A Conversation with Darryl Smith
In 2021 Windermere partnered with Homesight to create the Sam Smith “Hi Neighbor” Homeownership Fund. Named for legendary Washington State Legislator Sam Smith, who passed the state’s Open Housing Law barring discrimination based on race and religion in 1967, HomeSight’s fund helps Black/African Americans achieve their dream of homeownership. Building on his legacy, The Sam Smith “Hi Neighbor” Homeownership Fund provides deferred, low-interest loans to bridge the affordability gap for low-to-moderate income Black/African Americans whose homeownership rates have lagged far behind the rest of the population in Washington State, and for whom few resources are available
HomeSight is a local nonprofit helmed by Executive Director Darryl Smith. As HomeSight’s website states: “Since 1990, the organization has worked to preserve and promote economically and culturally diverse communities through affordable homeownership, business development, and community advocacy.” With an emphasis on homebuyer education and innovative loan and financing products to help first-time homebuyers of diverse backgrounds, HomeSight aims to create affordable, stable housing and build generational wealth for those who need it most.
Windermere Mount Baker’s Owner and Designated Broker, Joe Easterday, recently sat down with Darryl to learn a little more about HomeSight and their programs.
JOE
Darryl, can you tell us a little about your background and how you became the Executive Director at HomeSight?
DARRYL
Sure. It’s always great to chat with my old colleagues at Windermere. In fact, when I was a broker at Windermere for almost 15 years, our desks were pretty close together upstairs on the second floor. So I came to HomeSight from a circuitous route. As I mentioned, I was a real estate broker focusing on Southeast Seattle and the southern end of the city from about 1995 to 2009. I left the business when we were experiencing the great housing crash here. After that, I ended up working pretty closely with Mike McGinn in his mayoral campaign.
During that process, I went to City Hall with him and served as Deputy Mayor of the City of Seattle for four years. I had several departments that I was working with for Mayor McGinn. One of those included the Office of Housing, where I learned about how the city’s goals are always trying to be met by organizations like HomeSight and others to increase housing opportunities. So in some regard I’m coming full circle here to HomeSight, because of my background as a broker and a community activist. When I served as deputy mayor and before that as a Seattle planning commissioner, I got a broader view of the whole city of Seattle. And for me, a lot of it was really focused on some of the housing issues.
My activist and volunteer work came together with my professional work as a broker. I realized how challenging it is for low and moderate-income people to remain in the city. We’ve seen gentrification push a lot of folks out of the city and farther south. What we’ve seen in Western Washington in general is a strain on the ability of folks to keep a toe hold in these communities they helped to grow. The city has recognized that we have a housing crisis, both for rentals and homeownership. It’s an incredibly important building block for generational wealth. We need to create those clear rungs on the ladder from the low- and moderate-income rentals, to market rentals, into homeownership. Seattle’s housing ecosystem has not been healthy for a while.
At HomeSight, part of our role as a Community Development Financial Institution (CDFI) lender and a Community Development Corporation (CDC) is to help families remain in the city. As a lender, we strive to create opportunities for families to own a home, pass on generational wealth, and keep some economic and racial diversity in the communities we know and love. HomeSight is a wonderful organization that supports those efforts. We are all about creating generational wealth through homeownership. We try to be a good developer partner to those communities. We’ve built hundreds of affordable homes that are for sale in the city, and we’ll continue to do so.
JOE
Can you go into the specifics of what HomeSight does? Every time I talk with you, I’m impressed with all the different programs.
DARRYL
We are a mission-driven lender. That means we’re a nonprofit lender and a CDFI. CDFIs were created in the 1960s to serve communities in ways that other financial institutions were failing. We have a mission to serve low- and moderate-income families. The lion’s share of the lending we do is geared toward folks who make about 80% or less of area median income. We’ve developed several programs that specifically answer this community need. We are also a correspondent lender with the Washington State Housing and Finance Commission. A lot of our lending dollars come from the Commission, and then we recycle those loans by selling them in the secondary market so those funds can help the next family get a home.
We also provide a huge amount of down payment assistance through a variety of sources depending on where a buyer is purchasing a home. When we work with a client and they purchase a home, there’s usually a first mortgage, and there are second liens as well, which is down payment assistance. Almost all of those are what we call “silent seconds,” meaning there’s no payment due until the home is either sold or refinanced after 30 years. We’re trying to structure these so an individual or a family can grow into that payment. As opposed to banks, our credit scoring for clients is a typically little bit easier as well.
We tend to work long-term with our clients. A really important aspect of our programming is homebuyer education. We have two Housing and Urban Development (HUD) certified homebuyer counselors on staff at HomeSight. When a customer comes to us, they’re going to take those homebuyer classes and have one-on-one homebuyer counseling. Then they earn a certificate that allows them to go shopping for that right-sized mortgage with built-in down payment assistance. This is really important because we’re a portfolio lender, meaning we have our own money to lend as well. Our loan loss, or delinquency rate, is incredibly small because our customers are very successful with their mortgages. They’ve had homebuyer education.
We do first and second mortgages, including a couple that are particularly unique. We have a Halal Loan, for example, for Muslim community members who religiously cannot have interest associated with a loan. We’ve developed a loan product where interest isn’t accrued by the buyer themselves. It’s been walked hand-in-hand with Imams so everyone understands what’s going on and how this is helpful. Before this, there was no product available for those families unless they had cash to buy a home. Now we have something for them. We also have a Vista Loan, which is an Individual Taxpayer Identification Number (ITIN) product. You can find this occasionally at a bank, but the interest rate is usually pretty high and the down payment is also higher than ours.
With the ITIN loan product, you don’t need a social security number to obtain a mortgage. It’s alternate credit. This is a loan product that can work for undocumented people. We have undocumented families that have been contributing members to our community for decades, yet they could not buy a home. Now we have a loan product that works for them. For those who don’t have a social security number or just need alternate credit, we look at things like rent payments or cell phone bills to help establish credit. We’re a little bit easier to work with than some banks because the interest rates tend to be lower.
We also have several down payment assistance programs. One we love to highlight is the Social Justice Down Payment Assistance fund. It’s $10,000. We can apply it anywhere in the state of Washington. It comes with 0% interest, so it’s just money that can help you close the gap. We close the gap between the property and what you can afford to pay — that’s the name of the game for us.
The Sam Smith fund was also created as a response to a broker at Windermere who approached us and said, “I want to specifically help a Black family purchase a home in the city of Seattle.” We discovered that as a lender, in the central core of the city, home pricing was so volatile and high that even when someone had great income it met our credit score ceiling. As a customer, they weren’t able to bring money to the deal. This is largely because of the lack of generational wealth that has been experienced by a lot of BIPOC, especially African American families.
The Sam Smith fund was named for former legislator and city council member Sam Smith. The Sam Smith “Hi Neighbor” fund is the only one we have that offers down payment assistance for folks that make between 80% and 120% area median income. This reflects that even middle-class purchasers have difficulty buying a home in cities like Seattle. The fund allows us the flexibility to help families that are at a little bit more than 80% area median income, yet are still having a hard time buying a home. We’re proud of that fund and the partnership of Windermere and others to make it a reality.
JOE
How is the Sam Smith fund working?
DARRYL
I’m happy about the amount of money we’ve been able to build into the fund. Windermere has been incredible with agents stepping up and getting money into the fund. HomeSight has also contributed. A couple of other banks contributed to it as a recognition of this challenge. It’s been hard for the community in general because of what we experienced last year with housing prices and interest rates. I don’t think we’re seeing any softening in house pricing. Because of that, we’ve actually increased the available amount in the fund. It started at $12,000, and we’ve now increased to $20,000 per individual or family. The interest rates eat away at your buying power.
With house prices not softening, the gap is still growing. We need to do a better job of getting the word out and marketing the fund. As I’ve told other folks at Windermere, I will go anywhere to talk about this opportunity and what HomeSight does. We’ve been able to assist about eight families so far, but we’re all making a real commitment in 2023 to help many more. Some of that is not necessarily under our control — we need interest rates to start behaving themselves and we need inventory. And maybe most importantly, we need more awareness of the fund.
JOE
How do people hear about the services HomeSight provides?
DARRYL
We’ve got a website that is currently being revamped and improved. You can visit homesightwa.org to see all of our programs. When it comes to the Sam Smith fund, we’ve got a team at HomeSight you can get in touch with directly. Buyers are able to open our portal, get themselves logged in and create a profile, but the best option is to just get in touch with our team at HomeSight. From there, brokers can help get their buyers registered for our homebuyer education and lending courses.
Shatrice Watkinson is our loan originator assistant, and she can answer any of your questions about the loans, homebuyer education classes and anything else you might need.
JOE
Darryl, what are some specific things you would do in the Seattle/King County area, or Western Washington in general to provide more opportunities for African American families to become homeowners?
DARRYL
Yesterday, myself and about a hundred other guests at the Northwest African American Museum in Rainier Valley attended a bill signing with Governor Inslee for the Covenant Home Ownership Account Program. This bill (1474) passed the Washington State Legislature and Senate, will create a new program allowing the Washington State Housing Finance Commission to become a “special purpose credit program.” It is the only program nationally that allows race-specific assistance when it comes to housing. It originated with several lawmakers, including prime sponsor Representative Taylor, former Speaker Frank Chopp and Senator John Lovick. The State of Washington has hundreds, if not thousands, of racial covenants in deeds that were enforced for quite a few years. Essentially, these covenants said “This home will not be sold or occupied to anyone other than the white race.” That’s a shameful piece of history here in Washington state. Those were enforced for quite a few years, perhaps decades. Even though they have not been enforced for a while, they still exist. The de facto enforcement possibly continued even after it was illegal to do so for quite a few years.
This ultimately constricted the supply of housing for African Americans and others in certain areas. It made getting a mortgage in some neighborhoods almost impossible. Because of that, African Americans experience a lack of generational wealth. The two statistics I’ll cite are (1) in the State of Washington, half of African American families have zero net worth. That’s a direct result of the lack of housing opportunities in terms of homeownership. And (2) 35% of Black families in Washington State own a home, while 68% of white families do. That’s about half the rate of homeownership for Black families. You can link this directly to the lack of housing opportunities due to racially restrictive covenants and other issues. We’re correcting history here, and we’re moving forward by creating more housing opportunities for those that need it most.
As the bill moves forward, there will be a study detailing how such a program would work. Many organizations and researchers came together in lockstep to get this bill passed, including the legislature, HomeSight, the Washington Association of Realtors, the Seattle King County Association of Realtors and others. Governor Inslee signed the bill yesterday, making it one of the best days to be in the housing sector in a really, really long time. This is historic. We’re the first state in the country to do this, and I predict other states will follow. Now we can jumpstart homeownership which has been sorely lacking in many BIPOC communities.
JOE
When does the Covenant Home Ownership Account go into effect?
DARRYL
It will be coming online as an available program next year. From now until around December 2023, there is a Request for Proposal (RFP) from the Washington State Housing Finance Commission. The goal of this is research, and how the fund will actually work. They’re going to take some time to get it right. Other states will be watching this. We’re the first, and there likely will be more.
Racially restrictive covenants and redlining in Seattle are a microcosm of what happened across the entire country. We’re proud to be the first to address this. Redlining exists in almost every major city in the country, so this is a very deep problem. It’s part of the reason why certain disparities exist today — not just in home ownership, but in successful businesses and family wealth. All of these things are connected.
JOE
I know you’re also working on the national level to create solutions. What are the criteria you’re looking at for solutions across the country and nationwide?
DARRYL
HomeSight has the good fortune of being a member of NeighborWorks America. NeighborWorks America is a coalition of about 247 organizations that are builders, lenders and developers, or offer community development partnerships and homebuyer education. We’re in almost every congressional district.
NeighborWorks used to be called the Neighborhood Reinvestment Act. It became an organization back in the mid-60s or early 70s. As an executive director of a NeighborWorks organization, I’ve had the opportunity to join with colleagues in the Black Wealth and Asset Building Work Group. Nationally, we have folks representing NeighborWorks organizations in Washington, D.C., Houston, Texas, Virginia, Michigan and all kinds of places. This particular group got its start when NeighborWorks executives realized that although NeighborWorks has a great track record and funds a lot of organizations, they needed to do more regarding the issue of Black wealth and asset building.
Being able to work with colleagues across the country, find out what they’re doing and report on what’s happening here in Washington State creates invaluable collaboration. We can come together, bounce ideas off one another and take the best ideas and come up with a viable plan. I was recently down in San Francisco for the rollout of a NeighborWorks plan to get at this issue. It’s going to include five areas: housing empowerment, financial empowerment, real estate empowerment, community empowerment and economic empowerment.
My piece is housing empowerment, based on my work at HomeSight. One of the things we’re going to see nationally is more support for organizations that are being intentional about bringing forward solutions that make a difference in their markets. Our network is where the work happens across the country. Things that can be replicated are incredibly important. People from across the country are looking at the Covenant Home Ownership Account; I’m getting a lot of calls and emails saying, “When the playbook is done, we want a copy. We want to know how we can do this locally as well.”
Additionally, one of the other projects we’re doing development-wise is a limited equity co-op. We hope to break ground this summer, in Othello near the light rail station. This form of shared equity housing is something other jurisdictions are looking at as well. In many places, not just here in Western Washington, people are looking at different housing models. Limited equity co-ops, land trust models, rehab lending — all of these things are attempting to address this complex problem on different fronts. The things we do here locally can sometimes have a ripple effect. It’s great to be part of a group that’s focusing in this way.
JOE
The Covenant Home Ownership Account and the Sam Smith fund are small steps in this ultramarathon we’re competing in to solve these problems. They all came from people who had ideas and pursued them. Sometimes we get overwhelmed and think, “Oh, we can’t change anything. We can’t change the past. We can’t change what’s going on out there.” But we can, and we have to take these small steps and keep passing on what we have learned.
DARRYL
Exactly. Those small steps can lead to big ripples, right? The only way change happens is when someone does something and they talk to somebody else. They try an innovative program which inspires the next person. Before you know it, change has happened in so many ways. Think about the civil rights struggle. At the very beginning people thought, “Well, this is going to be horrible. We’ve got to do it.” And it caught on and changed the entire country to some degree. We still have a lot of work to do, so when I think about housing justice, racial equity and the racial wealth gap, all of this is part of it. We know, from the housing perspective, there are many other areas that need to be worked on.
Since I work in the housing sector, this is my own family’s story: My great-grandparent, in Greenwood, South Carolina, was a property owner in the 1920s. A Black woman owned nearly 10 contiguous lots. At some point that land was either lost, stolen or sold under value, and that generational wealth did not accrue. My mom purchased the home I grew up in because her employer helped her. My mom’s ex-husband, not my father, didn’t pay and the house had gone into foreclosure. So her employer helped her get a mortgage. That’s how I ended up in the house I grew up in. We know if folks connect the dots on the numbers, the response is, “Oh, the numbers are terrible, the disparities are so huge.”
Why is that? Well, sometimes there’s a clear and direct reason why. If we can address those things, we should.
JOE
Darryl, I appreciate all the work you’re doing personally and all the work HomeSight’s doing. Anything that we didn’t touch on that would be helpful?
DARRYL
If folks want to get in touch with us, especially about the Sam Smith fund or lending in general, I’ll give you some contacts. The first Shatrice Watkins, our Loan Originator Assistant. You can reach Shatrice at shatrice@homesightwa.org. You can also reach out to our Director of Lending Partnerships, Moussa Samb at moussa@homesightwa.org. We’d love to keep partnering with you all.
