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spotlight innovator

Santhosh Ramdoss

Gary Community Ventures

Denver, Colorado

Twitter: @santhosh
LinkedIn: Santhosh Ramdoss
Twitter: @garycommunity
LinkedIn: Gary Community Ventures

The Dearfield Fund for Black Wealth

Starting Date: 2021-06-01

Innovation Summary

Dearfield Fund provides up to $40,000 in downpayment support in the form of shared equity to help Black families buy their first home, helping to grow and preserve their wealth through homeownership.

The Dearfield Fund for Black Wealth aims to accelerate homeownership among Black families in the Denver metro area through an innovative down-payment assistance product, structured in the form of shared equity. The Fund is currently providing up to $40,000 in down-payment support to Black homebuyers looking to buy their first home and plans to use it as their primary residence. In return, the homeowner repays the Fund the down-payment amount as a lump sum when they sell or refinance their home alongside a small share (maximum of 5%) of the appreciation, while keeping the majority of the wealth generated through appreciation in their home’s value.

Through the Dearfield Fund, we hope to support at least 500 Black families in the Denver metro area to buy their first homes resulting in $50Mn in cumulative wealth creation within Black neighborhoods in the city. Part of the Fund’s strategy is to provide holistic wrap-around services to Black homeowners. This includes both pre-purchase support in navigating both the process of securing a mortgage and making a successful offer on a home. More importantly, the Fund also will work closely with clients post-purchase, helping them navigate their journey as first-time homeowners.

questions & answers

What is the geographic reach of your work to date?

Local

Which metropolitan areas (if any) does your work focus on?

Denver, Colorado

What is the core idea of your innovation? How does it increase the value of homes in Black communities?

The Dearfield Fund for Black Wealth aims to accelerate homeownership among Black families in the Denver metro area through an innovative down-payment assistance product, structured in the form of shared equity. The Fund is currently providing up to $40,000 in down-payment support to Black homebuyers looking to buy their first home and plans to use it as their primary residence. In return, the homeowner repays the Fund the down-payment amount as a lump sum when they sell or refinance their home alongside a small share (maximum of 5%) of the appreciation, while keeping the majority of the wealth generated through appreciation in their home’s value. Homeownership is often the primary vehicle through which White families have accumulated wealth. At the same time, Black homeownership rate in the Denver metro area is 42% compared to 78% for their White counterparts. Effectively addressing the homeownership challenge can help hundreds if not thousands of the Black families to build meaningful amounts of wealth and attain financial stability. While Black homebuyers face a range of barriers in accessing, lending and buying a home, the biggest challenge that families face is in securing the down payment needed for the loan. Through the Dearfield Fund, we hope to support at least 500 Black families in the Denver metro area to buy their first homes resulting in $50Mn in cumulative wealth creation within Black neighborhoods in the city.

Part of the Fund’s strategy is to provide holistic wrap-around services to Black homeowners. This includes both pre-purchase support in navigating both the process of securing a mortgage and making a successful offer on a home. More importantly, the Fund also will work closely with clients post-purchase, helping them navigate their journey as first-time homeowners. Our focus here is to help Black families preserve the value of their homes and protecting homeowners from predatory practices. The Dearfield Fund has established a trusted network of service providers in the housing ecosystem, including mortgage lenders, realtors, contractors, and appraisers, who are aligned with us on our focus on racial equity. Through this network, Dearfield clients will have access to equitable and high-quality services — whether it is getting competitive interest rates on their mortgages or in ensuring that their homes are appraised accurately.

How is your idea new or different from current approaches?

The Dearfield Fund is the first-of-its-kind Black homeownership and wealth fund in the United States. We have created a unique and ground-breaking financial services product directly addressing the needs of Black families helping to bridge the intergenerational wealth gap that prevents Black folks from buying homes. In doing so, we have also built a holistic platform for Black homeownership working with partners and providers in the entire value chain – pre-qualifying for a mortgage, making a offer, closing the home, making improvement, refinancing, and the sale of the home. In building scale through a core financial services product, we have been able to get other providers to minimize bias in their process and build collective bargaining power on behalf of Black clients. Thus, service providers across the homeownership value chain are lining up to work with us, and we in turn are able to ensure that Black homebuyers get fair deal.

What are the primary circumstances that devalue homes in Black communities that you are addressing? What is the impact?

We are able to slow the tide of devaluation in multiple ways: (a) We are helping Black families buy homes in historically Black neighborhoods that are rapidly gentrifying. Thus we are helping to preserve the wealth in Black neighborhoods by slowing gentrification, (b) We are directly helping to bridge the homeownership gap acknowledging the Black ownership is the first step towards preserving values in Black communities, and (c) We are creating a collective voice and platform for Black homeowners, emapannelling high quality service providers and ensuring that homeowners get a fair deal.

What were your “aha” moments (the key insights) that led you to see how your innovation could work?

The key “aha” moment is underlying need amongst Black communities for homeownership. A large share of Black households would qualify for a mortgage, but would be unable to buy a home because of lack of access to down-payment. We have seen a rising tide of applications to the Fund, with limited publicity and marketing, demonstrating aspiration among Black communities to overcome the unfair barriers placed on them to move being renters to owners.

How does your innovation create structural change? What will be different in 5-10 years if you are successful?

We hope that Dearfield pioneers a model for Black homeownership at scale that can replicated across other metro areas in the United States. We have developed a simple, replicable design with scalability built into the model. Additionally, we are seeing growing public interest in down-payment programs at both the state and federal level, with strong opportunity for the Dearfield model scaled through public funds. Thus, in 5-10 years we believe that at least 5,000 Black families in the Denver metro area, and 50,000 Black families nationally being positively impacted through the Dearfield approach, helping them buy, own, and preserve wealth through their homes.

What is your innovation’s path to (i.e. strategy for) success? What momentum or impact have you achieved thus far?

We are raising a $20Mn fund, and already soft-circled a 40% of this in commitments from foundations and impact investors. Till date, the Dearfield Fund has deployed $1.3Mn in capital, helping 33 Black families in the Denver metro area to buy their first homes. The average annual household income among Dearfield clients in $67,000 (67% of the AMI) and the mortgage interest rate for their loans in 2.61%. We have also achieve strong client satisfaction scores with an average approval timeline of 3 days. Most Dearfield clients agree that they would not have been able to buy their homes if it wasn’t the support from the Fund.

What will take your innovation to the next level?

We hope to reach 180-200 Black families in 2022, and reach 500 clients by 2024. Our main priority is to raise concessionary impact capital to finance the Fund and reach our $20Mn fundraise target. Additionally we are also working on putting in place a world-class execution team to oversee the creation of this pioneering Black homeownership platform. However, the thing outside our control is the housing market and interest rates, both of which may adversely affect the ability of prospective Black homebuyers to buy their first home.

How will you involve others to move your initiative forward?

We have built strong local networks. The Dearfield Fund has empaneled a strong cohort of mortgage lenders. The Fund has also built partnerships with the state housing finance agency. On the home-buying side, we working leading Black realtors in the community. Lastly, we are also empaneling a networks of high quality service providers to support homeowners in maintenance, appraisal, valuation, and refinancing.

What is the current composition of your team (types of roles, qualifications, full-time vs. part-time, board members, etc.). How do you plan to evolve the team’s composition as the innovation grows?

The Fund is incubated within Gary Community Ventures, and operation support is provided by the Gary team. This include diverse professionals with experience in impact investing, fund execution, affordable housing, and communications. Additionally, we are in the process of hiring a Partner to oversee the effort, with the penultimate goal of helping to create a independent Black-led, Black-owned enterprise.

How does your team reflect communities directly impacted by the topic you are addressing? Why are you, your team, or organization dedicated to the issue?

The team behind the effort is diverse, with life experiences that reflect the challenges we are trying to solve. Additionally, Gary Community Ventures is deeply committed to address the racial wealth gap, and as a sunset organization, we are committed are ensuring that all are assets are fully invested back in the community by 2035.

Is there anything else you think we should know about your innovation?

N/A

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