Delta Housing Development Corporation

Tri-State Affordable Housing Initiative

Housing development

This Initiative will provide immediate affordable housing with future home ownership opportunities for disadvantage families across the Delta area of Mississippi, Arkansas and Louisiana.

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To learn more about – or provide significant funding to – this project, please contact Lever for Change.

Project Summary

Delta Housing Development Corporation (DHDC) has dedicated it entire existence to providing safe decent affordable housing and related housing services to families in the Mississippi Delta. DHDC greatest success has come in delivering homeownership opportunities to families that, at one point, felt homeownership was a dream beyond reality. Today, with credit issues, lack of down payment assistance for potential homeowners to make mortgages affordable or attainable and an ongoing delivery system that is geared toward these vulnerable delta families, homeownership is once again out of the reach for the vast majority of them. DHDC is proposing to target small communities across the Delta through a lease-purchase program that would leverage the MacArthur Foundation grant funds with 4% low income housing tax credits (LIHTCs) that will create instant affordable housing, while providing a structured path to families that will enable them to take title to their homes in 15 Years.

Problem Statement

The housing situation in the Delta is the result of lack of investment in low income communities, resulting in too many residents still living in dilapidated, over-crowded, “shot gun” structures built in the first half of the 20th century. There is a great number of families that now have the financial ability to maintain home ownership status but are denied the opportunity because of the following factors: (1) Credit – It is safe to say that at least 60% of the family that apply affordable mortgage with Rural Development are turned down because of credit issues; (2) Adequate Down Payment – Many families that request mortgage financing from traditional lenders find it difficult to meet their down payment requirements or loan-to-debt ratios; and (3) Affordable New Homes – Many families are approved for affordable mortgages, especially thru Rural Development, but based on their income-to-debt ratios, they do not qualify for enough mortgage financing to build new homes. Almost one-quarter (23 percent) of all lower Mississippi Delta households are cost burdened – paying 30 percent or more of their earnings for housing Home ownership, housing value, and asset retention are heavily dependent on access to mortgage financing. Rural areas generally have fewer conventional banks and financial institutions than urban centers. This project will afford many families the opportunity to enter safe decent affordable housing and eventually home ownership through a lease purchase program with no down payment and credit counseling towards permanent financing.

Solution Overview

The MacArthur grant funding can be used to directly impact all three areas mentioned in the “Problem Statement”. With the use of these funds, DHDC and Delta Law Center proposed to build affordable housing through-out small communities of the tri-state delta region, especially those in dire need of affordable housing and home ownership opportunities. We will build subdivisions of 30 to 40 units utilizing 4% low income housing tax credits (LIHTCs) under a lease purchase program. There is a large pool of these credits and unlike the highly competitive 9% credits, the 4% credits creates a development funding shortfall of more than 57%. These grant funds will be used to write down the interest rate on the first mortgage loan to the project to a 1% o 0% interest with only principal payments for the life of the loan; making the project affordable and doable. This will enable the project to meet the required restrictions during the fifteen year tax credits compliance period prior to residents acquiring the unit as home ownership. This development process will enable residents of the units to become home owners regardless of their current credit scores; without down payments because of the mortgage payment investments over the 15 years compliance period reducing the initial mortgage to be financed by the family, and the team will provide financial and credit counseling to all resident during the compliance period so that they will be able to secure a permanent mortgage at the end of the compliance period.

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