To help provide affordable housing throughout the five boroughs, the New York City Pension Funds will invest $450 million to purchase and support non-predatory mortgages for New Yorkers and veterans.
The $450 million will be invested through a separately managed account with RBC Global Asset Management’s Access Capital Community Investment, which includes a renewal of $300 million that had been previously invested and the addition of $150 million in new funds. According to co-founder and managing director Ron Homer, RBC GAM Access Capital has been managing money for the city since 2007.
The investment, which looks to support and create “tens of thousands of affordable single-family homes and units citywide,” will also include a first-of-its-kind program to support affordable housing for veterans.
“We have to work together to make New York City more affordable—and we’re taking action in innovative ways through the Pension Funds. We’re demonstrating that you can simultaneously protect the retirements of hardworking New Yorkers while mitigating one of our city’s long-term challenges,” New York City Comptroller Scott M. Stringer said in a statement. “We’re proud to have helped create and preserve over 100,000 affordable units citywide, and even more thrilled to launch a new effort to support our veterans. Through this initiative, we’re helping everyday families, adding long-term affordable housing, and strengthening our pension funds.”
In partnership with RBC GAM Access Capital, the Comptroller’s office will invest at least $5 million each year in financing mortgages guaranteed by the Department of Veterans Affairs to veterans and their families living in New York City. The goal is for 10% of all capital invested through RBC GAM Access Capital to go these mortgages. In addition, one of the main intentions of this Veterans Administration (VA) program is to help more multi-family buildings and co-ops qualify for the loans.
“That was our idea,” Homer told CIO. “We were doing some work with the federal home loan bank, and they started to work with smaller banks to provide access to the Ginnie Mae securitization window. They’ll buy out individual loans and the federal home loan bank will hold those loans on their balance sheet until they have a large enough pool, and they’ll package them and they’ll sell them off.”
The idea for implementing the VA program came about when Homer was talking to program organizers and inquired about which type of loans were being purchased. After learning that VA and FHA loans were on the agenda, he mentioned that he’d love to be involved in something like that, which would eventually become the veterans deal. Homer admitted that he has a soft spot for VA loans, as his father, a World War II veteran, was able to not only become a citizen based on his service, but able to buy the Brooklyn home he grew up in through a VA mortgage. Homer and his associates were also aware from published articles that New York City had “less than 300 VA loans in 2013-2014,” which prompted his push for more awareness and support of VA loans.
“It’s a great program because it’s no down payment, you get some of your closing costs, [and] your income to loan lenders are a little higher. It’s a program that allows veterans to buy a home quicker than if they had to go conventionally, but they also happen to perform very well,” Homer said. “The combination of there being a need for it in New York City, the publicity surrounding it that made us aware of that need, and the city understanding that need was very helpful.”