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10/17/2016
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Innovations In Homeownership Strategies
Mike LoftinHomewise, Inc
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Homewise Mission
The Homewise mission is to help create successful homeowners so that they improve their financial wellbeing and contribute to the vitality of our communities.
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A customer-centered, integrated home purchase model that aligns the homebuyer’s success with the organization’s success.
Homewise’s Innovation in Home Purchase:
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Lending
Real Estate
Develop-ment
Real Estate Sales
Services
Buyer Prep-
aration
Buyer Assess-ment
OutreachLoan
Servicing
Successful HomeownershipEach function is aligned with the next, building the foundation for customers’
long term financial security and the organization’s self-sufficiency
Homewise Business Model
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EssentialElements of Integration
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Number 1:Customer Centric Path
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Lending
Real Estate
Develop-ment
Real Estate Sales
Services
Buyer Prep-
aration
Buyer Assess-ment
OutreachLoan
Servicing
Homewise Business Model
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Does the client need to know which number to dial to get started?
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Number 2:Alignment between steps
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Lending
Real Estate
Develop-ment
Real Estate Sales
Services
Buyer Prep-
aration
Buyer Assess-ment
OutreachLoan
Servicing
Homewise Business Model
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Number 3:Alignment of interests
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Originator
Risk
Homeowner Investor
Traditional Transaction
Reward
Cost
Reward
Cost
Risk
Reward
Cost
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Originator
Risk
Homeowner Investor
Traditional Transaction
Reward
Cost
Reward
Cost
Risk
Reward
Cost
Non‐Profit
Cost
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Homewise(Originator and Non‐Profit)
Risk
Homeowner Investor
Traditional Transaction
Reward
Cost
Reward
Cost
Risk
Reward
Cost
Risk
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Revenue Sources
‐ 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000
Earned Income
Grants and Contributions
Revenue Sources
The single biggest item in our earned income revenue is portfolio interest, which is tied to borrowers’ long term success.
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Financial Drivers
Lending
Real Estate
Develop-ment
Real Estate Sales
Services
Buyer Prep-
aration
Buyer Assess-ment
OutreachLoan
Servicing
Cost Cost Cost Income Income IncomeIncome
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Number 4:Measurability and Accountability
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Conversions in Homewise pipeline FY 14-15
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Monthly Debt Payment
Average decrease of clients who started with 10% or more debt ratio and became Buyer Ready
$6,906
Credit ScoreAverage increase of clients who started with score under 640 and became Buyer Ready.
SavingsMedian increase of clients who started with less than $5,000
savings and became Buyer Ready
63 points
$224
FY 2016
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Benefits of Integration
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On a $200,000 Home Purchase
PITI Cash Needed
Homewise Mortgage $1,232 $4,000FHA Mortgage $1,338 $14,000
The Homewise Mortgage is the equivalent of a
downpayment assistance grant of $30,000.
Value for the Homebuyer
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Value for the Homebuyer and Organizational Sustainability
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Organizational Sustainability
112%
86%
112%102%
82%89%
0%
20%
40%
60%
80%
100%
120%
2011 2012 2013 2014 2015 2016
Self‐Sufficiency Ratio
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Scale
17%
22%
16%
19% 18% 18%17%
15% 15%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013 2014 2015 2016
Santa Fe Home Purchase Loans Under $200K/$250KMarket Share and Rank by # of Loans
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Meet our 3,000thHomebuyer!
Annette and daughters Kameka and Kiara
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0.87
2.69
4.28
8.45
15.04
Homewise Prime VA FHA Subprime
Over 30 days delinquent(National Delinquency Survey June 2016)
Long Term Buyer Success
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Increasing Demand
2005-2014
Buyers Ready at Intake 825
Developed Buyers 615
Total Homebuyers 1,440
Effective homebuyer preparation increased
demand by over 75%
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Wealth Building
Median net wealth:
Owners $195,500Renters $5,400
Years of homeownership is the single biggest factor explaining the wealth gap between black and white Americans.
Sources: Joint Center for Housing Studies of Harvard University. The State of the Nation’s Housing. 2016.Shapiro, Thomas, Tatjana Meschede and Sam Osoro. “The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide.” Research and Policy Brief, Institute on Assets and Social Policy, February 2013.
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Wealth Building
Eliminating disparities in homeownership would erase
47% of the black-white gap and
69% of the Hispanic-white gap
Source: Sullivan, Laura, Tatjana Meschede, Lars Dietrich, Thomas Shapiro, Amy Traub, Catherine Ruetschlin, and Tamara Draut. The Racial Wealth Gap: Why Policy Matters, 2015.
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Welcome Home Loans2009 NEXT Award for Opportunity Finance
Jennifer Hopkins, New Hampshire Community Loan Fund
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What are manufactured homes?
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Are they trailers?
Not since 1976!
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Or substandard housing?
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Energy efficient
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Bright and comfortable
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Whirlpool tubs
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Average new home sales price
Source: US Census Bureau, 2007-2015
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Low-income housing solution
Median income of families in owned-occupied …
Source: Consumer Financial Protection Bureau, 2014
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120 resident-owned communities in New Hampshire
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Welcome HomeLoans Real mortgage loans
for manufactured homes In ROCs and on own
land Purchase, refinance,
home equity, new home installations
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Welcome Home Loans
As little as 5% down
Fixed interest rate
First mortgage
Full interior appraisal
Loss rate 2.23%
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Affordable
$49,400 median value
$898/month for mortgage, lot rent, taxes and insurance
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Owning MH vs. renting in N.H.
Saves $308/month $3,696/year
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Solution for first-time home buyers
Welcome Home Loan borrowers, 2002-16
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Solution for seniors
Source: US Census Bureau, American Housing Survey 2013
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“Thank you for making our golden years golden.”
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NEXT Award effect
Annual $ loans
