Loans for Self-Help Housing
The self-help process
enables low-income participants to build their
own homes, usually working together in groups
on their neighbors’ houses at the same time.
Homebuyers use their own “sweat equity”
to reduce the cost of their homes. When a SHOP
borrower meets its production goals and other
requirements, up to 80 percent of its loan is
forgiven. Then the organization can use those
funds for additional SHOP-eligible purposes. Some
groups have provided further subsidies to the
same homebuyers, while others have established
their own revolving loan funds or used the money
for future self-help developments.
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HAC received its first
Self-Help Homeownership Opportunity Program (SHOP)
grant in 1996 when the United States Department
of Housing and Urban Development (HUD) first began
the program. Since then HAC has received eight additional
SHOP awards for a total of $68.3 million to support
the production of over 6,000 self-help units across
the country.
During fiscal year 2006, HUD awarded HAC nearly
$6 million in new SHOP funds. From this funding
and revolved funds from earlier SHOP awards, HAC
committed funds to 41 local nonprofits in 25 states
to produce 741 homes.
HAC's 2007 SHOP application period is now closed.
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HUD released its FY 2007 SHOP
Notice of Funding Availability (NOFA) on March 13, 2007.
HAC plans to apply to HUD for part of the available funds.
To
view the HUD FY 2007 SHOP NOFA click here. For more
information on other programs, please visit our HUD
SuperNOFA page.
SELF-HELP HOUSING
The Housing Assistance Council (HAC), a nonprofit corporation,
has been helping local organizations, including self-help
housing sponsors, build affordable homes in rural America
since 1971. Headquartered in Washington, DC, with offices
in Georgia, New Mexico, California and Missouri, HAC's mission
is to improve housing conditions for the rural poor, with
an emphasis on the poorest of the poor in the most rural
places. Since its inception, HAC's loan funds have been
a centerpiece of its rural housing mission. HAC's capacity
to serve self-help housing organizations dramatically increased
in 1996 when HAC was awarded $13.5 million in the first
HUD Self-Help Homeownership Opportunity Program (SHOP) funding
round. Since then HAC has received eight additional SHOP
awards for a total of $68.3 million to support the production
of over 6,000 self-help units across the country. Self-help
housing production typically involves low-income families
performing a substantial amount of the construction labor
on each other’s homes, under qualified supervision.
The labor cost savings make homeownership possible for families
who would otherwise be financially unable to purchase homes.
 ELIGIBLE
BORROWERS . Eligible applicants
for SHOP funds include public and private nonprofit self-help
organizations.
ELIGIBLE PROJECTS . SHOP loans must be for affordable housing projects, in which the eligible homebuyer contributes a significant amount of sweat equity on the construction of their own home, minimum of 100 hours. SHOP eligible projects may be located in urban and rural areas.
ELIGIBLE USES. SHOP funds are to be used exclusively for land acquisition and infrastructure improvements associated with self-help housing for low-income households, as defined by HUD (below 80% of the area-wide median income). SHOP funds may not be used for actual unit construction or rehabilitation of existing units. Reimbursement or refinance of acquisition costs incurred prior to March 8, 2006 is not a SHOP FY 2006 eligible cost.
TERMS
- The average SHOP loan per unit may not exceed $15,000.
- Interest free loan due and payable to HAC when the developed lot is sold to an eligible self-help housing participant or by the due date of the loan, whichever occurs first. A 1% HAC loan service fee is included in the loan amount and is due upon loan closing.
- HAC may institute a maximum cap on SHOP FY 2007 loan
amounts.
- Two-year loan term for borrowers constructing four or fewer units. Three-year loan term for borrowers constructing five or more units.
- Take-out or permanent financing must be committed.
- SHOP loan must be fully secured. LTV no greater than 100%.
- Eighty percent (80%) of each SHOP loan may be forgiven, at HAC’s sole discretion, when funds have been used to produce the required number of affordable self-help housing units by the deadline and other loan agreement conditions have been satisfied. These grant conversion funds may be passed on as grants or loans to self-help families, or may be used by a borrower to capitalize an internal revolving development loan fund.
- Completion of a HUD Environmental Review, per 24 CFR 58, is required prior to disbursement of SHOP funds.
- Applicants may expend funds for which they expect SHOP reimbursement to acquire sites prior to receipt of a HUD environmental review approval. However, the borrower accepts all risk in the event that an environmental problem is uncovered after acquisition.
- Applicants may not incur infrastructure improvement costs for which they expect SHOP reimbursement before receipt of HUD environmental review approval.
- Properties acquired and or developed with FY 2007 SHOP
funding must comply with the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970, as
amended.
- Quarterly reporting required.
APPLICATION PROCESS. HAC's SHOP 2007 application round is now closed. Applications for
SHOP funding are reviewed on a competitive basis. If you
are interested in applying for HAC SHOP funds, please contact
Darren Favello, Loan Fund Program Assistant, at (202) 842-8600,
ext. 128, for information regarding application criteria
and to request an application packet. All potential SHOP
applicants are pre-screened to ensure eligibility.
FOR MORE INFORMATION. For further
information about SHOP funds and the HAC FY 2006 SHOP Program,
please contact Dierdra
Pressley, Loan Officer, at (202) 842-8600 ext. 154,
or Darren Favello
, Loan Program Assistant, at 202-842-8600, ext. 128.
For more information
about other HAC loan products, click here.
Updated: May 29, 2007
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