network. Fifteen mutual housing associations across the country have created almost 3,000 households. Two HOPE 2 implementation

The $10

grants were awarded to network programs in 1993, one in Westminster, Colorado and the other in Atlanta, Georgia. million set-aside for mutual housing development that HUD has maintained for FY 1993 and 1994, despite budget cuts, will continue to foster growth in this program area.

In addition to utilizing these federal funds, Neighborhood Reinvestment is requesting $6.65 million for equity capital grants to NeighborWorks® organizations for FY 1995. Equity grants enable an organization to commit flexibly and in a timely manner to opportunities for acquisition, maintenance or rehabilitation of primarily residential properties that may be a particular problem in the community. These funds also enable the organization to attract and leverage other meaningful working capital.

In FY 1992, Neighborhood Reinvestment received an additional $5 million for equity capital grants. This $5 million was quickly obligated and will result in $142.3 million in investment and 2,600 units of affordable housing; 40 percent of these units are currently occupied, and we anticipate that all will be occupied

Federal funds combined with other sources of funding enable conventional lending to work more efficiently for the local organizations. In 1993, 63 percent of the programmatic investments in NeighborWorks® organizations were made by nongovernmental sources (banks, corporations, etc.). By investing in an organization's revolving loan fund, providing equity investments for housing development and by working with the organization to counsel homebuyers and originate loans, these investors enable a significant amount of lending activity to take place throughout the network in many different kinds of

communities and situations.

Thus access to credit is enhanced

for people who often lack such access.

Currently, the Corporation is working with Freddie Mac, Fannie Mae and the Mortgage Guaranty Insurance Corporation (MGIC) to create a first-mortgage product suitable to distressed, lowerincome communities. The corporation's hope is that the new product will accommodate rehabilitation, normal debt-to-income ratios, very high combined loan-to-value ratios (up to 120 percent), and be available for mortgages under $80,000 to homebuyers with $1,000 cash or two percent of the first mortgage.

Freddie Mac has agreed to purchase up to $20 million in loans made by participating lenders with these writing criteria. Loans over 80 percent loan to value will require mortgage insurance by

of 0.6 percent on the amounts lent, a loan loss reserve with MGIC. After the last loan has been on the books eight years, any funds not used to cover losses will be returned.

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Commitments by local lenders to NeighborWorks®-generated lending grew from $21.5 million in 1990 to $26.1 million in 1993 percent increase in three years. In addition, many financial institutions have created special lending pools that serve NeighborWorks® clients. This has resulted in a rapid expansion of local lending. In FY 1993, $22 million was lent from these pools, in addition to the revolving loan fund activity.

Neighborhood Housing Services of America, Neighborhood Reinvestment's sister organization, purchases loans from local organizations' revolving loan funds and sells them to social investors on a unique secondary market. NHSA continues to keep pace with the needs of NeighborWorks® organizations for liquidity of capital for loans that do not meet normal credit standards. NHSA saw the demand for its secondary market services climb from $10 million in FY 1991 to $29.1 million in FY 1993. NHSA's cumulative loan purchases now exceed $103 million, against available commitments of $148 million made by such social investors as Allstate Insurance, State Farm Insurance and World Savings and Loan, among others. A new first-mortgage program that supports extensive housing rehabilitation totaled $23.4

In FY 1995, NHSA intends to commit $20 million in lending activity to network organizations. This includes $4 million in rehab/secondary mortgages; $14 million in first mortgages; and $1 million each for permanent multifamily loans and multifamily development loans. In addition, NHSA will be instrumental in brokering an additional $10 million to meet multi-family capital needs of the network.

The demographics of those served by this system show that the corporation has hit its stride in serving populations often disenfranchised by the conventional credit culture. An examination of revolving loan fund clients shows that of the 2,033 loans made in 1992, 38 percent of the borrowers are white, 43 percent are African-American, and 17 percent are from other racial groups. Hispanics constitute 11 percent of revolving loan clients. Regarding income level, 71 percent of all revolving loan borrowers are very-low or low-income; moderate- and abovemoderate borrowers constitute 20 percent and 7 percent, respectively. In addition, 53 percent of the borrowers are female, and 32 percent are elderly.

Data being collected as part of the NeighborWorks® Campaign for Home Ownership also illustrates the success of the network at reaching lower-income and minority Americans. This Campaign was initiated in early 1993 and is designed to double the number of

Campaign expects to reach 10,000 families within five years and generate $650 million in capital. National private-sector partners in the Campaign include Allstate Insurance Company, State Farm Insurance, Freddie Mac and World Savings and Loan Association. There are several regional partners as well (including Chase Manhattan Bank, Chemical Bank, Citibank, GE Capital Mortgage Insurance, Key Bank, NationsBank and Shawmut Bank).

Data collected at the six-month point from the first 20 pilot organizations involved paints an encouraging picture of who can be assisted to achieve the dream of home ownership: 92 percent are first-time buyers; 43 percent are female heads of households; 59 percent are minority households; 78 percent have household incomes of less than $30,000; and 40 percent are paying less to own than they were to rent. The 55 organizations now participating in the Campaign for Home Ownership are receiving accelerated assistance in the areas of training, technical assistance and small grants.

In FY 1995, all of this activity, it is projected, will result in revolving loan investment of $29 million; other direct investment of $195 million; and total housing production of 7,200 units.