Mark Tribuna (pictured), senior advisor for CRA Note Exchange, told Mortgage Professional America he first got the idea for the CRA-friendly security when he consulted the Habitat for Humanity affiliate in Dallas and studied the Habitat International charter. He first explained the relationship between the two, describing Habitat International as something akin to a franchisor fo r Habitat for Humanity affiliates, of which there are around 1,200 across the US.
“Under that model, when a Habitat affiliate raised donor dollars and built an affordable home, under the charter they then had to convert that loan into a zero interest rates loan and get it to their borrower,” he told MPA during a telephone interview. “And the whole process would start over every time they wanted to build a home – donor dollar, build it, zero interest rates loan and then it’s on the books and I can’t do anything with it. I collect payments for a 30-year period essentially.”
That was the flaw in the model, he explained, noting how $150,000 to $200,000 was being raised each time to build an affordable home. “And so, I started working with local Dallas banks to sell zero interest rates loans,” Tribuna, a 30-year mortgage industry veteran, added. “Because of the borrower profile and where they were being built, it satisfied a lot of the CRA requirements for the bank. And so, while a zero interest rate loan doesn’t trade, so to speak, at par, because of the impact of CRA it had value to these banks. So, it was attractive to banks.”
A primer: The CRA Note exchange is a secondary market platform that makes it possible for non-profit homebuilders and other community housing development organizations (CHDOs) to generate capital by selling their affordable mortgages. CBC Mortgage Agency, a nationally chartered housing finance agency and leading source of down payment assistance for first-time homebuyers, announced its CRA Note Exchange platform has completed the sale of mortgage notes on behalf of Habitat for Humanity affiliates in Florida and South Carolina, supplying much needed liquidity to enable them to build more affordable homes.