Narrowing New Jersey's Racial Wealth Gap Through Homeownership by Princeton School of Public and International Affairs

NARROWING NEW JERSEY’S RACIAL WEALTH GAP THROUGH HOMEOWNERSHIP Recommendations for the New Jersey Housing and Mortgage Finance Agency Princeton University School of Public and International Affairs December 2021

TABLE OF CONTENTS Executive Summary

Introduction

1. Outreach, Partnerships, and Community Collaboration

1.1. Employ a targeted home buyer strategy to prioritize outreach with underserved communities

1.2. Expand lender and real estate professional relationships with strong ties to communities of color and leverage their outreach capacity

1.3. Enhance community engagement and partnerships strategy to build trust with home buyers of color

2. Down Payment Assistance

2.1. Increase the base DPA amount to $14,000, and fix DPA to the maximum home purchase price

2.2. Leverage New Jersey Individual Development Accounts to increase available assistance to first-time home buyers

3. Foreclosure Prevention

3.1. Contract with one or more qualified CDFIs to purchase and service nonperforming loans

3.2. Target urban areas for bulk purchases of defaulted mortgages

4. New Programs and Innovations

4.1. Establish a statewide Homeowner Rehabilitation Assistance (HRA) program

4.2. Target first-generation professionals

4.3. Develop a comprehensive ‘northern county’ strategy to promote landlords of color

4.4. Improve access to community land trust (CLT) homeownership opportunities among low-income households

5. Agency Strategy and Process Improvement

5.1. Develop an annual NJHMFA strategy informed by racial equity and community input

5.2. Embed racial equity in goal setting and programs

5.3. Leverage digital platforms to improve efficiency and user experience

Conclusion

Acknowledgements

Endnotes

EXECUTIVE SUMMARY New Jersey has striking racial wealth inequality. While the Garden State’s median household net worth is the highest in the nation, its racial wealth gap is among the widest. The state’s legacy of slavery, racially restrictive covenants, redlining, predatory lending, and other forms of structural racism underlie the disparities in median net worth among white ($352,000), Black ($6,100), and Latino ($7,300) households.1 Inequitable access to homeownership is a primary driver of the racial wealth gap. The racial homeownership gap in New Jersey is wider than the national average with 76 percent of non-Latino white households owning a home compared to only 38 percent of Black households and 39 percent of Latino households.2 Low- and moderate-income New Jersey families face major barriers to purchasing their first home, including down payment, barriers to credit, a constricted supply of housing, and some of the highest housing prices in the country.3 This report provides the New Jersey Housing and Mortgage Finance Agency (“NJHMFA” or “Agency”) with recommendations to promote equity in access to homeownership across New Jersey. It addresses four principal goals set forth by the Agency: a) promote wealth creation, b) target neighborhoods for stabilization, c) support anti-gentrification efforts, and d) narrow the state’s racial wealth gap. The authors analyzed NJHMFA’s programs and internal data, conducted independent research, and met with housing stakeholders across the country to determine challenges, 4

innovations, and best practices around homeownership in New Jersey. Our recommendations fall into the following five categories:

1. OUTREACH, PARTNERSHIPS, AND COMMUNITY COLLABORATION

NJHMFA should look to community partners as sources of expertise, opportunities for collaboration, and forums for expanding access to underserved communities. We recommend a variety of new strategies to raise awareness of the Agency’s programs among home buyers of color and make the case that community collaboration should be a central part of the Agency’s strategies.

2. DOWN PAYMENT ASSISTANCE

NJHMFA should increase the baseline Down Payment Assistance (DPA) amount and respond to the wide variation in housing markets across the state. We offer a sliding scale framework for DPA and new ways that NJHMFA can partner with the state’s Department of Community Affairs to build pathways to homeownership through individual development accounts.

3. FORECLOSURE PREVENTION

NJHMFA should leverage its new authority under the New Jersey Foreclosure Prevention Act to stabilize neighborhoods and help prevent a wave of foreclosures across the state. We explain how the Agency can partner with qualified Community Development Financial Institutions (CDFIs) and target urban areas in order to maximize the reach and impact of its Residential Foreclosure Prevention Program.

4. NEW PROGRAMS AND INNOVATIONS NJHMFA should expand its suite of homeownership products to benefit more segments of the population, support antigentrification efforts, and promote climate resilience. We propose new programs and innovations that would provide home rehabilitation assistance to low-to-moderate income homeowners and buyers, mortgage assistance to first-generation professionals, financial support and counseling to potential landlords of color, and improved access to mortgages in community land trusts for lowto-moderate-income home buyers.

5. AGENCY STRATEGY AND PROCESS IMPROVEMENT

NJHMFA should clarify its own goals for promoting homeownership with an eye toward racial equity and maximizing the impact of the Agency’s programs. We outline the steps necessary to create a strategic plan, build a racial equity framework and update Agency practices to better position NJHMFA to serve more home buyers of color.

INTRODUCTION The New Jersey Housing Mortgage and Finance Agency is an independent state agency responsible for promoting affordable rental and homeownership opportunities for low-and-moderate-income New Jersey families.4 To meet this important mission, NJHMFA gives financial assistance and partners with mortgage lenders and community development stakeholders to fund mortgages for first-time home buyers, prevent foreclosures, and support housing construction.5 The NJHMFA Down Payment Assistance (“DPA”) Program is a statewide housing finance program that provides qualified firsttime home buyers with $10,000 to use toward down payment and closing costs.6 DPA is

designed to encourage homeownership and promote neighborhood stability by providing an interest-free, five-year forgivable second loan with no monthly payment.7 The program must be paired with a loan from the First-Time Homebuyer Mortgage Program.8 In recent years, the Agency has provided 1,300–1,400 DPA loans annually, and it expects to provide around 2,000 loans per year in future years. In March 2021, New Jersey Governor Phil Murphy signed into law the New Jersey Foreclosure Prevention Act. The Act created the Residential Foreclosure Prevention Program, which allows the Agency to purchase defaulted mortgage loans from banks and other financial institutions.9

FIGURE 1. NEW JERSEY HOMEOWNERSHIP RATE BY RACE AND ETHNICITY, 2019

Source: “2019 American Community Survey 1-Year Estimates,” Table S2502, U.S. Census Bureau, figure generated on November 15, 2021. Note: The households of color homeownership rate was calculated by dividing the sum of all nonwhite owner-occupied units by the sum of all non-white occupied units. “HH” stands for households. Each bar and demographic group is in units of households.

FIGURE 2. NEW JERSEY RACIAL HOMEOWNERSHIP GAP, 2009–2019

Source: “American Community Survey 1-Year Estimates,” Table S2502, U.S Census Bureau, 2010-2019, figure generated on November 15, 2021. Note: Projections of the homeownership rate were calculated using a depreciation rate of 0.32 percent per year, the average percentage point change in the racial homeownership gap between 2010 and 2019. Population projections after 2019 were calculated using the average percentage point change in number of households for each demographic group between 2009 and 2019.

The gap in homeownership between white households and households of color is 33 percentage points, as of 2019. These disparities exist in the context of a state with a history of anti-Black racism that includes slavery, racially restrictive covenants, redlining, and predatory financial practices.10 And they contribute to the state’s staggering Black– white wealth gap. The median household wealth among white families in the state is $352,000; for Black families, it is $6,100—a disparity of 58-to-1. The state’s racial wealth gap is also driven, in part, by disparities in property values. In cities with large Black populations such as Camden and Newark, median

home values are substantially lower than in predominantly white towns such as Cherry Hill and Millburn.11 In addition, predatory lending practices targeted Black and brown communities in the lead-up to the Great Recession, further suppressing home values and causing disproportionate rates of foreclosure in communities of color throughout the state.12 New Jersey’s racial homeownership gap has not significantly narrowed in 10 years despite the number of households of color growing by 18 percent within the same period. If these patterns persist, New Jersey’s racial homeownership gap will remain 24 percentage points in 100 years (see Figure

FIGURE 3. INCREASING THE HOUSEHOLD OF COLOR HOMEOWNERSHIP RATE TO 50 PERCENT BY 2030

Source: “American Community Survey 1-Year Estimates,” Tables S2502, U.S Census Bureau, 2010-2019, figure generated on November 15, 2021. Note: Projections of the homeownership rate were calculated using a depreciation rate of 0.32 percent per year, the average percentage point change in the racial homeownership gap between 2009 and 2019. Projections adjusted for population growth.

2). By 2030 the gap would narrow by only 1 percentage point while households of color grow by 22 percent.13 Notably, New Jersey will be a majority-minority state by 2030—households of color will outnumber white households.14 These trends suggest that an increasingly racially diverse New Jersey will not significantly narrow the racial homeownership gap. To reduce the gap by 7 percentage points by 2030 and achieve a 50 percent homeownership rate among households of color, roughly 100,000 additional households of color—net of secular trends in population growth—would need to become homeowners (see Figure 3). In response to these wealth disparities, NJHMFA seeks to use DPA, the First-Time Homebuyer Mortgage Program, and the Residential Foreclosure Prevention Program to advance several critical goals: (1) promote wealth creation, (2) target neighborhoods for 8

stabilization, (3) support anti-gentrification efforts, and (4) narrow the state’s racial wealth gap. To make progress towards these goals, NJHMFA should use an extensive network of partners, including housing advocacy groups, nonprofits, and community-based organizations. These stakeholders are vital because they have familiarity and trust with communities that have encountered barriers to homeownership and wealth accumulation. The policy workshop’s assignment was to analyze how NJHMFA should structure and target these programs to achieve these goals. In doing so, we analyzed the Agency’s programs and data. We also met with other Housing Finance Agencies (HFAs), nonprofits, lenders, community land trusts, and stakeholders from across the country to learn from their programs, best practices, innovations, and challenges. In total, we

interviewed more than 30 stakeholders.These entities are named in the acknowledgement section at the end of this report. We are grateful to everyone who provided their time, talent, and expertise. The topics covered in our meetings included outreach, partnerships, and community engagements; DPA; foreclosure prevention; HFA strategies and processes; and new and innovative programs. NJHMFA already approaches many of these areas in ways similar to other housing stakeholders, and we developed recommendations on how the Agency can improve its programs and processes to achieve its goals more successfully. Our report will make, and discuss, recommendations in the following categories: 1) Outreach, Partnerships, and Community Collaboration, 2) Down Payment Assistance, 3) Foreclosure Prevention, 4) New Programs and Innovations, and 5) Agency Strategy and Process Improvement. Recommendations with significant anticipated costs include cost estimates. While the total cost of all recommendations included here would require a significant financial commitment, we mean to provide a comprehensive set of options for NJHMFA to review and prioritize. Throughout the report, we acknowledge and address how our recommendations would advance racial equity. Our recommendations also address both the “supply side” and “demand side” of affordable homeownership. For example, we propose homeowner rehabilitation assistance to increase the state’s supply of affordable homeownership opportunities. Meanwhile, our recommendations concerning outreach and community collaboration aim to increase demand for NJHMFA products among underrepresented groups.

TERMINOLOGY Throughout the report, we use “low income” to refer to households with incomes below 50 percent of the area median income and “moderate income” for households with incomes between 50 and 80 percent of the area median income.15 The term “first-time home buyer” generally refers to someone who has never owned a home. In this report, we use the term in accordance with NJHMFA’s definition of a first-time home buyer, which is someone who has not had an ownership interest in their primary residence during the previous three years.16 We use “first-generation home buyer” for first-time home buyers whose parents do not currently own a home. In other contexts, we use the term “first-generation” to refer to individuals belonging to a category (e.g., professional, graduate) to which their parents do not belong. The term “Latino” is used throughout this report to refer to persons of Mexican, Puerto Rican, Cuban, Central American, Dominican, Spanish, and other Hispanic descent; they may be of any race. The analyses and recommendations offered in this report are the collective efforts of the student policy workshop, and do not necessarily reflect the views of the New Jersey Housing and Mortgage Finance Agency. We intend for NJHMFA to apply our recommendations in a manner that is in full accordance with all relevant federal and state laws and regulations. The policy workshop is committed to the full compliance of all federal, state, and local fair housing laws, which makes it illegal to advertise any preference, limitation, or discrimination based on a protected characteristic. This report and our recommendations should not be construed to suggest that NJHMFA either directly or indirectly discriminate against any prospective purchaser or lessee on the basis of race, color, religion, sex, disability, familial status, national origin, or other protected characteristic.

1. OUTREACH, PARTNERSHIPS, AND COMMUNITY COLLABORATION

NJHMFA’s outreach, partnership, and collaboration strategies have many notable strengths. The Agency should continue to innovate in these areas to promote homeownership, stabilize neighborhoods, and shrink New Jersey’s racial wealth gap. These recommendations aim to increase knowledge of the Agency’s products among New Jersey communities that have encountered historical barriers to homeownership and wealth accumulation.17,18

provides an unwieldy webpage to parties seeking to connect with a lender institution.

Through community events, online webinars, traditional media coverage, social media, advertising, and a newly redesigned website, NJHMFA has taken steps to make its programs more accessible. Despite this progress, we find that the Agency’s outreach efforts generally do not harness targeted and tailored strategies to reach underserved communities proactively. This gap has been especially detrimental for borrowers who are Black and Asian, groups that make up 17.8 percent and 10.2 percent of the state’s population but only 9.9 percent and 1.3 percent of 2020 DPA recipients, respectively.19

NJHMFA partners with New Jersey’s diverse network of nonprofit housing and community development organizations. Given these organizations’ trust and familiarity with New Jersey’s underserved communities, the Agency should prioritize the new partnerships to better address the state’s racial homeownership gap.

The Agency’s outdated technology infrastructure and insufficient staffing currently impedes its efforts to reach prospective borrowers of color and firstgeneration home buyers. So do its outmoded data collection systems, the barriers between the Agency and consumers, and the private lenders who often poach potential clients.20 The Agency lacks accurate demographic information about borrowers from private lenders, inefficiently tracks contact information for partner organizations, and

Beyond technological and staffing shortfalls, the Agency’s current outreach strategy relies on the institutional knowledge and expertise of a few staff members who oversee community engagement. This model limits the Agency’s ability to scale outreach to new audiences, and it risks major disruptions when those staff members leave the Agency.

The Agency’s meaningful steps to partner with outside organizations have, at times, been frustrated by inconsistent communication with affordable housing stakeholders. Our conversations revealed that many housing organizations lack certainty about the Agency’s key policy priorities, vision for state’s affordable housing landscape, and baseline expectations for the role these organizations should play. And many organizations say they are reacting to the Agency’s new programs, rather than receiving an opportunity to shape them. This dynamic tends to damage trust and frustrate the Agency’s mission.

1.1. Employ a targeted home buyer strategy to prioritize outreach with underserved communities

IMPROVE STAFFING PRACTICES TO ENHANCE TRUST WITH HISTORICALLY MARGINALIZED COMMUNITIES

NJHMFA should expand its community outreach and marketing staff with at least two additional full-time employees to ensure greater diversity and bilingualism. We estimate this would cost $160,000 per year.21

SPOTLIGHT: NJHMFA’s Hospital Partnership Subsidy Program In May 2019, NJHMFA announced its $12 million Hospital Partnership Subsidy Program. Under this program, the Agency matches funds from hospitals to develop affordable rental housing for low- and moderate-income families and to set aside units with wrap-around services for individuals who frequently use hospital emergency department services.22,23 One of the program’s first projects involved a partnership between NJHMFA, St. Joseph’s University Medical Center, and two nonprofits, New Jersey Community Development Corporation and New Jersey Community Capital.24 The partnership led to the construction of a 70-unit building on a vacant lot nearby St. Joe’s.25 Foreclosure and Eviction Prevention and Housing Counseling Through its Foreclosure Mediation Assistance Program, the Agency partners with HUDcertified housing counseling organizations to provide free, one-on-one foreclosure prevention counseling services.26 In March 2020, the program expanded to include New Jersey renters due to a potential surge in evictions after the COVID-19 eviction moratoriums expired.27 The Agency’s network of housing counselors extends to each county in the state and is comprised of trusted nonprofits, including NJ Citizen Action, Housing Partnership, Tri-City Peoples Corporation, Epic Community Development Corporation, and Consumer Budget and Credit Counseling.28 The Agency also oversees subgrant partnerships with several HUD-certified nonprofits across the state to provide pre-purchase counseling services.29 Bulk Purchases of Non-Performing Loans The Residential Foreclosure Prevention Program establishes NJHMFA’s authority to create public–private partnerships with nonprofits and community organizations for bulk purchases of residential properties or mortgage notes after a mortgage foreclosure judgment.30 The program is meant to curtail foreclosures by helping underwater homeowners modify their mortgages and to prevent the buildup of vacant properties.31 Due to the program’s recency, the Agency has not yet made a bulk purchase partnership.

Currently, one person runs community engagement for the entire state. To break into new markets and build trust in new communities, NJHMFA should invest in more staff of diverse backgrounds.

TARGET DIRECT OUTREACH TO “QUICK WIN” POPULATIONS “Quick Win” populations are groups with established internal communications mechanisms, high concentrations of people of color, and the financial conditions to be first-time home buyers. Examples include first-generation professionals, state and local government employees, union members, teachers, university staff, and large private employers. NJHMFA should hold information sessions with these groups or coordinate with their human resource departments to distribute pamphlets or emails. This strategy acknowledges the high cost—and potentially low return—of direct-to-consumer outreach, and it aims to targeting specific groups with greater potential to have true interest in the program.

CREATE A PROMINENT MARKETING CAMPAIGN TARGETING PROSPECTIVE HOME BUYERS OF COLOR

Following practices from other states, including California32 and Colorado,33 engagement with the target communities and representative partner organizations should directly inform this marketing campaign. The Agency should seek feedback, identify gaps in understanding and barriers to access, and tailor messaging to each group’s unique concerns and needs. The campaign’s main web page should be displayed prominently on njhousing.gov to signal that NJHMFA is an active player in this space and understands systemic racism.

EMPLOY MESSAGING STRATEGIES TO COMBAT PERSISTENT MYTHS AND MISCONCEPTIONS AMONG MORTGAGE-READY MILLENNIALS

National data from the Urban Institute indicate that a substantial portion of millennials, including millennials of color, are “mortgage ready.” Nevertheless, 39 percent of these potential homeowners mistakenly believe that they must have a down payment of more than 20 percent to purchase, and the majority are unfamiliar with down payment assistance programs.34 To promote awareness of its DPA program and dispel myths about down payment requirements, the Agency should adopt a statewide social media strategy. We recommend that the Agency advertise on Facebook, YouTube, and Instagram, the three platforms that Americans between the ages of 30 and 49 use the most.35 The campaign should use diverse representation in images and photos. The social media assets NJHMFA already has can be adapted with new messaging.36 This is a long-term strategy to raise awareness of the program, and it is not expected to have significant returns on originating new loans. Since this is not intended to be the central strategy for marketing, we recommend that the Agency spend no more than $10,000 per year on social media advertisements. Because NJHMFA does not have a presence on Instagram, the Agency should partner with prominent accounts of real estate professionals, associations, lenders and others across the state. For example, while there is a relevant news hook the Agency should partner with @NJGov to advertise to its 58,000 followers on Instagram and 399,000 followers on Twitter.

FINANCIAL READINESS AND HOMEOWNERSHIP TRAINING

NJHMFA should partner with a trusted nonprofit or a research lab at a state university to develop and administer a race-conscious financial readiness and homeownership education curriculum. The program should be developed, piloted, and evaluated by a nonprofit partner with established credibility in communities of color. By using data to target educational efforts in areas with low NJHMFA program take-up rates and in communities of color, this initiative will enhance awareness of the Agency’s homeownership programs and affirmatively address the racial homeownership gap. Following the model of many HFAs subsidizing nonprofit providers of home buyer counseling, the Agency should provide $50 in financial support for each student. We recommend NJHFMA either budget or request new appropriation of at least $60,000 for the initial pilot to cover subsidies, curriculum adaptation, program management, and evaluation.37 In developing a course, the Agency might consider elements of Getting Your House in Order, the Portland Housing Center’s raceconscious financial readiness community education course developed by Dr. Rhea Combs.38,39 Its curriculum acknowledges the historical and cultural context of financial practices in the African American community. Those who completed the course went on to have more savings, less debt, and improved credit scores. And while 54 percent of the program’s participants reported that they did not feel in control of their finances before they participated in the program, only 10 percent of graduates reported feeling the same way a year out from completion.40 Portland Housing Center developed a similar curriculum for the Latino Spanish-speaking community. This case study demonstrates that tailored outreach and policy design can create pathways

to homeownership among traditionally underserved communities.

AUDITING NJHMFA’S COMMUNITY OUTREACH AND EVENTS CALENDAR

NJHMFA should audit its current calendar of outreach events to identify, and address, gaps in its regional distribution, and reach to communities of color. The Agency should consult trusted housing stakeholder organizations—such as the Affordable Housing Alliance, Morris Habitat for Humanity, Urban League of Essex County, and Garden State Episcopal Community Development Corporation—to identify community events that do not have an NJHMFA presence.

1.2. Expand lender and real estate professional relationships with strong ties to communities of color and leverage their outreach capacity Because most client referrals come from lenders and real estate professionals, NJHMFA should ensure that this pipeline supplies a diverse population of potential home buyers. The Agency should proactively diversify and strengthen its relationships with lenders and real estate professionals. Some of the affinity groups the Agency already works with may be invaluable in these efforts including the New Jersey Association of Minority Real Estate Professionals, the New Jersey Chapter of the National Association of Hispanic Real Estate Professionals, and the Northern New Jersey Chapter of the Asian Association of Real Estate Professionals.41 Many communities of color distrust traditional banks and many rely on mortgage 13

brokers or mission-driven institutions like credit unions. Similarly, home buyers of color increasingly use online, algorithm-based lending platforms, which are not allowed access to NJHMFA programs under the Agency’s preferred lender list.42

AUDIT CURRENT LENDER AND REAL ESTATE PROFESSIONAL OUTREACH

NJHMFA should audit its internal data to identify which lenders originate the most loans among borrowers of colors and identify the geographic areas they serve. Then, the Agency should use this information to identify gaps in service and develop concrete goals to prioritize targeted outreach to lenders who work with home buyers of color and firstgeneration home buyers. These metrics should shape every step of the outreach strategy. NJHMFA should also survey lenders every six months to identify the challenges they face in navigating the Agency’s processes. For example, surveys might identify efficiency challenges, such as underwriting turnaround times, that could then be addressed.

PARTNER WITH NEW AND DIVERSE HOUSING PROFESSIONALS

NJHMFA should solicit feedback from community partners (discussed more below) to identify which lenders, real estate professionals, and mortgage brokers its clients are using. The Agency should leverage these relationships to build connections with new housing professionals and identify and address barriers to NJHMFA products. Meanwhile, NJHMFA should establish preferred lender relationships with credit unions and online mortgage service providers. In doing so, the Agency may choose to amend its requirement that preferred lenders have physical presences in the state. Consumers who use online mortgage services are digitally savvy, but they may lack the personalized 14

support offered by banks and traditional lenders. As a result, they will seek information about the Agency online. Once the Agency establishes a partnership with a provider—for example, Rocket Mortgage —it should create a “NJ First Time Homebuyer with Rocket Mortgage” page on its website and provide step-by-step instructions. These referral processes can be streamlined by creating tailored landing pages on the Agency’s website with direct referral links. That is, Rocket Mortgage would ideally embed a link from its website to link directly to the NJHMFA website. NJHMFA should also collect and understand information on each lender’s internal commission policies. Some lenders, like Prosperity Home Mortgage, LLC base commissions on the loan amount and do not consider the type of loan product at all, making them ideal candidates to partner with NJHMFA.

EDUCATE HOUSING PROFESSIONALS ACROSS THE STATE

NJHMFA already offers training for lenders, but these training efforts should expand to include tailored breakouts and networking opportunities for all housing professionals at conferences and events. These trainings should focus on increasing awareness of the programs NJHMFA offers, but importantly, they should emphasize the message we heard repeatedly from top lenders: First time home buyers will eventually want to buy a second home, and they will remember the lenders that helped them get free money. At each of these events, the Agency should survey housing professionals to learn about their needs and identify opportunities for new lending relationships.

LEVERAGE CO-BRANDING OPPORTUNITIES WITH LENDERS

NJHMFA already offers social media toolkits for lenders to co-brand, but these opportunities should expand to other media, including television, radio, print, and direct mail. NJHMFA should select one lending partner to pilot a co-branded marketing campaign, which should include both direct mail and a social media campaign with tracking links to measure the impact of the strategy. The Agency should also expand co-branding opportunities to real estate professionals by providing social media templates and sample copy for posts to Facebook, Twitter, and Instagram.

1.3. Enhance community engagement and partnerships strategy to build trust with home buyers of color ESTABLISH AN ANNUAL CONFERENCE FOR COMMUNITY PARTNERS ON COLLABORATION AND RACIAL EQUITY

NJHMFA should launch an annual conference focused on nonprofit, community development, and advocacy stakeholders. The conference should serve as a platform for Agency leadership and stakeholders to identify shared goals in areas such as affordable housing repair and construction, foreclosure mitigation, and homeownership expansion. The Agency should organize panel discussions and plenary sessions to highlight new collaborations between the Agency and organizations, review lessons from previous partnerships, identify opportunities to scale existing partnerships so that they reach underserved communities, and discuss how

the Agency and housing professionals can collaborate to close the state’s racial gaps in wealth and homeownership. Two conferences—the Governor’s Conference on Housing and Economic Development, and the Housing and Community Development Network of New Jersey’s annual conference— already center on affordable housing and community development. NJHMFA’s conference would uniquely focus on racial equity, partnerships, and collaboration. It will also help the Agency and stakeholders ensure that their efforts complement, rather than compete against, each other, a concern cited by several organizations throughout our field research. During the conference, NJHMFA should solicit feedback on its existing policies and programs to inform its annual strategic plan, as described in Recommendation 5.1, and refine its vision for racially equitable homeownership opportunities in New Jersey. Because no single state agency or housing organization has the perfect strategy for resolving New Jersey’s complex racial disparities in homeownership, the Agency will need to combine different ideas offered by various organizations to develop the necessary comprehensive approach for tackling these deep-rooted inequities.43

ANNUAL CONFERENCE COSPONSOR PARTNERSHIPS

To reduce costs associated with the annual conference, NJHMFA should host the conference in its own office space and create cosponsor partnerships with trusted nonprofit, advocacy, and community development organizations. Potential partner organizations include Fair Share Housing Center; New Jersey Institute for Social Justice; the Housing and Community Development Network of New Jersey; and Affordable Housing Alliance, New Jersey Policy Perspectives. Cosponsors’ 15

office spaces may serve as alternate conference venue options. Such partnerships would help the Agency build trust and legitimacy with influential housing professionals in these sectors. We estimate that the cosponsorship would cost the Agency $30,000 per year.44

DESIGNATE A NONPROFIT, COMMUNITY DEVELOPMENT, AND ADVOCACY STAKEHOLDER LIAISON

NJHMFA should designate a full-time, inhouse liaison who oversees partnerships with nonprofit, community development, and advocacy stakeholders. The liaison should report directly to the Agency’s Executive Director and understand the state’s pervasive racial discrepancies in homeownership rates and wealth accumulation. In addition, the liaison should have substantial experience working in the nonprofit, advocacy, or community development sectors such that she is familiar and credible to stakeholders. The liaison’s salary should be comparable to other Agency leadership positions in order to draw experienced candidates with high levels of trust among New Jersey’s nonprofit and advocacy stakeholders. As part of her responsibilities, the liaison should convene regular listening sessions with trusted representatives from partner organizations to solicit feedback on the strengths and weaknesses of NJHMFA’s policies and partnership practices, especially those that disproportionately affect communities of color. Her findings should be incorporated into NJHMFA’s regular internal process improvements discussed in Section 5. Finally, the liaison should prioritize communication with stakeholders in North and Central Jersey to help NJHMFA cultivate more robust networks in these regions.

DRAFT FORMALIZED MOUs WITH COMMUNITY PARTNERS SERVING HOME BUYERS OF COLOR

Memoranda of understanding can formalize the process by which the Agency shares information with partners, refers nonmortgage-ready borrowers to partners, and receives referrals for candidates to NJHMFA programs from partners. These memoranda should be simple and not impose any new administrative burdens on NJHMFA staff.

2. DOWN PAYMENT ASSISTANCE The barriers to homeownership are many, but one reigns supreme—the down payment. A 2018 Zillow Housing Aspirations Survey conducted with the Urban Institute found that down payment is the leading barrier consumers cite in their path to homeownership.45 While the fate of the current Build Back Better bill remains uncertain at the time of this writing, it includes DPA to firstgeneration home buyers, a testament to the momentum behind the use of DPA to expand homeownership.46 Even modest assistance can increase the number of low-income and minority households able to purchase homes.47 Down payment subsidies increase the number of qualified mortgage loan applicants without increasing the overall size of the loan.48 Programs that take the form of grants, rather than loans, transfer equity to the homeowner if conditions of the grant are met. After the Great Recession, most state HFAs added some form of DPA product to their loan portfolio. While DPA loan specifications vary widely by HFA, DPA is a central HFA product. NJHMFA offers a DPA program that provides a flat $10,000 to qualified first-time home buyers. The assistance is an interest-free loan, forgivable after five years if the homeowner stays in the residence. The DPA must be paired with an NJHMFA first-time mortgage loan. The following are simple yet effective recommendations to enhance the DPA loan program. Throughout the course of this research, the team investigated many of the county- and city-level DPA opportunities throughout the state of New Jersey. There are many 18

different opportunities that require extensive research by the potential home buyer and bear significant bureaucratic hurdles, including lengthy application review timelines and cumbersome application processes. Due to the barriers and administrative challenges associated with accessing these resources, we do not recommend pursuing a formal strategy of layering DPA with these local resources. This may, however, remain a point of consideration for the future if NJHMFA chooses to allocate staff bandwidth to this coordination challenge.

2.1 Increase the base DPA amount to $14,000, and fix DPA to the maximum home purchase price NJHMFA should increase the base DPA from $10,000 to $14,000 so home buyers can be more competitive in purchasing homes across a broader range of New Jersey counties. The loans should scale alongside the maximum purchase price limits and maximum income limits already set by NJHMFA.

DPA DESIGN AND GEOGRAPHIC CONCENTRATION

Over 75 percent of DPA loans originate in Camden, Gloucester, Burlington, and Atlantic Counties, where median home values are among the lowest in the state. This is not surprising—$10,000 goes further, as a percentage of home value, in counties with lower housing costs. Homes in these counties do not appreciate at the same rate as other higher-value counties in

FIGURE 4. DPA LOANS BY MUNICIPALITY data underscore a sentiment from Reverend Eric Dobson, Deputy Director of the Fair Share PER 1,000 PEOPLE, 2016-2020 Housing Center: “All this program is going to do,” he said, referring to the DPA program, “is push more segregation. You have a program that pushes homeownership in places that are rural and don’t have jobs.”50

Housing values have appreciated substantially since 2019. They appreciated the most in Ocean, Essex, and Monmouth Counties, where just 2.5 percent of the Agency’s loans originate. These disparities continue a trend that characterized the last decade: Values in the four counties that account for 75 percent of the Agency’s portfolio have appreciated on average 26 percent since 2010, compared with statewide appreciation of 38 percent, placing all in the bottom half of New Jersey counties for home value appreciation.51

Source: This map depicts the number of NJHMFA DPA loans per 1,000 residents within each New Jersey municipality. Population figures are drawn from the American Community Survey 2014-2019 5-year estimates.

the state. In Camden, the county with the most DPA loans, homes depreciated by 3 percent from 2014 to 2019. Homes in Gloucester, Burlington, and Atlantic Counties depreciated by 1 percent. Meanwhile, homes statewide appreciated by an average of 4 percent, buoyed by counties in North and Central New Jersey.49 For NJHMFA to narrow the racial wealth gap, its products must be used in communities where homes appreciate in value. But today, its loans are concentrated in counties where homes do not appreciate as quickly as in the rest of the state—if they appreciate at all. These

The Agency should increase its DPA to allow recipients to buy homes in communities more likely to see appreciation. Because a flat $10,000 goes further in some counties than in others, first-time home buyers are more competitive buyers in neighborhoods with lower value homes and lower likelihood of home appreciation.

DPA PRODUCT INNOVATIONS

NJHMFA should increase DPA for a second reason. Today, the value of DPA is outweighed by the cost of private mortgage insurance (PMI). Consider a $311,979 home, the maximum qualifying value set by NJHMFA for a single-family unit in Mercer County. PMI for the first year alone amounts to $8,111.45, almost the entire DPA. After closing costs are considered, the DPA covers approximately 37 percent of the initial purchase costs. It is worth underlining that the current maximum price set for Mercer County by NJHMFA is roughly 20% less than the 2021 median price for Mercer County.52

FIGURE 5. RECOMMENDED DPA BY COUNTY Counties

NJHMFA 1-Family Maximum Home Purchase Price Limit

NJHMFA 50% Target for DPA

Proposed New DPA Amounts

Atlantic, Cumberland, Mercer

$311,979

$13,649

$14,000

Warren

$326,195

$14,271

$14,000

Burlington, Camden, Cape May, Gloucester, Salem

$377,540

$16,515

$16,500

Bergen, Essex, $719,953 Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union

$31,499

$25,000

Source: NJHMFA 1-Family Maximum Home Purchase Prices have been developed from NJHMFA. The proposed new DPA amounts were calculated by the authors of the report.

Given the barrier that the down payment and other upfront costs pose for the home buyer, we recommend that the Agency increase the base DPA to $14,000 and further increase it according to the geography, similar to the current county-specific income and home price limits. In our analysis, we aimed to cover 50 percent of the upfront costs to the homeowner. These costs consist of an estimated 3.5 percent down payment, 3.5 percent closing costs, and a 1.75 percent PMI fee. Closing costs and PMI are rough estimates and will vary somewhat by buyer. We chose $14,000 as the new base DPA because it covers 50 percent of the upfront costs in Atlantic, Cumberland, Mercer, and Warren Counties. Our recommendation to scale the assistance aligns with practices at other HFAs. 20

With clear messaging, NJHMFA can avoid confusion around the different tiers. Following the example of MassHousing, NJHMFA may choose to advertise “down payment assistance of as much as $25,000.”53

COSTS AND FUNDING

We estimate that NJHMFA committed $13,650,000 to the DPA program in 2020. If our proposed DPA amounts had been offered to the same 1,365 home buyers that year, the program would have cost $21,050,000, an increase of $7.4 million. This does not account for geographic changes to NJHMFA’s portfolio that may result from the expanded funding.

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP The impact on DPA changes to the racial

homeownership gap is contingent on how the DPA loans are allocated. By increasing the amount of DPA funds available to each home buyer, NJHMFA enables home buyers to compete in higher appreciating neighborhoods and to combat the lack of generational wealth that many home buyers of color face. To fully leverage this recommendation toward reducing New Jersey’s racial homeownership gap, this must be paired with the targeting goals suggested elsewhere in this report.

2.2 Leverage New Jersey Individual Development Accounts to increase available assistance to first-time home buyers Individual development accounts (IDAs) are matched savings accounts that help households save for specific goals like homeownership. One study has found that IDAs can increase the homeownership rate among participants by 11 percentage points.54 New Jersey home buyers are eligible for two IDAs: the Temporary Aid for Needy Families (TANF) IDA55 and the New Jersey HOME IDA.56 Both are implemented by the Department of Community Affairs. Program eligibility is provided in Figure 6.

Department of Community Affairs and other organizations to promote IDAs, as other HFAs already do, and bundle them with DPA. For example, the Indiana HFA markets IDAs on its website and provides a list of administrators to supplement its support for first-time home buyers.57 The New York HFA previously provided an IDA program a different agency now administers.58,59 The NJHFMA should, at the least, promote the New Jersey HOME IDA as a supplemental option to DPA, given the programs’ similar eligibility criteria. This would provide firsttime home buyers with $7,000 in additional assistance. When bundling both programs, the Agency should allow its trainings to satisfy the homeownership education requirements of IDAs so that buyers can more easily participate in both programs. There is growing interest in IDAs as New Jersey recently passed a law in January 2020 to expand the benefits and eligibility requirements for the TANF IDA.60

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

Increasing the money available to home buyers of color for upfront homeownership costs increases the affordability of homeownership. This would increase the number of homeowners of color and narrow the racial homeownership gap.

NJHMFA should coordinate with the Department of Community Affairs to harmonize DPA and IDA programs for firsttime home buyers who qualify for both programs. In addition to the Agency’s DPA, for those who qualify for both IDAs, these programs could provide first-time home buyers up to $13,000 to cover a down payment, closing costs, and mortgage insurance.

OPPORTUNITIES FOR COORDINATION NJHFMA should coordinate with the

FIGURE 6. SUMMARY OF NEW JERSEY INDIVIDUAL DEVELOPMENT ACCOUNTS New Jersey HOME Individual Development Account

TANF Individual Development Account

Funding Entity

State

Federal

Matching Ratio

2:1

Maximum Contribution

$3,500

$3,000

Maximum Matching

$7,000

$6,000

Maximum years of account

2 years (5 with extension)

3 years (5 with extension)

Maximum contribution per year

$1,750

$1,000

Minimum length for fund withdrawal

6 months

Income Eligibility61

120% of County AMI First-time home buyer

250% of Federal Poverty Level

Examples of Qualifying Expenses

Down payment, settlement fees, financing or closing costs, title insurance, attorney fees, inspection fees, acquisition costs, construction or reconstruction, appraisal fees, mortgage insurance (as part of closing costs) and other customary prepaid expenses.

•First-home purchase (same as HOME IDA) •Education and job training •Small business support

Training Requirements

•10 hours of financial literacy •10 hours of basic financial •10 hours of homeownership literacy counseling •10 hours of homeownership counseling

Source: “The New Jersey Federal Individual Development Account Program, TANF IDA Program Manual,” New Jersey Department of Community Affairs; “The New Jersey Home Individual Development Account, HOME IDA Program Manual,” New Jersey Department of Community Affairs; New Jersey P.L. 2019, c. 460.

3. FORECLOSURE PREVENTION The Great Recession exacted an enormous, lasting toll on New Jersey homeowners. Foreclosures spiked, and they would not return to their pre-recession levels until more than a decade later in 2019.62 That year—as with every year since 2015—New Jersey’s foreclosure rate was the highest in the nation.63 And during 2020, as the COVID-19 pandemic caused unemployment to spike from 3 percent to as high as 16 percent, 64 the number of New Jersey households that deferred their mortgage payments exceeded 160,000 for five consecutive months.65 These trends motivated the passage of the Foreclosure Prevention Act.66 The Act authorizes NJHMFA to buy foreclosed properties and defaulted mortgages in bulk from mortgage lenders, investors, and loan

servicers.67 Most notably, Fannie Mae and Freddie Mac have “non-performing loan sale” programs in which they auction off pools of loans to private investors, non-profits, and governments.68 The Federal Housing Administration conducts a similar singlefamily loan sale program.69 Investors in these loan sale programs must meet specific requirements for servicing the loans and reporting on outcomes.70 The Agency should contract with community development finance institutions (“CFDI”) to purchase and service these loans. And where possible, it should seek to turn around vacant or foreclosed properties in urban areas, where the harm of foreclosure to surrounding homes is the greatest.

FIGURE 7. NEW JERSEY AND U.S. FORECLOSURE RATES BY QUARTER, 20052020

Source: Mortgage Bankers Association, 2021

3.1 Contract with one or more qualified CDFIs to purchase and service non-performing loans The loan purchase initiative and other activities under the Act will be funded through a $350 fee on sheriff’s sales collected in a Foreclosure Intervention Fund. NJHMFA projects sheriff sales revenues of around $6 million per year, and it will reserve 80 percent—or $4.8 million—for the bulk purchase of loans.71 The projection assumes that New Jersey’s baseline foreclosure activity going forward would be around 17,000 sheriff’s sales per year.

were mostly vacant—New York hoped to convert them to affordable housing. They were spread across 54 cities.74 And their partnership allowed for the participation of private investors in order to raise capital. Similarly, in 2017, SONYMA and NJCC partnered to purchase nearly 400 non-performing loans throughout New York state.75 Ultimately, they succeeded in leveraging SONYMA’s resources to acquire more loans.

The projected revenue would allow the Agency to purchase about 25 homes, and this estimate may be optimistic. If foreclosures return to their 2019 level—there were about 14,300 notices of foreclosure sales that year72—the revenue from sheriff’s sales would be $5 million, leaving only $4 million to purchase loans.

Our understanding is that NJHMFA plans to acquire mostly vacant homes at first, but that the full details of the Residential Foreclosure Prevention Program have not been finalized. Should the Agency begin acquiring occupied homes, it should work with the homeowner to reach the most favorable outcome. Generally, homeowners in default will see one of three outcomes. The homeowners might still face foreclosure, avoid foreclosure and keep the home, or avoid foreclosure but give up the home anyway—they might sell it in a short sale or provide the deed in lieu of foreclosure.76 On average, loans acquired through nonperforming or single family loan sales avoid foreclosure 30–40 percent of the time.77

CDFIs CAN HELP NJHMFA LEVERAGE ITS LIMITED RESOURCES

CDFIs HAVE EXPERIENCE WITH FORECLOSURE PREVENTION

The Agency should leverage its limited resources by contracting with a CDFI. The Act allows the Agency to contract with CDFIs that have at least $50 million in assets and two years of experience in financing affordable housing. One such institution is New Jersey Community Capital (“NJCC”), whose partnership with the State of New York Mortgage Agency (“SONYMA”) in April 2021 provides an instructive model. In April 2021, New York and NJCC partnered to purchase 70 loans from the U.S. Department of Housing and Urban Development, all located within the state of New York.73 The properties

CDFIs have a track record of success in helping homeowners avoid foreclosure. For example, as part of its ReStart program, NJCC partners with various private and nonprofit investors to pool resources for bidding on non-performing loans. Because of the different stakeholders involved, NJCC has specific requirements for participating in the investment partnership. Any properties foreclosed and sold must be made available first to owner-occupants, then to nonprofits and community land trusts, and only then to private investors.78 Further, NJCC has developed protocols for loan servicing, housing counseling, underwriting loan modifications, and reporting requirements

on progress and outcomes. NJCC has helped over 2,400 households avoid foreclosure since 2012.79 NJHMFA should partner with one or more CDFIs to acquire non-performing loans, service loans with the goal of helping borrowers avoid foreclosure, and manage foreclosed properties to be sold to new owneroccupants or be converted to affordable housing. By contracting with CDFIs, the Agency can leverage its limited program revenues to bring the program to scale. Further, some CDFIs have considerable experience in housing finance, bulk purchases of loans, and managing affordable housing. Finally, CDFIs are aligned with the Agency’s overall mission of helping low-income communities gain access to affordable housing.

3.2 Target urban areas for bulk purchases of defaulted mortgages Robust economic literature supports the existence of a foreclosure “contagion effect”: When a home is foreclosed, the values of neighboring homes fall.80,81 This downward price pressure can, in turn, put the owners of those homes at greater risk of foreclosure.82 The contagion effect is incredibly localized, affecting only those properties within 500 feet of the foreclosed home.83 Nevertheless, the size of the contagion effect is large. A single foreclosure reduces the value of nearby homes by about 1 percent84 and, on average, every 100 foreclosures will result in 30 to 60 more.85 Economists say these findings support the use of public funds to reduce the harm caused by foreclosures to neighboring properties.86 Because the foreclosure contagion effect is limited to properties within 500 feet of the

foreclosed property, foreclosures in urban areasf—where the density of surrounding homes is greatest—cause the greatest harm to their neighborhoods. Furthermore, each additional foreclosure within 500 feet of a property further reduces the property’s value and increases its own risk of foreclosure. Therefore, households within 500 feet of multiple foreclosed properties experience greater harm than households near a single foreclosed property. For these reasons, NJHMFA should concentrate its limited Foreclosure Intervention Fund revenues in urban neighborhoods with elevated foreclosure risk. To the extent that the Agency acquires its properties through bulk purchases, it will not have the luxury of creating, and consistently applying, criteria to guide it to identify homes whose neighborhoods would benefit the most from NJHMFA intervention. Instead, the Agency should use this knowledge as guiding principle. When choosing which properties, or pools of properties, to purchase, it should prefer the properties with the greatest number of other homes in a 500-foot radius. Matching these homes with new owners will help to stabilize their immediate neighborhoods. Finally, to the extent that NJHMFA acquires vacant homes, it should rehabilitate and resell them to new owners as quickly as possible. The longer a home sits vacant, the longer it depresses the value of surrounding properties. By moving to sell and have vacant homes be occupied quickly, NJHMFA will stabilize the surrounding neighborhood.

NJHMFA MAY NEED TO NEGOTIATE DIRECT PURCHASES OF TARGETED LOAN POOL

Our recommendations depend, in part, on the Agency having some level of discretion to acquire properties in urban areas. The “bulk”

nature of bulk purchases presents a challenge to this intentionality. Investors typically purchase non-performing loans through auctions held by Fannie Mae, Freddie Mac, or the Federal Housing Administration. The seller agencies pool together loans provided by their loan servicers, so investors do not generally choose which loans go into a pool or where the properties are located. Even pools designed with community impact in mind can have loans based across multiple states.87 There is precedent for nonprofits and governments negotiating with sellers to purchase a set of non-performing loans. For example, NJCC purchased underwater mortgages along the New Jersey coast after Superstorm Sandy. Unfortunately, this may come at a cost: NJCC paid a premium above the likely auction price.88 Depending on NJHMFA’s revenues, repeated direct purchases of loans may not be the most efficient or sustainable use of funds. By contrast, NJCC’s partnership with New York State resulted in a direct purchase of loans that were heavily discounted: $4.26 million sale price on a pool with $10.7 million in unpaid principal balance. 89 NJHMFA should work with sellers of nonperforming loans to negotiate targeted, direct purchases of non-performing loan pools. This will be made more feasible through contracting with CDFIs, as the Agency can leverage a broader pool of funds for purchasing loans. The Agency could also initially negotiate loan pools containing a higher proportion of vacant properties, which would cost less, as the Agency builds the program’s portfolio.

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

Contracting with CDFIs and targeting purchases of non-performing loans would allow NJHMFA to prevent a greater number of foreclosures. Preventing more foreclosures in a targeted manner would, at the least, help prevent the 26

racial homeownership gap from widening further. While vacant or foreclosed properties could be channeled into affordable housing opportunities, this would likely have little net impact on the homeownership gap over the long term given the Agency’s current budget for the program.

4. NEW PROGRAMS AND INNOVATIONS

The First-Time Homebuyer and Down Payment Assistance products promote affordable and stable homeownership in New Jersey. But not all communities have benefited from these products. We propose several new programs or adjustments to current programs to address this concern. Our proposed programs aim to reach the following groups: first-time home buyers who cannot afford a market-rate turnkey home, lower-income families at risk of losing their home due to substandard living conditions, first-generation professionals who are currently unable to access mortgage assistance, and potential landlords of color who would benefit from financial support and counseling. With the right supports in place, NJHMFA could expand homeownership opportunities among these populations and help narrow the state’s racial homeownership gap.

4.1. Establish a statewide Homeowner Rehabilitation Assistance (HRA) program NJHMFA should establish a homeowner rehabilitation assistance (HRA) program to rehabilitate homes for low- and moderateincome families. The program will complement HRA programs already offered by many New Jersey municipalities and counties. The Agency should direct part of its assistance to first-time home buyers, especially in areas with concentrated vacant, aged, or

substandard homes. It should also direct some funds to current homeowners in areas at risk of gentrification and in blighted neighborhoods. For the purposes of this recommendation, “gentrification” refers to the involuntary displacement of households in areas where housing costs are rapidly increasing. “Blight” refers to derelict or visibly substandard homes that depress surrounding property values.

A SURVEY OF HRAs

HRA programs provide financial assistance to low- and moderate-income homeowners for critical home rehabilitation, repair, or renovation needs. They can be categorized into two broad models. In the first model, a government offers loans or grants to current homeowner-occupants loans to improve their homes. The vast majority of state and local HRA programs operate this way. The second model reaches new home buyers. Under this model, a government will offer loans or grants to first-time home buyers to help cover the cost of rehabilitating a newlypurchased, substandard home. Few HRA programs currently operate on the purchase side. HRA programs improve both health and housing outcomes for those living in rehabilitated households. The health benefits include improved respiratory health and a reduction in exposure to lead paint, mold, pests, fire hazards, and other safety risks.90 Furthermore, renovation has been shown to appreciate home values in the surrounding area.91

HRA programs are also cost-effective. For example, Detroit’s small home repair grants— with a median grant of just $6,000—enabled homeowners to address one of every two major repair needs. In a survey, all participants said the program was important for their ability to stay in their home, and one-quarter said that, without the program, they would have left their home permanently.92

THE HRA LANDSCAPE IN NEW JERSEY

New Jersey has a patchwork of HRA programs administered by counties and municipalities. These programs are designed to meet the municipalities’ obligations under the Mount Laurel Doctrine, which requires that every municipality provide its fair share of affordable housing for people of low and moderate incomes.93 The programs are funded by local housing trust funds and by federal grants administered via HOME and the Community Development Block Grant Program. Few data exist on the extent to which rehabilitation under the Mount Laurel Doctrine meets the needs of New Jersey households. At the start of Mount Laurel’s “Third Round” in 2015, there existed at least 36,000 Present Need units requiring rehabilitation spread across over 200 municipalities.94 Meanwhile, the rate at which these homes are being repaired under county and municipal programs is inadequate. An administrator of a housing rehabilitation program informed us that three of the state’s largest HRA administrators each rehabilitate only several hundred homes annually.

TOWARD A STATEWIDE HRA PROGRAM

A statewide HRA program is critical for the expansion New Jersey’s stock of affordable, livable occupant-owned housing units. Today, low- and moderate-income households occupy tens of thousands of deficient units. And around 1.5 percent of units in the state are

vacant, many of which may not be habitable without rehabilitation.95 Without a comprehensive statewide HRA program, New Jersey is unlikely to meet its full housing rehabilitation needs. Existing home improvement programs at the municipal and county level are scattered, inconsistent, and not universally available. Meanwhile, many aging homes in the state will likely become deficient absent intervention. A state HRA program will promote streamlined, equitable access to rehabilitation assistance and allow NJHMFA to send rehabilitation funds to those areas with the greatest need. A statewide HRA program should not, however, replace local programs, which are legally mandated under Mount Laurel. Instead, eligible households should be able to combine state and local HRA loans.

TWO HALVES OF A STATEWIDE PROGRAM

NJHMFA’s HRA program should maintain two separate funds: one for existing low-tomoderate income homeowners and another for first-time low-to-moderate income home buyers. Both models have benefits, and each should be part of a comprehensive approach to expanding affordable, stable homeownership opportunities. The Agency should reserve at least half of state HRA loans for first-time home buyers. Today, only existing homeowners are eligible for county and municipal HRA programs. By reserving half of HRA loans for first-time buyers, the Agency will expand the stock of livable homes available to low- and moderateincome families, allowing these households to begin building wealth through home equity. NJHMFA should focus these loans in areas with the most vacant, aged, or substandard

housing units. Figure 8 shows New Jersey’s residential vacancy rate by county. Eight of the 10 counties with the highest residential vacancy rate are in southern New Jersey. Figure 9 shows the median age of housing units by county. Homes are oldest in the counties surrounding New Jersey’s oldest urban areas—Newark, Jersey City, Elizabeth, Paterson, Trenton, and Camden. HRA for first-time home buyers could expand the stock of livable homes in both New Jersey’s rural southern counties and its older urban areas.

The remainder of state HRA loans should assist existing homeowners, with the goal of preventing the displacement of households whose homes currently provide substandard or unsafe living conditions. The Agency should target these loans in areas where families are at risk of displacement due to rising housing costs or housing blight. In areas with rising housing costs, homeowners with distressed mortgages can use these funds to avoid foreclosure. Meanwhile, in areas with significant housing blight,

FIGURE 8. HOME VACANCY RATE BY COUNTY, 2019

FIGURE 9. MEDIAN HOME AGE BY COUNTY, 2019

Source: Craig McCarthy. “Here’s How Many Vacant Homes There Are in Each NJ County.” nj.com, January 16, 2019.

Source: 2019 American Community Survey 1-Year Estimate

rehabilitation assistance will not only help individual homeowners improve their home, but also buoy the value of other homes in the neighborhood. In either case, NJHMFA’s HRA program would work to promote neighborhood stability, and therefore support anti-gentrification efforts. Newark, Jersey City, Elizabeth, Paterson, Trenton, and Camden have been among the fastest-growing New Jersey municipalities over the past decade, indicating a potential for gentrification.96 Targeting homeowners in these counties for rehabilitation assistance is likely to go the furthest toward mitigating gentrification and blight. To target HRA loans to the desired communities and x, NJHMFA should follow the outreach and community collaboration guidelines outlined in Section 1. HRA loans to existing homeowners would also dovetail with NJHMFA’s foreclosure prevention efforts. For example, the Agency should offer HRA loans to first-time buyers and existing owners of properties acquired under the Foreclosure Prevention Program. NJHMFA should also use its HRA program to promote climate resilience for the state’s housing stock. Today, local housing rehabilitation programs across the state primarily cover health- and safety-related repairs. But repairs related to climate resilience are just as important in protecting future New Jersey families and their homes. By 2050, over 600,000 New Jersey properties are projected to have significant flood risk, due to both sea level rise and severe storms and hurricanes.97 Weatherization- and climate resilience-related repairs—including compliance with flood-resistance standards— should therefore be equally eligible for HRA loans as health- and safety-related repairs.

NJHMFA should leverage third-party HRA program administrators. Administering an HRA program is complicated and requires niche expertise. It requires the preparation of bid documents, comprehensive inspections, contractor review and outreach, applicant outreach and approval, unit certification, and legal documentation. Fortunately, several major private sector rehabilitation program administrators already operate in New Jersey. These include CGP&H, Rehabco, and Community Action Services, among others. Especially in the years leading up to and immediately after the launch of a statewide HRA program, NJHMFA should work with one or multiple such administrators to ease the program’s cost and personnel burden.

STRUCTURE OF HRA LOANS

The structure of HRA loans will be a critical decision point for NJHMFA. The Agency can either allow repayment to be deferred until the home is sold, or it can require regular interest payments similar to a conventional loan. Interest on the loan can be at market rate, below market rate, or zero. Most important, it may choose to forgive HRA loans after a certain number of years of occupancy. Forgivable loans are most beneficial to lowand moderate-income homeowners and home buyers. HRA loans should ideally be structured like DPA loans: zero-interest, no monthly payment, and forgivable after five years of occupancy. But non-forgivable, interest-free loans that defer repayment until resale offer a less costly alternative. These loans are still valuable in that they provide home buyers the upfront financing to move into and repair a home and begin to build wealth through home equity. If funds are insufficient to provide fullyforgivable HRA loans to both current

homeowners and first-time buyers, NJHMFA should prioritize forgivability for existing homeowners. Today, most low- and moderate-income first-time home buyers in New Jersey qualify for fully-forgivable DPA loans. But existing homeowners typically cannot access forgivable loans to rehabilitate their homes. By offering forgivable loans to existing homeowners, NJHMFA would even the playing field, thereby combatting displacement and gentrification.

COSTS AND FUNDING

NJHMFA should aim to scale its HRA program to a similar size as its DPA program: at least 1,000 unique loans per year. Based on our conversations with private sector HRA program administrators, we estimate that the average home rehabilitation project carries around $20,000, plus at least $4,000 in administrative costs. Considering the inflationary cost of materials and labor, we recommend that NJHMFA provide loans of up to $30,000. If NJHMFA were to provide 1,000 forgivable HRA loans of $30,000, the program would carry an annual cost of $30 million, plus administrative costs. We believe this is a cost-effective way to create or preserve 1,000 homeownership opportunities. When seeking funding from the State Legislature, NJHMFA should emphasize that HRA will create homeownership opportunities for low- and moderate-income households and expand the state’s stock of livable housing. If NJHMFA cannot obtain a full $30 million annual appropriation from the State Legislature, the Agency has a few options to reduce the cost of its HRA program. First, the program could be scaled down in terms of annual number of HRA loans. Second, the program could have a loan maximum of less than $30,000. Finally, the program could offer

interest-free, deferred payment loans instead of forgivable loans. As described above, if only some of the HRA program’s loans are to be fully forgivable, they should be prioritized toward existing homeowners.

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

While the state HRA program would not explicitly target households by race, we believe it would particularly benefit Black and Latino families, who are disproportionately low- and moderate-income. As described above, we recommend targeting many of the program’s loans toward areas at risk of gentrification, with widespread housing blight, or with an aged housing stock. These tend to be New Jersey’s older urban areas, which also have the state’s highest concentration of people of color.98 To ensure households of color can take advantage of the state’s HRA program, we recommend employing the outreach, partnership, and community collaboration strategies outlined in Section 1.

4.2. Target firstgeneration professionals Many factors contribute to the Black–white wealth gap, including policies and practices that have deprived Black Americans of equal access to higher education and homeownership. Today, Black Americans who attain a college degree carry an outsized share of student loan debt and earn a lower rate of return on their degrees compared to white graduates. For Black borrowers, many of whom are first-generation college graduates or professionals, student loan debt is a barrier to homeownership. Current mortgage underwriting practices unfairly penalize borrowers with high student loan debt burdens.

NJHMFA should partner with Rutgers Law School (RLS) to provide home buyer education to law students who are first-generation prospective home buyers and establish a pilot program to offset certain mortgage-related costs for RLS graduates.

NATIONAL IMPACTS OF STUDENT LOAN DEBTS ON BLACK COMMUNITIES Nationally, 37 percent of white adults have bachelor’s degrees, compared to just 22 percent of Black adults. Meanwhile, 13 percent of white adults and 8 percent of Black adults have graduate degrees.99 These disparities are partly explained by racial disparities in college graduation rates: 64 percent of white students graduate, compared to just 40 percent of Black students.100

Black students who do graduate see a lower return on their degrees than white graduates. For every dollar in wealth that the median Black household with a college degree accrues, the median white household accrues $11.49.101 This disparity explains, at least in part, why homeownership is less common among Black college graduates than for white high school dropouts.102 At graduation, Black students—who often lack access to family wealth—owe $7,400 more on average in student loans than do their white peers. Just four years later, that gap triples

to $25,000 due to interest accumulation.103 Typically, white borrowers reduce their student loan debt by 94 percent over 20 years. Black borrowers reduce their debt by just 5 percent in the same period, and half default. Although higher education is normally associated with wealth, an average collegeeducated Black family has just two-thirds of the wealth of an average white family headed by someone with less than a high school degree.104

IMPACTS OF STUDENT LOAN DEBT ON BLACK COMMUNITIES IN NEW JERSEY

New Jersey has the fifth highest student debt burden among the states. Two in three recent college graduates in the state have debt, and the average debt burden is $34,000. Since the Great Recession, funding per student at public universities in New Jersey has declined by 23 percent, shifting the cost of education to students. The average annual cost of public college in New Jersey is now $26,000, the third highest in the nation.

For Black and Latino students, these costs can be enormous. In 2017, the cost of public college to Black and Latino students in New Jersey was equivalent to 32 and 29 percent of their median household income, respectively.105 White families, meanwhile, needed only 17 percent of their household income to cover the cost of college. Student loans are therefore

FIGURE 10. STUDENT LOAN DEFAULT RATE BY COUNTY AND RACE Essex County Borrowers of Color

21%

White Borrowers 4%

Camden County

Mercer County

Atlantic County

24%

22%

28%

10%

Source: New Jersey Institute for Social Justice 2020 report - “Freed From Debt: A Racial Justice Approach to Student Loan Reform in New Jersey”

the only choice for many Black and brown students.106 And in the counties that surround New Jersey’s urban centers, default rates in communities of color are devastating.107 To mitigate the racial wealth gap among college graduates, NJHMFA should target students and graduates of color for its FirstTime Homebuyer Program. First-generation professionals and home buyers are typically trailblazers within their family. They may lack access to generational wealth and can, therefore, benefit greatly from NJHMFA’s guidance on homeownership.

BARRIERS TO HOMEOWNERSHIP AMONG RECENT PROFESSIONAL GRADUATES

To qualify for a conventional mortgage, borrowers must put 20 percent down and pay closing costs.108 Federal Housing Administration (FHA) loans allow borrowers to put as little as 3.5 percent down. To offset the risk of foreclosure, FHA loans require the borrower to carry PMI.109 This PMI is paid to FHA at an upfront rate of 1.75 percent, and at an annual rate of 0.45–1.05 percent, of the purchase price of the home.110 Lenders typically assess an applicant’s monthly debtto-income ratio. The greatest ratio allowed under NJHMFA’s First-Time Homebuyer Program is 45 percent.111 Many recent law school graduates have little savings, making a conventional mortgage unattainable. Because of their student debt, they also struggle to qualify for FHA mortgages despite job stability and modest income-based student loan payment obligations. Black lawyers are especially likely to find themselves unable to qualify for a mortgage—they graduate with nearly double the debt of their white counterparts.112 Federal student loans offer plans that cap monthly payments at 10 percent of an applicant’s discretionary income.113 Despite

this, historically FHA had for years required lenders to consider 1 percent of an applicant’s loan balance as their monthly debt. This policy harmed applicants with high student debt burdens by artificially inflating their debtto-income ratio.114 In 2021 FHA relaxed its terms by allowing lenders to use 0.5 percent of the total balance, or the actual student loan payment, when calculating debt-to-income ratio.115 But the requirement remains a hurdle. For some graduates, 0.5 percent of the total balance could still be higher than their actual income-based repayment. And the requirement fails to account for public sector loan forgiveness for which those who work in the public sector may qualify.

ESTABLISH A PROFESSIONAL MORTGAGE PILOT PROGRAM FOR FIRST-GENERATION HOME BUYER GRADUATES OF RUTGERS LAW SCHOOL

Recognizing that professionals pose a relatively low risk as borrowers, some lenders—like Cadence Bank, which does not operate in New Jersey—have created special mortgage products for select professionals, including attorneys, doctors, and dentists. These products offer up to $1.5 million, with no PMI requirements.116 The removal of PMI allows borrowers to enjoy lower closing costs and monthly payments. NJHMFA should fill the need for these products within New Jersey and establish a pilot program awarding grants to cover PMI for RLS graduates who use its First-Time Homebuyer Program. In year one of the pilot, NJHMFA should award such grants to 200 borrowers. After two years, the Agency should expand the pilot to include Rutgers School of Dental Medicine and Rutgers New Jersey Medical School. After three years, NJHMFA should assess risk of current grantees and, if 33

favorable, make it a permanent program. We are not aware of similar programs offered by HFAs, meaning the Agency has an opportunity to innovate. The program could have enormous benefits for professionals. In 2020 alone, New Jersey home values increased by 19 percent,117 creating enough equity for the average homeowner

to eliminate educational debt several times over. But the significant cost of PMI—nearly 10 percent of the home’s value over the first ten years of ownership—can wipe out much of these equity gains and dissuade recent graduates from becoming homeowners when they are already burdened with debt.

FIGURE 11. ILLUSTRATIVE PMI COSTS OVER TIME Atlantic County

Camden County

Essex County

Max Single Family Home Price

$311,979

$377,540

$719,953

Upfront PMI

$5,460

$6,607

$12,600

Annual PMI Fee

$2,652

$3,209

$7,560

Year 1 Cost

$8,112

$9,816

$20,160

Monthly PMI

$221

$267

$630

Property Tax (2%)

$6,240

$7,551

$14,399

Total PMI Cost for 10 $31,979 Years

$38,652

$88,200

Percent of Housing Cost – PMI after 10 Years

10.25%

12.25%

Approximate # of Pilot Grants

Cost of Pilot Grants over 10 Years

$2,718,215

$3,285,420

$3,969,000

Total cost of pilot over 10 years: $9,972,635 Source: “Appendix 1.0 - Mortgage Insurance Premiums,” U.S. Department of Housing and Urban Development, figure generated on December 13, 2021. Note: The PMI costs were calculated by multiplying the applicable rates published in Appendix 1.0 by the hypothetical purchase prices in each respective column. https://www.hud.gov/sites/documents/1501MLATCH.PDF

The table above models one approach for the pilot program. At a cost of $10 million over ten years, NJHMFA could fund PMI grants for 200 loans given current limits on home purchase price as discussed in the down payment analysis earlier in this report. If successful, this program should be made permanent and expand to include other public professional schools throughout the state of New Jersey. NJHMFA should also partner with RLS to provide home buyer education, with an emphasis on first-generation attorneys and home buyers. This will allow NJHMFA to tap into a promising future market, preparing this group to become homeowners. Early interventions have the potential to make law students ready for homeownership after graduation and keep talented Rutgers-trained attorneys in New Jersey.

4.3. Develop a comprehensive ‘northern county’ strategy to promote landlords of color NJHMFA should partner with real estate agent networks in key northern counties with higher quantities of 2–4-unit housing to promote its loans for these properties. To do this, the Agency should pair real estate professional partnerships with strategic outreach to home buyers of color, and train and certify on best practices for homeowner-landlords of such small properties (one owner-occupant and two-three renters). No county has a uniform housing stock. Our research and conversations with housing stakeholders revealed challenges to successful NJHMFA loans in northern counties: the high fraction of renters in these areas,118

housing stock that is more expensive, and more multi-units. These challenges present an opportunity for NJHMFA to help minority home buyers build wealth. If NJHMFA loans are used by home buyers to purchase 2–4-household units (while abiding by the regulation that the homeowner permanently reside in one of the units), these home buyers can become landlords to pay for their mortgages and build wealth.

DIFFERENCES IN HOUSING STOCK

Figure 12 `indicates the prevalence of 2–4unit housing by county. These units are more common in counties that receive few of the Agency’s loans: Essex, Hudson, Bergen, Passaic, and Union. These five counties accounted for 5.8 percent of NJHMFA’s DPA loan portfolio from 2016–2020.

DEPLOYING NJHMFA’S CURRENT PRODUCT LINE

Because the NJHMFA First-Time Homebuyer loan already includes maximum purchase price limits for 2–4-family homes, this recommendation requires little fundamental change. Instead, work remains in strategic outreach and communication. NJHMFA should adopt an online training module with best practices in buying a multi-family home and overall financial modeling. The Agency may choose to emulate, or simply take advantage of, the similar resources offered by partners to Freddie Mac.119 NJHMFA has had difficulty breaking into real estate professional networks in northern New Jersey. One lender we spoke to emphatically endorsed the idea of ensuring that low and moderate-income home buyers understood the potential of NJHMFA loans for multifamily units: “Making this more compelling,” she said, “is a big marketing hook. It really gives real estate professionals something to talk about.”120 Due to the challenge of making a 20 percent down payment on a larger 35

36 286,907 360,822 177,254 203,047 303,457 196,196 206,368 262,917 286,173 145,133 180,448 127,526 128,951 114,452 56,471 50,554 99,630 45,624 62,632 27,603

Hudson County

Bergen County

Passaic County

Union County

Middlesex County

Morris County

Camden County

Monmouth County

Ocean County

Mercer County

Burlington County

Somerset County

Atlantic County

Gloucester County

Cumberland County

Hunterdon County

Cape May County

Warren County

Sussex County

Salem County

21,722

53,648

36,043

76,215

40,459

40,921

93,053

86,740

94,853

145,614

100,428

242,746

196,383

150,708

141,397

194,299

110,567

83,902

211,523

40,213

126,850

1 Unit Housing

20,323

50,182

30,595

51,951

35,926

36,317

84,660

75,743

77,981

116,177

69,058

216,383

172,600

114,297

126,609

160,712

102,497

74,368

188,592

25,027

103,900

1 Unit Detached

Source: American Communities Survey Data, 2019, 1-Year Estimate137

319,689

Total Housing Units

Essex County

County

FIGURE 12: TYPES OF HOUSING UNITS BY COUNTY

1,399

3,466

5,448

24,264

4,533

4,604

8,393

10,997

16,872

29,437

31,370

26,363

23,783

36,411

14,788

33,587

8,070

9,534

22,931

15,186

22,950

1 Unit Attached

452

972

1,038

6,569

2,367

2,115

2,391

6,687

4,236

3,871

5,224

7,000

5,894

9,872

7,952

21,647

33,936

38,738

47,023

60,877

44,676

2 Unit

1,167

1,373

1,343

3,997

1,918

2,843

3,381

5,002

5,362

6,285

5,334

8,175

9,194

5,438

8,971

13,920

15,919

18,822

18,716

36,773

48,969

3 or 4 Unit

1,619

2,345

2,381

10,566

4,285

4,958

5,772

11,689

9,598

10,156

10,558

15,175

15,088

15,310

16,923

35,567

49,855

57,560

65,739

97,650

93,645

Total # Units 2 or More

136

164

170

228

233

Total # Units 2 or more/1,000

property, real estate professionals are more likely to recommend that buyers of multifamily units use an NJHMFA loan. The same lender continued, “Plus the icing on the cake is that in addition, they can get the $10,000 DPA. On top of that if the $10,000 was even higher that would be a game changer.”121

FINANCIAL BENEFITS OF MORE LANDLORDS OF COLOR

NJHMFA can help Black homeowners purchase properties, build wealth through rental income, quickly pay down mortgages, and generate home equity. For example, a buyer of a $599,900 four-unit home in Passaic County can rent each of the three spare units for $1,800,122 bringing in $5,400 in monthly rental income. That income more than covers the mortgage and PMI costs for the home, leaving about $1,500 that can be used to aggressively pay down principal.

SOCIAL BENEFITS OF MORE LANDLORDS OF COLOR

Black and Latino landlords have struggled to make payments during the COVID-19 pandemic.123 These landlords have been more likely than white landlords to opt into mortgage forbearance, in line with the wealth gaps outlined in this report. Despite their more precarious financial situation, Black and Latino landlords were more likely to provide rental payment plans for their tenants.124

COSTS AND FUNDING

This intervention is relatively low-cost, requiring focused marketing and work to partner with existing resources on landlord training. NJHMFA should strengthen its relationships with the New Jersey chapters of the National Association of Hispanic Real Estate Professionals and the National Association of Real Estate Brokers. These partnerships require focused staff time and would be allocated to new marketing and

partnership hires recommended in this report.

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

Given the higher costs of multi-unit properties and the work that accompanies becoming a landlord, we believe this program will reach a small number of home buyers of color. Despite its limited impact on the racial homeownership gap, this program allows borrowers the opportunity to accumulate wealth and equity quickly, making it a powerful component of the Agency’s goal to reduce the racial wealth gap through homeownership.

4.4. Improve access to community land trust (CLT) homeownership opportunities among lowincome households Community land trusts (CLTs) provide homeownership opportunities for families who would otherwise be unable to purchase a home, even with down payment assistance. While CLT homeowners see more modest equity accumulation than market-rate homeowners enjoy, CLTs can be an effective stepping-stone to nonsubsidized homeownership and can mitigate gentrification. Without radically altering its operations, NJHMFA can help make CLTs more accessible. In the short term, the Agency should offer CLTs right-of-first-refusal on some of its foreclosed properties and create underwriting guidelines that encourage private lenders to issue mortgages for homes in CLTs. Over the long term, the Agency should provide CLTs

with modest financial assistance and ensure that CLT home buyers can access DPA.

COMMUNITY LAND TRUSTS AND AFFORDABLE HOMEOWNERSHIP

Community land trusts are nonprofits that provide shared equity homeownership opportunities for low- and moderate-income households. CLTs operate as owners of the land. CLT homeowners purchase the house, but not the land itself, which they lease for a long period—typically 99 years.125 When the homeowners sell their homes, they do so at a restricted price, which ensures the homes’ long-term affordability. In addition to preserving neighborhoods’ stock of affordable housing, CLTs offer opportunities for homeownership to families which would otherwise be unable to afford a home, even if they received down payment assistance. A 2019 study found that 95 percent of shared equity homes, including community land trust homes, are affordable to moderate-income households, and nearly half are affordable to low-income households.126 Even with access to down payment assistance, low-income households in New Jersey can rarely afford a market-rate home. CLTs should therefore not be seen as competing with conventional or FHA-assisted homeownership opportunities. Rather, they may be a valuable means to help low-income families begin to build wealth through home equity, rather than lose money to rent. Shared equity homeowners see real gains in wealth—about $14,000, on average, by the time they sell their homes.127 More important, CLTs act as a stepping-stone for families to become market-rate homeowners. For example, more than two-thirds of homeowners in the Champlain Housing Trust, a CLT in Vermont, purchased a market-rate home

without subsidy after moving out of the land trust.128 CLT homeowners have also been at significantly lower risk of foreclosure compared to conventional homeowners, even during the Great Recession.129 Finally, CLTs have helped combat gentrification. A statistical analysis of CLTs nationwide found that they prevent the displacement of low-income homeowners, preserve affordability, and build community assets in neighborhoods at risk of gentrification.130

IMPROVING ACCESS TO CLT HOMEOWNERSHIP IN NEW JERSEY

Only one CLT, the Essex Community Land Trust, currently operates in New Jersey131. Established in 2011, the Essex CLT owns the land under 14 homes and seeks to expand. At least three CLTs previously operated in Trenton and Camden but were discontinued in the 1980s and 1990s. Our conversations with Alan Mallach and Harold Simon indicate that these CLTs stopped operating primarily due to inadequate management and resources.132 Despite the relative lack of CLTs in New Jersey, there are several short- and long-term opportunities for NJHMFA to facilitate CLT homeownership among low-income New Jersey families. As part of NJHMFA’s Foreclosure Prevention Program, the Agency should aim to offer CLTs a right-of-first-refusal when selling off foreclosed properties in their vicinity. Unfortunately, some of the mortgages NJHMFA acquires as part of its bulk purchase program will end up in foreclosure. The Agency should resell these homes to missiondriven organizations that promote affordable housing opportunities, rather than for-profit institutional investors.

Given the opportunities CLTs create for stable, affordable homeownership among low-income families, New Jersey CLTs should be offered the opportunity to purchase NJHMFA-owned properties in their vicinity— for example, if the CLT owns any land within one mile of the foreclosed property. While this policy would apply only to the Essex Community Land Trust today, it should also apply to any CLTs that form in New Jersey in future years. NJHMFA should create underwriting guidelines that encourage private lenders to issue mortgages for CLT properties. Currently, both Freddie Mac and Fannie Mae maintain checklists for underwriting CLT mortgages.133 These checklists are simple—they require confirmation that the ground lease conforms to National Community Land Trust Network guidelines, has a term of at least 30 years, and includes an explicit resale formula. NJHMFA should offer banks a similar checklist to reduce the perceived risk of issuing a mortgage to a CLT. Over the long term, NJHMFA should ensure CLT home buyers can access the Agency’s DPA program. Currently, it is difficult—but not impossible—to use an FHA-insured mortgage to purchase a home on land owned by a CLT. The difficulty arises from FHA’s stringent requirements around resale formulas and a CLT’s right to enforce resale restrictions.134As DPA loans are almost always paired with FHA first-lien mortgages, this makes DPA inaccessible to CLT home buyers. NJHMFA should work with FHA to develop a set of “mortgage amendment” guidelines, which the Agency can offer to CLTs such that they can structure a mortgage product that will be FHA-insured and thus DPA-accessible. And to the extent that the Agency seeks to offer DPA on conventional loans in the coming years, it should ensure that these loans are also

available to CLT home buyers. The Agency should also explore providing modest financial assistance to CLTs. Currently, eight state HFAs provide some financial support to land trusts, including loans or grants from the state’s housing trust fund.135 Colorado’s HFA uses money from the state’s housing trust fund to provide CLTs with cash collateral when seeking loans to purchase houses.136 While providing direct financial assistance to CLTs may not be immediately feasible for NJHMFA, it should consider such assistance as a long-term opportunity to promote affordable, stable homeownership.

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

CLTs create homeownership opportunities for households with low and moderate incomes. In New Jersey, as in other states, these households are disproportionately Black and Latino. Essex County, which contains New Jersey’s only currently operating CLT, is 38 percent Black and 24 percent Latino. To the extent NJHMFA’s policies support the growth of the Essex CLT, the Agency will be supporting new homeownership opportunities for Black and Latino households. As any new CLTs begin to operate in New Jersey in the coming years, the Agency’s modest support of these institutions is likely to benefit Black and Latino families with low and moderate incomes.

5. AGENCY STRATEGY AND PROCESS IMPROVEMENT To narrow New Jersey’s racial homeownership gap, NJHMFA should center racial equity in the design, targeting, and measurement of its programs. It should begin by developing and implementing an annual strategic plan informed by racial equity and input from community stakeholders, with the goals of improving Agency performance and better serving home buyers. Only a small fraction of mortgages statewide originate from NJHMFA. Even so, the Agency has opportunities to begin closing the state’s racial gaps in homeownership. In 2020, Black households received 10 percent of the Agency’s 1,365 DPA loans, and Latino households received 29 percent—notably 24 percent of households did not disclose their race so these are minimum estimates.138 Recall, however, that New Jersey needs roughly 100,000 new households of color to narrow its racial homeownership gap by seven percentage points, from 33 to 26 percent. Given the magnitude of the gap, the Agency should do more to attract and support home buyers of color. The Agency should improve its program experience to be more user-friendly and more accessible for borrowers and lenders. Agency management processes should be streamlined to better meet the needs of first-time home buyers during the underwriting process. These process improvements are important for racial equity because people of color are disproportionately harmed by administrative burden.139

In a seller’s market, quick response times are critical for home buyers. Lenders and real estate professionals are highly responsive, given the risk of losing sellers. In our conversations, they suggested that some firsttime home buyers forgo DPA because of the Agency’s prolonged underwriting process.140 While the Agency faces more administrative constraints than its private counterparts, some of its processes can be improved to better align with market standards.

5.1. Develop an annual NJHFMA strategy informed by racial equity and community input NJHFMA should develop an annual strategic plan informed by racial equity and community input. Several HFAs have strategic plans to establish a vision, define goals, measure progress, and create accountability. Such a plan would provide NJHFMA and community stakeholders with a structure to support home buyers. The plan can be detailed or high-level, but it should include a vision statement, goals, metrics, and accountability tools.

VISION STATEMENT

A vision statement defines priorities and goals for the year. The same statement could be used for several years, but it should serve as a guide both for the Agency and for stakeholders, who benefit from understanding the Agency’s priorities. Consider this example vision statement for 2022: “Provide the greatest

housing assistance to first-time home buyers and narrow the racial homeownership gap.” This message signals that NJHFMA prioritizes efficiency and tailors its programs to reach first-time home buyers, particularly buyers of color.

GOALS

Goals are critical to measuring progress—they will help NJHFMA identify challenges and opportunities for growth. When developing goals, NJHFMA should seek input from community development stakeholders to identify how they can help the Agency accomplish its vision. Equally important, the goals should reflect the racial equity goals detailed in the Racial Equity Plan (Recommendation 5.2). These goals should be informed by conversations with community partners during the annual NJHFMA conference (Recommendation 1.3). Goals may include marketing to people of color, increasing accessibility of programs to people of color, growing loan presence in counties with large shares of people of color, generating more total loans, generating a greater share of DPA for people of color, adapting DPA to meet the needs of lowincome first-time home buyers, bolstering the network of community partners and lenders, and improving the efficiency of Agency processes.

METRICS

Metrics will help measure progress toward goals. Notably, reducing the racial homeownership gap requires increasing the share of DPA loans that go to home buyers of color. The Agency will not meaningfully reduce the gap if it generates DPA loans for minority home buyers at a rate that is merely proportional to, or only slightly greater than, their share of the state population.

As NJHFMA develops goals for 2022, it should consider the following metrics: DPA. Metrics include the number of DPA loans, shares of DPA loans to home buyers of color and to low- and moderateincome buyers, and shares of DPA loans in majority-minority counties, highly segregated areas, or areas with high levels of negative home equity. Mortgage performance. Metrics include shares of homes with NJHMFA loans that increased in equity, decreased in equity, or refinanced. Preferred lenders. Metrics include types of lenders (e.g., credit unions, banks, online mortgage brokers, etc.), their geographic distribution, the demographic of their clientele, the completeness of their data on home buyers, and the number of loans they process. Outreach. Metrics include website traffic, social media engagement, newsletter subscription numbers and opening rates, uses of the DPA eligibility calculator, the number of special communication campaigns,141 the share of the Agency’s outreach budget used to target home buyers of color, and the number of marketing events in neighborhoods with high shares of people color and renters. Internal processes. Metrics include the average duration of underwriting, average response times to partners and home buyers, number of automated and digital processes, and number of pilot programs. Community partners. Metrics include the demographic breakdown of partners, number of partners in network, number of co-sponsored events, number of training

and informational sessions conducted by partners, number of meetings with partners, and number of home buyer referrals from community partners.

ACCOUNTABILITY TOOLS

Accountability tools also help monitor progress. NJHFMA should have routine, semiannual internal meetings to check on its progress toward annual goals. These meetings would include NJHFMA staff and the board only when needed. The Agency should assign one staff member to monitor metrics related to racial equity goals. For external accountability, NJHFMA should create a public data dashboard that displays its goals and metrics—especially as they relate to racial disparities, affordable housing construction, foreclosure mitigation, and partnerships with community development and nonprofit stakeholders. This transparency will foster trust and buy-in among stakeholders and the public. Figure 13 contains examples from HFAs already engaged in this work.

5.2. Embed racial equity in goal setting and programs Narrowing the racial gap in homeownership requires goals, metrics, and accountability. A Racial Equity Plan will affirm NJHMFA’s commitment to narrowing the gap by articulating goals and applying a racial equity lens comprehensibly across the Agency’s program portfolio.

RACIAL EQUITY PLAN

NJHMFA may choose to begin the process of drafting a racial equity plan by consulting resources provided by the Government Alliance on Race and Equity 42

(GARE).142 In practice, however, developing a comprehensive racial equity plan can be quite involved. It is often best to approach a third party to jointly develop the product. For example, the California Housing Partnership recently partnered with Race Forward to develop its Roadmap Home 2030 framework.143 Other HFAs and housing organizations are making progress toward racial equity plans (see Figure 13). The California HFA is developing a plan in 2022,144 the Washington State Housing Finance Commission recently requested proposals to identify a consultant to support the agency with a “long-term racial equity plan,”145 and the State of Oregon in August 2021 released a government-wide, detailed racial equity plan for all government agencies.146 At the federal level, the Federal Housing Finance Agency requested equity plans from both Fannie Mae and Freddie Mac in September 2021.147 These efforts demonstrate that housing finance is moving toward a racial equity framework. To begin creating a comprehensive racial equity plan, NJHFMA should: Develop a racial equity statement. This statement should center NJHFMA’s current and future programs. When developing the statement, the Agency should consider its history, mission, values, and unique role in narrowing the racial homeownership gap. A potential NJHMFA racial equity statement could be, “Design and provide easily accessible housing assistance programs that reduce the racial wealth gap through sustainable homeownership in New Jersey.” The statement could supplement, or be the same as, the vision statement in the Agency’s strategic plan. Below are two example statements from other housingfocused entities:

FIGURE 13. RESOURCES FOR RACIAL EQUITY FROM OTHER HFAS AND HOUSING ENTITIES Agency

Resource

California Housing Finance Agency

CalHFA Fiscal Year 2021-2022 Business Plan Commitment to develop a Racial Equity Plan.

Chicago Department of Housing

Racial Equity Impact Assessment: Qualified Allocation Plan Provides detailed steps to better allocate LIHTC to developers of color, develop measurement targets for sub-populations, and improve program application processes of people of color.

Connecticut Housing Finance Authority

Racial Equity Toolkit (pages 52–75) Includes tips and templates for developing a housing needs assessment that centers racial equity. Provides questions to consider and tools for outreach and communication approaches.

MassHousing

Racial Justice Housing Agenda A model establishing a vision across agency and programmatic areas, creating broad racial equity goals, and detailing specific strategic goals over a four-year period.

Michigan State Housing Development Authority

LIHTC 2022-2021 Qualified Allocation Plan (page 16) Committed to adding data collection and analysis including a racial equity impact assessment that will be utilized to fund more equitable housing projects, including affordable housing in highopportunity areas.

Ohio Housing Finance Agency

Fiscal Year 2022-2023 Annual Plan Provides an overview of annually examining the racial homeownership gap and example metrics for narrowing the gap.

Oregon Housing and Community Services

Statewide Housing Plan 2019-2023, Priority; Equity and Racial Justice Includes a racial equity statement, broad goal, and implementation strategies.

Vermont Housing Finance Agency

Justice, Equity, Diversity, and Inclusion Commitments Displays racial equity commitments, strategies to achieve them, and a status update on each.

Seattle (City Government)

Racial Equity Toolkit Provides a template for applying equity plans to new and existing programs. Seattle has been using this for years, and some departments are required use the toolkit annually. 170

Source: Author survey of racial equity plans and frameworks of select HFAs and state and local government entities.

• Portland Bureau of Planning and Sustainability: “Develop planning and sustainability solutions that eliminate racial disparities thereby creating prosperous, resilient, healthy, and affordable communities for all Portlanders.” • Seattle Race and Social Justice Initiative: “Eliminate institutional racism and achieve racial equity in Seattle.” Create a Racial Justice Housing Agenda,148 similar to that of MassHousing. Its agenda details specific racial equity and strategic goals over a four-year period. Through its agenda, MassHousing created the Racial Equity Advisory Council for Homeownership, “a public–private working group that seeks to narrow the racial homeownership gap through demand- and supply-side strategies.” Join the GARE network. This would offer NJHMFA a resource to engage in the most current racial equity approaches informed by over 350 jurisdictions, including government and quasi-government actors working in housing assistance. The GARE Member Portal provides real-time access to racial equity toolkits, webinars, experts, and discussion threads with agencies like NJHMFA.149 The membership also includes office hours, access to webinars and conferences. GARE membership costs $2,500 per year. These are initial steps toward establishing a racial equity plan. For a more comprehensive racial equity plan, NJHMFA should contract the services of a racial equity organization or racial equity consultant. A racial equity plan would require retaining a racial equity consultant for six months to a year, at a cost of $38,000 to $75,000.150

COMPLETE DISAGGREGATED RACIAL DATA

Today, a quarter of the racial data NJHFMA collects for DPA loan assistance is “other/ unknown.” This poses a limitation on targeting and the Agency’s ability to measure its impact on the racial homeownership gap. The race field should be required in the lender portal as opposed to being optional—of course this would include an option for home buyers to opt for not disclosing their race. This requirement would incentivize lenders to more proactively collect this information. An additional lender identification field should be added to identify the processor or underwriter so NJHMFA can follow up and collect additional data. The Agency should create incentives for lenders to encourage buyers to provide more complete data. This could be monetary, social, or both. Social accountability could include a monthly call with the approved lenders reminding them of their incomplete data. The Agency should also consider collecting additional data from housing counselors, who

have more trust with the buyer and would be able to collect accurate data. NJHFMA could also provide stipends to nonprofits to collect data on those interested in DPA assistance programs. The Agency should supplement its quantitative data with qualitative data and partner with nonprofits to create listening circles and focus groups on DPA assistance.

USE RACE-CONSICIOUS TARGETING

NJHFMA’s current targeting is informed by demographics, geography, income, unemployment rates, homeownership rates, average home equity, housing-cost burdens, and foreclosure rates.151 Narrowing the racial homeownership gap will require targeting informed by data that reflect present and historical racial disparities. Examples of such data include: Negative home equity. As NJHFMA considers home rehabilitation assistance, it should consider targeting areas such as Newark where socially disadvantaged groups are seeing their home prices decrease.152 Some areas with high shares of Black homeowners experience higher levels of negative home equity and should be prioritized.153 Level of segregation. Several areas in New Jersey are more racially segregated today than in 1990.154 NJHFMA should consider segregation levels when targeting programs and avoid contributing to segregation. This could include reframing outreach efforts to encourage home buyers of color to purchase homes in predominantly white neighborhoods. The Other and Belonging Institute provides national segregation data that can be used to support integration through outreach and marketing efforts.155 Redlined communities. NJHMFA should market DPA loans to potential home buyers in formerly redlined communities. Increase

outreach and provision of DPA loans and other homeownership programs in redlined communities such as Newark, Camden, and Atlantic City.156 Owner Vulnerability Index. The owner vulnerably index identifies the neighborhoods most at risk of foreclosure during the COVID-19 pandemic.157 These are neighborhoods with high foreclosure rates during the 2008 recession, with a disproportionate large number of homeowners who are severely cost burdened and have little remaining income after housing costs.158 CalHFA uses this index to target its mortgage relief from the Homeowner Assistance Fund. NJHFMA uses similar data for its targeting, but it could benefit from a similar tool for consistent monitoring.

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

A racial equity plan, more complete race data, and race-conscious targeting will provide NJHMFA insight into the needs of home buyers of color and aid the Agency in tailoring its programs to these buyers. If these efforts result in a higher share of DPA loans to households of color, they will narrow the racial homeownership gap.

5.3. Leverage digital platforms to improve efficiency and user experience TRANSITION TO DIGITAL PLATFORMS FOR HOMEOWNERSHIP PROGRAMS

Currently, NJHMFA requires physical signatures for underwriting documents in its single-family homeownership division.159 In a conversation with New Jersey lenders, they 45

suggested that low-income home buyers of color have limited access to printing, and they recommended that the Agency move to digital signatures.160 Many government agencies, including HUD, have already transitioned to digital services such as DocuSign for signatures.161 A DocuSign license for one user is $300 annually. We estimate that the Agency will need five licenses at an annual cost of $1,500 annually. NJHFMA may also benefit from a digital customer relationship management (CRM) service to collect data to inform process improvement.162 A CRM service could help NJHMFA better manage mortgages, cases, lenders, and community partners by automating internal processes and providing analytics on lender inquiries, outreach and marketing, and web and social media traffic. The cost of a CRM service will depend on the Agency’s needs, but we estimate this transition to cost at least $5,000 for initial implementation and $1,500 annually.163

UPDATE AND MODERNIZE THE LENDER PORTAL

The current version of the lender portal has outdated branding and a clunky infrastructure that lenders reported can be difficult to learn and use.164 To increase access to NJHMFA programs among homeowners of color, the Agency should improve the user experience of lenders, who may otherwise be discouraged from helping home buyers access DPA. Modernizing the lender portal will also allow for the underwriting process to be streamlined and automated. NJHMFA should solicit regular feedback from lenders to inform updates to the lender portal and other aspects of NJHMFA’s processes.

INCREASE UNDERWRITING TIMELINE TRANSPARENCY

NJHFMA should be transparent about underwriting turnaround times. Lenders we spoke with mentioned that the variability in underwriting speed can disadvantage buyers using NJHMFA products in a competitive bid. The Agency should strive to be transparent about processing times. The Pennsylvania HFA, for example, allows lenders to view the dates of applications currently under review. This strategy is a low burden on NJHMFA administrators, and it will allow lenders to plan and manage expectations for buyers and sellers.

INCREASE UNDERWRITING STAFF

NJHFMA would benefit from hiring, or contracting with, additional underwriters to speed up processing times.

USE AUTOMATED APPRAISAL MODELS TO INCREASE APPRAISAL ACCURACY

NJHFMA should use automated appraisal software to complement in-person appraisals. Reducing the importance of the human element could reduce racial bias in the appraisal process. Automated appraisals are conducted remotely, using public records such as tax appraisals to inform the home value. Fannie Mae and Freddie Mac recently made the temporary use of automated appraisals a permanent option for appraising.165 Automated appraisals should not, however, replace in-person appraisals.166 A recent study found that they are prone to error, particularly in lower-income, majority-Black neighborhoods. We caution against over reliance on these tools. Nevertheless, NJHMFA should use automated appraisals alongside traditional appraisals for greater accuracy.

CREATE A USER-FRIENDLY EXPERIENCE FOR HOME BUYERS AND LENDERS

NJHFMA should create a user-friendly website with quick and easy access to information about lenders and programs eligibility. Some state HFAs provide the ability to easily check eligibility for programs by entering contact information and basic financial information. See, for example, the Iowa Finance Authority Eligibility Quick Check167 and the Idaho Housing and Finance Association “Check your Eligibility.”168 NJHMFA’s website has a similar resource, but it requires visitors to click through individual program PDFs to view eligibility criteria. Similarly, NJHFMA should create an interactive preferred lender tool with filters that eases identifying for users. Currently this information is only provided through a PDF file with minimal information that requires users to research additional information for each lender on their own. A more helpful preferred lender tool should include the following information for each lender: county location, languages spoken, and the type of lender (bank, credit union, broker, online, etc.). The CalHFA Preferred Loan Officers tool is one example to follow.169 The NJHFMA lender request form should also be improved by providing an estimated response time in the subheading, such as, “you should expect a response in less than one business day after submission.”

IMPACT ON NEW JERSEY’S RACIAL HOMEOWNERSHIP GAP

More efficient NJHFMA processes would reduce barriers for home buyers of color to seek and use DPA loans. Given the disproportionate harm of administrative burden on people of color, reducing these barriers may result in more homeowners of color and may therefore narrow the racial homeownership gap.

CONCLUSION The New Jersey Housing and Mortgage Finance Agency cannot single-handedly close New Jersey’s racial gaps in wealth and homeownership. But the Agency can take significant steps to set new standards for equitable access to homeownership for every New Jerseyan. The recommendations in this report aim to further integrate the Agency into communities throughout the state and position them to recognize, and respond to, the needs of communities of color and other underserved populations. By enhancing its suite of programs and increasing awareness of those programs among target audiences, NJHMFA can become a national leader in racially equitable housing policy and take meaningful steps to promote wealth creation, stabilize neighborhoods, prevent displacement via gentrification, and narrow the racial homeownership gap.

TEAM CHRIS BERNEDO previously worked at the San Jose City Auditor’s Office. His policy interests are in urban inequality, housing, and social welfare.

LEA HUNTER works on public safety and justice reform policy. She has worked in the nonprofit sector as well as local and federal government.

ROLANDO CUEVAS works on social and racial equity policy. He has experience working in international development on projects that strengthen local government capacity and democratic institutions.

SHERROD SMITH is a criminal justice and public safety law and policy practitioner. He has previously served in government at the federal, state and local levels and most recently worked for the Lawyers’ Committee for Civil Rights Under Law.

RODY DAMIS works on justice and housing related issues. He has public sector experience developing policy at the federal, state, and local levels. He also has private sector experience as a real estate attorney, broker, investor, and manager.

ANDRE VASILYEV previously worked at the Federal Reserve Bank of New York and in management consulting. His interests are in economic policy and anti-poverty policy.

LEAH HAZARD works in social justice and anti-poverty programming both domestically and in East Africa. She has over ten years of professional experience managing and building teams in the nonprofit, academic and social enterprise space.

ACKNOWLEDGEMENTS We wish to thank NJHMFA Executive Director Melanie R. Walter, Manager of Policy and Legislative Affairs Jonathan Sternesky, Managing Director of the Single Family Division Jordan Moskowitz, Policy Research Coordinator Stephen Madsen, Head of Markting and Outreach Amy Palmer, and Lender and Outreach Coordinator Jesse Crawford, for making time to thoughtfully educate us on the processes, programs, and efforts of NJHMFA in creating affordable homes for the residents of New Jersey. We appreciate your dedication to public service, equitable housing, and the people of New Jersey. We also thank our advisor David Kinsey, FAICP for his tireless support and guidance as we conducted research and drafted this report. David is truly dedicated to affordable and equitable housing, and we are very fortunate to have had the opportunity to develop this report under his leadership. Although the recommendations made in this report reflect the collective efforts of the authors, we came to these conclusions as a result of countless hours spent interviewing remarkable individuals representing various stakeholders including housing finance agencies, non-profit entities, universities, real estate professionals, lenders, CDFIs, and CLTs, among others who are mentioned below. We thank each of you for generously giving us your time, expertise, and wisdom which allowed us to develop this report. ALAN MALLACH, FAICP, Senior Fellow, Center for Community Progress

REVEREND ERIC DOBSON, Deputy Director, Fair Share Housing Center

ALEX STARIPOLI, Esq., Fair Share Housing Center

ERIKA MALONE, Strategic Advisor for Homeownership, City of Seattle, Office of Housing

ALEX RAMILLER, PhD Student, UC Berkeley ARNOLD COHEN, Senior Policy Advisor, Housing & Community Development Network of New Jersey ARTHUR ACOLIN, Assistant Professor, University of Washington West Coast Poverty Center BLAIR SCHLEICHER WILSON, Chief Executive Officer, Morris Habitat for Humanity CHRISTINA TELLO, Director of Housing Outreach, The Affordable Housing Alliance CISSY YIN, BMR Homeownership Program Manager, San Francisco Mayor’s Office of Housing and Community Development ELBA SERRANO SCHILDCROUT, Director of Community Wealth and Services, East LA Community Corporation

FRANCESC MARTI, Director of Legislation and Policy, California Housing Finance Agency HAROLD SIMON, Board Chair, Essex Community Land Trust JAMES C. WILLIAMS IV, Director Racial Justice Policy, Fair Share Housing Center JEFF CRUM, Chief Investment Officer New Jersey Community Capital and Community Asset Preservation Corporation JUSTIN SCHEID, New Jersey Field Office Director, U.S. Department of Housing and Urban Development KATIE ULLRICH, Homeownership Program Director, Proud Ground

LISA MATTHEWS, Branch Manager Gateway Mortgage Loan Corp.

TOI COLLINS, Chief Program Officer The Affordable Housing Alliance

MARK STIVERS, Director of Legislative and Regulatory Advocacy, California Housing Partnership

VONETTA HAWKINS, Vice-President, Diverse Segments NE Markets, Wells Fargo Home Mortgage

MARK WILLIS, Senior Policy Fellow, Housing Solutions Lab at NYU Furman Center

WAYNE T. MEYER, President (retired), New Jersey Community Capital

MICHAEL NEAL, Senior Research Associate, Housing Finance Policy Center at the Urban Institute NATALIE MONK, Housing and Community Development Division Manager, County of Santa Clara, CA NICHOLAS E. CUMMINGS, Corporation Counsel, City of Evanston, IL NICHOLE NELSON, PhD, Policy Analyst, New Jersey Institute for Social Justice PEG MALLOY, Executive Director, Portland Housing Center PRESIDENT, New Jersey private sector home rehabilitation administrator RANDI MOORE, Chief Executive Officer The Affordable Housing Alliance STACI BERGER, President and Chief Executive Officer, Housing & Community Development Network of New Jersey STEVE KING, Executive Director, Oakland Community Land Trust TAMMIE LITTLE, HBMR Lending Specialist, San Francisco Mayor’s Office of Housing and Community Development

ENDNOTES 1 “Erasing New Jersey’s Red lines,” New Jersey Institute for Social Justice, April 30, 2020, https://d3n8a8pro7vhmx. cloudfront.net/njisj/pages/689/attachments/original/1588358478/Erasing_New_Jersey%27s_Red_Lines_Final. pdf?1588358478. 2 U.S. Census Bureau, American Community Survey, 2019 American Community Survey 1-Year Estimates, Table S2502, generated by Andre Vasilyev, using data.census.gov. 3 “New Jersey Needs More ‘Missing Middle’ Housing,” New Jersey Future, July 19, 2021, https://www.njfuture. org/2021/07/19/new-jersey-needs-more-missing-middle-housing/. 4 “About NJHMFA, “ NJHMFA, accessed October 23, 2021, https://www.njhousing.gov/dca/hmfa/about/ aboutnjhmfa/index.shtml. 5 Ibid. 6 “Homebuyers,” NJHMFA, accessed October 23, 2021, https://www.njhousing.gov/dca/hmfa/consumers/ homebuyers/index.shtml. 7 Ibid. 8 Ibid. 9 “New Jersey Housing and Mortgage Finance Agency, Governor Murphy Signs Legislation Authorizing Comprehensive Programs to Address Mortgage Distress in New Jersey,” New Jersey Housing and Mortgage Finance Agency, News release, (March 9, 2021) 10 Ryan P. Haygood, “America’s Original Sin and it’s Vestiges Belong to its States - Including N.J.,” N.J.COM (August 18, 2019), https://www.nj.com/opinion/2019/08/americas-original-sin-and-its-vestiges-belong-to-its-statesincluding-nj.html. 11 Michael Neal and Daniel Pang, “Newark Housing Pulse, March 2021,” Urban Institute, March 2021, https://www. urban.org/research/publication/newark-housing-pulse-march-2021/view/full_report. 12 Ibid. 13 “American Community Survey 1-Year Estimates,” Tables S2502, U.S Census Bureau, 2010-2019, accessed November 15, 2021, https://data.census.gov.) 14 “American Community Survey 1-Year Estimates,” Tables S2502, U.S Census Bureau, 2010-2019, accessed November 15, 2021, https://data.census.gov. 15 “Guide to Affordable Housing in New Jersey (Rev. April 01, 2016),” New Jersey Department of Community Affairs, accessed November 24, 2021, https://www.nj.gov/dca/divisions/codes/publications/guide.html. 16 “NJHMFA Homeward Bound Homebuyer Mortgage Program with Down Payment Assistance Program Descriptions,” New Jersey Housing and Mortgage Finance Agency, accessed December 10, 2021, https://www. njhousing.gov/dca/hmfa/consumers/docs/HWB-ConsumerFactSheet.pdf. 17 “Erasing New Jersey’s Red lines,” New Jersey Institute for Social Justice, April 30, 2020, https://d3n8a8pro7vhmx. cloudfront.net/njisj/pages/689/attachments/original/1588358478/Erasing_New_Jersey%27s_Red_Lines_Final. pdf?1588358478. 18 Ryan P. Haygood, “America’s Original Sin and it’s Vestiges Belong to its States - Including N.J.,” N.J.com (August 18, 2019), https://www.nj.com/opinion/2019/08/americas-original-sin-and-its-vestiges-belong-to-itsstatesincluding-nj.html. 19 New Jersey Housing and Mortgage Finance Agency, DPA_Demographics_2016-2020, generated by David Kinsey, September 12, 2021. 20 Amy Palmer and Jesse Crawford. 2021. “Author Interview with NJHMFA Communications and Outreach Department,” interview by Lea Hunter, October 20, 2021, Zoom. 21 Two additional FTEs, budgeted at $80,000 per year each. 22 “New Jersey Housing and Mortgage Finance Agency, NJHMFA Seeking Hospitals Interested in $12M Supportive Housing Partnership,” New Jersey Housing and Mortgage Finance Agency, News release, (November 7, 2018) 23 “New Jersey Housing and Mortgage Finance Agency, Murphy Administration Announces Collaboration with University Hospital in Newark Under NJHMFA’s Hospital Partnership Subsidy Program,” New Jersey Housing and Mortgage Finance Agency, News release, May 19, 2021. 24 “New Jersey Housing and Mortgage Finance Agency, Murphy Administration, St. Joseph’s Health Announce First Affordable Rental Development Under Agency’s Hospital Housing Partnership Program,” New Jersey Housing

and Mortgage Finance Agency, News release, July 10, 2019. 25 Ibid. 26 “Foreclosure Assistance Program COVID-19 Expansion,” New Jersey Housing and Mortgage Finance Agency, 2020, https://www.ncsha.org/wp-content/uploads/New-Jersey-Special-Achievement-COVID-19Reponse-2020.pdf. 27 “Governor Murphy Announces Effort to Help Renters, Homeowners Threatened by Potential Foreclosure,” New Jersey Housing and Mortgage Finance Agency, News release, March 19, 2020. 28 “Foreclosure Assistance Program COVID-19 Expansion,” New Jersey Housing and Mortgage Finance Agency, 2020, https://www.ncsha.org/wp-content/uploads/New-Jersey-Special-Achievement-COVID-19Reponse-2020.pdf. 29 Randi Moore, Phone conversation between Randi Moore, Executive Director of The Affordable Housing Alliance and Sherrod Smith, November 1, 2021. 30 “Governor Murphy Signs Legislation Authorizing Comprehensive Programs to Address Mortgage Distress in New Jersey,” State of New Jersey, News Release, March 3, 2021. 31 Joshua Burd, “NJBA: New foreclosure prevention law will foster continued ‘pro-housing environment,’” Real Estate NJ, March 15, 2021, https://re-nj.com/njba-new-foreclosure-prevention-law-will-foster-continued-prohousing-environment/. 32 “Black Homeownership Initiative: Building Black Wealth,” CalHFA, accessed October 30, 2021, https://www. calhfa.ca.gov/community/buildingblackwealth.htm . 33 “Mi hogar,” CHFA, accessed October 30, 2021, https://www.chfainfo.com/mi-hogar/Pages/educacion-vivienda. aspx . 34 Laurie Goodman, Alanna McCargo, Bai Bing, Edward Golding, and Sarah Strochak, “Barriers to Accessing Homeownership Down Payment, Credit, and Affordability,” Urban Institute, 2018. 35 “Social Media Fact Sheet,” Pew Research Center, April 7, 2021, https://www.pewresearch.org/internet/factsheet/ social-media/?menuItem=4abfc543-4bd1-4b1f-bd4a-e7c67728ab76. 36 “NJHMFA Social Media Toolkit,” NJHMFA, accessed October 30, 2021, https://www.njhousing.gov/dca/hmfa/ about/docs/mktgmaterials/DPA_toolkit.pdf. 37 Estimate based on Colorado HFA reimbursement to nonprofits of $50 per household that completes home buyer education, and CHFA survey which finds that awards to support nonprofit prepurchase education programs range from $7,000 to $60,000. Since the recommendation includes evaluation of the program, we recommend at the high end of this range. See Doug Dylla Consulting LLC, ”Winning Strategies: An Analysis of State Housing Finance Agency Support for Homeownership Education and Counseling Services,” February 2012, https://www.chfainfo.com/news/ResourceLibrary/HFA_HEC_Report_March2012.pdf. 38 Dr. Combs was previously at the Smithsonian’s National Museum of African American History and Culture and taught culture, film, and race and gender courses at Chicago State University, Lewis & Clark College, and Emory University. 39 Lisa Bates and Stacey Triplett, “Getting Your House in Order: A Model for African-American Financial Education,” 2014, Urban Studies and Planning Faculty Publications and Presentations, 82. 40 Jacqueline Butts, Sarah Forsthye-Insley, Michelle Puggarana, Portland Housing Center African American Advisory Committe, Rhea Combs, Ph.D, Lisa Bates, Ph.D., and Stacey Triplett, ”Getting Your House in Order: The Argument for Culturally-Specific Financial Education for African Americans,” 2016. 41 New Jersey Association of Minority Real Estate Professionals, accessed October 30, 2021, https://www.nareb. com/new-jersey-association-of-minority-real-estate-professionals/ 42 Robert Bartlett, Adair Morse, Richard Stanton, Nancy Wallace, “Consumer-Lending in the FinTech Era,” NBER Working Paper 25943, National Bureau of Economic Research, June 2019, https://www.nber.org/papers/ w25943. 43 Deborah H. Gruenfeld et al., Group Composition and Decision Making: How Member Familiarity and Information Distribution Affect Process and Performance, 67 Organizational Behav. and Hum. Decision Processes 1, 4 (1996). 44 Conference costs may include catering expenses, travel reimbursements, venue rental expenses, recording expenses, and payments to consultant writers to record notes and key takeaways throughout the conference and to produce a post-conference report for New Jersey’s housing stakeholders. 45 “What Works - Reducing Racial Homeownership Gaps,” Housing Finance Policy Center, accessed October 27, 2021, https://www.ncsha.org/wp-content/uploads/A-McCargo-Presentation-to-NCSHA-07.14.20.pdf. 46 Natalie Campisi, “Can’t Afford A Home? Here’s How Biden’s Affordable Housing Proposal Could Help,” Forbes Advisor, November 19, 2021, https://www.forbes.com/advisor/mortgages/cant-afford-a-home-heres-howbidens-affordable-housing-proposal-could-help/. 47 Christopher E. Herbert and Winnie Tsen, “The Potential of Downpayment Assistance for Increasing Homeownership Among Minority and Low-Income Households,” Cityscape 9, no. 2 (2007): 153–83.

48 Alex F. Schwartz, “Homeownership and Income Integration,” in Housing Policy in the United States, vol. 3rd ed (New York: Routledge, 2015), Chapter 12. 49 American Community Survey 5-Year Estimates, 2014–2019, U.S Census Bureau, Social Explorer Database, accessed October 2021. 50 Reverend Eric Dobson, “Perspectives on NJHMFA Programming in the Context of New Jersey Housing Issues,” interview by Sherrod Smith and Leah Hazard, October 20, 2021, Zoom. 51 “New Jersey Local Market Updates,” New Jersey Realtors, accessed November 20, 2021, http://njar-public. stats.10kresearch.com/reports. 52 New Jersey Realtors, ”2021 Public State and County Reports,” Monthly Housing Market Statistics, (October 2021), https://www.njrealtor.com/research/10k/. 53 “MassHousing homepage,” MassHousing, accessed November 20, 2021, https://www.masshousing.com/ . 54 Gregory Mills, et al., “Assets for Independence Act Evaluation,” United States Department of Health and Human Services, February 2008, https://www.acf.hhs.gov/sites/default/files/documents/ocs/afi_impact_evaluation_ full_report.pdf 55 “The New Jersey Federal Individual Development Account Program, TANF IDA Program Manual,” New Jersey Department of Community Affairs, accessed November 24, 2021, https://www.nj.gov/dca/divisions/dhcr/ offices/docs/ida_program_manual.pdf. 56 “The New Jersey Home Individual Development Account, HOME IDA Program Manual,” New Jersey Department of Community Affairs, accessed November 24, 2021, https://www.nj.gov/dca/divisions/dhcr/ offices/docs/ida_home_program_manual.pdf. 57 Indiana Housing & Community Development Authority. “Matched Savings Opportunities: Individual Development Accounts (IDA).” IHCDA, May 25, 2021. https://www.in.gov/ihcda/homeowners-and-renters/ matched-savings-opportunities-individual-development-accounts-ida/. 58 “Assets for Independence New Strategies for Stronger Outcomes Initiative,” U.S. Department of Housing and Urban Development, Case Study, https://www.hud.gov/sites/documents/NYCASE-STUDY.PDF 59 Federal Home Loan Bank New York. “Homebuyer Dream Program (HDP) Overview.” FHLBNY, accessed December 9, 2021. https://www.fhlbny.com/community/housing-programs/hdp/ 60 New Jersey P.L. 2019, c. 460. 61 For complete, non-income related eligibility criteria, see the New Jersey Department of Community Affairs website. 62 A5130, Section 2-a. 63 Dino Flammia, “5 Years Straight — NJ Still No. 1 (In A Bad Way) For Foreclosures.” New Jersey 101.5, Web. Published 6 February 2020. Accessed 29 October 2020. 64 U.S. Bureau of Labor Statistics, Unemployment Rate in New Jersey [NJURN], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/NJURN, October 29, 2021. 65 A5130, Section 2-c. 66 A5130, Section 2, see especially 2-d. 67 New Jersey Foreclosure Prevention Act. P.L. 2021, c.34. March 9, 2021. 68 Wesley M. Phillips, Alisa Davis, and Omlola Anderson, “Compliance Review of FHFA’s Enterprise NonPerforming Loan Sales Program.” Federal Housing Finance Agency Office of the Inspector General. Accessed October 29, 2021. 69 Carol Galante, “The Federal Housing Administration’s Distressed Asset Stabilization Program: An Innovative Solution for Addressing the National and Local Impacts of the Recession,” Community Development Investment Review 9, no. 2 (2013): 65, accessed October 29, 2021, https://www.frbsf.org/communitydevelopment/files/cdir_vol9issue2_fha_distressed_asset_stabilization_program_an_innovative_solution.pdf. 70 Laurie Goodman, “HUD’s Recent Changes to the Distressed Asset Stabilization Program: A Positive Development,” last modified July 11, 2016, https://www.urban.org/research/publication/huds-recentchanges-distressed-asset-stabilization-program-positive-development. 71 “New Jersey Foreclosure Prevention Funding Plan,” New Jersey Housing and Mortgage Finance Agency, August 12, 2021. 72 “RealtyTrac, RealtyTrac Activity Reports and Inventory Reports (2005-2021 Q2) (September 27, 2021), distributed by Princeton University Data and Statistical Services, https://dss.princeton.edu/studies/1040“ 73 “HUD Completes Direct Sale of State of New York Single Family Mortgage Notes to Strengthen Neighborhoods,” U.S. Department of Housing and Urban Development, news release, May 7, 2021, https://www.hud.gov/press/ press_releases_media_advisories/HUD_No_21_081. 74 U.S. Department of Housing and Urban Development, Single Family Loan Sale 2021 Direct Sale (NY): Sale Results Summary, May 7, 2021, https://www.hud.gov/sites/dfiles/Housing/images/ SFLS2021DSNYSalesResultsSummary5-6-21Final.pdf.

75 New Jersey Community Capital, 2017 Annual Report: 30 Years of Transforming Communities, accessed November 29, 2021, https://www. newjerseycommunitycapital.org/invest/annual-reports-publications/. 76 Laurie Goodman and Dan Magder, “Selling HUD’s Nonperforming Loans: A Win-Win for Borrowers, Investors, and HUD,” last modified January 6, 2016, https://www.urban.org/research/publication/sellinghudsnonperforming-loans-win-win-borrowers-investors-and-hud. 77 U.S. Federal Housing Finance Agency, Enterprise Non-Performing Loan Sales Report, 2020, accessed October 29, 2021, https://www.fhfa.gov/AboutUs/Reports/Pages/Enterprise-Non-Performing-Loan-Sales-ReportDecember-2020.aspx. 78 New Jersey Community Capital’s ReStart Program Guide for Fund Partnerships, January 29, 2021, filed with author. 79 New Jersey Community Capital, ”ReStart: Home Preservation Program,” accessed November 29, 2021, https://www.newjerseycommunitycapital.org/programs-initiatives/current-programs/restart-homepreservationprogram/. 80 John P. Harding, Eric Rosenblatt, and Vincent W. Yao. “The contagion effect of foreclosed properties.” Journal of Urban Economics 66, no. 3 (2009): 164–178. 81 Arpit Gupta, “Foreclosure contagion and the neighborhood spillover effects of mortgage defaults.” The Journal of Finance 74, no. 5 (2019): 2249–2301 82 Ibid. 83 John Harding et al. find “almost no statistically significant contagion effect” on home prices beyond 500 feet of the foreclosed home; Gupta finds that spillover foreclosures occur within a 0.1 mile radius (or about 500 feet) of the foreclosed home, noting that “the size of the spillover effect is no longer statistically significant” among “properties 0.10 to 0.15 miles from the resetting home.” 84 Harding et al., 164. 85 Gupta, 2249. 86 Harding et al., 178. 87 U.S. Federal Housing Finance Agency, Enterprise Non-Performing Loan Sales Report, 2020, accessed October 29, 2021, https://www.fhfa.gov/AboutUs/Reports/Pages/Enterprise-Non-Performing-Loan-Sales-ReportDecember-2020.aspx. 88 Joe Tyrell, “ReStart Shore Salvages Underwater Mortgages in Struggling Counties,” NJ Spotlight News, January 14, 2014, https://www.njspotlightnews.org/2014/01/14-01-13-restart-shore-salvages-underwatermortgagesin-struggling-counties/. 89 U.S. Department of Housing and Urban Development, Single Family Loan Sale 2021 Direct Sale (NY): Sale Results Summary, May 7, 2021, https://www.hud.gov/sites/dfiles/Housing/images/ SFLS2021DSNYSalesResultsSummary5-6-21Final.pdf. 90 “Housing Rehabilitation Loan & Grant Programs,” County Health Rankings & Roadmaps, accessed October 25, 2021, https://www.countyhealthrankings.org/take-action-to-improve-health/what-works-for-health/ strategies/housing-rehabilitation-loan-grant-programs. 91 Bev Wilson and Shakil Bin Kashem, “Spatially Concentrated Renovation Activity and Housing Appreciation in the City of Milwaukee, Wisconsin,” Journal of Urban Affairs 39, no. 8 (November 17, 2017): 1085–1102, https:// doi.org/10.1080/07352166.2017.1305766. 92 “U-M Study on Detroit’s Make It Home Repair Program Links Home Repairs, Housing Stability,” University of Michigan Poverty Solutions, February 4, 2021, https://poverty.umich.edu/2021/02/04/u-m-study-ondetroitsmake-it-home-repair-program-links-home-repairs-housing-stability/. 93 “Mount Laurel Doctrine,” Fair Share Housing Center, accessed October 29, 2021, https://fairsharehousing.org/ mount-laurel-doctrine/. 94 Peter A. Angelides, “New Jersey Affordable Housing Need and Obligations” (Econsult Solutions, 2017), accessed October 25, 2021, https://econsultsolutions.com/wp-content/uploads/New-Jersey-Affordable-Housing-Needand-Obligations-Econsult-Solutions-11-29-2017.pdf. 95 Craig McCarthy, “Here’s How Many Vacant Homes There Are in Each NJ County,” nj.com, February 13, 2016, https://www.nj.com/news/2016/02/heres_how_many_vacant_homes_there_are_in_each_nj_county.html. 96 “Census 2020: New Jersey’s Older and Increasingly Diverse Centers Are Now Leading The State’s Population Growth | New Jersey Future,” September 13, 2021, https://www.njfuture.org/2021/09/13/census-2020newjerseys-older-and-increasingly-diverse-centers-are-now-leading-the-states-population-growth/. 97 Frank Kummer, “New Jersey among States to Be Hit Hardest by Future Flooding, with Thousands More Properties at Risk than Expected, Group Warns,” The Philadelphia Inquirer, June 29, 2020, https://www. inquirer.com/science/climate/climate-change-new-jersey-first-street-foundation-sea-level-rise-20200629. html. 98 U.S. Census Bureau, 2020 Decennial Census, Table P2, generated by Andre Vasilyev, using data.census.gov.

99 Andrew Howard Nichols and J. Oliver Schak, “Degree Attainment for Black Adults: National and State Trends,” The Education Trust, 2017, https://edtrust.org/wp-content/uploads/2014/09/Black-Degree-Attainment_ FINAL.pdf. 100 “Status and Trends in the Education of Racial and Ethnic Groups Indicator 23: Postsecondary Graduation Rates,” National Center for Education Statistics, February 2017, https://nces.ed.gov/programs/raceindicators/ indicator_red.asp. 101 Amy Traub et al., “The Racial Wealth Gap Why Policy Matters,” Demos, June 21, 2016, https://www.demos.org/ research/racial-wealth-gap-why-policy-matters. 102 Jung Hyun Choi and Laurie Goodman, “Why Do Black College Graduates Have a Lower Homeownership Rate Than White People Who Dropped Out of High School?,” Urban Institute, February 27, 2020, https://www. urban.org/urban-wire/why-do-black-college-graduates-have-lower-homeownership-rate-white-peoplewho-dropped-out-high-school. 103 “Freed From Debt: A Racial Justice Approach to Student Loan Reform in New Jersey,” New Jersey Institute for Social Justice, 2020, https://d3n8a8pro7vhmx.cloudfront.net/njisj/pages/689/attachments/ original/1593521244/Freed_From_Debt_Report.pdf?1593521244#:~:text=Freed%20from%20Debt%3A%20 A%20Racial,who%20were%20already%20bearing%20the. 104 Ibid. 105 Michael Mitchell, Michael Leachman, and Matt Saenz, “State Higher Education Funding Cuts Have Pushed Costs to Students, Worsened Inequality,” Center on Budget and Policy Priorities, October 24, 2019, https:// www.cbpp.org/sites/default/files/atoms/files/10-24-19sfp.pdf. 106 “Freed From Debt: A Racial Justice Approach to Student Loan Reform in New Jersey,” New Jersey Institute for Social Justice, 2020, https://d3n8a8pro7vhmx.cloudfront.net/njisj/pages/689/attachments/ original/1593521244/Freed_From_Debt_Report.pdf?1593521244#:~:text=Freed%20from%20Debt%3A%20 A%20Racial,who%20were%20already%20bearing%20the. 107 Ibid. 108 “Understanding Loan Options,” Consumer Financial Protection Bureau, accessed December 1, 2021, https:// www.consumerfinance. gov/owning-a-home/loan-options/. 109 Ibid. 110 “APPENDIX 1.0 – MORTGAGE INSURANCE PREMIUMS,” U.S. Department of Housing and Urban Development, 2016, https://www.hud.gov/sites/documents/15-01MLATCH.PDF. 111 “MORTGAGE PROGRAM POLICY AND PROCEDURES FOR PARTICIPATING LENDERS,” New Jersey Housing and Mortgage Finance Agency, April 2021, https://www.njhousing.gov/dca/hmfa/lenders/docs/len_ sellerguide.pdf. 112 Melanie Hanson, “Average Law School Debt,” Education Data Initiative, December 5, 2021, https:// educationdata.org/average-law-school-debt. 113 “See Your Federal Student Loan Repayment Options with Loan Simulator,” U.S. Department of Education, accessed December 1, 2021, https://studentaid.gov/loan-simulator/. 114 “Mortgagee Letter 2021-13,” U.S. Department of Housing and Urban Development, June 17, 2021, https://www. hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf. 115 Ibid. 116 “Early Professionals Loan Program,” Cadence Bank, accessed December 9, 2021, https://cadencebank.com/ personal/mortgages/early-professionals-loan-program. 117 “New Jersey Home Values,” Zillow, accessed December 9, 2021, https://www.zillow.com/nj/home-values/. 118 Vonetta Hawkins, interview with Leah Hazard, October 14, 2021. 119 “Becoming a Landlord: Take the Test,” Readynest by MGIC, accessed November 18, 2021, https://www. readynest.com/homebuyer-resources/landlord-test. 120 Vonetta Hawkins, interview with Leah Hazard, October 14, 2021. 121 Ibid. 122 “Passaic County NJ Rental Listings,” Zillow, accessed November 22, 2021, https://www.zillow.com/passaiccounty-nj/rentals/. 123 Laurie Goodman and Jung Hyun Choi, “Black and Hispanic Landlords Are Facing Great Financial Struggles because of the COVID-19 Pandemic. They Also Support Their Tenants at Higher Rates,” Urban Wire: The blog of the Urban Institute, September 4, 2020, https://www.urban.org/urban-wire/black-and-hispanic-landlordsare-facing-great-financial-struggles-because-covid-19-pandemic-they-also-support-their-tenants-higherrates. 124 Ibid. 125 “Community Land Trusts,” Grounded Solutions Network., accessed December 9, 2021, https:// groundedsolutions.org/strengthening-neighborhoods/community-land-trusts. 126 “Tracking Growth and Evaluating Performance of Shared Equity Homeownership Programs During

Housing Market Fluctuations,” Lincoln Institute of Land Policy, April 15, 2019, https://www.lincolninst.edu/ publications/working-papers/tracking-growth-evaluating-performance-shared-equity-homeownership. 127 Ibid. 128 Shelterforce Staff, “Q: Does Shared-Equity Homeownership Build Assets?,” Shelterforce (blog), October 10, 2012, https://shelterforce.org/2012/10/10/answer_170_seh_builds_assets/. 129 Emily Thaden, “Stable Home Ownership in a Turbulent Economy,” Lincoln Institute of Land Policy, July, 2011, https://www.lincolninst.edu/publications/working-papers/stable-home-ownership-turbulent-economy. 130 Myungshik Choi, Shannon Van Zandt, and David Matarrita-Cascante, “Can Community Land Trusts Slow Gentrification?,” Journal of Urban Affairs 40, no. 3 (April 3, 2018): 394–411, https://doi.org/10.1080/07352166.2 017.1362318. 131 Interview with Harold Simon, former publisher at Shelterforce Magazine and Board Chair at Essex Community Land Trust, Interview with Andre Vasilyev, November 18, 2021 132 Ibid. 133 “Community Land Trust (CLT) Mortgages,” Freddie Mac Single-Family, accessed November 17, 2021, https:// sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/community-land-trustclt-mortgages. 134 “SUMMARY: HUD Regulations Affecting Community Land Trusts,” Burlington Associates in Community Development, LLC, n.d. accessed December 9, 2021, https://www.burlingtonassociates.com/index.php/ download_file/view/44/128/. 135 “Benchmarking and Research Report: Lessons for Michigan State Housing Development Authority,” Public Policy Associates, May 2021, https://www.michigan.gov/documents/mshda/ OverarchingBenchmarkingReport_final_ed061021_002_730039_7.pdf. 136 Ibid. 137 American Community Survey (5-Year Estimates), 2014-2019, Social Explorer Database, October 2021, https:// www.census.gov/data/developers/data-sets/acs-5year.html. 138 Down Payment Assistance Demographic Data for 2020, New Jersey Housing and Mortage Finance Agency, accessed October 2021. 139 Suzanne Wikle, “Administrative Burdens Exacerbate Inequities and Must Be Reduced,” The Center for Law and Social Policy, August 23, 2021, https://www.clasp.org/blog/administrative-burdens-exacerbate-inequitiesand-must-be-reduced. 140 Vonetta Hawkins and Lisa Mathews, interview with authors, October 11, 2021. 141 “Black Homeownership Initiative: Building Black Wealth,” California Housing and Finance Agency, accessed November 24, 2021, https://www.calhfa.ca.gov/community/buildingblackwealth.htm.) 142 Ryan Curren, Julie Nelson, Dwayne S. Marsh, Simran Noor, and Nora Liu, “Racial Equity Action Plans, A Howto Manual.” Haas Institute for a Fair and Inclusive Society, University of California, Berkeley, 2016, https:// www.racialequityalliance.org/wp-content/uploads/2016/11/GARE-Racial-Equity-Action-Plans.pdf, 143 “Roadmap Home 2030,” California Housing Partnership, March 25, 2021, https://roadmaphome2030.org/app/ uploads/2021/03/Roadmap-Home-Report-1.pdf, 144 “CalHFA FY2021-2022 Business Plan,” California Housing and Finance Agency, May 2021, https://www.calhfa. ca.gov/about/financials/budget/2021-22ExecSummaryBusinessPlan.pdf, 145 “Request for Proposals: Racial Equity Consultant,” Washington State Housing Finance Commission, September 23, 2021, https://www.wshfc.org/admin/RFPRacialEquityProgramConsultant.pdf, 146 “Diversity, Equity, and Inclusion Action Plan,” State of Oregon, September 23, 2021, https://www.oregon.gov/ lcd/ Commission/Documents/2021-09_Item-2_Directors-Report_Attachment-A_DEI-Action-Plan.pdf.) 147 “Enterprise Equitable Housing Finance Plans”, Request for Input, Federal Housing Finance Agency, September 21, 2021, https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Equitable-Housing-FinancePlans-RFI.pdf 148 “Racial Justice Housing Agenda,” MassHousing, accessed November 24, 2021, https://www.masshousing.com/ programs-outreach/racialjustice-housing-agenda.) 149 GARE Network Portal Overview,” Government Alliance on Race & Equity, October 24, 2021, https://drive. google.com/file/d/1LNwbBIXYDa0GEspngUXV0cOSLskHB2Hg/view 150 Director of Marketing and Sales, Museaum of Pop Culture, email conversation with Director, November 22, 2021. (Note: The estimate provided by the nonprofit in Seattle was from a request for proposals (RFP) for a Racial Equity consultant for 12 months.) 151 New Jersey Housing State and Finance Agency, virtual call conversation with agency, September 20, 2021. 152 Michael Neal, Daniel Pang, “Housing Trends in Newark, New Jersey, Illustrate How the COVID-19 Recession Has Affected Black and Hispanic Homeowners,” Urban Institute, March 18, 2021, https://www.urban.org/ urban-wire/housing-trends-newark-new-jersey-illustrate-how-covid-19-recession-has-affected-black-and-

hispanic-homeowners 153 “Erasing New Jersey’s Red lines,” New Jersey Institute for Social Justice, April 30, 2020, https:// d3n8a8pro7vhmx.cloudfront.net/njisj/pages/689/attachments/original/1588358478/Erasing_New_ Jersey%27s_Red_Lines_Final.pdf?1588358478. 154 “Stephen Menendian, Samir Gambhir, and Arthur Gailes, “The Roots of Structural Racism Project,” The Other & Belonging Institute, June 21, 2021, https://belonging.berkeley.edu/roots-structural-racism“ 155 “National Segregation Data, The Roots of Structural Racism Project,” The Other and Belonging Institute, June 2021, https://belonging.gis-cdn.net/us_segregation_map/?bounds=42.18%2C-70.80%2C38.96%2C-77.51&year =2020&geoid=34021004501&geo=cbsa_county&seg_measure=iso_W. 156 “Erasing New Jersey’s Red lines,” New Jersey Institute for Social Justice, April 30, 2020, 15, https:// d3n8a8pro7vhmx.cloudfront.net/njisj/pages/689/attachments/original/1588358478/Erasing_New_ Jersey%27s_Red_Lines_Final.pdf?1588358478. 157 Paul M. Ong and Chhandra Pech, “California COVID-19 Owner Vulnerability Index,” UCLA Center for Neighborhood Knowledge, May 20, 2021, https://escholarship.org/uc/item/9ph523vd.) 158 Ibid. 159 New Jersey Housing State and Finance Agency, virtual call conversation with agency, November 15, 2021. 160 Vonetta Hawkins and Lisa Mathews, video conferencing call with both individuals, October 11, 2021. 161 Many government agencies, including HUD, have already transitioned to digital services such as DocuSign for signatures. 162 “How CRM Can Help Bring Government Technology Into the 21st Century,” Salesforce, accessed November 24, 2021, https://www.salesforce.com/solutions/industries/government/resources/crm-helping-governmenttechnology/. 163 Amy Cui, Program Manager, Stanford Impact Labs, conversation with individual on Salesforce omplementation in the non-profit context, Stanford Impact Labs, November 23, 2021. 164 Conversations between authors and lenders in New Jersey, November 10-12, 2021. 165 “FHFA Announces Two Measures Advancing Housing Sustainability and Affordability,” Federal Housing Finance Agency, October 18, 2021, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-AnnouncesTwoMeasures-Advancing-Housing-Sustainability-and-Affordability.aspx. 166 Michael Neal et al., “How Automated Valuation Models Can Disproportionately Affect MajorityBlack Neighborhoods,” Urban Institute, December 2020, https://www.urban.org/sites/default/files/ publication/103429/how-automated-valuation-models-can-disproportionately-affect-majorityblackneighborhoods_1.pdf.) 167 “Eligibility Quick Check,” Iowa Finance Authority, accessed December 6, 2021, https://www.iowafinance.com/ eligibility/. 168 “Check your Eligibility,” Idaho Housing and Finance Association, accessed December 6, 2021, http://lender. ihfa.org/ CheckEligibility/Qualify1.aspx?_gl=1*1lvp0n0*_ga*OTI0MjcwNjcuMTYzNTUzMzI2Nw..*_ga_ CC89ZHTCQB*MTYzNTUzMzI2Ny4xLjEuMTYzNTUzMzYzNi4w&_ga=2.264840655.1587021807.16355332679 2427067.1635533267. 169 “CallHFA Preferred Loan Officers,” California Housing Finance Agency, accessed December 1, 2021, https:// www.calhfa.ca.gov/apps/PLO/. 170 Mayor Edward B. Murray, “Executive Order 2014-02: Race and Social Justice Initiative,” City of Seattle, April 3, 2014, http://murray.seattle.gov/wp-content/uploads/2014/04/RSJI-Executive-Order1.pdf.)

Narrowing New Jersey's Racial Wealth Gap Through Homeownership

Articles inside

Endnotes

Acknowledgements

4. New Programs and Innovations

5. Agency Strategy and Process Improvement

Conclusion

3. Foreclosure Prevention

Introduction

2. Down Payment Assistance

1. Outreach, Partnerships, and Community Collaboration

Executive Summary