Preserving Owner-Occupied Affordable Homes

Programs like the Urgent Repair Program reduce the taxpayer cost of nursing homes and assisted living facilities by allowing more seniors to remain in their homes. Photo credit: iStock.com/peterspiro

As the U.S. housing stock ages, homeowners nationwide face an estimated backlog of up to $98 billion in repairs. Homes in disrepair create health and safety risks that disproportionately affect low-income and minority households. Relatively low-cost repairs and upgrades, however, often can salvage homes and make them more energy efficient. On April 17, 2024, the National Council of State Housing Agencies hosted “Preserving Owner-Occupied Affordable Homes: A National Symposium,” a webinar in which industry, nonprofit, and academic players discussed this backlog of repairs facing lower-income homeowners and highlighted programs and policies to help finance housing maintenance.

One of the panels at the symposium, "Innovative State and Local Programs," featured leaders from state housing finance agencies and nonprofit organizations who explained how their entities are supporting housing repairs and upgrades. The discussion was moderated by Kristin Faust, the executive director of the Illinois Housing Development Authority and included Mike Handley, manager of home ownership rehabilitation and compliance at the North Carolina Housing Finance Agency (NCHFA); Shannon Gerving, home improvement programs manager at Minnesota Housing; Keisha Allen, executive director of the Home Repair Resource Center (HRRC); and Christie Cade, regional vice president of NeighborWorks America.

Funding Home Repairs

The panelists discussed how their organizations are funding, or facilitating funds, for home repairs, with a focus on elderly, disabled, or low-income populations. Two panelists represented state housing finance agencies that oversee various loan programs administered by networks of public and philanthropic partners. For example, NCHFA's Essential Single-Family Rehabilitation Loan Pool supports essential repairs for homeowners who are seniors, veterans, or have disabilities and earn up to 80 percent of the area median income (AMI). The secured forgivable loans, which are funded through HUD's HOME Investment Partnerships program, cover up to $40,000 per unit in costs for labor and materials. NCHFA also administers two smaller unsecured loan programs to cover emergency repairs. The Displacement Prevention Partnership supports accessibility modifications to help owner-occupants with physical disabilities remain in their homes, and the Urgent Repair Program (URP), which Handley refers to as "the emergency room for housing," funds immediate repairs for seniors or people with disabilities when an immediate threat of displacement or hazard exists. Eligible repairs range from fixing the roof to adding a wheelchair ramp. These programs, which the state housing trust fund supports, cover up to $12,000 per unit for labor and materials. Both programs serve households earning up to 50 percent of AMI, although half of URP recipients earn less than 30 percent of AMI. Handley pointed out that URP's role is particularly important as the state's senior population continues to grow, because many homeowners prefer to age in place rather than move to an assisted living facility. By allowing more seniors to remain in their homes, this program reduces the taxpayer cost of nursing homes and assisted living facilities. An NCHFA study estimates that every dollar invested in URP over the past 10 years saved an average of $19 in Medicare or Medicaid spending. As of 2023, NCHFA had supplied nearly $350 million in financing to approximately 40,000 homes.

Similarly, Minnesota Housing administers multiple loan programs for single-family housing rehabilitation. Some of these programs are available only under specific circumstances, such as to remedy unsafe housing conditions or repair post-disaster damage. Minnesota Housing's Fix Up Loan Program, however, supports a range of renovations, from basic repairs to kitchen and bathroom upgrades, and is available to households earning up to 130 percent of AMI. The program also supports energy and accessibility upgrades without imposing any household income requirements. Loan amounts range from $2,000 to $75,000 and have flexible repayment terms. Gerving noted that the loan-to-value ratio of 110 percent is unusually high, especially for this type of product. The program also allows a debt-to-income ratio of up to 48 percent. In 2018, the agency made several changes to the loan guarantee program, including adding eligible improvements, increasing the maximum loan amount from $50,000 to $75,000, and adding funding streams through the Inflation Reduction Act. In 2023, the Fix Up Loan Program originated more than 1,200 loans totaling more than $37 million. According to Gerving, this program is expected to award more than 1,400 loans totaling approximately $44 million in 2024.

Several nonprofit organizations have their own repair loan programs. HRRC, a community nonprofit based in Cleveland Heights, Ohio, operates the Challenge Fund Loan Guarantee program for eligible local homeowners. The program, which is supported through individual and philanthropic donations, funds a range of housing repairs and improvements for interiors, garages, and driveways. Allen said that the program's beneficiaries typically are homeowners whose equity or credit score is too low to obtain a conventional loan but who exceed the income requirements for other programs. Although HRRC guarantees the loan for its lending partner, Key Bank, the program has a 94 percent repayment rate. Meanwhile, NeighborWorks America is a large, congressionally chartered nonprofit that, through its network of nearly 250 organizations nationwide, provides funding, training, and other assistance to help families acquire and maintain homes. Many of these loans and grants are also provided in areas underserved by lenders.

Other Support

Although the speakers focused on loans, some panelists discussed other programs that support home repairs. Cade highlighted the New Directions Housing Corporation, a NeighborWorks America affiliate organization in Louisville, Kentucky, that hosts an annual fair offering free critical repairs for local homeowners. This program, which is funded with donations and supported by volunteers, is open to homeowners who are at least 60 years old or have a disability and earn less than 50 percent of AMI. Allen mentioned that HRRC offers homebuyer education classes, home repair workshops, and a tool rental library for $25 per year. Allen explained that her organization’s goal is to empower homeowners to make their own repairs or work directly with contractors. “We don’t do for folks, we do with folks,” Allen said.

Support also can come in the form of direct community engagement. According to Cade, although several federal, state, and local funding programs target housing repairs and improvements, organizations need to build relationships with communities to ensure that the funds are being used effectively. "In many of those programs, the state, local, [and] even federal government is looking for an avenue to community, and that's where the NeighborWorks network steps in," Cade said. Cade explained that community engagement can help alleviate the public's concerns that these programs are scams.

Scaling the Programs

The panelists advocated for more funding to expand these programs and discussed the importance of leveraging existing funds to finance home repair programs, including those from COVID-era federal funding programs. Handley and Allen emphasized the need to reduce restrictions on loan programs. Allen specifically suggested curbing income restrictions for certain home repair programs, noting that households of all income levels often need help with renovations. "I think that we have recognized that, as a country, [we need] to invest in physical infrastructure like roads and bridges, but we haven't quite come to the realization that our single-family housing stock is also part of our critical infrastructure," Faust explained. With the appropriate investment and right design, however, the panelists are optimistic about the effectiveness and scalability of programs that improve the health, safety, accessibility, and efficiency of the nation's stock of single-family homes.