Agencies in Memphis encourage homeownership as alternative to high rents

United Housing wants renters to consider buying a home to help stabilize the city's housing market and lower their personal housing costs.

High homeownership in a neighborhood comes with a reduction in blighted properties, and cheaper housing could mean fewer evictions. Mortgage rates in many areas of Memphis are lower than rental rates.

Not everyone can qualify to purchase a home, but many Memphians don't explore the option at all because they assume they'll be denied. 

The majority of prospective homebuyers who seek help from United Housing are single women, between 30 and 50 years old, who earn 80% of the area's median income. In Shelby County, that 80% translates to $36,900 annually for an individual and $52,700 for a family of four.

United Housing is a nonprofit affordable housing agency based in Memphis that serves West Tennessee. It offers homebuyer education courses, building and renovation programs, and mortgage loans for people and neighborhoods that traditional lenders may deny. This includes moderate-income borrowers and areas that have been heavily disinvested.

Brenda Ifabiyi is a housing counselor with United Housing. She said recent graduates of their pre-purchase homebuyer education course bought homes in Cordova, Germantown, Bartlett, Raleigh, Whitehaven, and Frayser.

“It appears more people are potentially interested in learning how to buy a home because of the high cost of rent,” said Priscilla Reed, another United Housing HUD-certified housing counselor.
Brenda Ifabiyiis a HUD-certified housing counselor with United Housing. She helps potential home buyers through the process of purchasing a home. (Submitted)
The nonprofits' housing counselors talk through misconceptions with potential homebuyers around things like income and credit requirements and eviction history. They emphasizes that past evictions do not always impact credit scores. They want potential homebuyers to know it's worth initiating a conversation with counselors to understand all of their options. 

Dalisia “Dee” Brye found her Whitehaven home in February and closed in June after completing United Housing's counseling and pre-purchase education course. Brye said the process took four months due to bank closures in the pandemic. 

Brye is a former United Housing employee, so she knew to turn to the agency for help.

“I was actually about to move into an apartment, but the pricing was extremely high for my budget," she said. "I began to search for the prices of homes and mortgages and noticed that it was well within my budget. So, I went back to my housing roots [with United Housing] to see what I needed to do."

United Housing said potential homebuyers also miss out on a monthly mortgage that is less expensive than their rent because they're intimidate by down payment and closing costs. Its housing counselors help potential buyers understand what funding is available to cover those upfront costs. 

“Homeownership has definitely been a dream come true," Brye said. "I’ve been in my home for a few months now, and I still can’t believe that I’m walking through something that belongs to me."

The Precarious State of Housing

The “2020 State of Memphis Housing: Rising to Respond to Crisis” report was released September 28 by the City of Memphis Division of Housing and Community Development in partnership with Innovate Memphis.

The report lays out an impending disaster: high unemployment plus the end of emergency unemployment assistance and end of federal foreclosure and eviction moratoriums could lead to widespread instability in housing and a major hit to the local economy.

Its authors stated that: "One month where 20% of Memphians are unable to pay mortgages or rents could lead to a nearly $70 million impact in the local economy."

Unemployment claims have remained high due to extended and permanent business closures while emergency federal unemployment assistance is phasing out.

The Federal Housing Administration placed a moratorium on foreclosures and evictions for homeowners with FHA-insured mortgages, and the Centers for Disease Control and Prevention has a similar freeze on evictions for renters. Both orders expire on December 31.

Paul Young is director of the City of Memphis Division of Housing and Community Development. He said his team is looking towards the end of the moratorium when missed payments are due.

“... we will have a number of families that will have a lump sum payment that will be due,” said Young. “Hopefully, there are some other measures that come forward and it’s not as big of an issue as we think it might be. But we definitely want to be prepared for that.”

In the meantime, HCD launched the Eviction Settlement Program. It uses City of Memphis and Shelby County funding from the CARES Act to help both tenants and landlords affected by COVID-19. The program will run until the end of the year or until funds run out.

Recruiting new first-time homebuyers like those who work with United Housing will be critical to maintaining long-term stability in the city's housing market.

Where's the Money? 

There's money for the upfront costs of home buying, if you know where to look.

Those funds are often targeted at first-time borrowers, moderate-income borrowers, and people buying in specific areas. Working with housing counselors certified by the U.S. Department of Housing and Urban Development or HUD is a frequent requirement. 

Finishing homebuyer education is no guarantee of funding, as funding changes according to granting cycles and other parameters, but United Housing said having a housing counselor who is abreast of changes is beneficial to potential buyers.

United Housing said their homebuyers receive, on average, around $5,000 in funding, but they've seen as high as $15,000 to $25,000 awarded.

Upfront dollars for United Housing's clients have come from the Tennessee Housing Development Agency, City of Memphis, Shelby County, and Pinnacle Bank, among others. Traditional lenders like Wells Fargo or BancorpSouth may also offer some downplaying and closing assistance contingent upon completion of pre-purchase education.

Young said the City of Memphis is finding success with its own down payment assistance programs. It has programs designed for people who have previously or are currently receiving rent assistance. There are programs for firefighters and police officers and people who buy in specific areas of town with depressed housing markets.

There are several programs for moderate-income buyers earning 80% or less of the area's median income. Young said HCD receives around $600,000 at the beginning of their fiscal year in July to divvy up among qualified buyers.

“We have expended about 65% of the funds already in the first quarter so we know it’s something that’s working and people are certainly taking advantage of it,” Young said. “Our hope is that we can help more families continue to buy homes in the core of the city.”

The City of Memphis will continue the conversation on homebuying at its State of Memphis Housing Summit on October 29.

The Case for New Counselors

United Housing's pre-purchase education curriculum requires potential homebuyers to complete eight course hours and at least one phone or in-person session.

“This leads prospective homebuyers all the way through the process, from just thinking about buying a home to being a responsible homeowner,” said Matt Hein, one of United Housing's HUD-certified housing counselors.

The homebuyer education covers six topics including: “Are you Ready to Buy a Home?,” “Managing Your Money,” “Understanding Credit,” “Obtaining a Mortgage Loan,” “Shopping for a Home,” and “Protecting Your Investment.”

The timeline from counseling to purchase varies for each homebuyer based on a number of factors. Some of the funding products, such as United Housing's Cherry Mortgage, require a closure agreement within a set timeline. In other cases, timelines are extensive. Poor housing stock in the homebuyer’s desired neighborhood or within their financial specifications can slow the process.

United Housing is championing its HUD-certified housing counselors as the people who can help renters understand their options in these uncertain times. The agency said Memphis needs more certified housing counselors, and it is encouraging people to consider a certification.

Reed, Ifabiyi, and Hein emphasized the community impacts of their counseling work and encouraged others to consider  a career in the field.

For a HUD certification, housing counselors must pass a written examination and verify employment at a housing counseling agency. After being certified, counselors often undergo one to two years of shadowing and training and have continuing education requirements for re-certification every three years.

“Have a sincere and genuine desire to help others and have empathy,” Ifabiyi said to those interested in the field.

“If you’re looking to get rich quick, you’re in the wrong line of work! Rather, enjoy the small successes and differences that you can make in the lives of others by helping them to solve their problems and still earn a decent living for yourself.”
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Read more articles by Ashlei Williams.

Memphis native Ashlei Williams has been writing for business, philanthropic, minority and academic audiences for a decade. She earned her master’s in Journalism from Northwestern University’s Medill School and bachelor’s in English from Spelman College. In 2016, she started GJC Publicity, focusing on editorial, marketing, advertising and creative writing. Get in touch with her at [email protected].