Housing, homeowners benefit from ADU construction loan programs

Editor’s note: This story has been updated to correct the name of one of the banks that offer loans to homeowners who want to build secondary suites. First Citizens’ Federal Credit Union is one of the banks now offering such loans on Cape Cod.

When Alisa Magnotta and Housing Assistance Corporation staff began researching why there weren’t more secondary suites (ADUs) in Cape Town, they learned that traditional loan options were holding some homeowners back.

They have asked local lenders for help, Magnotta said. Now Cape Cod 5, First Citizens’ Federal Credit Union and the Cooperative Bank of Cape Cod offer products for owners who want to build ADUs – an in-law unit is an example of an ADU – but who otherwise could not. make.

The offer of each bank is different and depends on the situation of the owner and the type of equity he has. Homeowners can refinance their home, take out home equity lines of credit or home equity loans.

“They all want to get more homes online,” Magnotta said. “They want to help their customers and Cape Town owners succeed.”

Magnotta said having the right type of loan that can inspire year-round housing is a great tool. This will help customers and landlords in Cape Town, and it will bring more accommodation online, she said.

Nine towns in Cape Town have established secondary suites by-laws to tackle the housing crisis. Although regulations vary from city to city, loan products require ADUs to be used for year-round, not short-term rentals.

The Housing Assistance Corporation has been at the forefront of affordable housing efforts since 1974. Today, it offers an incentive program for people to build ADUs, a technical assistance program that guides homeowners throughout the construction process and a vetting process to ensure tenants and landlords are a good match.

Continued: Barnstable proposes ADU ordinance, zoning changes to increase housing units

“We wanted to make it easier for landlords to say yes to housing construction,” Magnotta said.

HAC enticed homeowners to be part of the solution by offering technical assistance, incentive payments and loan products that it said were modeled after the solar industry.

“We hope to develop a scalable program that we can expand beyond Cape Town,” Magnotta said.

Local lenders are essential to the efforts.

Continued: Housing headache: Can a new regulation help Wellfleet solve a crisis for workers and residents?

The Cooperative Bank of Cape Cod has flexible qualification guidelines in place, including considering an applicant’s projected rental income in addition to their existing income.

Projected earnings usually can’t be taken into account, but community banks have more flexibility, according to Shanika Rogowski, senior vice president and director of residential loans at the Coop.

“We hope this will open the door for a lot of people who might not have had that option,” Rogowski said.

Banks use city criteria for long-term rental contracts. They work with local appraisers to assess appropriate rental amounts. What makes loan products special is that they work with affordable housing efforts by requiring year-round rentals.

“A great thing about living and working in Cape Town is the people and the community,” said Magnotta. “We are problem solvers.”

She points to the controversy surrounding so many affordable housing projects, including Twin Brooks in Hyannis and Cloverleaf in Truro. Building 150 apartments would require millions of dollars, millions in grants and between three and five years, she said.

Continued: To understand Cape Cod’s housing crisis, watch what’s happening in Twin Brooks

“But if every city encouraged 10 homeowners to build ADUs, we could have 150 apartments in less than a year,” Magnotta said. “Without taxpayers’ money. You have a real solution.

For more information, visit https://haconcapecod.org or contact the mentioned banks directly.

Contact Denise Coffey at [email protected]

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