The Bank of Labor, headquartered in Kansas City, Kansas, is one of six large institutional investors that have invested in the IMPACT Mortgage Opportunities Fund.
The fund exceeded its initial capital target and raised $210 million in recent weeks, according to a news release.
IMPACT seeks to make positive social change in America’s underinvested communities by preserving existing affordable multifamily properties and providing investors market rate returns, the news release stated.
The fund’s successful close signifies the impact financial institutions can make on affordable housing. Investors joining Bank of Labor include Farmers Insurance, Nationwide and Pacific Life Insurance Company.
“IMPACT’s mission aligns well with our Bank’s efforts to support the working class in Kansas City and across the country,” noted Joe Schoonover, first vice president, at Bank of Labor. The bank formerly was known as Brotherhood Bank.
Since 2001, IMPACT has invested over $1 billion in affordable housing. Unfortunately, the nation’s housing crisis faces an immediate threat: affordability restrictions on hundreds of thousands of federally assisted homes are set to end over the next several years, placing these properties at risk of becoming market-rate rentals, according to a bank spokesman. In 2021 alone, affordability restrictions on more than 123,000 federally assisted units are due to expire.
The fund helps address this need by providing high-quality, short-term bridge loans to developers and owners of affordable housing who want to preserve their properties’ affordability status. The loans provide borrowers time to apply for permanent financing and government subsidy programs.
“IMPACT will bring tremendous value to developers from the Kansas City region who are seeking bridge or permanent financing on affordable housing projects,” Schoonover stated. He added, “Bank of Labor has the know-how to assist with scoping local projects and helping developers successfully navigate the funding.”
Over the lifespan of the fund, IMPACT expects to preserve over 5,000 affordable units across the United States.
“To address the critical need for quality, safe, and affordable housing across the country, we have to meet the short-term challenge of preserving the current at-risk housing supply,” said Jeff Brenner, IMPACT’s president and chief executive officer.
“IMPACT’s Mortgage Opportunity Fund means funding for developers that will result in thousands of more affordable homes from the Midwest to the coasts,” Schoonover stated. He added, “It’s exciting to be behind this effort to provide new housing opportunities to families ready to settle into a community.”