NEIGHBORHOOD FINANCE CORPORATION
1912 SIXTH AVENUE, DES MOINES, IA 50314 www.neighborhoodfinance.org

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Organizations Filed Purposes: NEIGHBORHOOD FINANCE CORPORATION PROVIDES UNIQUE LENDING PROGRAMS AND OTHER SERVICES TO FACILITATE TARGETED NEIGHBORHOOD REVITALIZATION IN POLK COUNTY AND CEDAR RAPIDS, IOWA THROUGH PARTNERSHIPS WITH RESIDENTS, GOVERNMENTS, COUMMUNITY BASED ORGANIZATIONS AND THE BUSINESS COMMUNITY.

LENDING PROGRAMS & SERVICES TO FACILITATE TARGETED NEIGHBORHOOD REVITALIZATION IN POLK COUNTY AND CEDAR RAPIDS, IOWA.

LOAN ORIGINATION: NEIGHBORHOOD REVITALIZATION IS THE KEY MISSION OF NFC. THIS IS ACCOMPLISHED BY PROVIDING A LOAN FOR REPAYMENT AS WELL AS A FORGIVABLE LOAN FOR EACH QUALIFIED TRANSACTION. THE FORGIVABLE LOAN IS AT 0% INTEREST WITH NO PAYMENTS AND GENERALLY FORGIVEN OVER 5 YEARS. IN ADDITION, PURCHASE AND SOME REFINANCE LOANS HAVE A SECOND MORTGAGE AT A 2% INTEREST RATE FOR 10 YEARS INSTEAD OF REQUIRING PRIVATE MORTGAGE INSURANCE FOR BORROWERS WITH LESS THAN 20% EQUITY. NFC'S LOANS WORK TOGETHER TO PROVIDE A MORTGAGE THAT REDUCES THE BARRIERS OF DOWNPAYMENT AND EQUITY WHILE COMPLETING NEEDED RENOVATIONS OF THE PROPERTY.IN 2019, NFC CLOSED 496 LOANS. CLIENTS WERE SERVED THROUGH OUR PURCHASE LOAN, SECOND MORTGAGE, REFINANCE, HOME IMPROVEMENT LOAN PRODUCTS, PROJECT REINVEST DEFERRED LOANS, AND NEIGHBORHOOD LIFT FORGIVABLE LOANS FOR DOWN PAYMENT ASSISTANCE. THE TOTAL DOLLAR AMOUNT OF REPAYABLE LOANS CLOSED IN 2019 WAS $15,638,837. PURCHASE LOAN, SECOND MORTGAGE, REFINANCE AND HOME IMPROVEMENT TRANSACTIONS WERE COMPLETED IN AREAS OF POLK COUNTY THAT ARE TARGETED FOR REVITALIZATION. THE NEIGHBORHOODS ARE TYPICALLY LOW TO MODERATE (LOW-MOD) INCOME CENSUS TRACTS. IN 2019, 149 LOANS (NOT INCLUDING SECOND MORTGAGES, PROJECT REINVEST HOMEOWNERSHIP LOANS, OR NEIGHBORHOODLIFT LOANS) CLOSED WERE MADE TO BORROWERS THAT WERE IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT AND/OR LOW-MOD INCOME FOR POLK COUNTY, IOWA. OF THESE 149 LOANS, 61 LOANS WERE MADE TO BORROWERS THAT HAVE LOW-MOD INCOME IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACTS; 22 WERE MADE TO BORROWERS WITH LOW-MOD INCOME, BUT NOT IN LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT, 66 LOANS WERE MADE TO BORROWERS THAT ARE LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT BUT DO NOT HAVE LOW-MOD INCOME, THE OTHER 34 LOANS CLOSED WERE MADE TO BORROWERS THAT ARE NOT LOW OR MODERATE INCOME OR IN A LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT. IN 2019, 81.42% OF LOANS CLOSED WERE TO EITHER LOW-MOD BORROWERS, LOW-MOD INCOME AND/OR NFC INVESTMENT AREA CENSUS TRACT OR BOTH. IN 2019, 15.49% OF THE LOANS CLOSED WERE TO MINORITY BORROWERS. OUR LOANS TO MINORITY BORROWERS INCREASES TO 30.22% WHEN THE NEIGHBORHOOD LIFT LOANS ARE INCLUDED.NEARLY ALL RESIDENTIAL MORTGAGE LOANS CLOSED THROUGH NFC ARE TO OWNER OCCUPANTS. THE NUMBER OF HOME PURCHASE LOANS CLOSED IN 2019 WAS 53. NFC CLOSED 40 SECOND MORTGAGES, 42 HOME IMPROVEMENT LOANS, 41 REFINANCE LOANS, 52 PROJECT REINVEST LOANS (13 OF 52 WERE NFC BORROWERS), AND 210 NEIGHBORHOODLIFT LOANS (2 OF 210 WERE NFC BORROWERS).ADDITIONALLY, IN 2019, 57.69% OF THE HOME PURCHASE LOANS CLOSED WERE TO FIRST TIME HOME BUYERS.NFC LAUNCHED A DOWN PAYMENT PROGRAM SPECIFICALLY FOR NFC BORROWERS. IT IS CALLED NEIGHBORHOOD REINVEST, AND PROVIDES A $10,500 0% INTEREST 30 YEAR DEFERRED LOAN TO HOMEBUYERS EARNING BELOW 100% OF THE AREA MEDIAN INCOME. FURTHERMORE, NFC WAS CHOOSEN TO ADMINISTER THE NEIGHBROHOODLIFT LOAN PROGRAM IN DOUGLAS AND SARPY COUNTIES, NEBRASKA IN JULY 2019. NFC IS ABLE TO USE THE INCREASE IN CAPITAL AWARDED THROUGH NEIGHBORWORKS AMERICA AS A RESULT OF ADMINISTERING $9,626,000 IN DOWN PAYMENT FUNDS THROUGH PROJECT RENIVEST POLK COUNTY, AND NEIGHBORHOOD LIFT POLK COUNTY, IOWA AND OMAHA AREA, NEBRASKA 2016 THROUGH 2019. NEIGHBORHOOD REINVEST WAS CREATED TO OVERCOME A PRIMARY BARRIER TO HOMEOWNERSHIP FOR LOW AND MODERATE INCOME HOUSEHOLDS. THE DEFERRED LOAN CAN BE USED TOWARDS DOWN PAYMENT AND CLOSING COSTS ASSISTANCE FOR ELIGIBLE HOMEBUYERS WHO PURCHASE A HOME UTILIZING NFC FINANCING IN NFC'S LENDING AREAS IN POLK COUNTY, IOWA AND CEDAR RAPIDS, IOWA. THE LOAN IS STRUCTURED AS A 'SOFT SECOND' MORTGAGE LOAN THAT IS DEFERRED UNTIL THERE IS A CASH-OUT REFINANCE OR THE HOME IS SOLD OR 30 YEARS, WHICHEVER OCCURS FIRST. IN 2019, NFC CLOSED 11 NEIGHBORHOOD REINVEST DEFERRED LOANS TOTALLING $115,500, 52 PROJECT REINVEST POLK COUNTY DEFFERRED LOANS TOTALLING $546,000,172 NEIGHBORBORHOOD LIFT OMAHA AREA FORGIVABLE LOANS TOTALLING $2,705,000, AND 38 NEIGHBORBORHOOD LIFT POLK COUNTY AREA FORGIVABLE LOANS TOTALLING $582,500.

FORGIVABLE LOAN: AS STATED IN LOAN ORIGINATION DESCRIPTION, EACH TRANSACTION THAT NFC PROVIDES TO OUR BORROWERS INCLUDES A FORGIVABLE LOAN FOR PROPERTY REHABILATATION. THE FORGIVABLE LOAN IS A 0% INTEREST RATE LOAN FOR EITHER 5 OR 10 YEARS. A 5 YEAR FORGIVABLE LOAN IS GRANTED ON ALL SINGLE FAMILY DWELLING TRANSACTIONS. A 10 YEAR FORGIVABLE LOAN IS GRANTED ON ALL TRANSACTIONS THAT ARE DOWNSIZING A MULTI FAMILY DWELLING BACK TO A SINGLE FAMILY DWELLING. THERE IS NO REPAYMENT REQUIRED ON THE FORGIVABLE LOAN AS LONG AS THE BORROWER IS RESIDING IN THE HOME. THE FORGIVEN AMOUNT IS REPORTED TO THE BORROWER ON FORM 1099C EACH YEAR UNTIL THE ENTIRE AMOUNT IS FORGIVEN. SINCE INCEPTION, NFC HAS AWARDED FORGIVEABLE LOANS TOTALING $50,404,651 THROUGH DECEMBER 31, 2019.IN 2019, NFC CLOSED $1,523,727 IN FORGIVABLE PROPERTY REHABILITATION LOANS. THE FORGIVABLE PROPERTY REHABILITATION LOANS WERE GRANTED IN 30 NEIGHBORHOODS AND OTHER LOW INCOME CENSUS TRACTS. IN 2019, NFC CLOSED $3,287,500 IN NEIGHBORHOOD LIFT FORGIVABLE PROPERTY REHABILITATION LOADS IN ADDITION TO THE FORGIVABLE LOANS.MOST PROPERTIES WITH NFC FUNDING FOR HOME PURCHASE ARE INSPECTED BY A CITY OF DES MOINES INSPECTOR TO MAKE SURE ALL CODE VIOLATIONS AT THE PROPERTY ARE ADDRESSED THROUGH THE HOMEOWNER'S PROPERTY REHABILITATION PROJECTS. THE CITY OF DES MOINES INSPECTOR ALSO PROVIDES AUTHORIZATION FOR PAYOUT ONCE THE PROPERTY REHABILITATION PROJECT IS PROPERLY COMPLETED AND MEETS THE BORROWER'S SATISFACTION. THE CITY OF DES MOINES INSPECTOR NOTIFIES NFC WHEN THE PROJECT IS COMPLETED AND VERIFIES THAT IT WAS COMPLETED IN A WORKMAN-LIKE MANNER. NOTE THIS POSITION WAS TRANSITIONING TO AN NFC POSITION (INSPECTION/RENOVATION COORDINATOR) DURING THE 2019 FOURTH QUARTER. NFC WILL NOT USE A DES MOINES CITY INSPECTOR IN 2020. HOWEVER, THE CEDAR RAPIDS CITY INSPECTOR WILL CONTINUE IN THIS ROLE IN THIS CITY.ADDITIONALLY, THESE PROPERTY REHABILITATION PROJECTS IMPROVE THE VALUE OF THE HOMES IN THESE NEIGHBORHOODS. THIS CAN LEAD TO INCREASED VALUES FOR OTHER HOMES IN THESE NEIGHBORHOODS.

AT NFC PROPERTIES LLC, OUR GOAL IS TO PROVIDE SAFE, AFFORDABLE, QUALITY HOUSING TO OWNER OCCUPANTS. IN 2019 NFC PROPERTIES LLC ACQUIRED 10 PROPERTIES. OF THOSE 10 PROPERTIES, 2 WERE FROM NFC'S REAL ESTATE OWNED (REO) INTAKE THROUGH BORROWER DEFAULT, 2 WERE EXISTING HOMES REQUIRING EXTENSIVE REHABILITATION, AND 6 WERE INFILL LOTS WITHIN THE CITY FOR NEW CONTSRUCTION IN PRIMARILY LOW AND MODERATE INCOME CENSUS TRACTS. DURING 2019, 9 UNITS IN NFC PROPERTIES LLC HOUSING INVENTORY COMPLETED REHABILITATION (1 WAS AN REO PROPERTY), AND 8 OF THE INVENTORY UNITS WERE SOLD. NFC PROPERTIES LLC FOCUSES ON ENERGY EFFICIENCY BY ADDING HIGH EFFICIENCY FURNACE AND A/C, VINYL LOW-E WINDOWS, AND BLOWN CELLULOSE INSULATION. THIS HELPS ENSURE THAT THE HOME STAYS AFFORDABLE FOR THE FUTURE HOMEBUYER.

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