set up its lending policies.

As the bank servicing the loans, Home Savings’ Whitney and Johnson provided help in developing the technical language for Revitalize.

“When they said they needed to set up some guidelines, we assisted in writing their underwriting manual,” Whitney says. “It says, ‘These are the customers who qualify. Here’s what to be careful of. Here’s how you verify information.’ ”

While no mortgages have been made through Revitalize yet – those eligible are still in YNDC’s housing counseling program – Sokol says she expects “to make a couple loans in the next couple months.” About 200 people have taken part in the HUD-approved counseling this year.

“Are all of them going to apply for mortgage loans through Revitalize? Probably not,” she says. “If we’re able to get them to a place where they can get a bank loan, then we’ll help them get a bank loan.”

For those who need the extra help, though, Revitalize exists to serve them. If a client doesn’t have a credit score, the nonprofit may look at alternative forms of credit, such as utility payments, rental payments – even the client’s credit history at rental stores. In some cases, those who have deferred student loans or income-based repayment plans for their student loans can benefit from Revitalize’s offerings.

Despite the differences between what Revitalize will look at and the standards of the banking industry, the product the mortgage agency offers is by and large the same. The key difference, Sokol notes, is the accountability and support Revitalize offers.

After mortgages have been approved, homeowners will remain in contact with Revitalize Home Mortgage officers, meeting quarterly – as part of the pre-purchase counseling, they meet monthly – to review finances and address any questions. Those meetings are held over the course of five years. If a payment or meeting is missed, the period is extended.

All of these requirements for those receiving financing through Revitalize, Sokol says, fit squarely into YNDC’s mission of improving Youngstown’s neighborhoods.

“Homeownership is at the center of everything we do. We’re not just developing the physical infrastructure of the neighborhoods where we’re working,” she says. “We’re developing the people too.”

Pictured: Tiffany Sokol oversees Revitalize Home Mortgage at YNDC.

Published by The Business Journal, Youngstown, Ohio.