President and co-founder
External LinkCHES, Inc. (Credit & Homeownership Empowerment Services, Inc.)
Kansas City, Missouri
This interview is one of five conducted for an article about home repair in the Tenth District. The full article offers background information and links to all interviews.
The Kansas City Fed does not endorse any specific products or services.
Launched in 2010, CHES, Inc., offers HUD-approved pre- and post-purchase homebuyer education, financial and credit counseling, coaching and education, asset management, rental and real estate owned (REO) purchase counseling, as well as National Foreclosure Mitigation Counseling certified in advanced foreclosure prevention and loss mitigation. CHES is one of the few sources of post-purchase homebuyer education. Williams applauds new bank loan products tailored to the low- and moderate-income market he serves. He says CHES is forming a community development financial institution (CDFI) and exploring the possibility of community land trusts.
Q: Your post-purchase homeownership class gives you a close look at how new homeowners are faring. What has been their experience?
A: A lot of banks are requiring that people who want down-payment assistance take (a) homebuyer education class. After the purchase, there’s usually not much out there. In our post-purchase class, we talk about how to turn the pilot lights on if they blow out, where the main cutoff switches are and how to label their electrical panel so they’ll know when a circuit breaks. Those are some of the things we talk about. There are a couple of classes that we do online for those who are working and can’t make it out to the seminar or practice area. We do think that people get a better handle on it when they’re interacting, looking at what their mistakes are and laughing when water squirts up in their faces.
We find that everybody’s so into purchasing the home that they forget about those little things that happen that could damage the house or that can create serious issues with the house over time if they don’t know what to look for. Those basics are important. We think that helps them understand that now it’s not about calling a landlord.
Q: When it comes to the system related to the rehabilitation of homes – what some call naturally occurring affordable housing – what challenges do you see?
A: In the urban core, appraisals aren’t where they should be when looking at the square footage of housing. When we’re talking about the same size house, the same amount of bedrooms, kitchens, bathrooms, they’re not appraising for the same amount. Today it’s getting a little bit better.
We also are dealing with people who have lived in their houses for quite some time, and they could have had some challenges when it comes to credit scores. They’ve put their kids through school. They’ve done a lot of things in their lives and now they’re starting to think about aging in place and staying in their homes, and their credit scores aren’t where they need to be or their debt-to-income ratio, because they’re adults and things have happened. So there are challenges when they’re looking at refinancing to do some type of remodeling. And you have to have a decent credit score to be able to do that even though the house is almost paid off. They have equity in their homes, it’s just a matter of getting that equity out.
Q: What in that system do you see working well?
A: The banks here in Kansas City are doing a lot of great things. (For example), they have lowered the (required) credit score so that a borrower could renovate their home. Again, the only reason that the homeowners haven’t done it is because of access to capital and the credit score. So now lowering that credit score, they will be able to do some of the work, like the new roof or paint or gutters, the things that will prolong the lifespan of the house, so they can age in place.
Q: What trends do you see heating up that will have an impact on the ability of people to rehab their homes?
A: Our banking partners have new products that are intended to help the clients we serve. This is something they have been working on for the last two or three years. The products are really tied to our local low- and moderate-income (LMI) population. Some of the products are based on the census tract and some of them are based on income. They’ve really stepped up and are listening to not only the organizations like ours that are trying to help people through these challenges, but they’re talking amongst themselves also to get products that are truly looking at the LMI population. Most of the loans they’re doing are not typical loans, but they’re listening and working through the requirements and doing a great job of homeownership preservation. We’re ecstatic.
Q: When you think about what might help people better afford to rehab their homes, what comes to mind?
A: When we talk about rehabbing a home, we shouldn’t let people take out money to rehab on their own. There should be a mechanism that helps them with that process. It’s tough to find qualified folks to help you without being taken advantage of. That’s a huge barrier. Having a pool of people you can trust plays a part in the process. It can be very stressful. Living through construction is not easy.
Q: What plans does CHES have in the works?
A: CHES is putting together a CDFI to do really low interest loans for housing, like keeping rates at 2 or 3 percent. It’s also to help people with their credit scores so we can help them get back into the (regular) market. We are working on the CDFI now. We’re doing small loans, looking to get our designation.
We are also looking at community land trusts (CLTs). That’s another solution for people looking for home ownership. It’s not the traditional way we’ve looked at home ownership. Our mantra was, owning a home gives you generational wealth. With CLTs, there is some equity but not the full amount. It’s a steppingstone. It gives you a way to test the waters. With the CLT you own the house but not the land. It’s not a rental, but there are mechanisms to bail you out if needed. So there will probably never be a foreclosure because that property continues to turn over. The equity is based on how many years you stay there.