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The Role of Community Development Financial Institutions in Home Ownership Finance

Research funded by Abt Associates for the Community Development Financial Institutions Fund, U.S. Treasury Department

The center examines the role of community development financial institutions in providing home loan in communities and protecting consumer from high-priced or predatory loans.

Project Overview

Community Development Financial Institutions (CDFIs) provide a range of financing products to low-income and minority borrowers, with mortgage lending making up approximately one fourth of all of this activity. In this capacity, CDFIs play an important role in promoting homeownership opportunities for borrowers and communities that have been historically denied access to mainstream sources of credit, and that have increasingly been targeted by high-priced or predatory loans.

Researchers examined four issues to attain a fuller understanding of how CDFIs fit within the mortgage market in general:  (1) whether and how CDFIs provide access to mortgage finance; (2) whether and how CDFIs keep homeowners in mortgages; (3) whether and how CDFIs provide mortgage financing in rural markets; and (4) whether and how CDFIs save borrowers from predatory or unsustainable mortgages.

The analysis suggests three different roles CDFIs play in mortgage finance, and corresponding strategies supporting these roles for CDFIs. These roles are: CDFIs as alternative lending sources; CDFIs as complements and partners with mainstream financial institutions; and CDFIs as innovators within the mortgage market.


The UNC Center for Community Capital conducts research and policy analysis on ways to make financial services work better for more people and communities.


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