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China’s central bank has cut its key mortgage reference rate by a record amount, as it ramps up efforts to stem a prolonged property crisis.
The People’s Bank of China (PBOC) announced Tuesday that it would cut its five-year loan prime rate (LPR) from 4.2% to 3.95%, while keeping the one-year LPR unchanged at 3.45%.
The 25 basis point cut to the five-year LPR is the biggest reduction the central bank has made since it revamped its LPR system in 2019. That August, the central bank announced that the LPR would become the new reference rates for lending by Chinese banks.
The latest cut was also the first reduction to the five-year LPR since June 2023.
The LPR is the rate at which commercial banks lend to their best customers. The five-year rate usually serves as a reference for mortgages.
“Today’s 25 (basis point) cut to the five-year LPR is clearly aimed at supporting the housing market,” analysts from Capital Economics said in a note on Tuesday.
“On its own, it will not revive new home sales. But coupled with efforts to provide increased credit support to developers, today’s cut should help to reduce pressure on the property sector somewhat,”they said.
China’s economy has been hobbled by a real estate downturn since 2021, when a government crackdown on developers’ borrowing triggered a liquidity crisis in the sector.
The property market has since entered a prolonged slump, marked by an ongoing decline in both investment in and sales of property. Dozens of major developers have defaulted on their debt, with Evergrande, once the country’s second largest homebuilder, ordered to liquidate last month.
The crisis has triggered widespread protests by unpaid construction workers, buyers of unfinished homes and frustrated investors facing financial losses. It has also spilled over to the country’s massive shadow banking industry, with Zhongrong Trust declaring itself severely insolvent last year after failing to repay its debt.
Beijing has scrambled to revive the property sector, which accounts for as much as 30% of China’s gross domestic product.
Measures unveiled include slashing interest rates, reducing the size of down payments, encouraging banks to extend maturing loans to developers and loosening restrictions on home purchases in Chinese cities.
Capital flight
China’s economy faces a litany of other problems, including deflation, low confidence and accelerated capital flight.
The country’s direct investment liabilities, a measure of foreign direct investment, reached $33 billion in 2023, according to data released by the State Administration of Foreign Exchange on Sunday.
The gauge, which measures direct investments by foreign-owned entities in China, was down 82% from 2022 and stands at its lowest level since 1993.
While an uncertain economic outlook and rising geopolitical tensions are partly to blame for the exodus, foreign companies and investors have also grown wary of increasing political risks in China, including the possibility of raids and detentions.
The country’s stock markets have suffered a prolonged slump since their recent peaks in 2021, with more than $6 trillion in market value having been wiped out from the Shanghai, Shenzhen and Hong Kong markets.
You can sense it in the ubiquitous “Help Wanted” posters in artsy shops and restaurants, in the ranks of university students living out of their cars and in the outsize percentage of locals camping on the streets.
This seaside county known for its windswept beauty and easy living is in the midst of one of the most serious housing crises anywhere in home-starved California. Santa Cruz County, home to a beloved surf break and a bohemian University of California campus, also claims the state’s highest rate of homelessness and, by one measure based on local incomes, its least affordable housing.
Leaders in the city of Santa Cruz have responded to this hardship in a land of plenty — and to new state laws demanding construction of more affordable housing — with a plan to build up rather than out.
A downtown long centered on quaint sycamore-lined Pacific Avenue has boomed with new construction in recent years. Shining glass and metal apartment complexes sprout in multiple locations, across a streetscape once dominated by 20th century classics like the Art Deco-inspired Palomar Inn apartments.
And the City Council and planning department envision building even bigger and higher, with high-rise apartments of up to 12 stories in the southern section of downtown that comes closest to the city’s boardwalk and the landmark wooden roller coaster known as the Giant Dipper.
“It’s on everybody’s lips now, this talk about our housing challenge,” said Don Lane, a former mayor and an activist for homeless people. “The old resistance to development is breaking down, at least among a lot of people.”
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Said current Mayor Fred Keeley, a former state assemblyman: “It’s not a question of ‘no growth’ anymore. It’s a question of where are you going to do this. You can spread it all over the city, or you can make the urban core more dense.”
But not everyone in famously tolerant Santa Cruz is going along. The high-rise push has spawned a backlash, exposing sharp divisions over growth and underscoring the complexities, even in a city known for its progressive politics, of trying to keep desirable communities affordable for the teachers, waiters, firefighters and store clerks who provide the bulk of services.
A group originally called Stop the Skyscrapers — now Housing for People — protests that a proposed city “housing element” needlessly clears the way for more apartments than state housing officials demand, while providing too few truly affordable units.
City officials say the plan they hope to finalize in the coming weeks, with its greater height limits, only creates a path for new construction. The intentions of individual property owners and the vicissitudes of the market will continue to make it challenging to build the 3,736 additional units the state has mandated for the city.
“We’ve talked to a lot of people, going door to door, and the feeling is it’s just too much, too fast,” said Frank Barron, a retired county planner and Housing for People co-founder. “The six- and seven-story buildings that they’re building now are already freaking people out. When they hear what [the city is] proposing now could go twice as high, they’re completely aghast.”
Susan Monheit, a former state water official and another Housing for People co-founder, calls 12-story buildings “completely out of the human scale,” adding: “It’s out of scale with Santa Cruz’s branding.”
Housing for People has gathered enough signatures to put a measure on the March 2024 ballot that, if approved, would require a vote of the people for development anywhere in the city that would exceed the zoning restrictions codified in the current general plan, which include a cap of roughly seven or eight stories downtown.
The activists say that they are trying to restore the voices of everyday Santa Cruzans and that city leaders are giving in to out-of-town builders and “developer overreach laws.”
The nascent campaign has generated spirited debate. Opponents contend the slow-growth measure would slam on the brakes, just as the city is overcoming decades of construction inertia. They say Santa Cruz should be a proud outlier in a long string of wealthy coastal cities that have defied the state’s push to add housing and bring down exorbitant home prices and rental costs.
Diana Alfaro, who works for a Santa Cruz development company, said many of the complaints about high-rise construction sound like veiled NIMBYism.
“We always hear, ‘I support affordable housing, but just not next to me. Not here. Not there. Not really anywhere,’ ” said Alfaro, an activist with the national political group YIMBY [Yes In My Back Yard] Action. “Is that really being inclusive?”
The dispute has divided Santa Cruz’s progressive political universe. What does it mean to be a “good liberal” on land-use issues in an era when UC Santa Cruz students commonly triple up in small rooms and Zillow reports a median rent of $3,425 that is higher than San Francisco’s?
Beginning in the 1970s, left-leaning students at the new UC campus helped power a slow-growth movement that limited construction across broad swaths of Santa Cruz County. Over the decades, the need for affordable housing was a recurring discussion. The county was a leader in requiring that builders who put up five units of housing or more set aside 15% of the units at below-market rates.
But Mayor Keeley said local officials gave only a “head nod” to the issue when it came to approving specific projects. “Well, here we are, 30 or 40 years later,” Keeley said, “and these communities are not affordable.”
Today, with 265,000 residents, the county is substantially wealthy and white.
An annual survey this year found Santa Cruz County pushed past San Francisco to be the least affordable rental market in the country, given income levels in both places. And many observers say UC Santa Cruz students contend with the toughest housing market of any college town in the state.
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State legislators have crafted dozens of laws in recent years to encourage construction of more homes, particularly apartments. While California has long required local governments to draft “housing elements” to demonstrate their commitment to affordable housing, state officials only recently passed other measures to actually push cities to put the plans into practice.
Regional government associations draw up a Regional Housing Needs Assessment, designating how many housing units — including affordable ones — should be built during an eight-year cycle. The state Department of Housing and Community Development can reject plans it deems inadequate.
For years 2024 to 2031, Santa Cruz was told it should build at least 3,736 units, on top of its existing 24,036.
Santa Cruz and other cities have been motivated, at least in part, by a heavy “stick”: In cases when cities fail to produce adequate housing plans, the state’s so-called “builder’s remedy” essentially allows developers to propose building whatever they want, provided some of the housing is set aside for low- or middle-income families. In cities like Santa Monica and La Cañada-Flintridge, builders have invoked the builder’s remedy to push ahead with large housing projects, over the objections of city leaders.
The Santa Cruz City Council resolved to avoid losing control of planning decisions. A key part of their plan envisions putting up to 1,800 units in a sleepy downtown neighborhood of auto shops, stores and low-rise apartments south of Laurel Street. Initial concepts suggested one block could go as high as 175 feet (roughly 16 stories), but council members later proposed a 12-story height limit, substantially taller than the stately eight-story Palomar, which remains the city’s tallest building.
City planners say focusing growth in the downtown neighborhood makes sense, because bus lines converge there at a transit center and residents can walk to shops and services.
“The demand for housing is not going away,” said Lee Butler, the city’s director of planning and community development, “and this means we will have less development pressure in other areas of the city and county, where it is less sustainable to grow.”
A public survey found support for a variety of other proposed improvements to make the downtown more attractive to walkers, bikers and tourists. Among other features, the plan would concentrate new restaurants and shops around the San Lorenzo River Walk; replace the fabric-topped 2,400-seat Kaiser Permanente Arena, which hosts the Santa Cruz Warriors (the G-league affiliate of the NBA’s Golden State Warriors), with a bigger entertainment and sports venue; and better connect downtown with the beach and boardwalk.
Business owners say they favor the housing plan for a couple of reasons: They hope new residents will bring new commerce, and they want some of the affordable apartments to go to their workers, who frequently commute well over an hour from places such as Gilroy and Salinas.
Restaurateur Zach Davis called the high cost of housing “the No. 1 factor” that led to the 2018 closure of Assembly, a popular farm-to-table restaurant he co-owned.
“How do we keep our community intact, if the people who make it all happen, the workers who make Santa Cruz what it is, can’t afford to live here anymore?” Davis asked.
The city’s plan indicates that 859 of the units built over the next eight years will be for “very low income” families. But the term is relative, tied to a community’s median income, which in Santa Cruz is $132,800 for a family of four. Families bringing home between $58,000 and $82,000 would qualify as very low income. Tenants in that bracket would pay $1,800 a month for a three-bedroom apartment in one recently completed complex, built under the city’s requirement that 20% of units be rented for below-market rents.
The people pushing for high-rise development say expanding the housing supply will stem ever-rising rents. Opponents counter that the continued growth of UC Santa Cruz, which hopes to add 8,500 students by 2040, and a new surge of highly paid Silicon Valley “tech bros” looking to put down roots in beachy Santa Cruz would quickly gobble up whatever number of new units are built.
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“They say that if you just build more housing, the prices will come down. Which is, of course, not true,” said Gary Patton, a former county supervisor and an original leader in the slow-growth movement. “So we’ll have lots more housing, with lots more traffic, less parking, more neighborhood impacts and more rich people moving into Santa Cruz.”
Leaders on Santa Cruz’s political left say new construction only touches one aspect of the housing crisis. Some of the leaders of Tenant Sanctuary, a renters’ rights group, would like to see Santa Cruz tamp down rents by creating complexes owned by the state or cooperatives and enacting a rent control law capping annual increases.
“No matter what they build, we need housing where the price is not tied to market swings and how much money can be squeezed out of a given area of land,” said Zav Hershfield, a board member for the group.
The up-zoning of downtown parcels has won the support of much of the city’s establishment, including the county Chamber of Commerce, whose chief executive said exorbitant housing prices are excluding blue-collar workers and even some well-paid professionals. “The question is, do you want a lively, vital, economically thriving community?” said Casey Beyer, CEO of the business group. “Or do you want to be a sleepy retirement community?”
Just days after the anti-high-rise measure qualified for the March ballot, the two sides began bickering over what impact it would have.
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Lane, the former mayor, and two affordable housing developers wrote an op-ed for the Lookout Santa Cruz news site that said the ballot measure is crafted so broadly it would apply to all “development projects.” They contend that could trigger the need for citywide votes for projects as modest as raising a fence from 6 feet to 7 feet, adding an ADU to a residential property or building a shelter for the homeless, if the projects exceed current practices in a given neighborhood.
The authors accused ballot measure proponents of faux environmentalism. “If we don’t go up,” they wrote, “we have less housing near jobs — and more people driving longer distances to get to work.”
The ballot measure proponents countered that their critics were misrepresenting facts. They said the measure would not necessitate voter approval for mundane improvements and would come into play in relatively few circumstances, for projects that require amendments to the city’s General Plan.
While not staking out a formal position on the ballot measure, the city’s planning staff has concluded the measure could force citizen votes for relatively modest construction projects.
The two sides also can’t agree on the impact of a second provision of the ballot measure. It would increase from 20% to 25% the percentage of “inclusionary” (below-market-rate) units that developers would have to include in complexes of 30 units or more.
The ballot measure writers say such an increase signals their intent to assure that as much new housing as possible goes to the less affluent. But their opponents say that when cities try to force developers to include too many sub-market apartments, the builders end up walking away.
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Santa Cruz’s housing inventory shows that the city has the potential to add as many as 8,364 units in the next eight years, when factoring in proposals such as the downtown high-rises and UC Santa Cruz’s plan to add about 1,200 units of student housing. That’s more than double the number required by the state. But the Department of Housing and Community Development requires this sort of “buffer,” because the reality is that many properties zoned for denser housing won’t get developed during the eight-year cycle.
As with many aspects of the downtown up-zoning, the two sides are at odds over whether incorporating the potential for extra development amounts to judicious planning or developer-friendly overkill.
The city’s voters have rejected housing-related measures three times in recent years. In 2018, they decisively turned down a rent control proposal. Last year, they said no to taxing owners who leave homes in the community sitting empty. But they also rejected a measure that would have blocked a plan to relocate the city’s central library while also building 124 below-market-rate apartment units.
The last time locals got this worked up about their downtown may have been at the start of the new millennium, when the City Council considered cracking down on street performers. That prompted the owner of Bookshop Santa Cruz, another local landmark, to print T-shirts and bumper stickers entreating fellow residents to “Keep Santa Cruz Weird.”
Santa Cruzans once again are being asked to consider the look and feel of their downtown and whether its future should be left to the City Council, or voters themselves. The measure provokes myriad questions, including these: Can funky, earnest, compassionate Santa Cruz remain that way, even with high-rise apartments? And, with so little housing for students and working folks, has it already lost its charm?
Countrywide announced today that its foreclosure prevention efforts increased markedly over the last six months of the year, helping more than 80,000 borrowers stay in their homes.
“Countrywide is proud of the progress made toward helping our customers sustain homeownership,” said Steve Bailey, senior managing director, Loan Administration at Countrywide, in a statement
“Home retention efforts in the second half of the year increased 148 percent compared to the first six months, and we anticipate helping even a greater number of borrowers in 2008.”
The recently taken-over mortgage lender said loan modifications and other workouts accounted for 69 percent of its home retention efforts in 2007.
One such modification method is to refinance qualified subprime borrowers into prime loans. Hmm…
The Calabasas, CA-based company said it modified home loans for 55,801 borrowers last year, set-up long term repayment plans for 12,110, and put in place other workout efforts for 6,862 homeowners.
According to the company’s data released today, it also executed 7,880 short sales, 1,217 deeds-in-lieu of foreclosure, and 4,621 special forbearance plans.
Since the program was launched in late October, Countrywide has applied home retention solutions to 16,676 mortgages, greater than 20 percent of its total loan modification goal.
“We are eager to continue to work with housing industry professionals, nonprofit organizations and government agencies to communicate to homeowners across the nation that we often can prevent foreclosures, if we are given the opportunity to work with them,” added Bailey.
Recently, Countrywide ironed out deals to work with consumer advocacy groups ACORN and NACA in an effort to help more homeowners avoid foreclosure.
These groups had previously held a number of protests claiming the lender wasn’t doing enough to help stem the problem.
In related news, presidential hopeful Hillary Clinton slammed Countrywide CEO Angelo Mozilo’s proposed pay package ($36.4 million), calling it “outrageous” during an interview with CNBC-TV.
“Executives of a lot of these companies that participated in creating this very difficult set of problems we’re trying to work our way out of should not be rewarded … as they walk away,” Clinton said.
Perhaps some of that money could go towards the home retention efforts…
Everyone has heard of Nashville. It’s not called Music City, U.S.A. for nothing! Most people think the city is all about country music, cowboy boots and line dancing, but locals know the Nashville facts that are the truth behind the stereotypes.
It has great weather and amazing views. Some of the most unique architecture in the country is here. Two U.S. Presidents are buried in or near Nashville. As for music, sure we’re the home of country music, but Elvis also recorded more than 200 songs at RCA Studios. Here are a bunch of other Nashville facts known only to locals.
39 facts only real Nashville locals know
1. BBQ is a separate food group. Don’t argue about it. Just try all the different kinds and decide on a favorite. Not all of them involve pork and tomatoes. Barbecue chicken with Liquid Gold barbecue sauce is a national treasure.
2. Named “The Athens of the South,” Nashville is the only city in the world that has a replica of the Parthenon from Athens, Greece. You can find it in Centennial Park.
3. The city hosts Tin Pan South, the largest festival for songwriters in the world. Songwriters of all genres, not just country, descend on the city every spring for the weeklong festival. Many perform their work on street corners, as well as at local music venues.
4. The creators of Maxwell House Coffee did it in Nashville. President Theodore Roosevelt reportedly gave the brand its famous tagline “Good to the last drop” when he tried it on a visit to the city.
5. The Grand Ole Opry has been airing weekly for 94 years. It’s the longest-running show in the entire world. It’s still carried on the radio, as well as on TV and the auditorium is always packed with a live audience. Good luck getting tickets if you don’t make plans in advance!
6. Revolutionary War general, Francis Nash, is the inspiration for the name Nashville. The city was founded in the middle of the war in 1779.
7. The famous music scene began with African-American gospel groups, not country music. It all started with the Jubilee Singers of Fisk University way back in the 1870s. Emancipated slaves studying at the university were the first members of the group. They traveled the country to raise money to fund the school. The group is still around and continues to travel and perform.
8. Gaylord Opryland Resort and Convention Center is an overrated tourist attraction that’s not worth the admission price except in December. That’s when Opryland turns into a true wonderland that delights Christmas lovers of all ages. It’s the best Christmas display in the city.
9. The first seeing-eye guide dog in the United States was trained in Nashville by a native named Morris Frank. He left his studies at Vanderbilt University to travel to Europe to find out more about the seeing-eye dogs he’d heard about. He returned with his first guide dog, Buddy, and began training more. The foundation he created, The Seeing Eye, is still in Nashville.
10. Hunting for the best apartments in Nashville is easier and more fun compared to other cities. There are many types of apartments to choose from here. Nashville is more affordable than most other big cities, too!
11. Nashville is where the phrase “Old Glory” became popularized to describe the American flag. It started in the Civil War when a retired sailor named William Driver retrieved his hidden flag and flew it over the city after the Union Army recaptured it from the Confederates. He referred to his flag as “Old Glory” and the nickname caught on.
12. Famous thoroughbreds War Admiral and Seabiscuit were both born in Nashville. Move over, Louisville. They’ve got the Triple Crown winners right here in Nashvegas. Belle Meade Plantation, which bred both horses, is open to the public for tours. They also offer tastings at the on-site winery.
13. Every neighborhood in Nashville is distinctive and has its own personality. You’re sure to find one that suits you perfectly.
14. The architecture at the Country Music Hall of Fame is better, but the real country music history is at the Johnny Cash Museum. They’re proud of their favorite native son. (Yes, he was born in Arkansas, but they overlook that small flaw.)
15. Pancake Pantry’s pancakes aren’t worth the wait. Neither are the biscuits from Biscuit Love. They’re both overpriced restaurants that cater primarily to tourists. Many other restaurants have pancakes and biscuits that are homemade, just as good and don’t require an hour-long wait.
16. Prince’s Hot Chicken Shack IS worth standing in line for. Be prepared to drink a bucket of water to douse the heat. That chicken is hot, hot, hot.
17. Nashville was the first city in the South to desegregate public businesses. The protests and sit-ins that led to the victory sparked civil rights advocates in other cities to do the same.
18. RCA Studio B stays decorated for Christmas since Elvis recorded his first Christmas album there in the middle of July. The Music Row Studio is open to the public year-round.
19. Goo Goo Clusters were created in Nashville and are still made right here. The company makes over 3 million pounds of chewy confection every year.
20. The city has thriving hip-hop and rap scenes. Some of the best rappers have come from Cashville, including Young Buck, Lil Queze and Starlito.
21. Speaking of music, Nashville has a ton of live music venues and might be the only place in the world where you can listen to bluegrass, walk next door to catch a country concert, then go downstairs to listen to a rap battle and finally finish off the day by driving down the road to listen to the Nashville Symphony perform.
22. Nashville has more people working in the music industry than anywhere else in the country, including Los Angeles and New York. Over 60,000 music industry jobs are in Nashville. That’s four times as many as the next nearest city.
23. No one really knows what goes on in the Batman Building downtown. Supposedly, it’s owned by AT&T and is an office building for them, but locals aren’t so sure. Could Bruce Wayne have an office on the top floor?
24. Nashville has the only music studio left in the entire world that can record music directly on vinyl records. The Blue Room is part of Jack White’s Third Man Records and has live performances, too.
25. The only American to ever become President of a foreign country was born in Nashville. William Walker became Chief Executive of Nicaragua in 1856.
26. Ryman Auditorium started off as a meeting place for local gospel churches. It was only later converted into a concert venue. It’s been a designated Historic Landmark since 2001.
27. The Frist Art Museum is an underrated landmark. It’s one of the only museums on the National Register of Historic Places. The building itself is a work of art in the Art Deco style. It was the main post office!
28. Nashville is home to the oldest FM radio station in the country. It’s another reason for the nickname “Music City.” In fact, local legend has it that it was one of the DJs for this music station back in the day that first called Nashville by the famous moniker.
29. The Gulch is still an old hippie neighborhood, despite the new businesses moving in. It’s still the best place to find eccentric shops and bars. There’s no better location in town to hear eclectic music, either.
30. We’re the only city other than Los Angeles to ever host the Grammy Awards. They’d love to do it again if anyone from the Recording Academy is reading this.
31. Sri Ganesha Temple and Sanctuary will transport you to another time and place. It’s a replica of Hindu Temples built in India between 900 and 1100 AD. The temple welcomes visitors and holds tours daily, but it is a working temple, so it closes periodically during the day for services. There’s a restaurant and a gift shop on-site, too.
32. Nashville has the largest Kurdish community in the U.S. More than 15,000 Kurds call Nashville home, though the U.S. Census has yet to recognize the refugees from Iraq. The community calls its neighborhood Little Kurdistan.
33. Percy Priest Lake is the best place to go boating and hiking despite the entry fee, which is only $5, anyway. There are miles of trails and campgrounds, as well as plenty of boat ramps.
34. Nashville is home to over 678,000 people. It’s the biggest city in the state of Tennessee and is rapidly growing. Its population has grown by almost 13 percent since 2010 and it’s the 23rd largest city in the United States. More and more people are discovering the charms of Music City and deciding to call it home!
35. The monument to Lysicrates in Athens was the inspiration for the Tennessee State Capitol building, which is one of the oldest capitol buildings in the country still operating. President James Polk and his wife are buried on the grounds.
36. Even people who don’t like country music will admit that the architecture at the Country Music Hall of Fame is amazing. From the front windows designed to look like piano keys, to the physical representation of recording technology evolution that makes up the rotunda’s roof, it’s worth visiting just to see the building.
37. The Honky Tonk Highway is the nickname for an area of South Broadway that has bars and other venues playing live music — and letting it flow outside onto the streets —from 10 a.m. every morning until 3 a.m. the following morning. Many of the venues have multiple floors and they rarely publish their playing schedules in advance. Sometimes, music stars just show up and start playing.
38. President Andrew Jackson lived just outside Nashville on an estate named The Hermitage. He’s buried on the grounds. The estate is now a museum dedicated to the history and the President’s life.
39. Wave Country is the place to go during the summer. The freshwater swimming pool and water park complex can easily be an all-day affair to help the family keep cool during the hot Southern summers. There are concession stands but you can also bring your own picnic. You can even bring a tent if you like.
Did we miss any Nashville facts?
Residents are proud of their city and heritage. If you’re moving to Music City, you can find apartments in Nashville here.
Did we forget any Nashville facts that we should have included? Did we get anything wrong? Let us know in the comments below!
Buying a house is a dream for many Americans, but it can feel very out of reach for some people. To qualify for a mortgage, you’ll need an adequate credit score and down payment, which many people just don’t have.
That is where the Neighborhood Assistance Corporation of America (NACA) comes in. The NACA has helped hundreds of thousands of people find affordable housing with no money down and no minimum credit score. NACA also provides financial assistance for approved homeowners that encounter financial difficulties.
If you’ve been struggling to figure out how you’ll afford to purchase a home, then the NACA program could help. This article will explain how the NACA mortgage process works and how the organization could help you find your next home.
What is the NACA mortgage program?
The Neighborhood Assistance Corporation of America (NACA), a non-profit organization established in 1988, is dedicated to providing affordable housing options to Americans. Its mission is to combat discriminatory and unjust lending practices. With 45 branches across the United States, NACA assists borrowers with low credit scores in securing affordable mortgages.
NACA offers various solutions such as property improvement and foreclosure avoidance to help achieve this goal. Additionally, the organization helps homeowners reorganize their existing mortgages, preventing them from losing their homes to foreclosure. Nevertheless, NACA’s signature mortgage program remains the most sought-after offering among its services.
How does the NACA program work?
The NACA is known for its purchase program, which it calls the Best in America Mortgage Program. This program is designed to make homeownership more affordable for everyone.
If you applied for a mortgage through a bank or credit union, you would undergo an extensive credit check. But the NACA makes it possible to buy a home with:
No down payment requirement
No closing costs
No requirement for perfect credit
No limits on your income
No fees – The lender pays the appraisal costs, attorney fees, title insurance, transfer tax, settlement agent fees, and buyer closing costs.
All of this is available at a below-market interest rate. Currently, the NACA is offering a 30-year fixed-rate mortgage of 2.125% APR and a 15-year fixed-rate mortgage of 1.75% APR. You’d be hard-pressed to find a better deal anywhere else.
Bank of America stands as NACA’s largest and most significant partner, providing a major portion of the funding for the loans.
NACA Requirements and Qualifications
Before you assume the NACA mortgage program is too good to be true, there are certain requirements you’re going to have to meet to qualify. Unlike traditional lending practices, NACA evaluates creditworthiness based on character, rather than solely relying on credit scores.
For instance, NACA members won’t be penalized for financial hardship caused by an injury or illness. But you must demonstrate that you can afford to pay your monthly housing expenses.
These expenses include your mortgage payments, property taxes, homeowners insurance, and HOA dues. And your income can’t fluctuate from month to month.
While there are no income restrictions in the NACA purchase program, earning higher than the median income could limit your home buying options to specific regions. It’s also worth noting that owning another property while closing on a NACA mortgage is strictly prohibited.
Furthermore, as a NACA mortgage recipient, you are expected to engage in a minimum of five membership activities annually. These activities include volunteering at NACA offices, participating in protests, or offering support to other members during the home buying process.
Eligible States
Unfortunately, the NACA mortgage program still isn’t available everywhere, though the organization is working hard to expand across the U.S. It’s currently available in the following states:
Alabama
Arkansas
Arizona
California
Colorado
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Illinois
Louisiana
Massachusetts
Maryland
Michigan
Minnesota
Missouri
Mississippi
North Carolina
New Jersey
Nevada
New York
Ohio
Pennsylvania
South Carolina
Tennessee
Texas
Virginia
Wisconsin
NACA Program Pros and Cons
Here are some of the biggest advantages and disadvantages of taking out a mortgage through the NACA.
Pros
Buying a home with no down payment or standard closing costs
Snag a below-market interest rate on a 15-year or 30-year mortgage
No credit requirements or income limits to apply
Receive extensive borrower education and training
Cons
Time-consuming application process
Program isn’t available in all 50 states
There are limits to how much you can borrow
You’ll have to pay for property taxes and homeowners insurance
NACA Loan Limits
The NACA home buying program has loan limits that cap your mortgage amount. The purchase price of a home cannot exceed the conforming loan limit, which is $647,200 for a single-unit property in most states. The conforming loan limit for a single-unit home in Alaska and Hawaii is $970,800.
Who qualifies for the NACA program?
The NACA mortgage program is very generous, but there are several steps you’ll need to take before you can close on your home. Here are the seven steps you’ll take to complete the NACA loan qualification process.
1. Attend a free homebuyer workshop
If you’re considering applying for a NACA mortgage, you’ll first have to attend a homebuyer workshop. During this free workshop, you’ll learn more about homeownership and how to qualify for the NACA mortgage program. Then, you can register on the company’s website to reserve your spot.
2. Meet with your housing counselor
Once you’ve completed the homebuyer workshop, the NACA will assign you a housing counselor to guide you through this process. Your housing counselor will help you determine an affordable monthly mortgage payment and help you come up with a reasonable monthly budget. You’ll continue to meet with your counselor until you’ve qualified for the NACA housing program.
3. Attend a NACA purchase workshop
Once you’ve qualified for the mortgage program, you must attend a purchased workshop at the NACA office. During this workshop, you’ll review the home purchase process and work with a real estate agent to help you find the right home.
4. Receive a property qualification letter
Once you’ve chosen the home you plan to buy, you’ll have to get in touch with your housing counselor again. They will help you secure your qualification letter.
This letter states that you are qualified to purchase the home you’re interested in. Your NACA counselor and real estate agent can also help you draft an offer on the home.
5. Get your home inspected
Before you can purchase a home, it must pass a NACA home inspection and pest inspection. If the inspection reveals any problems with the home, you must resolve those issues before you can close on the home.
6. Meet with your mortgage consultant
Throughout this entire mortgage process, you should be saving money, maintaining your income level, and paying your bills on time. At this point, you’re going to meet with your mortgage consultant to prove that you’ve met the required guidelines and are ready to move forward with the mortgage application.
7. Close on your mortgage
Now it’s time to close on your home! There are no closing costs for a NACA mortgage. Additionally, NACA members do not pay private mortgage insurance (PMI).
Instead, your NACA membership provides you with a post-purchase assistance program through NACA’s Membership Assistance Program (MAP). But this is the final step that allows you to close on your new home and finalize the process.
Alternatives to the NACA program
The NACA program may not be suitable for everyone, or you may not qualify. If this is the case, consider other mortgage programs that may be available to you.
FHA Loans
For low-to-moderate income borrowers who may not meet the stringent requirements of conventional loans, the Federal Housing Administration offers the FHA loan program. With lower down payment needs and more lenient credit score standards, these loans provide a viable option for those looking to finance their first home.
USDA Loans
The U.S. Department of Agriculture extends its support to those seeking to purchase a home in rural or suburban areas through its USDA loan program. These loans offer attractive terms such as low or no down payment options and competitive interest rates, with the aim of fostering home ownership in less densely populated regions.
VA Loans
As a way to show appreciation for the sacrifices made by military service members, veterans, and their surviving spouses, the Department of Veterans Affairs provides VA loans.
These loans, exclusive to eligible individuals, boast features such as no down payment requirement, no private mortgage insurance, and interest rates that are often more favorable than those of traditional loans.
First-Time Homebuyer Programs
For those entering the housing market for the first time, many states and local governments offer programs tailored to their needs. First-time homebuyer programs often provide financial assistance in the form of lower interest rates and down payment assistance, as well as other incentives, making homeownership a reality for those who may not have the funds for a down payment otherwise.
Down Payment Assistance
To help alleviate the burden of the upfront costs of buying a home, down payment assistance (DPA) programs are available from government agencies, non-profit organizations, and private lenders.
These programs provide homebuyers with the necessary funds to cover their down payment, allowing them to get one step closer to affordable homeownership.
National Homebuyers Fund
As a non-profit organization, the National Homebuyers Fund offers down payment assistance to low-and moderate-income homebuyers in the form of grants that do not need to be repaid. Their mission is to provide a helping hand to those who may not have the resources to make a down payment on their own.
Chenoa Fund
The CBC Mortgage Agency’s Chenoa Fund is a down payment assistance program that provides low-and moderate-income homebuyers with up to 3.5% of the home’s purchase price. This support is provided through either forgivable or repayable second mortgage loan options.
Bottom Line
If you’re concerned that you don’t have the down payment or credit requirements necessary to apply for a traditional mortgage, a NACA mortgage may be a suitable option. Borrowers that qualify could receive low-interest mortgages with no down payment, closing costs, or fees. The application process is tedious, but the benefits can help you achieve the dream of homeownership.
Frequently Asked Questions
Is there a minimum credit score requirement for the NACA program?
No, NACA does not consider credit scores for mortgage approval. Instead, they look at your payment history and ability to make future mortgage payments.
Is there an income limit to qualify for the NACA program?
There is no strict income limit to qualify for the NACA program. The program is designed primarily to assist low- to moderate-income individuals and families, but it does not set an upper limit on income. The focus is more on your ability to afford the mortgage payments, and whether you meet other program criteria.
How long does the NACA mortgage process take?
The time frame can vary depending on individual circumstances, but generally, it takes several months from attending the initial workshop to closing on a home. The more promptly you can provide the required documentation and fulfill program requirements, the quicker the process will likely be.
How does the NACA mortgage differ from a traditional mortgage?
NACA mortgages typically offer more favorable terms compared to traditional mortgages. They come with no down payment, no closing costs, and no requirement for private mortgage insurance (PMI). The interest rates are often below market rate as well.
Can I use a NACA mortgage to refinance my existing loan?
No, NACA mortgages are designed for the purchase of a primary residence only. They cannot be used for refinancing existing loans or for investment properties.
The proliferation of special-purpose credit programs should help increase homeownership rates among Black households, but it won’t happen without specialized expertise and intentionality, according to industry leaders.
The products have gained traction in the aftermath of 2020 racial justice protests following the death of George Floyd as businesses attempt to address wealth disparities between Blacks and whites. Since the end of the Great Financial Crisis, the difference in homeownership rates between Black and white households has widened, with the 2020 gap exceeding the difference that existed in 1960.
But offering SPCPs is not about doing “a good thing,” according to Nikitra Bailey, executive vice president of the National Fair Housing Alliance. They ought to be a business priority moving forward as well.
“We know that seven out of 10 future borrowers are going to be families of color,” she said at a September roundtable discussion organized by four government regulating agencies. “This is actually about the health and the financial safety and soundness of our mortgage market.”
Financial institutions that have taken the initiative to introduce SCPCs in the past two years say that success depends not only on having more minority loan and banking officers. Desired outcomes can only occur by bringing to the table historical knowledge and sensitivity to enable effective communication with the stakeholders they’re meant to serve. Those types of efforts may require a shift in the typical approach to customer acquisition and originator compensation.
“We’re building the trust within the community, recognizing that there’s still a level of mistrust with banks amongst minority communities,” said Michael Innis-Thompson, senior vice president and head of community lending and development and fair lending center of excellence at TD Bank, which has offered SPCPs since early 2022.
Recognizing the need to have professionals who both look like and can relate to their likely clients, TD created a network of community mortgage loan officers serving as “credible intermediaries” to help build that trust, Innis-Thompson said.
With community loan officers focused on outreach to low-to-moderate income people of color, “their payment structure is designed, so that they have a salary to compensate for the additional community work they do on top of loan commissions, versus a standard loan officer that’s on pure commission,” he said.
“There’s an incentive for them to continue to develop these relationships, and we designed it specifically that way.”
Much of the work involved with strengthening SPCPs entails finding partnerships in neighborhoods. With a great deal of nuance in each program as well as differences between individual SPCPs, there’s a fair amount of education required before the first transaction can take place, according to Dale Baker, president of home lending at KeyBank.
“We do sit down with Realtors, we do work with various community groups, trade associations, affinity groups, faith based organizations, to provide education. And, in exchange they help us with getting the information out to their members, constituency, et cetera, in order to take advantage of this funding,” he said. Baker also added that KeyBank has received interest from loan officers themselves who want to join the company as a result of their bringing SPCPs to the market.
The most constructive partnerships make the work for lending officers simpler, thanks to the backing of influential sources.
“When you’re dealing with community organizations, for example, those are trusted intermediaries that potential homebuyers go to. When they’re sharing the information, they consider it credible.” Innis-Thompson said.
The work behind special-purpose credit programs don’t end once the loan closes, but require regular monitoring to improve upon them. While the fine details may seem complicated, having analysts who can examine processes and identify missed opportunities is vital toward fulfilling the mission SPCPs were created to address. Even after their programs rolled out, lenders continue to sort through their data to see if they failed to offer the program to an eligible borrower.
“That’s a key point about any special-purpose credit programs — monitoring to see if it’s really having the effect that it was designed to have,” Innis-Thompson noted.
The Mortgage Bankers Association convened in San Francisco this week for its 95th annual convention, an event marked by protests and angry sentiment from passer-bys.
During a Monday morning presentation involving Fannie and Freddie CEOs, the co-founder of activist group “Code Pink” jumped on stage and argued for a foreclosure moratorium, claiming case-by-case foreclosure prevention doesn’t work.
Interestingly, Freddie CEO David Moffett responded to the question, noting that measures used in the past weren’t viable, but said they still needed to figure out a way to assist homeowners on a case-by-case basis.
Outside the event, protesters could be seen holding signs saying, “Honk if you hate Mortgage Bankers!” and “Jail them, don’t bail them!”
Meanwhile, ordinary citizens walking by the event who spoke with San Francisco Chronicle reporters attributed the mortgage crisis to greed, arrogance, and incompetence, among other things.
Inside, things weren’t much rosier, as MBA chairman Kieran Quinn said we are currently experiencing the “most painful deleveraging in the history of finance.”
The Chronicle noted that attendance continues to plummet at the annual event, with only 2,500 guests at this year’s conference, down from 4,000 last year and 5,500 in 2006.
And just 774 exhibitors are presenting their wares this year, down nearly fifty percent from the 1,336 seen last year.
I suppose it makes perfect sense, with mortgage applications down considerably from last year’s dismal numbers and delinquencies and foreclosures continuing to inch up.
And with tickets for the event ranging between $950 and $2,250, you could understand why attendance is plummeting.
WASHINGTON — After years of proposals, counterproposals, interagency disagreement and political intrigue, the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency appear poised to finish their modernization of the Community Reinvestment Act’s implementing rules.
FDIC Chairman Martin Gruenberg said last fall that he expected the three agencies would finalize a joint rule updating the CRA in early 2023. But the intricacies of the rule, a shake-up of leadership and a string of midsize bank failures this spring likely contributed to pushing back that timeline, according to Jesse Van Tol, CEO of the National Community Reinvestment Coalition.
“You had a mini banking crisis in the spring that certainly pulled people away from this. You had a leadership transition at the Fed as well with [former Vice Chair Lael] Brainard’s departure, [and] you’ve gotten new Fed governors who came on board.” he said. “The light at the end of the tunnel is here, and I think we will see the final rule in October.”
Congress passed the CRA in 1977 as a way to address de facto lending discrimination faced by communities of color. The act requires that banks be graded on how equitably they are lending to low- and moderate-income customers and neighborhoods in their service areas, typically determined by where they have branches and deposit-taking automated teller machines. Banks need to receive a satisfactory mark in order to merge with or acquire other banks.
Given the advent of mobile banking, both banks and community groups have long agreed on the need to update the CRA — the most recent comprehensive overhaul of the rules was conducted in the 1990s.
Former Comptroller of the Currency Joseph Otting previously attempted to reform CRA implementation during the Trump administration, but community organizations argued the proposal effectively allowed banks to ignore underinvested communities and they threatened to sue the OCC when the plan was finalized in 2020. Otting’s proposal also failed to gain the support of Fed officials. The Biden administration then took on the task of reform, starting from scratch under the leadership of former Brainard.
The banking agencies issued a notice of proposed rulemaking in May 2022, but banking trade organizations raised a variety of concerns about the proposal. Banks argued that it would be too difficult to attain satisfactory ratings under the change, particularly under the retail lending portion of CRA exams. Banks also argued that the 90-day comment period was too short for banks to meaningfully respond to the proposed changes under the Administrative Procedure Act and hinted at a legal challenge if the rule was finalized as written.
Banking groups on Tuesday asked regulators to delay issuing the final joint rule due to uncertainty created by a constitutional challenge to the Consumer Financial Protection Bureau’s funding structure and by the recent capital changes regulators have proposed as part of the Basel III accords.
But the regulators appear unfazed by that criticism. Ian Katz, a Washington analyst with Capital Alpha Partners, said that may be due in part to the closing window of opportunity that regulators have to finalize the rule and avoid a congressional repeal after the 2024 election. The Congressional Review Act allows Congress to nullify a regulation within 60 legislative days of its finalization with a majority vote in both chambers and approval of the president. Katz said that a real threat of an override exists if Republicans win the House, Senate and White House.
“If the administration wants to make sure that the rule can’t be nullified by a Republican administration and Congress, it probably needs to finalize it by roughly mid-2024 to avoid the other CRA, the Congressional Review Act,” Katz said. “I think they’ll put it out before then.”
But in addition to racing against the clock, experts say regulators also have to take their time to ensure that the final rule is not vulnerable to a legal challenge.
“CRA is complicated, and the proposal gives the banks a lot of different pieces they can attack. The banks are also asserting that the regulators are going beyond their statutory authority and that the proposal, if unchanged, would be vulnerable to a legal challenge,” Katz said. “I imagine the regulators have been taking a look at that and will try to make sure they put out something that won’t be easy to strike down in court.”
Van Tol said the agencies are highly sensitive to industry concerns and have spent a lot of time making certain the law complies with statutory authority. To craft a durable rule, the agencies — particularly the Fed, which is leading the rewrite — are likely to take all the time they have. Van Tol said this puts pressure on regulators to ensure the rule withstands the test of time.
“Because the banking trades have threatened to sue them, I think they are trying to make sure that they’ve dotted the i’s and crossed their t’s in such a way that the rules are best protected,” said Van Tol.
Ye the delay in finalization can’t all be attributed entirely to industry pressure, Van Tol said. CRA-related rules have historically been very difficult to get done, in part because the details are very complex and also because they require interagency collaboration.
“It’s an interagency ruling, it’s much more complicated to coordinate amongst three agencies — two of whom have boards — who have to vote on the proposal,” he said. “The Fed [officials] are perfectionists. If you give them time, they’ll take it. They’ll take as much time as they need to get to something they’re satisfied with.”
Dennis Kelleher, CEO of the public advocacy organization Better Markets, said part of the problem is that industry turmoil and agency turnover made an already tedious process more difficult.
“I think anyone thinking it was going to be finalized earlier this year was overly optimistic,” Kelleher said. “It would have been record-breaking for them to do all that and finalize by earlier this year. While we always prefer rules to be finalized sooner than later, we’re more interested in rules being finalized that are effective, workable, durable and achieve the intended goal. If that takes more time than less, better to get it right than be quick about it.”
When reached for comment, officials at the OCC indicated they are working on the rule and incorporating public feedback.
“The OCC has been working with the Federal Reserve and FDIC to modernize and strengthen the Community Reinvestment Act to expand financial inclusion and opportunity for all Americans, especially the underserved,” they noted in an email. “The agencies received hundreds of detailed and thoughtful comments on the notice of proposed rulemaking, and we are working together to consider the suggestions.”
The FDIC and the Fed did not comment for this story.
Van Tol said that for all the bluster about a possible legal challenge, he is skeptical that banks would actually follow through on their threat to sue their prudential regulators over the rule.
“I think the trades sending that letter [on Tuesday] is just an attempt to continue to delay, which is really just an attempt to kill it,” Van Tol said. “It will be interesting to see if they do. I think it’s one thing to sue the CFPB; I think it’s another thing entirely to sue your prudential regulator. I wouldn’t want to be in that position.”
He added that banks also must toe a fine line in opposing the CRA, given how such a stance could contradict banks’ previous stated commitments to racial justice.
“Some banks will think twice — many of them having made statements about their commitment to racial equity, their commitment to the community in the wake of George Floyd — about suing over a rule that fundamentally is about lifting up underserved communities,” he said. “I think obviously that’s the reason why they work through their trades, to shield themselves from criticism.”
A new affordable housing law passed by Florida’s legislature and signed in March by Gov. Ron DeSantis is reportedly creating anxiety among local elected officials who are concerned that the new law cedes too much control over zoning and other matters to the state government.
The “Live Local Act,” passed unanimously in the State Senate and by a vote of 103-6 in the House, represents a sizable investment in housing by incentivizing developers to construct affordable housing units while restricting zoning and planning restrictions in local jurisdictions approving multifamily construction projects in order to limit bureaucratic barriers to increase supply.
But some of those local officials are now expressing concern that the provisions of the new law are restricting their ability to more actively participate in development decisions within their communities, according to reporting by WUSF Public Media.
“I think the hesitancy comes with the fact that it’s a preemption. I think whenever we’re talking about home rule or preemption, there’s always going to be local pushback,” Florida Housing Coalition Legal Director Kody Glazer told the outlet.
The new law comes with restrictions as to how much local elected officials can influence zoning and development decisions as well as density and height restrictions. Some of these concerns have been echoed in other states that have passed restrictions on zoning in other states including Massachusetts and Washington.
The Tampa metro area has experienced among the highest home price increases in the country since 2019, in large part because the counties have in place restrictive zoning policies that increase the value of land.
Following antidevelopment protests from residents ostensibly concerned about local infrastructure, in late 2019 Hillsborough County placed a moratorium on the rezoning of land for housing in some areas. Two years later, Pasco County, north of Tampa, also put a moratorium on rezoning to multifamily use in some areas.
The new Florida law applies to any residential housing projects that sit “on commercial, industrial or mixed-use land that allocates at least 40% of units to be affordable for residents earning up to 120% of the area median income,” according to WUSF. The law went into effect on July 1, and officials in cities including St. Petersburg and Tampa were reportedly briefed on their remaining rights overseeing such projects under the new law.
The process has gone more smoothly in St. Petersburg than Tampa, where officials in the former have “already heard interest from ‘ready to build’ developers in recent weeks” based on local reporting by the Tampa Bay Business Journal. In Tampa itself, however, a city council meeting on July 13 featured sometimes tense discussions between city leaders centered on compliance anxiety with the new law.
“The state is going to just gonna keep taking and taking and taking – and I’m not willing to give an inch more than I’m required to,” said Tampa city council member Lynn Hurtak, according to WUSF. She later introduced a motion to implement only what was legally required by the city to comply with the new law until the next scheduled council meeting. That motion passed.
During the meeting, another city official – Nicole Travis, Tampa’s economic development director – explained that while she understood the council’s frustrations, “the new housing rules make the approval process of eligible affordable housing projects a solely administrative function that can circumvent city council,” according to WUSF.