The Family Housing Fund—a nonprofit Twin Cities-based organization— launched a new program that utilizes the contract for deed as a tool to create affordable housing opportunities. The new initiative, titled The Bridge to Success Contract for Deed Program, launched in fall 2008.
Through this program, the Family Housing Fund made a $500,000 loan to Dayton's Bluff Neighborhood Housing Services (DBNHS) and Greater Metropolitan Housing Corporation (GMHC).
These two organizations have a lender commitment—similar to a line of credit—of up to $1 million from a private lender. DBNHS and GMHC will use the funding pools to sell properties on a contract for deed to homebuyers who may not be ready to qualify for a traditional mortgage. The funds from the Family Housing Fund will make up 20 percent of the purchase price, with a balance of 80 percent funded by lenders. This arrangement eliminates the need for private mortgage insurance. Key components of The Bridge to Success Contract for Deed Program are homeownership education and financial counseling to ensure that the buyer is mortgage-ready in three years.
More information on Contract for Deeds