The Story of Mission-Based Lending

Housing affordability has long been a major issue in the United States, especially for low- and moderate-income (LMI) renters, including seniors, the disabled, and others on fixed incomes. A lack of affordable housing options often means that LMI individuals and families – with incomes between 50 and 80 percent of area median income – must spend a large percentage of their take-home pay on housing, leaving them less able to afford food, healthcare and other necessities. With millions of homes expected to go into foreclosure over the next few years, an ample supply of affordable multifamily rental housing is more crucial than ever.

Mission-driven, blue-chip, multifamily affordable housing lenders serving areas as diverse as New York, Alabama, Massachusetts, California, and the Carolinas have stepped up to help address this affordability challenge, and have for decades made mortgages on buildings that LMI families are proud to call home. Capitalized by insured depository institutions, these lenders provide financing for multifamily apartment complexes across the nation, buildings often developed by independent “Ma and Pa” developers who live in the communities they build in.

Many of the mission-based lenders are 501(c)(3) nonprofits, and others are for-profits; all have financed the construction or substantial rehabilitation of thousands of homes, with 97 percent of the units affordable to LMI renters. These lenders are at the forefront of financing affordable and sustainable housing for LMI individuals. They have successful track records of pooling private capital to finance the expansion of affordable rental housing. These mission-based lenders are making loans which are the building blocks of community development, often expertly combining multiple Federal subsidy programs such as Low Income Housing Tax Credits (LIHTCs), Community Development Block Grants (CDBGs), and the HOME program.

These lenders are not only addressing the affordable housing shortage; many also finance the construction of new schools, community centers, theaters, libraries, and mixed-used developments – all of which help to revitalize LMI communities and underserved areas.