Mark Tribuna (pictured), senior adviser for CRA Note Exchange, told Mortgage Professional America that he got the idea for CRA-friendly security when he consulted with Habitat for Humanity’s Dallas branch and studied the charter of Habitat International. He first explained the relationship between the two, describing Habitat International as something akin to a franchisor for Habitat for Humanity affiliates, of which there are approximately 1,200 in the United States.
“Under this model, when a Habitat affiliate raised donor dollars and built an affordable home, under the charter, they would then have to convert that loan to a zero-interest loan and give it to their borrower. “, he told MPA in a telephone interview. “And the whole process would start over every time they wanted to build a house – donor dollar, build it, zero interest loan, and then it’s on the books and I can’t do anything with it. I collect payments for a period of 30 years essentially.
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That was the model’s flaw, he explained, noting that $150,000 to $200,000 was raised each time to build an affordable home. “And so, I started working with local Dallas banks to sell zero-rate loans,” added Tribuna, a 30-year veteran of the mortgage industry. “Because of the profile of the borrower and where they were built, this met many of the CRA requirements for the bank. And so, although a zero rate loan is not trading, so to speak, at par, due to the impact of ARC, it had value for these banks. So it was attractive to the banks.
An introduction: The ARC Note Exchange is a secondary market platform that allows nonprofit homebuilders and other community housing development organizations (CHDOs) to generate capital by selling their mortgages affordable. CBC Mortgage Agency, a nationally chartered housing finance agency and leading source of down payment assistance for first-time home buyers, announced that its CRA Note Exchange platform has completed the sale of mortgage notes on behalf of affiliates. from Habitat for Humanity in Florida and South Carolina, providing much-needed cash to enable them to build more affordable homes.