Vacant properties in 32 states to be made available for rehabilitation and re-sale as affordable housing
New Brunswick, NJ (June 2, 2022) – New Jersey Community Capital (NJCC), the state of New Jersey’s largest community development financial institution (CDFI), today announced the purchase of 169 non-performing home equity conversion mortgage (HECM) loans from the U.S. Department of Housing and Urban Development (HUD). This purchase marks the first transaction of its kind to be completed at this scale with collaborating nonprofits.
“Never before has a transaction of this magnitude been executed to convert pending foreclosures into affordable housing across the country. We are truly seeing an evolution in the interactions between HUD and nonprofits in the nonperforming loan (NPL) market,” said Bernel Hall, President and CEO of New Jersey Community Capital. “Nonprofit participation in transactions such as this is essential to creating vibrant, equitable communities, especially as we confront a national housing crisis. We are grateful for the collaboration with our partners and look forward to working with more mission-aligned nonprofit and for-profit institutions to create quality affordable housing across the country.”
This transaction comes following the Biden-Harris Administration’s September 2021 announcement that more HUD-owned loans should be sold to nonprofit and community organizations committed to creating positive community outcomes. HUD then offered priority bidding for eligible non-profit organizations and units of state and local government on up to 50% of the loans in its HUD-Held Vacant Note Sale (HVLS 2022-1) in fall of that year.
The loans are secured by one- to four-unit vacant properties. The partners will seek to take title to the properties and sell them to nonprofit affordable housing developers or directly to low- and moderate-income (LMI) owner occupants. Most of the properties are expected to be sold to local affiliates or members of the partner nonprofits.
The NPLs included in this transaction have an outstanding loan balance of $37.1 million and are secured by vacant properties in 32 states. The five states with the largest concentrations of properties include Michigan (16 properties), Missouri (14 properties), New York (16 properties), Texas (18 properties) and Wisconsin (23 properties). While the partnership will prioritize property sales to local affiliates or members, it will also welcome opportunities to partner with other nonprofits in the communities in which the properties are located.