Funding Partners Hits Record Production

Fort Collins, CO, February 9, 2006 – Funding Partners (FP), a Community Development Financial Institution (CDFI), serving the state of Colorado , recently released loan production numbers for 2005.  Lending activity for the year includes 188 loan originations, representing $3,646,524 in production volume, aggregated across all business lines.  Through year-end, FP manages a combined loan portfolio of $8,833,623. 

According to Donna Taub, President of the FP Board of Trustees and Chief Credit Officer for First National Banks, the past year represents a significant milestone for both the organization and low-income communities it serves.  “Without a physical location in the Denver metro area, FP has faced a fair amount of skepticism as a player in the community and economic development arena.  However, that fact has also pushed the organization to recognize the divergent needs, as well as the business opportunities in abundance across our state.  This past year demonstrates our capacity to address local conditions from a single location with innovative loan products and efficient delivery systems that elevate the effectiveness of our many partners – whether they serve Alamosa, Vail or the Five Points neighborhood in Denver .” 

A breakdown of 2005 activity shows the following:

Housing Production and Rehabilitation

Through the Mammel Affordable Housing Loan Fund (MAHLF), FP originated 5 project-based term loans for a production level of $1,186,500. 

• Fort Collins Housing Authority received 2 separate loans to acquire single-family properties in lieu of foreclosure.  In purchasing the properties, the Authority was able to preserve $46,000 in prior public subsidies that would have otherwise been extinguished as result of foreclosure sale.  The properties were subsequently re-marketed to families earning less than 80% of the Area Median Income (AMI).  

• The Inn Between of Longmont received a loan to purchase an 8-unit property that will increase their inventory of housing units available to transitional homeless, emancipated youth and domestic abuse victims, all of whom qualify as very-low to low-income households. 

• The Longmont Housing Authority received financing to preserve 72 units of affordable senior apartments.  FP participated in a loan issued by Mile High Housing Fund, a similar organization based in the Denver metro area.

• Fort Collins Habitat for Humanity was issued acquisition financing for a vacant parcel to be held for future development.  The parcel allows for 27 attached housing units.  Habitat provides home ownership opportunities to households earning less than 50% AMI, or $34,600 for a family of four, in Larimer County .

 Project lines of credit were issued to 2 organizations in support of recurring housing-related activities for a production level of $1,000,000.

• Hope Communities, primarily serving the northeast neighborhoods in Denver , was granted a renewal and increased credit limit to a previous facility, allowing the organization to expand its rehabilitation program.  Hope purchases blocks of HUD-foreclosed properties and re-markets the units to low and moderate income households after minor rehabilitations to the property.  To date, Hope has converted 16 single-family homes under the FP facility.

• Thistle Community Housing, primarily serving Boulder County , received a credit facility to enhance their process for evaluating, acquiring, rehabilitating both rental and ownership housing within their market area with greater agility.

 In summary, under the MAHLF program, FP made loans totaling $2,186,500 to preserve or create 130 housing units that are designated for households earning 80% AMI, or less.  All but 5 of the units will be occupied by households earning less than 60% AMI.  These totals do not include numbers attributed to Thistle activities, as those will be reported as projects are completed.

·         2005 MAHLF production represents a 98.8% increase over 2004 and 132.9% increase over the 3-year average.

·         The number of housing units preserved or created in 2005 represents a 31.3% increase over 2004.

Since 1997, the MAHLF program has issued 48 loans for an aggregate production level of $9,561,314 encompassing 1,676 low-income housing units across the state.  The program boasts a 0% default rate since inception.

Down Payment Assistance

Through the House to Home Ownership (H2O) Down Payment Assistance Program®, FP originated 116 subordinate mortgage loans to assist first-time buyers with income levels at or below 80% AMI.  This resulted in production of $922,035 for the year.

• Loans were originated in 16 counties, with the greatest volume in Eagle County resulting in 20 loans and $190,162 in production.
• 39% of all loans were made to Hispanic households and 15% of loans were issued to single-parent families.
• Loan volume in 2005 represents a 12.3% increase over the prior year, but a 23.6% decrease from the 3-year average production.

 Since 1999, 871 H2O loans have been originated, representing $6,411,427 in loan volume.  38% of all loans have been issued to households below 60% AMI with an average loan amount equal to $7,361.  41.6% of all loans issued since inception have been repaid by the borrower, resulting in an average loan life of 22.4 months in spite of a 10-year loan term.  Cumulative default is equal to 2.81%.

Third-Party Services

Under a contractual relationship with outside agencies, public authorities and private-sector interests, FP originates loans and services portfolios that are similar in nature to proprietary programs.  In 2005, FP originated 65 subordinate residential mortgages representing $537,254 in production volume.

·         Eagle County , through its Department of Housing, moved two down payment loan portfolios to FP, representing 95 loan files and $894,472 in receivables outstanding.  This marked the first time an existing portfolio was assumed by FP.

·         12 loans under this program were made to qualified employees of private-sector companies that participate in FP’s Employee Home Ownership Program (EHOP)®. 

·         Yampa Valley Housing Authority, Eagle County and Housing Resources of Western Colorado entered into third-party agreements during the year.

·         Production volume in 2005 represents a 208.7% increase over the prior year.

Under such agreements, FP currently manages loan portfolios consisting of 159 files representing $1,374,624 in outstanding credit, where aggregate credit capacity is $2,431,680.

Operations

During the year, investments in technology, personnel and market exposure received high priority.  Installation of more robust software applications allowed the organization to increase productivity.  Additional hardware and security components have greatly improved the sophistication of operations, while providing capacity for continued expansion of programs. 

A full-time coordinator position was created to enhance and grow partnership opportunities among the development community, non-profit agencies and public authorities.  This has spawned a complimentary initiative known as Housing Development Solutions; a regional effort to acquire and rehabilitate multi-family properties primarily located in more rural markets.  These markets can be characterized as having limited resources and minimal capacity to apply increasingly sophisticated tools towards smaller, less frequent, housing projects. 

A separate position was created to coordinate and administer subordinate mortgage programs, while a part-time position was created to handle marketing, communications and assistance in loan servicing functions.  The latter has resulted in the development of collateral material and website reconstruction that provides greater utility to our constituency. To further enhance name recognition, FP registered with the State to conduct business under the name ‘Funding Partners’, which does not affect the corporate name of Funding Partners for Housing Solutions, Inc.       

Capitalization

As of year-end, FP’s aggregate loan capital base (excluding funds under management) was $8,010,834, with 89.6% of funds deployed or committed to loans across the state.  H2O loans represent 34.7% of the total outstanding portfolio, with no single source of repayment comprising more than 7.5% of the capital base.  The breakdown of loan capital shows 36% derived from governmental sources, 56% from regulated financial institutions, 8% from Foundations, Trusts or Associations.  All non-permanent sources of capital have been renewed or re-committed for a minimum of 5 years, but typically 10 years, providing sufficient long-term liquidity.  The organization does not currently carry any secured, full-recourse debt obligations as loan capital. 

2006 Outlook

With continued fiscal pressures at all levels of government, FP continues to explore and pursue opportunities to expand programs that introduce market-based disciplines as backfill for diminished public investment.  The Board of Trustees is confident that current conditions in the public arena provide the impetus to reconsider how and under what form community and economic development is best achieved.  FP is well-positioned to affect positive change and considerably strengthen the market position of the organization. 

Third party services will show increased significance in the FP business plan as resources become scarcer.  Growing recognition that fragmentation of services within the industry presents an offer to streamline the process for our constituency with higher impact to the communities served by FP.   

Greater participation from private-sector interests is a focus area for the organization, as the competition for attracting and retaining a highly-qualified workforce increases.  As well, there appears to be a growing awareness within the business community that safe, vibrant neighborhoods that offer an appropriate mixture of housing options affordable to all segments of society provides greater economic opportunity across the board.  Funding Partners is committed to finding methods for increasing private-sector participation in community objectives, where the Employee Home Ownership program serves as a prime example. 

Funding Partners is changing the economic, physical and social condition of the 2,600 Coloradans FP programs 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 low-income communities.