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U.S. Representative Barbara Lee, Congressional Black Caucus Members and Fannie Mae Announce $500,000 Deposit with Community Bank of the Bay to Expand Affordable Housing Opportunities in West Oakland; Announcement is Part of Western Regional Housing Summit

Submitted by: Fannie Mae

Categories: Community Development

Posted: Aug 11, 2000 – 12:00 AM EST

 

Aug. 11 /CSRwire/ - An innovative affordable homeownership effort in West Oakland is one step closer to reality thanks to a $500,000 deposit announced today by U.S. Representative Barbara Lee (D-CA) between Community Bank of the Bay, Northern California Land Trust (NCLT), and Fannie Mae (FNM/NYSE), the nation’s largest source of financing for home mortgages. The $500,000 deposit will allow the bank to underwrite a revolving line of credit to create a Community Land Trust in West Oakland which will purchase, rehabilitate, and sell homes to first time home buyers. Today’s announcement marks the start of the Western Regional Housing Summit convened by the Congressional Black Caucus, to be held in Oakland tomorrow.

Joining Rep. Lee for the check presentation were U.S. Representatives Sheila Jackson Lee (D-TX), Carolyn Kilpatrick (D-MI), Stephanie Tubbs-Jones (D-OH), Eddie Bernice Johnson (D-TX), Gregory Meeks (D-NY), Melvin Watt (D-NC), Corrine Brown (D-FL), James Clyburn (D-SC), and Eva Clayton (D-NC). The investment is part of Fannie Mae’s Community Development Financial Institutions (CDFI) Initiative to promote fair lending, increase affordable housing where needed, spur economic development and job creation, and encourage other investments in the local area.

"This half-million dollar investment into West Oakland will go a long way to turn around underserved neighborhoods and help working families become homeowners," said Rep. Lee. "The line of credit will create a local land trust, which enables home buyers to purchase homes without having to buy the land beneath the home, a tremendous cost savings. I applaud Community Bank of the Bay, Fannie Mae, and West Oakland residents for putting faith and funding behind this land trust."

"Tough challenges require creative solutions, and the land trust model is an effective way to create affordable homeownership opportunities and turn a blighted street into a viable neighborhood," said Philip Williams, senior deputy director of Fannie Mae’s Bay Area Partnership Office. "Fannie Mae’s deposit will help provide the spark to advance the land trust in West Oakland."

Community Bank of the Bay’s $500,000 line of credit will help establish a West Oakland Community Land Trust with the assistance of Rep. Lee, Fannie Mae, lenders, the U.S. Department of Housing and Urban Development (HUD), nonprofits, local residents, and the Northern California Land Trust (NCLT), the only Bay Area nonprofit organization that develops such models.

The Community Land Trust model maintains long term affordability for homeownership developments because the land is owned by a land trust. The cost of land is typically one of the largest single cost components in housing, and because ownership of the land is retained by the land trust, the sales price of the home is lower than a typical home purchase in the same location, allowing the occupant to save thousands of dollars.

In West Oakland, the NCLT will identify properties to acquire, rehabilitate, and sell to first time home buyers at significantly reduced prices. The Community Land Trust will then take ownership of these properties. The rehabilitated homes will be sold to households earning between 60-to-80 percent of the area median income (up to $54,000 for a family of four). These homes will then be available for sale to first time home buyers within the next 12 months.

"The land trust model is an innovative, proven ownership structure that provides permanently affordable homeownership and preserves public investments for future generations, said David Jay-Bonn, executive director of Northern California Land Trust. "This effort can be a bellwether for providing affordable homeownership in traditionally low-income, but rapidly gentrifying, communities like West Oakland."

Through land trusts, home buyers agree on a purchase price for the home itself and sign a long-term, monthly ground-lease for the land beneath the home. The lease is a 99-year, renewable agreement that essentially provides many of the same benefits that comes with traditional homeownership. For example, the benefits can be passed on or willed to family members over time. If the homeowner chooses to sell the home at a future date, the lease includes a means for setting the sales price that provides a return to the owner and keeps the home affordable to future qualifying buyers.

The Community Bank of the Bay is the first financial institution in California to receive federal certification as a Community Development Financial Institution. Opened in 1996, Community Bank of the Bay provides services and banking products in targeted, under-served, low-income Bay Area communities to promote economic development activities. The Community Bank of the Bay’s main office is located at 1750 Broadway in downtown Oakland, with a newly opened loan office in San Francisco’s Western Addition neighborhood. Its customers include small businesses, nonprofit organizations, faith-based institutions, affordable housing developers, and households with an average income of 80 percent of area median income.

"This $500,000 deposit will enable us to leverage a line of credit to jump start the land trust effort," said George McDaniel, president of Community Bank of the Bay. "We thank Rep. Lee and Fannie Mae for continuing to demonstrate support of homeownership for working families."

Washington Mutual, a Fannie Mae approved lender, will offer end loans to the land trust home buyers in West Oakland. Washington Mutual is experienced in Community Land Trusts, having worked on similar land trust transactions in other western cities.

Fannie Mae has committed to invest $100 million in community-focused lenders through the year 2009. CDFIs make additional loans in the community and expand the services they offer to customers. Fannie Mae’s deposit is part of "House Bay Area," the company’s five-year $16 billion housing investment plan to provide affordable mortgage and rental financing to 100,000 families in the nine-county Bay Area.

For more information on the Northern California Land Trust effort in West Oakland, please contact David Jay-Bonn at (510) 548-7878.

For more information on House Bay Area, Fannie Mae’s affordable mortgage products, or a list of local lenders, consumers may call Fannie Mae’s Consumer Resource Center at 1-800-7FANNIE (1-800-732-6643), Monday through Friday, 6:00 a.m. to 2:00 p.m. PDT.

For more information, please contact:

Colleen Haggerty Fannie Mae
Phone: (626) 396-5225

 

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