Habitat Minnesota Loan Fund Capital

The 21st Century Fund was established in 2000 with a $21 million, 0% interest loan from the Minnesota Housing Finance Agency. Because Habitat Minnesota holds this money interest free, we are able to loan 21st Century Funds to affiliates at 0% interest. The 21st Century Fund loan pool totals approximately $1.3 million per year and carries an 8% loan origination fee to help cover program costs (3% fee for the one year, short-term loan option). Traditionally, the loan term matches the term of the mortgage pledged to Habitat Minnesota, on average 25 – 30 years. As of June 30, 2019, approximately $41.2 million has been disbursed from the original loan of $21.3 million plus recycled funds, funding 554 mortgages.  In FY’20 Habitat Minnesota has approximately $2.7 million available.  Click here for a copy of the FY21 Request for Applications. 

Capital Fund Guidelines and Forms

A complete application consists of the following seven items. Click here for a copy of the FY20 Request for Applications.

  1. The detailed FY20 program and operating budget.
  2. A Monthly Cash Flow Projection Report approved by your Board for the 12-month fiscal year ending June 30, 2020.  If you operate a ReStore, please include the ReStore Projections. See sample and blank HFH Projected Cash Flow Budget templates.
  3. FY19 year end financial statements including 1) balance sheet; 2) profit & loss statement compared to budget; and 3) an annual statement of cash flows. If you do not prepare an income statement compared to budget, please provide the report provided to your board that compares your financial performance to budget, such as a cash flow budget compared to actual report.  See sample HFH Actual compared to Budget Cash Flow.
  4. Your affiliate’s Historical Summary of Sources of Support showing data for the 12-month fiscal years ending June 30, 2017, 2018 and 2019 and projections for FY’20. Please use the Historical Sources of Funds FY20 Template.
  5. A completed June 30, 2019 Mortgage Portfolio Quality Report for each mortgage in your portfolio.  Please use the Mortgage Portfolio Quality Report Template.
  6. A count and brief narrative of your affiliate’s plan for new housing production, A Brush With Kindness or Critical Home Repair and ReStore over the next two years and how HFH-MN resources will be utilized to accomplish your program goals.
  7. A copy of your current Fund Development Plan that supports the income projections in your Monthly Cash Flow Projection report.  An “ideal” Fund Development Plan includes planned fund sources, amount, timing and the responsible committee or staff person.

Funding Criteria

  1. Broad Allocation of Resources throughout the State
  2. Local Fund Raising

Funding available under this program is intended to leverage affiliates’ local fund raising efforts. As such, these loans should be considered as matching funds to those raised locally. Each affiliate’s budget, Historical Sources of Support and Fund Development Plan will be reviewed to ensure that no more than 50% of an affiliate’s program and operating support comes from Habitat Minnesota loan funding.

  1. Home Production

An affiliate is active in housing production and has a reasonable plan in place to continue to utilize Habitat Minnesota loan funds for their intended purpose of increasing home production and partner families served in Minnesota.

  1. Credit Risk Rating (CRR)

Habitat Minnesota’s CRR system is used as a guide to the affiliates’ financial health, capacity and the related risk of a Habitat Minnesota allocation. The CRR measures risk based on percentage of the portfolio pledged, portfolio delinquencies, cash management, debt service coverage and other debt-load. View the Credit Risk Rating System Summary.

  1. Other Funding Requirements

Other Funding Requirements pertain to the affiliate and their Mortgage portfolio. The other requirements must be met at the time of application or disbursement and be maintained as long as the affiliate is a borrower of Habitat Minnesota.

Due to the ongoing impacts of the COVID-19 pandemic, Habitat Minnesota has opened up the loan application period through March 2021. At that point, we will reassess funding needs and availability and may reinstate the standard quarterly application timelines.

Disbursement Process

Once approved for a Loan Fund Allocation, affiliates must submit a request for Disbursement. The Disbursement Request consists of the following materials:

  1. Loan Disbursement Request form
  2. Current Mortgage portfolio quality report form
  3. Borrowing resolution including new amount to be borrowed, total outstanding balance owed to Habitat Minnesota and authorized signers.
  4. For each mortgage to be pledged:
    1. Mortgage Information Sheet
    2. Homeowner payment history
    3. Copy of recorded mortgage in a form acceptable to Habitat Minnesota.
    4. Original homeowner promissory note in a form acceptable to Habitat Minnesota.
    5. Current Title Opinion or Title Insurance
    6. Evidence of homeowners property insurance paid
    7. Flood hazard determination
    8. Appraisal
    9. Homeowner application and income verification (maximum 60% AMI – see Income Limits)

Loan Closing

Habitat Minnesota will travel to the affiliate office to close the loan. Two authorized signers should be available at the loan closing to sign the following documents:

  1. Promissory Note
  2. Loan Agreement
  3. Certificate of Collateral or Security Agreement
  4. Authorization to Debit the affiliate bank account for monthly loan payment
  5. Assignment of Mortgage for each mortgage pledged.

The 2020 Second Mortgage Fund is a program operating within the 21st Century Fund. Through the 2020, Habitat for Humanity affiliates in Greater Minnesota can apply and receive funding to subsidize the first mortgage of a qualifying project. The 2020 program operates solely within the funds exceeding $500,000 in the 21st Century repayment account. When the repayment account dips below $500,000, no additional 2020 second mortgages are to be disbursed until the account again exceeds $500,000.

Click HERE for a full list of Project Qualifications, Underwriting Guidelines, and Required Documentation.