Neighborhood Finance Corporation

What it reported doing in 2024

Loan Origination: Neighborhood revitalization is the key mission of NFC. This is accomplished by providing a loan for repayment as well as a forgivable loan for each qualified transaction. The forgivable loan is at 0% interest with no payments and generally forgiven over 5 years. In addition, purchase and some refinance loans have a second mortgage at a 2% interest rate for 10 years instead of requiring private mortgage insurance for borrowers with less than 20% equity. NFC's loans work together to provide a mortgage that reduces the barriers of downpayment and equity while completing needed renovations of the property.In 2024, NFC closed 216 loans. Clients were served through our purchase, second mortgage, refinance and home improvement loan products as well as Polk County Large Renovation and Polk County Down Payment deferred loans. The total dollar amount of repayable loans closed in 2024 was $10,477,952. Purchase loan, second mortgage, refinance and home improvement transactions were completed in areas of Polk County and Cedar Rapids that are identified as areas for revitalization. In 2024 NFC launched a new commercial lending line of business to support the development of affordable homeownership and rental housing. There were 3 construction loans and 1 multi-family commercial loan in 2024 totaling $1,634,477.The neighborhoods are typically low to moderate (low-mod) income census tracts. In 2024, 215 primary loans (not including second mortgages, NFC Neighborhood Reinvest, NeighborhoodLIFT , Journey to Homeownership, Energy Advantage Deferred, Polk County Down Payment Assistance, or Polk County Large Renovation loans) were closed, while 152 closed were made to borrowers that were in low-mod income and/or NFC investment area census tract and/or low-mod income for Polk County, Iowa and Cedar Rapids, Iowa. Of these 215 loans, 61 loans were made to borrowers that have low-mod income and are in low-mod income and/or NFC investment area census tracts; 33 were made to borrowers with low-mod income, but not in low-mod income and/or NFC investment area census tracts; 58 loans were made to borrowers in low-mod income and/or NFC investment area census tracts, but do not have low-mod income; the other 63 loans closed were made to borrowers that are not low or moderate income or in a low-mod income and/or NFC investment area census tract. In 2024, 70.7% of repayable loans closed were to either low-mod borrowers, low-mod income and/or NFC investment area census tract or both. In 2024, 82.5% of home purchase loans closed were to first time home buyers.Though residential lending remains NFC's primary mission, residential mortgage loans closed through NFC are to owner occupants. The number of home purchase loans closed in 2024 was 40. NFC closed 21 second mortgages, 169 home improvement loans, 6 refinance loans, 38 Energy Advantage Deferred Loans, 60 Polk County Large Renovation loans (17 of 60 were NFC borrowers), and 69 down payment assistance deferred and forgivable loans (33 NFC down payment loans, 13 Journey to Homeownership (J2H) loans (6 of 13 were NFC borrowers), and 23 Polk County Down Payment Assistance loans (9 of 23 were NFC borrowers)).NFC launched a down payment program specifically for NFC borrowers in 2019. It is called Neighborhood Reinvest, and provides a $10,500 0% interest 30 year deferred loan to homebuyers earning below 100% of the area median income. Neighborhood Reinvest was created to overcome a primary barrier to homeownership for low and moderate income households. The deferred loan can be used towards down payment and closing costs assistance for eligible homebuyers who purchase a home utilizing NFC financing in NFC 's lending areas in Polk County, Iowa and Cedar Rapids, Iowa. The loan is structured as a 'soft second' mortgage loan that is deferred until there is a cash-out refinance or the home is sold or 30 years, whichever occurs first.In 2023, NFC launched the Polk County Down Payment Assistance Program. Th

Financial Efficiency

• Mission deployment rate: 56.7%; rating input score 57
• Program expense ratio: 82.7%; rating input score 83
• Fundraising efficiency: Limited

Transparency & Controls

• Consistency checks: 100%; rating input score 100; 62nd percentile among comparable filings
• Pay-setting controls: 3 of 6 controls in place; rating input score 50
  • Compensation committee: Missing
  • Independent consultant: Pass
  • Other Form 990s reviewed: Missing
  • Written employment contract: Missing
  • Compensation survey or study: Pass
  • Board or committee approval: Pass
• Foreign activity oversight: Limited
• Grant itemization coverage: 100%; rating input score 100; 72nd percentile among comparable filings
• Major donor itemization: Yes; rating input score 100
• Related-party transparency: Limited

Accountability

• Independent voting board: 100%; rating input score 100; 66th percentile among comparable filings
• Governance controls: 9 of 9 controls in place; rating input score 100
  • Conflict-of-interest policy: Pass
  • Whistleblower policy: Pass
  • Document-retention policy: Pass
  • CEO compensation review process: Pass
  • Other executive compensation review process: Pass
  • Form 990 shared with the board: Pass
  • Board meeting minutes documented: Pass
  • Audit committee oversight: Pass
  • Independent financial-statement audit: Pass

Sustainability

• Operating margin: 37.1%; rating input score 91; 91st percentile among comparable filings
• Total-asset coverage ratio: 15.89; rating input score 94; 94th percentile among comparable filings
• Liabilities to assets ratio: 0.43; rating input score 34; 34th percentile among comparable filings
• Officer compensation ratio: 7.3%; rating input score 34; 34th percentile among comparable filings

Growth

• Program expense growth: 6.3% per year; rating input score 100; 51st percentile among comparable filings
• Revenue growth: 7% per year; rating input score 100; 59th percentile among comparable filings
• Asset growth: 9.1% per year; rating input score 100; 61st percentile among comparable filings