Neighborhood Housing Services Of America To Cease Operations

OAKLAND, Calif.--The Board of Directors of Neighborhood Housing Services of America (NHSA) has authorized the orderly wind down of its affordable housing programs due to extraordinary liquidity demands resulting from the current severe housing market downturn. The financial demands of the current market and expected continuing challenges have contributed to NHSA's inability to secure its annual grant from NeighborWorks America (NWA). The lack of grant funding has left the nonprofit organization with liquidity levels that will not allow it to continue operations.

NHSA has been a strong contributor to the community development field for 35 years, raising private sector funds for purchasing loans from local nonprofit housing organizations that supported lower income first time home buyers. As a secondary market source for loans outside the normal conventional market, NHSA was a leader in demonstrating the value and success of responsible lending to low-, and moderate-income first time home buyers with the collaboration of local community based entities to provide first mortgages and subordinated rehabilitation and down payment financing. Pursuant to the legislation that created the Neighborhood Reinvestment Corporation, NHSA’s business model relies on an operating and capital subsidy from NWA in support of the NeighborWorks Organizations who sold loans to NHSA.

During the past year, NHSA has implemented a comprehensive restructuring plan, including the hiring of restructuring specialists, a significant reduction in operating expenses, the cessation of funding of its technology initiatives and changes in management and board governance. During this period, NHSA has successfully negotiated concessions in loan terms and interest rates from its lenders/investors, in anticipation of obtaining the grant funding necessary to support the continued purchase of loans for low- and moderate-income homeowners from the NeighborWorks Organizations.

NHSA is planning an orderly wind down of its operations over the next several months. During this period, every effort will be made to protect the interests of its lenders, other creditors, customers, employees and other stakeholders in the community lending field. It will no longer purchase new loans, but NHSA will continue to collect payments and service existing mortgage loans until arrangements can be made to transfer these responsibilities to other parties. NHSA will seek to minimize losses and maximize recoveries on behalf of its creditors. It will continue to enforce contractual arrangements with all parties. It may seek to sell mortgage loans, mortgage servicing rights, its interest in intellectual technology rights and other assets, as appropriate. Should other opportunities emerge; the Board will evaluate the feasibility for other outcomes.

Bruce Gottschall, Chairman of the Board of Directors of NHSA stated, “Neighborhood Housing Services of America has been a strong supporter of the community development field for 35 years. NHSA has arranged responsible mortgage financing for thousands of homeowners who otherwise would have been unable to own or rehabilitate their homes, or would have paid higher, unaffordable interest rates. Its unique programs have also helped many current homeowners avoid foreclosure during these difficult economic times. NHSA has also served its investors by maintaining delinquencies and credit losses on its mortgage loans at levels well below national averages for similar borrowers. NHSA is proud of its success in meeting the needs of so many low- and moderate-income and minority citizens. It is unfortunate that circumstances require the ending of this exemplary contribution to the nation’s housing needs.”

About NHSA

Neighborhood Housing Services of America (NHSA) is a nonprofit secondary market for home loans to low- and moderate- income homebuyers. Since 1974, NHSA has helped place thousands of fiscally responsible consumers into homes, injected capital into local communities, and bolstered the U.S. economy through sound investments in mortgage lending. With the support of private social investors, as well as government funding, NHSA’s endeavors have created a win-win solution for investors, homeowners and communities. To learn more visitwww.nhsaonline.org.