UMassFive Weighs In To Fight For Affordable Housing

UMassFive College Federal Credit Union ($647.3M, Hadley, MA) is tackling the problem of affordable housing in its Western Massachusetts market through a partnership with MassHousing, a quasi-public agency that offers financing assistance from Boston to the Berkshires in the form of grants, lending programs, and other initiatives.

According to Zillow, the average home price in Western Massachusetts is nearing $500,000, and the region’s geography — there’s a lack of usable land for residential property that’s not already being used for agriculture — creates an environment that suppresses inventory and inflates prices.

“The thing about most of New England, we don’t have these huge tracts of land to develop new houses,” says Lauren Duffy, UMassFive’s executive vice president and chief operating officer. “Inventory is a real challenge. It has always been a challenge.”

But inventory is only one of the reasons the region’s affordable housing is so elusive.

“There’s an inventory issue and there’s financing issues,” Duffy says.

UMassFive serves Mount Holyoke, Smith, Amherst, Hampshire College, and the University of Massachusetts from its centrally located headquarters that’s within an eight-mile radius of all five colleges. Together, the five institutions boast a total student enrollment of 31,000, according to the Five College Consortium, a cooperative serving the academic and operational needs of the five, mostly liberal arts, schools. The existence of so many colleges in such a small area presents some distinct challenges to the larger region, Duffy says. Big problems the smaller cooperative works diligently to address.

“As a smaller institution, it has always been a challenge to get access to unique programs,” says Duffy, adding that UMassFive has tried to join MassHousing since 2019 but the pandemic put a stop to all new applicant institutions. “There are lots of affordable housing initiatives out there, but we’ve wanted to be part of MassHousing for a long time because it has some programs people can’t find anywhere else.”

One of those offerings is Workforce Advantage, a down payment assistance program for first-time home buyers. Borrowers can take out 10% — up to $30,000 or $50,000, depending on location — at 0% interest. What’s more, borrowers don’t have to make payments and only have to pay back the loan when they sell the home.
“We exist for the benefit of our members, and our goal is to help them reach their home ownership goals,” Duffy says. “Programs like this is how we make that happen.”

A Partnership That Benefits More Members

UMassFive is a member of the credit union service organization Member Advantage Mortgage, which is the entity that holds the affiliation with MassHousing. The credit union joined the CUSO more than a decade ago; today, that relationship is driving creativity within its mortgage portfolio.

“We’re doing all of these different programs now because of this partnership,” Duffy says. “Fifteen years later, it was such a great decision. We’ve always had a mind toward doing these types of things for our members.”

When UMassFive initiated the partnership with MassHousing, it opened the door for other CUSO members to take advantage of the housing organization’s programs. That’s exactly what Worcester Credit Union ($103.1M, Worcester, MA) — located 52 miles to the east — did. Because it’s in the same state and also a member of the CUSO, Worcester can offer MassHousing programs to its members, too.

Those programs include Workforce Advantage, of course, but MassHousing also offers traditional FHA and conventional financing. And its private mortgage insurance product MIPlus protects the lender — which is standard — as well as the borrower, covering the mortgage payment for up to six months in the event of a job loss.

A Pathway To Prosperity

To maintain its relationship with MassHousing, Member Advantage Mortgage must close at least five MassHousing loans every year, a number Duffy is confident UMassFive can sustain.

Other goals for the new MassHousing relationship are fluid, Duffy says. Her biggest focus is establishing programs that help members purchase homes and build wealth, and the credit union’s relationship with MassHousing allows it to offer members more options.

It’s easier to stay in the middle class when you own a home. That’s an important way for credit unions to deliver on our mission.

“The truth is, the American economy favors home ownership,” Duffy says. “It’s easier to stay in the middle class when you own a home. That’s an important way for credit unions to deliver on our mission.”

The income cutoff to qualify for a MassHousing loan tops out at $180,000 per year, says Jeff Leep, CEO of Member Advantage. Borrowers who earn more than that still have access to other programs, including VA and USDA. Leep says both work well for Western Mass. For example, the Veteran’s Clinic in Leeds, MA, is a SEG member of UMassFive, which expands the options for a handful of members in the region.

Another challenge UMassFive has tackled is how to help medical school graduates — with tremendous earning potential and lots of debt — purchase a house when there’s already a supply issue.

“We’ve got a medical mortgage that has really benefited the community and been well received,” Duffy says of the program that accepts a low down payment, requires no PMI, and offers flexible closing options. “We feel confident in being able to help them in their new careers.”

Trust In The Solution

UMassFive has had a front row seat to affordable housing challenges for several decades and points to community land trusts as a creative solution that has thrived in the region.

In a community land trust, the trust — a nonprofit corporation — owns the land on which it builds a housing development or subdivision. The land itself — whose value can exceed that of the physical home — remains the property of the trust. The trust can then sell the home at a more affordable price.

“For a $400,000 house in Amherst, the land might be half of that,” Duffy explains. “The community land trust will own the land and sell the house. It’s a very nontraditional idea, but it works well in our community. We work with these entities and get people into homes they might not otherwise be able to afford.”

The community land trust concept originated in Western Massachusetts in 1972. Today, community land trusts are active in several states; Massachusetts alone has 16 separate community land trusts, according to the Schumacher Center for a New Economics.

Duffy says UMassFive hasn’t closed a lot of these loans, but the option is still a good one for many borrowers. It’s one of many tools the credit union has in its multi-prong approach to make housing more affordable for members. To that end, the credit union continues to innovate, form creative partnerships, and target specific needs to make a difference in the lives of members.

“Our goal is to make our members the heroes in their home ownership story,” Duffy says.

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