If funds get cut, here's how to support affordable housing

In March, the president signed an executive order that declared the U.S. Community Development Financial Institutions Fund "unnecessary," calling for it to “be eliminated to the maximum extent consistent with applicable law.”

The fund supports community banks and other financial institutions that provide much-needed financial services and assistance to some of the most underserved communities in America, including rural areas, low-income communities and communities of color, and Native American tribes.

These cherished institutions, which qualify as local community development financial institutions, are critical funders of affordable housing. They provide low-interest loans to affordable housing developers and mortgage assistance to low-income and first-time homebuyers, among other services.

In New Mexico, well known community development financial institutions include Nusenda Credit Union, Native Partnership for Housing and Tiwa Lending Services, the Santa Fe Community Housing Trust, and Homewise Inc.

These organizations are essential in helping Santa Fe remain an affordable place to live for local residents. Considering that more than half of Santa Fe’s workforce lives outside the city due to affordability issues, this work could not be more important.

Homewise has helped more than 6,000 New Mexicans purchase homes and has helped thousands more install energy efficiency updates, refinance their homes and get the financial education they need to become successful first-time homeowners.

Nationally, at least a third of all affordable housing units built in the U.S. in the last year were financed by the national Community Development Financial Institutions Fund.

Luckily, the fund has bipartisan support. Shortly after the executive order was issued, 23 senators from both sides of the aisle sent a letter to the secretary of the U.S. Department of the Treasury urging him to protect the fund. On March 21, the Treasury issued a report finding that all 11 programs run by the fund are required by law.

For now, at least, this means the Community Development Financial Institutions Fund and its vital programs can't be scrapped. However, they could still be subject to funding and staffing cuts, which could reduce their ability to support the institutions that provide the financial services working-class Americans depend on.

The good news is we can all do something to support affordable housing. Volunteering or donating to local organizations and advocating for affordable housing policy in local government are both fantastic ways to get involved. But there are also several other options for investors who want to use finance as a tool for change.

At the community scale, many local community development financial institutions offer the opportunity for regular people to participate in impact investing. Homewise, for example, allows anyone to invest in their programs with a minimum commitment of $1,000. Investors are paid back with interest rates of 1% to 4%, depending on the length of their commitment, and terms range from one to 10 years.

It’s also possible to support affordable housing at the national level by investing in “impact” funds like Community Capital Management’s Affordable Housing MBS ETF (OWNS) or RBC Bluebay Access Capital Community Investment Fund (ACCSX). These and similar funds can be easily purchased through most brokerage accounts.

Such funds screen mortgage-backed securities to make sure the loans in their portfolios are issued to underserved communities and create positive social outcomes. Affordable housing makes up a large portion of their investments. These funds show lenders there is demand for investments in affordable housing, which can make lenders more willing to issue loans to impactful projects.

No one should have to sleep on the streets. But when people are severely cost burdened, they are at much higher risk of becoming homeless. And when a quarter of American renters are likely to forgo basic necessities just to make rent, increasing affordable housing should be a top priority. This problem is unlikely to be solved without government support, but all of us can contribute to solutions.