Housing Loans

Investing in family stability

A cheerful peach-colored house stands out on a street with a wide range of dwellings: tidy mobile homes, a concrete shell, stick-built homes in Vasquez familyvarious stages of completion, and in one jarring instance, a van that is obviously home to someone.

The peach-colored house belongs to Hector and Sonia Vasquez and their two children. If you were to visit the Vasquez’, you would be welcomed into their small, fruit-themed kitchen and offered a glass of sweet tea.

It has not always been this way at the Vasquez home, however. “We use to live with my mother-in-law, but we had to leave because there were so many bad faces there.” There were simply too many people in too small a space.

While Hector built the one room that is now the Vasquez’s kitchen, the family lived outside. When it was finished, the room served as kitchen, living room, and bedroom. When the family needed a bathroom, they drove to the market.

Later, a church group built a bathroom next to the house. Both buildings were cold in the winter and blazing hot in summer, having only plywood walls and no insulation. The roof leaked too.

The family didn’t know where to turn. Hector and Sonia worked hard, but couldn’t save enough to expand their home.

Then Sonia’s sister told her about ACLF. Sonia applied for a home repair loan and waited. “I kept calling and calling. I never gave up,” Sonia recalls. “And then it came true – we got the loan.”

Thanks to their own hard work, ACLF’s matched savings (IDA) program and the ACLF loan, the Vasquez’ insulated and finished the kitchen, attached the bathroom, and added two small bedrooms and a porch to the house.

When asked what they like best about their expanded home, Sonia replies immediately. “When I drive up to my house, it looks like a home.”

 


The Housing Loan is ACLF’s primary product.

The ACLF board believes that housing is the foundation from which the family builds a better future. Owning a home provides the necessary stability for the family 1) to acquire a social network in a community that the family can depend on, 2) to benefit from a permanent school setting in which teachers can get to know the children and thereby improve their chances of success, and 3) to attain the tranquility and confidence generated by having a home base.

ACLF has invested in 365 colonia families through loans designed to provide them with decent affordable housing. The average monthly loan payment is $150 per month, which represents no more than 15% of their annual income.

Savings Projects: Individual Development Accounts (IDAs)

This program provides an incentive for families to save money for a down payment on a home loan. It started as an attempt to assist very low income families build assets while introducing them to a financial institution and the concept of saving money in a bank. Each participating family is required to attend ACLF’s Financial Literacy/homeownership counseling workshops. This down payment assistance program uses a matching system. Once a family reaches its savings goal, ACLF matches the family savings to complete their down payment, usually 4X1 ($2,000 ACLF X $500 family). The down payment reduces the principal amount on a low or no interest home loan. The loan is restructured to be repaid based only on their 10% monthly income to avoid potential default or delinquency.

 

ACLF Housing Loans and Programs

Self-help housing loans: Families physically “invest” in building their homes through sweat equity in a contractual agreement with local builders. The average loan is for $25,000.

Home improvement (HI) loans: Families use these loans to complete their homes, to add rooms to address overcrowding, to update bathrooms and electrical work, or to install septic tanks and/or utility connections to bring a colonia home up to state housing standards. The average home improvement loan is for $7,500.

Lot acquisition loans: These loans assist families to buy out contracts for with high interest rates (14%-18%) charged by developers or to prevent foreclosure. The average lot acquisition loan is for $5,000.

Homeownership and 1st time homebuyer course
ACLF has created a special homeownership curriculum to address the need for extremely low-income families to receive support during the transition from living in third world conditions to becoming owners/managers of valuable property. ACLF created its own homeownership class that focuses on linking the families to essential resources that will make them successful homeowners. Some of them include meetings with 1) the county tax appraiser concerning the value of their home and how that affects their taxes, 2) the county tax assessor concerning the benefits of and filing requirements for the homestead exemption, 3) representatives of insurance companies offering home insurance and information regarding circumstances under which they could file insurance claims, and 4) contractors who worked on their home concerning warranties on their work. It is not enough to talk about things; they must be understood and linkages are needed to connect them to the actual sources of information, products, and services. This training complements the family’s construction experience in the program and supports the concept of life-long learning and assimilation of mainstream American society.

Financial Literacy
ACLF provides financial literacy and first-time homebuyer courses for its prospective borrowers. The financial literacy training focuses on the fundamentals of banking and personal finance, including opening a checking account and the importance of saving money. Consumer credit counseling and specific information regarding home purchases are also provided. These services help families to learn the importance of avoiding delinquencies and defaults, to establish good credit and repair credit histories, and to steer clear of predatory lending.