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Partner Engagement Follow-up and RFP Updates

Thank you so much to all of you who attended our Partner Focus Group on March 18, 2024! Your feedback is invaluable and helps us to shape policy that better meets the needs of your communities. We heard your feedback and will be incorporating it into the 2024 Single Family Request for Proposals. There were additional topics that we were unable to explore during the March 18^th focus group. We will reach out at a later date for feedback on these other topics.

In this eNews you will find information about the following:

• 2024 Single Family Request for Proposals Affordability Gap and Owner-Occupied Rehabilitation Projects
• Upcoming Topics for Discussion
• 2024 Single Family Request for Proposals – Opens April 10, 2024

2024 Single Family Request For Proposals Affordability Gap and Owner-Occupied Rehabilitation Projects 

Affordability Gap and Owner-Occupied Rehabilitation Loan Structures

The Agency has provided 30-year deferred repayable loans for affordability gap and owner-occupied rehabilitation for as long as the program has existed. In 2023, we changed our policy to allow deferred forgivable loans as an option.

As we continue to explore how best to meet the needs of your communities, we shared with you two options for structuring forgivable loans in our March 18^th Partner Focus Group. Many of you shared that you’d like to see a blend of the two proposed options so we will be incorporating the blended option for the 2024 Single Family Request for Proposals. Affordability gap and owner-occupied rehabilitation loans provided through the 2024 Single Family Request for Proposals will be structured as described below, which represents a blend of the two proposed options. The Agency will continue to prioritize affordability gap and owner-occupied rehabilitation proposals that address existing gaps in the market not served by other products.

• Income Limit: 80% AMI. This reflects the income limit in Option 2. Based on your feedback, we chose to increase the income limit from the 60% AMI in Option 2 to the 80% AMI in Option 1. Some of you noted a need for downpayment resources for households up to 115% AMI. While we considered this, we chose to incorporate the 80% AMI because there are limited funding resources for affordability gap. We also heard that lower income households need more affordability gap to purchase homes, especially in today’s market. For this reason, we chose to prioritize using our limited funds to serve lower income households. While we recognize that higher income households also face challenges in today’s market, the hope and expectation is that households at 115% AMI, the equivalent of $143,700 in the Metro, will have access to their own downpayment resources or to other existing programs such as the Agency’s Start Up and Step Up programs that are not as scarce of a resource.
• Loan Length: 10- and 20-year terms. This reflects the loan lengths in Option 2, which provides the option of a shorter, 10-year loan term if the loan amount is under $50,000. This balances the opportunity for wealth building with the potential for some repayments so that funds can be recycled to serve more households in the future.
• Forgivable in annual increments. We heard from partners that you appreciate the option for annual forgiveness. Similar to the above, this balances the opportunity for wealth building through having a portion of the loan forgiven annually with the potential for some repayments so that funds can be recycled to serve more households in the future.
• Maximum Loan Amount: Up to $100,000. This reflects the loan amount maximum in Option 2. Some of you expressed concern about the $50,000 maximum for owner-occupied rehabilitation so we will be structuring owner-occupied rehabilitation loans the same as affordability gap loans with the same forgiveness tiers based on loan amount. While some of you expressed concern that $100,000/loan is not enough, we want to balance deep subsidy for one household with being able to serve more households. We also considered the suggestion to have loans that are partially forgivable and partially repayable. While we explored this option, we will not be pursuing it for the 2024 Single Family Request for Proposals.
• Loan Assignment and Servicing. All loans will be assigned to Minnesota Housing and serviced by Minnesota Housing’s servicer, AmeriNat. This is consistent with how we have historically structured affordability gap and owner-occupied rehabilitation loans. This will enable us to recycle funds to serve more households in the future.

Community Land Trusts

Affordability gap and owner-occupied rehabilitation for community land trusts (CLTs) will continue to be structured as grants.

Special Purpose Credit Programs

Special Purpose Credit Programs will be considered on a case-by-case basis and may be structured differently from the loan structure above when the program design warrants a different loan structure. Special Purpose Credit Programs will be assessed based on the extent to which the Special Purpose Credit Program’s unique design fills a gap in the market that aligns with and furthers the Agency’s strategic priorities.

Homeownership Development Projects

Homeownership development projects requesting value gap and interim loans for new construction and acquisition, rehabilitation, resale may still serve households up to 115% AMI. Any affordability gap related to a homeownership development project that is also receiving value gap will be limited to the 80% AMI noted above.

Upcoming Topics for Discussion 

In addition to the above, we also heard your feedback about a number of other items that we will continue to explore and will likely reach out to you about in the near future for additional feedback. This includes:

• Income calculation guidelines
• Administration fee
• Disbursement procedures
• Housing ratio
• Monitoring and oversight

Single Family Request for Proposals- Opens April 10, 2024 

The 2024 Single Family Request for Proposals will be available on April 10, 2024. The deadline to apply is July 11, 2024 at 12:00pm CST.

Visit the Impact Fund webpage on April 10, 2024 for more information about the 2024 Single Family Request for Proposals and application materials.

Register to attend the 2024 Single Family Request for Proposals Information Session on Tuesday, April 30 at 1:30 p.m. Central Time. A recording of the training will be posted on the website when available.

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Questions?

Contact the Impact Fund team: impact.fund.mhfa@state.mn.us

www.mnhousing.gov

In connection with Single Family Division loan programs, Minnesota Housing is neither an originator of loans nor a creditor and is not affiliated with any Lender. To find out if you are eligible, or to apply for a loan, please contact a participating Lender.