Neighborhood Finance Corporation is a public-private partnership between the city of Cedar Rapids, local lenders, neighborhood residents and the business community to create a not-for-profit, licensed mortgage lender providing unique home loans and lending programs to facilitate neighborhood revitalization.
NFC began in Cedar Rapids in October 2018, in cooperation with NFC Des Moines, to make mortgage loans in targeted neighborhoods. The neighborhoods are where homes are generally more than 50 years old, with some in need of repair or other updates. NFC lending programs provide primary mortgage loans as well as home improvement loans with a forgivable portion of up to $10,000.
Potential borrowers qualify for NFC lending in the same manner as going directly to a local lender. The difference is NFC provides a forgivable second mortgage for home improvements. This feature makes NFC unique.
Neighborhoods are at the core of our community. When I ran for city council in 2015, my goal was to bring NFC to Cedar Rapids in order to drive investment in our older neighborhoods.
NFC started in Des Moines in 1991 as community leaders realized many of their core neighborhoods were failing or at a tipping point. Since that time, NFC has made more than $350 million in loans to more than 6,500 borrowers in the Des Moines metro area.
Neighborhoods with extensive NFC lending have seen the most improvement in home valuations and neighborhood stability.
In Cedar Rapids, some of our older homes have moved to rental status, become run down, or have become functionally obsolete. While Cedar Rapids neighborhoods are not experiencing the difficulties that impacted Des Moines, investment now can head that off.
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The city of Cedar Rapids is supporting the program with $1 million annually to fund a portion of the improvements, while 11 local lenders are providing $8 million in repayable loan funds. In addition, more than $800,000 has been pledged by local businesses to fund startup costs for the first three years of operations, before NFC becomes self-funding. Local commitment to this program has been tremendous and is growing.
New homebuyers often do not have the financial capacity to buy a home and fund critical improvements to overcome deficiencies. This forces the potential buyer to look elsewhere, often outside of Cedar Rapids. NFC plays a role in leveling the playing field so that these quality neighborhoods don’t fall behind and are attractive to new homebuyers and existing residents.
NFC lending is neighborhood-based with lending areas in all quadrants of the city. NFC makes core neighborhoods more accessible and provides a pathway to homeownership, which is a critical component for a strong Cedar Rapids.
The city has learned since the flood of 2008 that reinvestment in neighborhoods is essential for job retention, public safety, quality schools, and maintaining the tax base. As such, we cannot afford to allow our older, established neighborhoods to fall into disrepair and become unattractive to new homebuyers or existing residents.
As our neighborhoods transition to new families of diverse backgrounds, we must build on previous investment in streets, other infrastructure, and transportation to provide an incentive for citizens to establish new roots and traditions in core neighborhoods. Cities that maintain their older neighborhoods are stronger — lower crime, better schools, and healthier residents. NFC provides tools to make these dreams a reality.
Information is available at neighborhoodfinance.org or by calling the local office, 1100 Old Marion Rd. NE, at (319) 777-7127.
• Scott Overland represents District 2 on the Cedar Rapids City Council.
FINANCE PROGRAM SHARES EARLY SUCCESS STORY
The Neighborhood Finance Corporation began operating in Cedar Rapids less than a year ago, but it has already shown great potential to promote neighborhood stability.
Some homes in Cedar Rapids’ core neighborhoods have fallen into disrepair, and the families who own them may not be well served by traditional lenders. The Neighborhood Finance Corporation, a collaboration between leaders in Des Moines and Cedar Rapids, offers a workable solution.
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The organization recently shared a promising success story. Mary Belcher lives in a nearly century-old house in the Taylor neighborhood, which was damaged by the flood in 2008.
“After the flood, I was able to get my first floor refinished, but I hadn’t been able to pursue any of the work on the second floor. And it definitely needed work,” Belcher said in a news release last month.
Belcher was one of the city’s first applicants for a partially forgivable loan from the Neighborhood Finance Corporation. Those renovations began in January. The loan will allow her to replace flooring, remodel the bathroom, and replace siding on the garage.
“The program is fantastic. I’m thrilled,” Belcher said.