The power of partnership was evident during this past year, as the organization was able to post a record year in spite of much-publicized turmoil in the housing market.  Through a growing network of public, private and not-for-profit organizations, Funding Partners was able to deliver more capital to more households than any year in our history.  Now in our second decade serving Colorado, the organization has become a vital source of capital and technical expertise for those seeking to serve families and individuals that comprise a vital component of our workforce: The estimated 40% of Colorado families earning less than $52,800 per year.   

 

While different programs offered through Funding Partners target specific income ranges according to the source of capital utilized, the primary function of the organization facilitates the delivery of residential units considered affordable to those priced out of the market.  Although mainstream financial markets seek to develop products that provide initial affordability, Funding Partners is dedicated to long-term affordability and stability within the community.  Consequently, the organization defines ‘affordability’ in slightly different terms and context than our banking partners.  Like many in our industry, FP believes a home is affordable when rent comprises no more than 30% of gross monthly income, while a mortgage (PITI) is affordable when it comprises no more than 38% of gross monthly income.  The difference is attributed to tax and investment advantages of ownership versus renting.

 

As the exuberance creating home ownership within financial markets recognizes greater scrutiny in Colorado and, indeed, across the nation, our resolve to address immediate needs within the state comes into sharper focus.  Critical to our mission as a Community Development Financial Institution (CDFI), FP will work through our network of partners, develop new alliances and initiate responses to alleviate deteriorating conditions without losing sight of long-term objectives.  Just as we have long eschewed the use of exotic mortgage instruments, FP accepts that a certain level of economic pain must be borne in the short term if, collectively, we are to re-establish comprehensive vitality within our communities.  We welcome this challenge and invite your continued participation.   

 

The following information provides a snapshot of accomplishments in 2007.

 

Through the Mammel Affordable Housing Loan Fund (MAHLF), FP originated 9 project-based term loans for a production level of $3,652,961, a record year for the program.  Activity highlights include:

 

During the year, activity under the MAHLF program provided critical financing to create or preserve 344 rental units, all but 5 of which are permanently designated for households below 50% AMI.  Additionally, 12 single family ownership units will be produced and sold to households below 80% AMI.  Total project costs amounted to $43,401,130, which means every $1 of FP financing attracted $11.88 in equity and commercial financing.  Performance measures include:

 

 

Through the House to Home Ownership (H2O) Down Payment Assistance Program®, FP originated 82 subordinate mortgage loans to assist first-time buyers with income levels at or below 80% AMI.  This resulted in production of $800,881 for the year.  Additionally, 2 loans were issued for relocation expenses to families impacted by the closure of the Dry Creek Mobile Home neighborhood in Fort Collins. Performance measures include:

 

Under contractual relationships with outside agencies, public authorities and private-sector employers, FP originates loans and services portfolios that are similar in nature to our own programs.  In 2007, FP originated 86 subordinate residential mortgages representing $1,021,936 in production volume.

 

Under such agreements, FP currently manages loan portfolios consisting of 228 files representing $2,219,720 in outstanding credit as of December 31.  Across all residential assistance programs, FP has originated 1,296 mortgage loans representing $10,505,319 in production volume within 26 Colorado counties since 1999.

 

Across all loan programs during the year, FP originated 182 loans representing $5,488,438 in aggregate volume; 49.2% higher than the previous record of $3,678,299 achieved in 2005.  The number of transactions, however, fell short of the record set in 2003 when 231 loans were issued at the height of the purchasing boom.

 

Unaudited financial performance of the organization reflects a more challenging environment, with a reduction to Net Assets in the amount of $124,292 versus an increase of $225,159 in 2006.  Excluding non-cash items, the organization will recognize a Net Loss of $19,604 for the year ended 12/31/2007.  During the prior year, the organization benefited from non-recurring entries; however, the primary cause for the large deviation rests with a mid-year adjustment to increase the non-cash provision for Loan Loss Reserves, coupled with an increased aggregate loan portfolio.  Although originated loans provide a future income stream, the reserve for potential losses is recognized immediately, thus creating a revenue imbalance until such time adequate repayment occurs.  During the year, the organization also recognized a significant decrease in corporate and philanthropic support which allows the organization to deliver products and services at the lowest possible cost.  The Board of Trustees is committed to elevating awareness and interaction with the larger community to enhance existing relationships, while forging new alliances that strengthen the financial health of the organization.   

 

During the year, several community members were appointed to the Board of Trustees, including:

 

Internal management tools have been improved, providing greater data integrity and redundancy, while enhancing staff efficiencies.  Preliminary discussions have taken place to secure off-site management of operations during an emergency event.  Formal arrangements are anticipated within the 2^nd quarter of 2008.

 

As of year-end, FP’s aggregate loan capital base (excluding third party contracts) was $10,835,636, an increase of 29.8% from 2006.  A breakdown shows 43.0% of capital derived through regulated financial institutions, 41.9% through federal and local governments, 9.9% through corporations and the balance of 5.1% through foundations, associations and retained earnings.  All non-permanent sources of capital have been renewed or re-committed for a minimum of 5 years, more typically 10 years, providing sufficient long-term liquidity. 

 

In response to the economic and financial devastation experienced along the Front Range, FP is working to build a consortium of private, public and non-profit agencies to arrest further deterioration of the owner-occupied housing market.  The program will be initiated in pilot form to work through logistics in select neighborhoods in the metropolitan area before a wider roll out across the state.

 

Employer assisted housing initiatives, particularly within the resort and Western Slope markets, will add significant activity levels in terms of loan volume and technical assistance.  Look for the EHOP product brand to become synonymous with the concept as public and private sector interests seek out greater leverage and efficient implementation. 

 

More communities and regions across the state will look to form dedicated capital sources within their market, while FP is uniquely positioned to provide cost-effective administration.  Adapting the management information tools, efficient delivery systems, multiple product lines and familiarity across the state, FP is able to bring initial discussions to implementation phase quickly with a high degree of competence.       

 

Thank you for taking the time to understand how your investment in Funding Partners is changing the economic, physical and social condition of the 3,500 Coloradans FP has directly impacted!  With numerous possibilities yet to be explored, we look forward to engaging you and your organization in further discussion of expanding business activities within underserved communities!

 

Respectfully,

Betty Lou Swift                                      Joe Rowan

Board President                                     Executive Director

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[1] Employee Home Ownership Program (EHOP)® is a registered Service Mark of Funding Partners for Housing Solutions, Inc.  All rights reserved.