# Mutual Benefits: AFI Projects and Housing Agency

# Self-Sufficiency and Homeownership Programs

> Assets for Independence Projects and housing agencies share a mission:
> to help low-income families achieve self-sufficiency. For housing
> agencies, self-sufficiency primarily means a family has no need for
> assistance with the costs of shelter; for AFI Projects the emphasis is
> on creating asset ownership as a base on which a family can build to
> insure long-term self-sufficiency. With assets, whether a home, a
> revenue-generating business, or additional education or training,
> individuals and families are less likely to need housing assistance.
>
> There are a number of housing agency-based programs that can
> complement the opportunities and services embedded in Assets for
> Independence Projects and have greater impact for participants and the
> local community. Partnerships between AFI Projects and local housing
> agencies have already produced strong, positive outcomes around two
> programs in particular: the Family Self-Sufficiency Program (FSS) and
> the Section 8 Housing Choice Voucher Home Ownership Program. A number
> of AFI grantees are already linked to these opportunities, but many
> more may be able to develop productive relationships with local
> housing agencies. Following are:

-   Brief descriptions of how these two programs work, from the
    perspective of the housing agency and of an AFI Project;

-   Summary information on a few other housing programs that AFI
    grantees may wish to explore further; and

-   Links to more information on these and other complementary housing
    initiatives.

## The Family Self-Sufficiency Program (FSS)

> Residents of multifamily public housing properties or families
> receiving housing assistance in the form of a partial rent subsidy in
> the open market, a Section 8 voucher, may participate in the FSS
> program, or may be required to participate. In an FSS program,
> residents receive services similar to those included in AFI Projects,
> such as financial education. They build up saving through an escrow
> account, similar to an AFI match. Residents enter into a five-year
> agreement with the housing agency and develop an Individual Training
> and Service Plan (ITSP) that may extend up to seven years. In some
> ways, the ITSP is similar to an AFI participant's Savings Plan
> Agreement: it sets out obligations and benchmarks for the participant
> and the agency and the conditions under which the participant will
> have access to the escrow account.
>
> The ITSP is based on an analysis of the participant's barriers to
> economic self-sufficiency, such as low educational level, high debt,
> lack of transportation, weak employment history, and the like. The
> participant and the housing agency, represented by an FSS coordinator,
> agree on specific steps the participant will take to increase
> household earnings over the long run. Steps may include securing a GED
> if necessary or other training, paying off debts, getting or keeping a
> job, or advancing in a career path. The premise is that addressing
> these issues successfully will result in increased earnings.
>
> Normally, the amount of rent paid by a family receiving housing
> assistance through rent subsidy or residents in public housing depends
> on income: the higher the income, the higher the rent paid (or the
> lower the rent subsidy), up to 30 percent of adjusted household
> income. For FSS participants, however, the participant pays their rent
> increase to the property owner but may recapture the increase in the
> future. From its own funds, the housing agency sets aside up to 30
> percent of the increase in an interest-bearing escrow account. Over
> time, these accounts may accumulate quite large sums, and there is no
> ceiling on the total amount. Families may not receive a final payment
> from the escrow account if they do not satisfy the terms of their
> Individual Training and Service Plan. Thus the FSS escrow account
> offers an incentive to progress toward self-sufficiency while building
> savings. Unlike AFI, however, no "match" or additional funds come into
> play. Available data shows that more than 71,000 individuals have
> participated in 1,400 FSS programs around the country. The average
> amount accumulated has been more than \$3,300, but it is sometimes
> much greater. Individual income increases may jump by as 200 percent
> and higher.[^1]
>
> To receive the funds from the escrow account, an FSS participant must
> satisfy the terms of the Individual Training and Service Plan.
> Further, the individual must have not received welfare cash assistance
> for a full year, and no one in the household may be receiving
> assistance at the time the escrow is paid to the participant. Funds
> are usually paid directly to the participant, rather than to a third
> party, and may be used for almost any purpose, including
> homeownership, education, business capitalization, retirement or other
> goals consistent with support of self-sufficiency and specified in the
> ITSP. It is also possible to receive FSS escrow funds incrementally,
> for education or work-related expenses, for example, as the
> participant is meeting benchmarks over the life of the Individual
> Training and Service Plan. About one-third of FSS graduates have used
> their savings for homeownership.
>
> FSS participants usually must attend financial education classes. They
> may also receive homeownership training, small business training, or
> case management services, provided by the FSS coordinator, other
> housing agency staff, or outside partners. Thus, FSS components
> closely align with those of most AFI Projects. The ability of the
> housing agency to support an FSS coordinator is the key to having an
> FSS program and to mutually beneficial coordination with AFI Projects.
> A housing agency rarely offers an FSS program without an FSS service
> coordinator.

### How AFI Projects and FSS Programs Can Work Together

> Clearly, local FSS and AFI initiatives can help each other and jointly
> could provide more benefits to participants served by both programs.
> In addition to the potential for participants to have much larger nest
> eggs for asset purchase, there are a number of other ways in which AFI
> Projects and FSS Programs can mutually enhance their outcomes. Among
> these are:

-   Cross referrals: The FSS program and the AFI Project may refer
    individuals who are eligible for each other's programs, but each
    initiative operates independently.

-   Sequential services: Often, FSS participants need to achieve some of
    their plan benchmarks before they are strong candidates to enter and
    complete the AFI savings and asset purchase process. AFI-eligible
    individuals may, for example, complete financial education, begin
    separate savings, stabilize in employment, or resolve significant
    legal or credit issues before being referred to an AFI Project.
    Establishing and maintaining a savings account prior to enrollment
    are common, though not required, thresholds for enrollment for both
    FSS and AFI Projects. Sequencing could also lead to more than one
    asset for participants, for example, postsecondary education through
    the FSS program and then home purchase through AFI.

-   Shared services: FSS program staff and AFI staff can serve the same
    individual concurrently, allocating provision of services that are
    common to the two programs, such as financial education or
    homeownership preparation. Other project components, such as case
    management or crisis counseling, may be shared as well, resulting in
    lower attrition and greater success for both programs. Of course,
    each participant served concurrently must meet each program's
    eligibility requirements separately

## The Section 8 Housing Choice Voucher Homeownership Program

> The Section 8 Housing Choice Voucher Program allows eligible
> participants to rent any unit that meets HUD housing quality standards
> and where the property owner has contracted with the housing agency to
> receive vouchers as partial payment of the rent. The housing agency
> agrees to pay participating landlords a portion of the monthly rental
> fee, calculated so that the renter is not, in most cases, paying more
> than 30 percent of adjusted household income for shelter. The total
> rental charge cannot exceed a fair market rent figure calculated
> annually for each market. Under the Section 8 Homeownership Voucher
> track, the housing agency may also choose to allow the voucher to be
> used for homeownership, agreeing to cover some part of a first or
> second mortgage payment (including principle, interest, taxes and
> insurance) for up to 15 years.
>
> To use vouchers for homeownership, individuals *may* be required to
> participate in the agency's FSS program in order to build savings and
> to prepare for independence. The FSS requirements are as described
> above, and the participant graduates with the escrowed savings and use
> of the housing voucher to support purchase of a first home. Housing
> agencies, however, do not have to offer an FSS program in order to
> offer the homeownership option under Section 8. Some agencies choose
> to have in-house staff provide basic financial education and homebuyer
> counseling. Most refer interested and eligible participants to
> external housing counseling agencies, usually those with HUD
> certification. Participants who complete homebuyer training with
> certified agencies are often eligible for additional kinds of home
> purchase assistance or better financing terms from local lenders.
>
> To offer the Section 8 Homeownership Voucher, a housing agency must
> formally adopt a number of policy changes and amend its administrative
> and annual plans according to HUD guidelines. In addition, it must
> develop its own specific program and eligibility policies within those
> guidelines. In contrast to the support of FSS program staff and escrow
> accounts, HUD does not offer any additional compensation for the
> additional tasks linked to implementing Section 8-based homeownership
> initiatives. Despite these disincentives, however, a number of housing
> agencies strongly support use of the Section 8 Homeownership Program.
> First, increasing homeownership is a national priority for HUD, as
> well as for other Federal agencies. Second, there is a very powerful
> and pragmatic reason. Housing agencies have found that owners of
> rental property in many areas are becoming less interested in
> participating in subsidized rental agreements. This factor combines
> with an overall decrease in rental units in many markets. The result
> is that homeownership is becoming a better and more feasible option
> for more low-income families, from the perspective of the family and
> in view of the best use of HUD's resources as well.

### How AFI Projects and Section 8 Homeownership Programs Can Work Together

> From an AFI perspective, the key differences between FSS and the
> Section 8 Homeownership Program are three. First, a Section 8
> Homeownership Program participant may or may not also be an FSS
> participant. Second, the standalone Section 8 Homeownership
> participant will not be building an escrow account that may be used to
> purchase an asset, though he or she may develop some personal savings
> or plan to use EITC refunds to purchase an asset. Third, a standalone
> Section 8 Homeownership participant will rarely receive housing agency
> support for activities leading to asset purchases other than a first
> home. In light of these differences, potential ways that AFI Projects
> and Section 8 Homeownership Programs can work together include:

-   Enrollment of AFI-eligible individuals who have completed homebuyer
    training through the housing agency but who still need general
    financial education and accumulated savings and match to make the
    home purchase.

-   Shared responsibility for homeownership purchase. The housing agency
    might provide financial education, homeownership training, or other
    supportive services, with the AFI Project supplying the missing
    elements, specifically the savings and match infrastructure, but
    perhaps other elements as well. Thus, the AFI Project does not bear
    all the costs of critical service components and the participant may
    have easier access to additional purchase support, such as soft
    second mortgages or other forms of downpayment assistance.

> The best combination would be for AFI Projects to work with housing
> agency residents who are also FSS participants, but there are benefits
> to working with standalone Section 8 Homeownership participants as
> well, particularly for projects that have chosen to offer only or
> primarily homeownership as their AFI asset option.

## Other Housing Programs of Interest

> Following are brief descriptions of a few other homebuyer assistance
> programs that AFI Projects may wish to explore in their own areas and
> with the local housing agencies. You can reach descriptions of these
> programs from the HUD home page:
> [http://www.hud.gov](http://www.hud.gov/). Search on the program name.

### U. S. Department of Housing and Urban Development

> *[HOME (HOME Investment Partnership Fund)]{.underline}*
>
> HOME provides formula grants to states and localities that communities
> use to support a range of activities related to homeownership. Many
> AFI projects link home-buying participants to local entities that
> manage HOME-funded downpayment assistance (in the form of grants and
> forgivable loans), homeownership training, and other services.
>
> *[American Dream Downpayment Initiative]{.underline}*
>
> ADDI is a subset of HOME focused on increasing homeownership,
> especially among lower-income and minority households. Assistance goes
> to low-income, first-time homebuyers to purchase single family homes.
> Funds may be used for downpayment, closing costs, and rehabilitation
> as part of the purchase process.
>
> *[HOPE VI and Community Supportive Services]{.underline}*
>
> HOPE VI is the program under which dense, multifamily sites are being
> redeveloped as mixed-income communities. Residents of the existing
> sites may receive a number of services, such as education, aimed at
> preparing them to return to the new community or to live elsewhere.
> HUD is encouraging housing agencies that have HOPE VI projects under
> way and that are providing case management under HOPE VI to offer a
> Family Self-Sufficiency program to those residents.
>
> *[Resident Opportunity and Supportive Services Program
> (ROSS)]{.underline}*
>
> ROSS programs may include a wide range of services to residents,
> throughout a housing agency or at one or more specific sites.
> Financial education, employment and training for career advancement
> are only a few activities that could intersect comfortably with AFI
> Project designs locally. Site-based resident organizations manage
> their own funds so multiple relationships are possible. Local housing
> agencies can provide the correct contact information for resident
> organizations.
>
> *[Rural Housing and Economic Development (RHED)]{.underline}*
>
> RHED supports capacity building and innovative housing and economic
> activities at the state and local level. Funding of individual
> development accounts is an allowable activity under the innovative
> housing and economic development track, though this resource cannot be
> used as nonfederal match to AFI funds.
>
> *[University and Community Partnerships]{.underline}*
>
> *[Historically Black Colleges and Universities
> Partnerships]{.underline}*
>
> Both of these programs link the resources of higher education
> institutions to local community organizations and activities to
> address housing, homeownership and other community issues, sometimes
> through a nonprofit affiliate. A few of these programs include
> individual development accounts in their activities.
>
> *[Youthbuild]{.underline}*
>
> Under the Youthbuild program, unemployed young people, ages 16 to 24
> prepare for GED exams while developing job skills (often in
> construction).. The program emphasizes leadership and community
> service, and includes Individual Development Accounts as an allowable
> activity. There are Youthbuild programs in 47 states and territories.

### Other Homeownership Coordination Opportunities

> *[Federal Home Loan Banks]{.underline}*
>
> The 12 regional Federal Home Loan Banks provide to their member
> financial institutions low-cost funds for mortgages and small business
> and rural and agricultural loans. They also support homeownership
> asset building through their own Individual Development and
> Empowerment Account (IDEA) program. With IDEA, a member bank can
> receive up to \$50,000 in an annual competition to match savings of
> eligible participants who have saved under an Individual Development
> Account or Family Self-Sufficiency program. The amount available for
> each purchase varies by region. Further, the funds are generally
> available only at closing and may not be used for any operations or
> services the IDA program provides to participants.
>
> *[Habitat for Humanity]{.underline}*
>
> The Habitat approach is the most well known of the self-help
> approaches to linking low-income families to homes. In the Habitat
> model, participants, along with family members, friends, and Habitat
> volunteers, actually help with the construction of their home, with
> the number of hours of this "sweat equity" varying by locality.
> Usually, the participant purchases the home from the Habitat chapter,
> and the organization also requires (and provides) financial education
> and homeownership training.

## Additional Resources

> Following are links to organizations and resources that provide more
> information on the FSS and Section 8 Homeownership Voucher Programs.
>
> **American Association of Service Coordinators**
>
> http://[www.servicecoordinator.org](http://www.servicecoordinator.org/)
>
> This organization helps its members with shared knowledge and
> practices and sponsors an annual meeting. Members work with a number
> of supportive programs for families, the elderly, and the disabled.
>
> **FSS Partnerships**
>
> [www.fsspartnerships.org](http://www.fsspartnerships.org/)
>
> This organization brings together the available research on the Family
> Self-Sufficiency Program and on its outcomes. FSS Partnerships also
> provides technical assistance to housing agencies and other
> organizations with an interest in implementing FSS programs, whether
> in the context of Housing Choice Homeownership Programs or not. There
> are also links to a variety of other community-based and advocacy
> organizations with an interest in promoting this asset-based strategy
> and to a few regional associations of FSS Coordinators.
>
> **National Association of Housing and Redevelopment Officials**
>
> [http://www.nahro.org](http://www.nahro.org/)
>
> This organization advocates for adequate and affordable housing and
> strong, viable communities for all Americans---particularly those with
> low- and moderate-incomes. Members administer HUD programs such as
> Public Housing, Section 8, Community Development Block Grants, and
> HOME. Much information is available without membership.
>
> **National Low Income Housing Coalition**
>
> [http://www.nlihc.org](http://www.nlihc.org/)
>
> This organization brings together various entities with an interest in
> affordable housing: developers, advocates, service organizations, and
> the like. The site offers summaries and information on the current
> status of many Federal and state housing initiatives. As with NAHRO,
> the site offers much information and resource links without
> membership.
>
> *Compiled by Anne Yeoman for the Assets for Independence Resource
> Center, with assistance from Anna Oles, Peggy Martinez, and others.*

[^1]: There is not yet comprehensive research on outcomes for all FSS
    programs. For current information, go to
    [http://fsspartnerships.org](http://fsspartnerships.org/).