Partners (Fall 1998)

"Tilly the All-Time Teller" - 1978
Little Haiti Housing

Juan C. Sanchez

This article presents an overview of a successful nonprofit community development corporation working to revitalize a distressed community in south Florida. Little Haiti Housing Corporation strives to incorporate quality assets, both in the community and individually-owned, in their efforts to serve this low- and moderate-income community.

For a community development corporation to be a successful housing provider, it must have more than just development experience. Many other attributes are required to succeed including persistence, integrity, trust, resources, ingenuity, community involvement, partnerships, housing programs, quality products, and an ongoing drive to enhance the community it serves. While it is difficult to find half of these qualities under one roof, Little Haiti Housing Association, Inc. (LHHA) has elements of them all. It is no wonder that they consistently win awards, notably the Fannie Mae Foundation's "Maxwell Award of Excellence."

LHHA was formed just over a decade ago through the sponsorship of several churches in the Little Haiti area of Miami, Florida. They were challenged to work with recent Haitian immigrants whose language and culture differ greatly from the United States'. In 1990, LHHA ran out of funds and was left without a staff. Board members approached the Mennonite Central Committee, which helped re-establish and strengthen the organization. In 1992, David Harder was invited to stay on board as the Executive Director of LHHA, a position that he has held since.

LHHA uses housing as a powerful tool to restore pride and stability in the Little Haiti community. Their mission is to provide decent, affordable housing as a base for an improved quality of life for residents of Little Haiti. They focus their efforts in five key areas: (1) home ownership education services, (2) housing rehabilitation and new construction, (3) rental project development, (4) tenant services, and (5) community building initiatives.

In 1997, through an 11 unit Scattered Site Home Ownership project, LHHA was a recipient of the Maxwell Award of Excellence, a FannieMae Foundation program. The award recognizes nonprofit organizations for their outstanding work in developing and maintaining affordable housing initiatives. LHHA was one of six national awardees that year to receive a $25,000 grant for their exemplary performance in providing quality housing to low-income residents of Little Haiti.

LHHA's Scattered Site Home Ownership project built one new home on a foreclosed vacant lot and renovated ten abandoned houses on different streets to help stabilize the neighborhood. Homebuyers are very low-income, Black Haitian immigrant families who have graduated from LHHA's Homeownership Counseling Program. These families must have sufficient savings for a down payment of at least 5 percent of the purchase price of a home, and usually have more. Unfortunately, income levels are often inadequate for families to afford a suitable residence. According to Dave Harder, many area families often have to spend up to 70 percent of their income on housing, leaving little cash for anything else.

LHHA's Scattered Site project uses various local, state, and federal grants and subsidy programs to provide quality-affordable housing. Funds from these sources are used to create low-cost second mortgages that have nominal monthly payment requirements, and are forgivable over time. These mortgages are subordinated to participating lenders that provide the first mortgage financing. The amount of subsidy used per residence depends on each family's level of income. The program is intended to reduce first mortgage balances, thus lowering monthly payments to a maximum of 30 percent of each family's income.

New School in Little haiti - 1998

Second mortgage programs include the Dade County HOME program offering zero-interest, 20-year loans for up to half of the purchase price of the home. This loan becomes due only if the house is sold within the first five years; otherwise, it is forgivable proportionately over the remaining 15-year term. The Dade County Surtax Program offers 30-year loans for up to 65 percent of the purchase price at 3 percent. The loan must be repaid only if the home is sold during the first two years; otherwise, it is assumable by another eligible family. One or both of these sources can be used, depending on the family income.

Other partners involved in LHHA's Scattered Site project include the City of Miami which provided a $125,000 property acquisition grant; Greater Miami Neighborhoods, which provided a $450,000 acquisition and construction loan at zero-interest; and several area banks that provided construction loans and permanent financing.

The total development cost of the 11-unit project was $801,000, with a purchase price of approximately $73,000 per residence. To cover these costs, the average financing package included a $32,000 first mortgage, a $27,000 HOME or Surtax second mortgage, $10,000 in grants and contributions, and $4,000 from the borrower.

According to David Harder, comprehensive homebuyer education is one of the most important factors leading to a successful homeownership program. LHHA takes all potential homebuyers through a three-stage process, beginning with an individual's pre-qualification based on their existing financial condition and credit standing. This initial stage of the process determines the steps required by each potential homebuyer to qualify for a mortgage. Credit repair, income verification, and sources of down payment are addressed here.

Rehab Home by Little Haiti Housing Association- 1998

The length of time necessary to complete this stage will vary. Some applicants are ready for Stage Two in a couple of months, while others may take well over a year before they can proceed.

The second stage of LHHA's homebuyer program is a comprehensive six-week course that begins with education in the areas of banking and insurance. This portion of the program is important as many residents of Little Haiti have never used banks and are not familiar with the role banks and insurance companies play. This training is designed to lessen the resident's fear of using banks and of communicating with insurance companies. In fact, many of the families that have graduated from LHHA's program have established accounts with area banks. The course also covers post-closing home ownership issues in an effort to anticipate and minimize unpredictable circumstances, such as a roof leak.

After finishing stage two, a potential homebuyer knows how much they can borrow and can begin looking for a home. If the borrower chooses, they can be placed on LHHA's waiting list to purchase a freshly rehabilitated home once completed. Or, they can find a suitable home on their own. Families typically choose to wait on the list because quality affordable housing is very limited and rarely available in the area. With a waiting list that has now grown to over 70 pre-qualified families ready for home-ownership, LHHA says it can't complete homes fast enough.

Thus far, LHHA has completed 52 homes and have graduated over one hundred and fifty families; only two of these graduated families have been denied access to credit. According to Jacques Saint-Louis, Assistant Director of LHHA, delinquencies are rare. "Since the inception of Little Haiti Housing in 1987, there have been no foreclosures and only two 60-day late payments, which have been resolved." Gaining the trust of the community and staying in constant communication with homebuyers are two key ingredients to LHHA's success.

Although unique in its own way, Little Haiti has challenges much like many other low- to moderate-income areas including lack of credit and income verification, which makes home-ownership difficult. However, according to Dave Harder, unlike many other low-income communities, saving for the down payment is not usually a problem. Families work two or three jobs and reduce costs by sharing residences with other families, allowing them to save substantially. "It is not rare to see a family that goes through LHHA's program with five or six thousand dollars in savings."

Many pockets of the Little Haiti community consist of substandard housing. Investors rent property to area families but insufficient maintenance has depressed property values. "With this severely depressed housing market, new construction and substantial rehab is a real challenge in Little Haiti," says Dave. This is especially true today as recent changes in building codes have increased construction costs by 35 percent or more. "A new home in the area would likely cost 115% of market value or more to build. Without considerable subsidy, new developments in the area would not make financial sense." LHHA targets "focus areas" in which to build. By concentrating in small pockets of the community, they hope to slowly drive up market values to eventually meet actual development costs. This will in turn decrease loan-to-value ratios to levels acceptable to conventional lenders.

The Little Haiti community has one unique financial need - wire transfer services. "Area residents send extra cash to their families living in Haiti," says Dave. He also comments on the need for consumer credit, especially installment loans, in Little Haiti.

"The community has a fear of dealing with banks because no personal trust has been developed." Dave explains that, "a Haitian resident would more likely finance a used vehicle from a buy here — pay here lot than from a bank. The interest rates charged by this type of outfit are typically unreasonable, but area residents do not feel threatened." In an attempt to provide low-cost financial services, LHHA is encouraging the development of a local credit union to help foster personal financial needs in the area.

Overall, Dave Harder accepts "no deviation from LHHA's mission." Within the next five years, he expects to become a vertically integrated non-profit corporation, partially self-supported, producing three times the number of housing units as it is producing today. If successful, the impact on this community will be substantial.

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