Best Practices in Revolving Loan Funds for Rural Affordable Housing

摘要

This study provides case study analyses of four different rural revolving loan funds in order to ascertain which best practices are the most salient in different rural contexts. The funds examined include the Kentucky Mountain Housing Development Corporation (KMHDC), Inc. in eastern Kentucky; the Federation of Appalachian Housing Enterprises (FAHE), which serves Kentucky, Virginia, West Virginia, and Tennessee; the Vermont Community Loan Fund (VCLF), serving the state of Vermont; and the Northwest Farmworker Housing (Tri-State) Loan Fund, which covers Washington state, Oregon, and Idaho. The study first finds that different community lending structures are appropriate to different rural contexts. For example, the KMHDC loan fund which provides permanent mortgage lending over a two-county area is suited to a rural context where there are high poverty and unemployment, but low operating costs. Conversely, the VCLF model which combines a housing and community facilities lending program with a business development program would be more appropriate to a rural area where there is more robust economic growth, but greater housing affordability problems. Second, the study outlines best practices that are common to the four case studies. In founding a loan fund, a clearly focused mission, good technical assistance, and solid initial capitalization are key. In structuring loan fund policies and procedures, successful funds start with simple, user-friendly procedures, and then diversify their lending products and practices as their funds encounter competition from other community lending groups.