Miki Adams of CBC Mortgage Agency: How Down Payment Assistance Has Evolved Over Past Decade

Miki Adams is president of CBC Mortgage Agency (CBCMA), a nationally chartered housing finance agency and a leading source of down payment assistance for first-time homebuyers. She joined the Cedar City, Utah-based company in November 2016 as executive vice president and was promoted to president in January 2021. She has 30 years’ mortgage lending experience and has managed companies through calm and tumultuous markets.

Adams’ background includes credit and collateral underwriting, secondary marketing and portfolio asset management, regulatory compliance, and regulatory audit and examination management. MBA NewsLink interviewed her about down payment assistance.

MBA NEWSLINK: How have the number of down payment assistance transactions changed since 2013?

MIKI ADAMS, CBC Mortgage Agency: DPA has grown dramatically over the past decade. There are many different types of DPA, DPA programs and sources, so it’s difficult to get an accurate total of the number of loans that include some form of assistance. But according to HUD, DPA was used on 210,514 FHA purchase-money transactions in 2013. Last year, that number was 278,023, which should give you an idea how popular DPA has become.

NEWSLINK: Has the growth in DPA been evenly spread across different sources?

ADAMS: Not really. Most of the growth in DPA has been concentrated in government sources of DPA, which soared from fewer than 50,000 of FHA purchase transactions in 2013 to nearly 95,000 last year. During 2021, when mortgage rates were significantly lower than they are today, more than 127,000 homes were purchased with government sourced DPA. Meanwhile, the number of borrowers who received down payment help from a family member increased only mildly during the same time frame, from 157,829 to 175,709.

NEWSLINK: What is the benefit of down payment assistance?

ADAMS: The immediate benefit is that borrowers who are otherwise credit-worthy but simply don’t have enough money for a down payment can use DPA to get over this hurdle. However, the biggest benefit is unlocking wealth accumulation through homeownership, especially for people in low income and minority communities. Keep in mind that home equity is by far the largest source of wealth for the average U.S. household. For example, last year, the National Association of Realtors reported that the average single-family homeowner who bought a home 10 years ago gained $225,000 in housing wealth through their home’s equity.

By helping more borrowers overcome the down payment hurdle, DPA also promotes broader economic equality and opportunity. Think of all the different things homeowners can do with their home’s equity, like paying for home improvements, a child’s college education or their own home purchase, or even starting a small business.

Homeownership also creates generational wealth, allowing people to pass on their homes or the proceeds from its sale to their children. Ultimately, DPA plays a significant role in fostering wealth creation and promoting economic growth within traditionally underserved communities.

NEWSLINK: Why do low-to-moderate income consumers struggle so much with saving for a down payment?

ADAMS: While this group might have sufficient income to sustain homeownership, they don’t have the same level of accumulated wealth as higher-income consumers. They also struggle to save up for a down payment because of the increasing cost of rent and other goods and services. Yet another reason this group struggles is that they typically have little to no financial cushion, so they are less likely to part with what money they do have in case they run into an unexpected emergency. For these individuals, the prospect of saving for a large down payment can seem daunting and, in many cases, unattainable.

That’s why DPA programs like CBC Mortgage Agency’s Chenoa Fund are so valuable—they create a viable path to homeownership by enabling low-to-moderate income consumers to circumnavigate one of the most significant barriers to buying a home. By reducing the upfront financial burden, these individuals are better equipped to achieve sustainable homeownership as well as greater financial security in the long run.

NEWSLINK: Are all types of DPA the same?

ADAMS: Not at all. DPA comes in a wide variety of forms and from numerous sources. For example, there are state housing finance agencies and government agencies that provide structured programs designed to help homebuyers with the necessary down payment. These often come in the form of grants, second mortgages, or low- to no-interest loans. These programs may have eligibility requirements, often based on the borrower’s income level or whether they are a first-time homebuyer.

In addition, many companies offer Employer-Assisted Housing (EAH) programs to their employees as part of their benefits packages, which may include assistance with down payments or closing costs. You’ll often see these programs in high-cost areas where employers are trying to attract and retain talented workers who may not be used to such high housing prices. Alternatively, a homebuyer’s family members can also provide DPA in the form of gifts, which are typically acceptable to most lenders provided that the gift-giver is a close relative, and the funds are truly a gift and not a loan.

While the end goal for most DPA is the same, it’s always advisable for potential homebuyers to research and explore all their options to identify the type of assistance that best fits their needs and circumstances.

NEWSLINK: How does CBCMA fit into the housing market?

ADAMS: CBC Mortgage Agency is 100% Native American owned and a HUD-approved FHA Government Entity Mortgagee. We are a national provider of down payment assistance. Our DPA is provided in conjunction with FHA first mortgages originated through approved correspondent lenders. Our DPA program is completely self-funding–we do not rely on taxpayer dollars to fund the down payment assistance. Funding is derived from secondary market premiums earned and from the sale of second mortgages to banks and private investors interested in CRA credit. The program’s unique structure allows our lender clients to offer their borrowers the benefits of DPA without having to carry the risk of the second mortgage on their own books.

In this way, we’ve been able to help lower-to-moderate income consumers – and our own CBCMA employees — overcome one of the most significant barriers to homeownership. In fact, over the past decade, CBCMA has helped more than 42,000 consumers buy their own homes, most of whom are people of color. Ultimately, we see ourselves as a vital bridge between lenders and borrowers that is helping to unlock the keys to homeownership while building stronger, more sustainable communities.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Michael Tucker, editor, at mtucker@mba.org.)