As Neighborhood Finance Corp. grows, organization works to help more people of color own homes

Rodney Tracy embraces his wife, Tracy Tracy, on Nov. 22 in the attic of their home in Cedar Rapids. The couple decided to renovate the space after buying the house to make it their own, with assistance from the Neighborhood Finance Corp. (Savannah Blake/The Gazette)

Realtor Tonya Marie, from left, Tracy Tracy and Rodney Tracy pose for a portrait Nov. 22 in the living room of their home in Cedar Rapids. With the help of Marie and Neighborhood Finance Corp. staff, Tracy Tracy said she learned the lingo of homeownership and began to see it was something she could achieve. (Savannah Blake/The Gazette)

Stephanie Murphy is executive director of the Neighborhood Finance Corp. (Submitted photo)

CEDAR RAPIDS — Kyla Mullinex long dreamed of owning a home but never had enough credit or money to put down on a house.

But a year ago, Mullinex, a 23-year-old customer care representative at Transamerica, got a credit card, started to build credit and began in the spring to seriously consider her options. She learned about the assistance available through Neighborhood Finance Corp., a program designed to spur reinvestment in neighborhoods and revitalize ones teetering toward decline. Large swaths of Cedar Rapids are eligible for the program.

Mullinex said she is using all programs the organization offers — the basic $10,500 down payment assistance and more through the Journey to Homeownership program for minorities, forgivable closing cost assistance and a forgivable rehabilitation loan.

She chose a house near Cleveland Elementary School, pushed to pursue homeownership to avoid hopping from one apartment to another and worrying about landlords hiking rent.

When she’s ready to get an animal, now she won’t need permission and can pick whichever dog or cat she pleases. And she’ also excited that as part of her rehabilitation loan, she’s getting an entirely new kitchen.

“I’m someone who really loves cooking and being in my kitchen space, and baking is huge for me,” Mullinex said. “Having a kitchen that’s exactly how I want it — everything from where the cabinets are to the color of the walls to the lighting, everything is what I want it to be — is super exciting.”

Effort boosts minority homeownership

Mullinex is one of the Cedar Rapids borrowers who has closed on loans as part of the Journey to Homeownership program launched this year. This stemmed from the Neighborhood Finance Corp.’s Race, Equity Diversity and Inclusion committee as an effort with other community partners to increase minority — particularly African American — homeownership.

The grant-funded program aims to create a safe space where people can share the barriers they face to homeownership, while learning about available resources and receiving down payment and closing cost assistance. Borrowers through this program must participate in a class or event and also complete eight hours of homebuyer education as part of the process.

Mullinex said she learned about the history of minorities and homeownership, as well as tips for being a homeowner — even simple lessons such as changing your light bulbs to new LED ones to reduce energy costs.

Stephanie Murphy, executive director of the Neighborhood Finance Corp., said the program acknowledges that when people face obstacles such as lacking generational wealth, access to credit or equal educational and employment opportunities, they can’t achieve the same outcomes. Minority populations disproportionately grapple with these systemic barriers.

“Instead of just putting this money out there, we need to have community conversations around it so that people can have a safe place to talk about why their family doesn’t have generational wealth, or if somebody did become a homeowner and wasn’t successful … that conversation can be focused on the systems that created that,” Murphy said.

Lending rebounding after 2020 crises

The Journey to Homeownership program is among the ways Neighborhood Finance Corp. has grown after COVID-19 and the 2020 derecho disrupted the its efforts in Cedar Rapids.

Those crises brought lending below targets, but Murphy said the organization is seeing a rebound. In fiscal 2022 — the budget year that spanned July 1, 2021 through June 30, 2022 — the organization wrote 44 loans for a total of $2.3 million.

Murphy said she’d like to eventually ramp up to 75 in Cedar Rapids, and the organization has made a big turn with Realtors knowing Neighborhood Finance Corp. is in the market as a lender and understanding its value proposition.

The organization targets homes that may not otherwise be targeted for homeownership because they have deferred maintenance, and allows people to purchase the home for likely less money with the assistance provided for home rehabilitation and the down payment.

“It really helps neighborhoods stay strong,” Murphy said.

The organization, like other lenders, also is grappling with rising mortgage interest rates, which have soared to nearly 7 percent — well beyond the 4.5 percent rate the organization envisioned when setting lending targets.

“We’re pretty excited that we’re not that far off,” Murphy said.

She said the city has committed the financial support needed to support the organization’s move to boost the forgivable loan amount to $15,000, up from $10,000. Murphy said this, in addition to the down payment assistance, has helped maintain lending while prospective homebuyers have contended with higher interest rates.

To get the organization off the ground in Cedar Rapids, the city initially agreed to contribute $1 million a year for five years to cover the forgivable loans. While that has ended, the city provided another $500,000 for fiscal 2023, the budget year that ends June 30, 2023.

Neighborhood Finance Corp. also received $250,000 in federal American Rescue Plan Act funds the city allocated to cover operational losses, which Murphy said she anticipates being the last needed for operational support.

Another $391,445 allocation of ARPA funds awarded by the city will support an Energy Advantage program slated to come out in January. The program provides deferred loans for energy efficiency upgrades to promote sustainability and help reduce utility costs for low- and moderate-income households.

Ownership made ‘feasible for normal people’

City Council member Scott Overland, who helped bring the Des Moines-based organization to Cedar Rapids, said Neighborhood Finance Corp. has become more ingrained in the community to fill the need and help people become homeowners.

Moreover, when individuals invest in rehabilitating older homes, he said that spurs renovations of surrounding houses.

“NFC is playing the role that we anticipated that it would,” Overland said. “It’s always been the long game with it, and the organization is executing on that. I think it’s definitely here to stay.”

Mullinex said she wished more cities had similar resources.

“It made someone like me who thought I was never going to own my own house a homeowner at 23,” Mullinex said. “ … You don’t have to have some crazy job where you make a whole bunch of money to own a house. It makes it feasible for normal people.”

Tracy Tracy, 53, found that it’s never too late to become a homeowner. She and her husband, Rodney, 56, married in 2016 and lived in rental properties. A handyman, Rodney would fix things up, and leave the place a little better than when they found it.

According to the National Association of Realtors, the Black homeownership rate is 43.4 percent — nearly 30 percentage points below the white homeownership rate of 72.1 percent.

But when the Tracys’ landlord informed them of plans to sell the property they were renting in the Mound View neighborhood, Tracy said she didn’t want to move again. They’d come to like their neighborhood and their house, filled with many plants, nature-inspired decor and family photos.

With the help of Neighborhood Finance Corp. staff and Realtor Tonya Marie with Exit Kingdom Realty, Tracy said she learned the lingo of homeownership and began to see it was something she could achieve.

“I want to be settled, stable,” Tracy said. “I don’t want to keep moving. I’m too old for that now. … I want to own something. I want to have something. I have two grandsons. I have one daughter. I want them to have a place to come.”

She was able to use assistance from Neighborhood Finance Corp. to buy the house. Now, the Tracys are fixing up their attic — perhaps creating a space the grandkids could play. They’re also fixing up the roof, gutters, the kitchen ceiling and their garage.

“I’m just so happy and so stress-free right now,” Tracy said.

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