Community Fix Up Loan Program  

This program assists communities to address specific home improvement needs and goals by promoting partnerships between Fix Up lenders and community organizations. The partnerships provide for the origination and purchase of qualifying Community Fix Up loans that provide supplemental funds and/or other value-added incentives or services to borrowers.

A Fix Up lender, and their community partner(s) (if applicable), submit a Community Fix Up Loan Program Initiative Proposal to Minnesota Housing. The proposal will identify supplemental funds and/or other value-added incentives or services for borrowers. After approval of the proposal, lenders have access to the lower interest rate that’s described below and are expected to begin the marketing and outreach activities that the initiative has developed for the target population of homeowners.

The Fix Up lender must provide supplemental funds and/or other value-added incentives or services to borrowers as described below or partner for such items with community organizations. Examples of organizations include nonprofits, utility companies, local governments, and housing and economic development authorities.

Community Fix Up loans offer the same flexible product features available with Fix Up loans: longer repayment terms than traditional loan products, equity based on after-improved value, no-cost or low cost alternatives to an appraisal, and a fixed interest rate for the full loan term.

The proposed Community Fix Up Initiative must:

1. Address and incentivize specific community rehabilitation needs that cannot be as effectively met under the statewide Fix Up Loan Program,
2. Provide or partner with community organizations (such as nonprofits, utility companies, local governments and housing and economic development authorities) to provide:
   1. Leveraged funds in the form of discounted interest rates or matching funds; or
   2. Other value-added incentives or services such as donated rehab advising, energy conservation rebates, or translation services; or
   3.  A loan loss reserve fund.
3. Include a written plan for targeted outreach and marketing.

A pool of funds is available to the approved initiative for two years as long as Agency funding is available, and the Fix Up lender remains in good standing with Minnesota Housing. Staff of Minnesota Housing review and approve Community Fix Up Initiative proposals.

Visit the Fix Up and Community Fix Up Loan Programs webpage for Procedural Manual, Forms and other Resources

Home Improvement Programs Manager for Community Fix Up by phone 651.296.8215 or by email mnhousing.solution@state.mn.us.

• Access all the features of Community Fix Up loans: Fixed interest rate; longer repayment terms than traditional bank loans; equity based on after-improved value; and no or low-cost alternatives to appraisal
• Stretch a source of leveraged funds over a larger number of homeowners by only needing to allocate funds to the interest rate buy-down
• Increase homeowner’s affordability and incentive to participate in housing preservation efforts

• Participating Fix Up lender(s) and community partner(s) establish source(s) of funds for the interest rate write-down and submit a Proposal for Community Fix Up Initiative that identifies goals and targeting to Minnesota Housing.
• After approval of the initiative, the participating lender originates and sells loans to Minnesota Housing:
  • Lender originates and underwrites loan.
  • Lender executes the note with the homeowner at the discounted interest rate agreed on by lender and partner.
  • Lender disburses loan proceeds to borrower and submits loan to Minnesota Housing for reimbursement of principal and payment of processing fee ($650).
  • Minnesota Housing discounts the principal amount of the loan reimbursed to lender based on discount factors (available on Minnesota Housing’s website). See examples below.
  • Lender collects the discounted amount from their leveraging resource(s).
  • Loan is serviced at the rate and payment amount as indicated on the note.

Community Fix Up loan rate is for example only. Refer to Minnesota Housing’s website for current rate.

Example: Loan Amount = $7,500; Loan Term = 10 years (120 months):

• Community Fix Up program rate (yield to agency) = 4.00%
• Discount interest rate (rate paid by borrower) = 2%

Process:

1. Lender underwrites and closes loan with borrower. Note is executed at the lender-chosen discount interest rate of 2% (rate paid by borrower).
2. Loan amount is $7,500 with a 10-year repayment term (120 months).
3. At loan purchase, Minnesota Housing discounts the principal amount of the loan that will be reimbursed to the lender using a discount factor of 90.88185%. This factor is found on the Discount Factors chart. In this example, the program rate is 4.00% - find the 2% column and the 10-year term row.
4. Minnesota Housing pays lender $6,816.14 ($7,500 X 90.88185%), plus the $650 loan processing fee. The discount is the difference between the original loan amount and the discount purchase amount, in this case $683.86 ($7,500 minus $6,816.14).
5. Lender covers the discounted amount of $683.86 with funds from their leveraged funding source.