On Friday, February 28, months of work and planning culminated in NASB (North American Savings Bank) presenting a check to CSL for $100,000. With NASB’s support, CSL is launching Next Step KC: Home, a new loan product. The formal launch will occur in June 2020.
NASB, one of our area’s largest providers of home loans, recognizes the importance for all people to be able to access quality housing. NASB also shares belief with CSL’s Vision Statement that states “Communities where all people… have a place to call home.”
Next Step KC has been helping Kansas City families avoid toxic loans since 2013. CSL took ownership of Next Step KC in 2019, and added it to its existing portfolio of lending opportunities. Through its products, CSL has lent more than $1,000,000 to families, most with very low credit scores, who otherwise might turn to toxic lending operations. Most of the loans have been underwritten through Holy Rosary Credit Union, a CDFI (Community Development Financial Institution) with CSL supporters providing a backstop to the loans.
Next Step KC: Home seeks to address many barriers that families have to accessing quality housing. These new loans can be used for:
• Transitional Housing - Helping people in temporary hotel/motel lodging overcome short-term financial obstacles to get back into rental housing. Example: loans for deposits, past utility bills, etc.
• Minor Home Repair - Helping homeowners fund minor repairs triggered by code enforcement efforts in communities. This prevents fines from building up, and costly legal action from being pursued.
• Unhealthy Living Conditions - Providing funds to help tenants or homeowners remediate pests (bed bugs and cockroaches causing asthma, etc.), mold, or other allergens that create unhealthy living conditions for families that can't afford to move.
• Housing Instability Mitigation - Providing low-cost loans to help cover unexpected or hard to manage expenses in a time of struggle and prevent eviction and foreclosure (taxes, behind on rent, etc.).
CSL helps more than 6,000 families annually. The reason most families walk through our doors is that something is happening in their life that could derail their current housing situation. In our industry, we call that imminent risk of homelessness. CSL invests more than $500,000 annually into direct financial aid to help families stave off homelessness. That comes in the form of utility assistance, rental assistance, mortgage assistance, or other emergency payment. While we don’t have an official tracking mechanism, we believe the total of requests or inquiries we receive is the tens of millions of dollars annually.
A low-interest loan makes a lot of sense, because it opens up the capital markets to assist families, and allows them to make reasonable payments over time. The majority of families we work with have earned income through employment, and are able to make reasonable payments. A family living in a motel often pays $300 weekly, or more than $1,200 a month, which includes utilities. That family usually has stable income, but can’t outrun a past utility bill, which might be thousands of dollars. Therefore, they can’t get utility service at their own residence, so they can’t rent or buy their own place.
Right now, families in Kansas City have to make dozens of calls just to try to find a place that could maybe help them out. It’s exhausting for a family that’s facing a crisis. The addition of a loan product to support improved housing situations provides a supply of assistance that can be replenished as borrowers make their payments.
An additional benefit of the loan product is that families can connect (or reconnect) with traditional banking and credit services, along with improving their credit score over time.
Next Step KC: Home is in final development. To best connect with families, a dedicated web portal is in design. Additionally, a marketing team is finalizing the roll-out of information about the program, so that families can connect to loan opportunities. CSL expects to be closing its first loans in May and June. We look forward to keeping you updated on our progress.