A grant from the U.S. Treasury Department will enable nonprofit La Plata Homes Fund Inc. to provide certified housing loans, paving the way for the quasi-governmental entity to become a "community bank."

The $100,000 grant by the Community Development Financial Institution Fund will be used for the Regional Housing Alliance's nonprofit arm to provide larger housing loans to low- to median-income residents.

RHA Director Jennifer Lopez defined "community bank" as a governmental entity operating with the mission of providing capital to low-income communities through lending and investment, similar to the federal government's Department of Housing and Urban Development.

Lopez expects that CDFI certification will be awarded this summer, making the RHA Homes Fund the only CDFI in the Four Corners and the Western Slope. She said the designation will allow the agency to provide more loans to families in La Plata County with a median annual income of up to $84,000.

Some city councilors have raised concerns at past meetings that the program unfairly burdens the city with financial liability, but Lopez said the loans RHA gives out don't just go to risky borrowers who can't get bank loans.

"We only provide mortgage assistance to families who could get a first mortgage. What we do is literally fill a gap," she said. "So Joe Schmo, who can afford a $150,000 mortgage when the lowest thing on the market is $200,000, we provide that gap assistance for the $50,000 in the form of a second mortgage. That allows him to have an affordable home."

But City Councilor Doug Lyon said he wants to know more about the program.

"I congratulate the RHA for acquiring another grant," he said. "I believe that all of the Regional Housing Alliance partners need to become comfortable that the creation of a community bank by the RHA poses no liability and risk to the city of Durango and the other funding partners."

RHA was founded in 2003 but did not become permanently staffed or fully functional until 2006. The agency's operations are funded primarily through an intergovernmental agreement between the city of Durango, La Plata County, Bayfield and Ignacio and federal grants. The launch of the Homes Fund program was bolstered by a donation of $1.1 million last year by BP.

The Homes Fund is positioned to hand out about 20 to 30 loans this year with a 37 person waiting list. RHA housing counselor Luan Dody said she advises between five and seven new clients a week on the basics of home purchasing and managing credit.

The legitimacy that comes from a CDFI designation, Lopez said, will allow the Homes Fund to compete for more federal grants and private donations. Along with providing second-mortgage lending, RHA intends to direct a portion of the grant to go to predevelopment financing and speeding up rental developments.

Lopez said there's never been a better time to buy a house.

"It's sort of the perfect storm," she said. "You've got a slowdown in home building. You've got four-year lows for first mortgages. You've got a 25 percent drop in median house prices in the county. And you get a tax credit if you're a first time homebuyer."

gandrews@durangoherald.com