Helping Families Across Appalachia Achieve Homeownership

About this Project

Founded in 1980, the Federation for Appalachian Enterprises (Fahe) is a Community Development Financial Institution (CDFI) that provides more than $250 million a year in investment capital to a network of more than 50 housing and community development organizations across Appalachia, including Kentucky, Tennessee, West Virginia, Virginia, Alabama, and Maryland. 

Fahe is one of nine members of the Housing Partnership Network’s (HPN) Equitable Homeownership Collaborative (EHC), a national initiative that expands access to sustainable mortgage products for borrowers who are often underserved by traditional lending systems.

A $2 million loan from the Robert Wood Johnson Foundation (RWJF) allows Fahe to purchase mortgage loans originated by EHC members. When Fahe acquires these mortgages, participating lenders can recycle that capital to originate new loans, expanding access to homeownership.

This is RWJF’s second investment in Fahe. In 2022, RWJF provided a $4 million loan to help increase access to homeownership opportunities for Appalachian residents with limited financial resources. 

Learn more: https://fahe.org/

Challenge

CDFIs play a critical role in expanding homeownership for borrowers who may not qualify for conventional mortgage products. However, many CDFIs face a significant constraint: Limited lending capital.

Traditional financial institutions are often hesitant to purchase loans that fall outside conventional underwriting standards, even when those loans perform well. As a result, CDFIs may struggle to replenish their lending capital after originating mortgages.

Without a reliable secondary market for these loans, many CDFIs must retain them on their balance sheets. This limits their ability to originate additional mortgages and slows the expansion of homeownership opportunities in underserved communities.

Solution

RWJF’s investment enables Fahe to strengthen a secondary market model that increases lending capacity for mission-driven lenders serving Appalachian communities.

Through this structure, Fahe purchases mortgages originated by EHC member organizations and then sells them to Self-Help Credit Union, which serves as the program’s secondary market partner. Fahe continues to service the loans on behalf of Self-Help Credit Union, managing escrow, taxes, and insurance for homeowners. 

This structure allows participating lenders to recycle capital quickly and originate additional mortgages, increasing the availability of responsible lending products for borrowers who are often overlooked by traditional lenders. 

How it Works:

• EHC members provide mortgage loans to homebuyers with low incomes.  
• Fahe then uses its loan from RWJF to purchase the mortgages and resell them to Self-Help Credit Union; Fahe services handle escrow, taxes, and insurance for the homeowner.  
• RWJF’s investment allows Fahe to acquire more loans than it could otherwise purchase on its own, increasing liquidity within the system and enabling participating CDFIs to originate more mortgages.

In the Spotlight

Rolander Lindsey tried earnestly to buy a home twice before she resigned herself to staying a renter. Lindsey’s 11 grandchildren motivated her to persevere. Then she found Fahe’s JustChoice Lending.

JustChoice provided an accessible Inspire 100 mortgage, designed to break down barriers to homeownership, and support through the homebuying process. With a 30-year conventional fixed rate mortgage, it doesn’t require mortgage insurance and has flexible underwriting guidelines.

Now, Lindsey is in love with her new home, which includes a large backyard and creek for her grandchildren to play in (two of them even live with her now).

“I love this home and am always doing something to it,” Lindsey said with pride. “I want my grandkids to have someplace stable if anything was to happen to me. I would have stopped looking if I didn’t find JustChoice.”

Impact Goals

• Help borrowers with low wealth and communities of color access affordable mortgage products such as Inspire 100, which is designed for borrowers who have historically faced barriers in traditional mortgage markets. With no mortgage insurance required, a 30-year conventional fixed rate, and flexible underwriting guidelines, the mortgage can be a transformational product for underserved communities.   
• Implement liquidity strategy for CDFIs by purchasing Inspire 100 mortgages from them, allowing the CDFI to replace the capital so they can go on to serve the next borrower.
• Demonstrate strong loan performance so Self-Help Credit Union and Government-Sponsored Enterprises can support broader adoption of this model.