In 2021, CHN Housing Capital, the lending arm of CHN Housing Partners, launched The Believe Mortgage program to help more people become homeowners in Northeast Ohio. The program is geared towards helping people get mortgages who otherwise might not be able to, and in addition to financing, offers down payment assistance, home repair grants and loans, and an education center. The Believe Mortgage was created to give people the belief that they can achieve the American dream and benefits of homeownership.
“We are really trying to fill gaps in the mortgage market in Cleveland and Cuyahoga County,” said Kevin Nowak, president and CEO of CHN Housing Partners. “Our loan product helps people who have credit challenges in the traditional sense, become a homeowner. We began CHN Capital by trying to understand the barriers to homeownership, then designed The Believe Mortgage product around that.”
With The Believe Mortgage homebuyers are not required to pay for private mortgage insurance, can pay as little as 3% in down payment costs, and can be considered for a mortgage even with lower credit. They are also not required to be first-time homeowners, and can take advantage of a second mortgage home repair program when combined with the Believe Mortgage.
CHN Housing Capital is a nonprofit lender and certified Community Development Financial Institution that provides homeownership services to everyone with a specific focus on low-income individuals and distressed communities. Its parent organization, CHN Housing Partners, states its mission is to leverage the power of affordable, stable housing to change lives and improve communities.
Nowak said in the past year CHN Partners helped 192 homeowners secure a first mortgage, and also helped over 4,000 people through The Believe Mortgage education program. He added that 150 counseling clients have increased their credit since the program launched two years ago, and 117 have increased their savings. The Believe Mortgage program operates in Cuyahoga, Lorain, Lake, Medina and Mahoning counties, and also in Wayne County, Michigan. There are no income restrictions for the mortgage program.
Claudette Williams is one of the Cleveland homeowners who benefited from the program. She became a first-time homebuyer in 2022 after completing The Believe Mortgage education program. “I did not know anything about buying a house until I took the program and went through the process with them,” Williams said. “I learned about saving, budgeting, taxes, and things to expect as a homeowner. The program was helpful and I have referred people to them.”
Barriers to homeownership
The Believe Mortgage was created to address the fact that homebuyers in Cleveland, especially Black homebuyers on the city’s east side, have difficulty getting financing to buy homes. Many of these homes sell for well under $100,000, and often banks do not want to make smaller loan amounts of $75,000 or less. Other challenges include homes not appraising to a high enough value and banks requiring a significant down payment, something that is a barrier for many Black homebuyers, who have a savings rate much lower than the white community.
In essence, Nowak said, the traditional mortgage market has a square credit box that is really hard for everyone to fit in, and The Believe Mortgage is designed to expand those opportunities.
The Believe Mortgage originates mortgages starting with a 570 credit score, Nowak said. “We wanted to have credit available for people even if they didn’t fit in a box but do it in a responsible way,” he said. “We also took a purposeful approach in the way we sought out potential clients. To date, all of our mortgages that we have originated have performed and all of their payments have been made.”
The Believe Mortgage also began working with Realtists, a group of primarily Black real estate professionals. “We’ve been able to connect people in African American communities with Realtist members who operate primarily within African American neighborhoods,” Nowak said.
“This has resulted in 97% of our borrowers being African American or Latino, with the preponderance being African American. This proved out that when you have an intentional approach to delivering more bridges to African American communities, you can have success.”
Pillars to homeownership success
After applying for a mortgage to purchase a home, Believe Mortgage program homeowners are eligible for any of the resources offered by the program, including assistance with down payment, home repair, and education. These specific programs typically have income guidelines, which means that people qualify based on income so they’re available to people who need them most.
“We try to make people aware of available resources, whether it be assistance with making payments, taxes, or utilities,” Nowak said. “We tell them that CHN is one of the biggest resources they have in Northeast Ohio to help you in the long run. Most of the programs are income-qualified, but this safety net is available to anyone in the community.”
Assistance with down payments are provided through the Cuyahoga County DPA (Down Payment Assistance) program, which provides up to 10% of the purchase price for those whose income is within 80% of the area median income.
Nowak said that The Believe Mortgage program provides home repair resources because many homes in urban communities, especially lower value homes, have deferred maintenance. “Cleveland and Cuyahoga County have a substantial home repair deficit,” Nowak explained, meaning that there are many people who cannot afford to renovate their homes because they don’t have money. He added home repair loans and grants can also be used to bring empty properties up to a habitable state. “This includes rehabbing and renovating vacant homes so they can be sold at an affordable rate and become new affordable housing for someone else,” he said.
Nowak said that when a homebuyer moves into a house and fixes it up, it not only improves the value of that home, but also helps stabilize the neighborhood, creating a virtuous cycle of improvement. “When homeowners make improvements to their house, they are improving the value of the property which also helps the house become a homeownership option for the next family,” he said.
The Believe Mortgage’s education program helps people understand how they can become homeowners. In August 2022, CHN launched a homeownership center to help people determine what they want to do, create a plan, and understand the value that homeownership can bring.
“We want to make sure we’re supporting people who otherwise aren’t ready yet, but want to become a homeowner,” Nowak said. “Before the Great Recession, there was so much direction to become a home buyer. We feel like part of the education that we can give the community is not the financial capability, but understanding the value in becoming a homeowner and the fact that one can become a homeowner.”
Ready or not buyers
The Believe Mortgage program was founded based on the idea that even if you come from poverty, it’s possible to become a homeowner with some planning.
If an applicant is able to qualify, then they can secure a mortgage. If someone needs a little help, they go through an intake interview and are then referred to the homeownership center team to develop an individualized approach. Once they meet the underlying credit criteria, they are transferred to a homeownership officer to begin the home buying process.
“We picked the name ‘believe’ because we want people to believe that they can become a homeowner and have that inspirational feeling,” Nowak said. “Homeownership over the years has been the American dream, which can create generational wealth and asset building for a family. When people are left out of homeownership it stops the dream, or disrupts their ability to pass wealth generationally, or the ability to help their kids go to college.”
Information on The Believe Mortgage can be found at www.chnhousingcapital.org/believe/ or by calling 855-764-5626 or visiting the office at 2999 Payne Ave., Suite 134 in Cleveland’s Asiatown neighborhood.
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