The Economic downturn has badly impacted the country, but Florida has taken the brunt of the crisis. The National Mortgage Bankers Association released a study that shows Florida as having 25% of the foreclosures in the US and they predict that the rest of the country should be recovered from the housing crisis in five years. They further state that they will not predict how long it will take Florida to recover, but it will be much, much longer.
The homeless population continues to grow in Florida. Families with children represent the highest number of newly homeless due to the foreclosure crisis. In Florida counties with the largest populations, every day between 5 and 15 children join the homeless roles and there is no end in sight. One third of all the homeless families in this country are in Florida.
Housing & Education Alliance (HEA) understands that the effects of the economic downturn could have been lessened if we did a better job as a country and community of educating our youth and adults about financial matters. This is why we think it is time to roll out a project that will benefit those most vulnerable and who have suffered hardship with the current economic conditions and who would be most appreciative for a second chance.
HEA has been at the forefront of housing issues since inception in 2002. Over 25,000 bay area families have benefited from our programs. In the last 5 years alone more than 4,000 families came to HEA for our free foreclosure prevention services and more than 3,000 families purchased their first home, the right way, being educated, counseled and coached by HEA staff.
Through strategic partnerships, HEA will acquire, either through donation or below market cost, an apartment complex ranging in size from 100 units to 150 units. A minimum of 80% of the units will be rented at market rates to families that wish to become homeowners. The balance of the units will be rented at discounted rates to families with children who have been negatively impacted and are recovering from the current economic conditions. Also, in this group HEA would like to include young adults leaving foster care that are turned out once they reach the age of 18 with no place to go. These are the two most fragile groups needing to be addressed.
Although it would take more time to bring about, another option for the project would be to acquire land through donation or partnership and build a new complex.
Residents in the project will be required to attend monthly meetings that will focus on financial literacy, including, but not limited to, understanding and building credit and how to repair it, budgeting before and after purchasing a home, establishing a savings plan, enlisting the services of a realtor and lender, choosing the right home, choosing the right mortgage product, etc.
Project Benefits and Outcomes
There are many benefits to be derived from this type of project and it will be a win-win-win for all parties involved.
Families with children and young adults just out of the foster care system will have a better chance of successful financial futures from the comprehensive financial literacy education the residents will receive. This process will help them establish sound financial behaviors geared toward serving them throughout the rest of their lives. HEA will also deliver age appropriate financial literacy education to children living in the complex. A small percentage of the monthly rent will be set aside for residents to use toward the down payment on a home. Attendance at monthly meetings is mandatory to receive the accumulated down payment monies.
The lender partner may be able to receive CRA credits depending on their level of involvement and commitment in the project. HEA will work with the lender partner to achieve a goal where 25% of the residents purchase a home annually. The lender partner will have access to all residents and be directly involved in the resident’s monthly training. Getting to know the resident’s personally has a huge impact on the level of loyalty and confidence of a potential homeowner. The lender partner will be encouraged to offer residents banking and loan services.
Residents of the project will derive benefits from a multitude of services including special banking and loan programs offered by lender partner, intense comprehensive financial capability training, connection to social services, connection to job preparedness training and job search agency and much more. We plan to develop a community which is multi-generational in nature with involvement and interaction between all residents with a throwback to the days when neighbors helped neighbors.
HEA will relocate our headquarters to the Esperanza site to be more hands on with the clients we will be serving there in order to be able to better monitor their progress, participation and commitment. Net revenues generated from the project will be used to help HEA become self-funded and self-sufficient, while delivering on its mission. Esperanza will offer residents a new start by first building sound financial behaviors and then linking residents to resources they will need for a better future.
Recent economic conditions will require intensive, focused strategic planning and a strong commitment to the community. HEA hopes to enlist partners who understand the need is great and who are committed to making a difference. We believe the Esperanza Project will become a model which will be replicated in communities throughout the country with the greatest need and it will enable a step in the right direction as a project type whose time has come.