Lending With Purpose – A Powerful Investment Alternative
We instituted the Positive Social Purpose (PSP) Lending Program in 1990 with the goal of promoting affordable housing and community development for disadvantaged communities, while delivering competitive returns to investors. This strategy complements our traditional fixed-income mortgage investments. The program began with a $25 million commitment to affordable housing and surpassed $2 billion in cumulative investments in 2016.
The PSP Lending Program demonstrates that investors can do well by using their money to improve the lives of others, one loan at a time. By targeting underserved market niches and partnering with established, qualified lenders, we are able to provide market returns commensurate with risk, while providing high-impact social benefit that can literally be life-changing. The loans that PSP makes offer attractive credit spreads and also provide strong prepayment protections.
Bringing Affordable Housing Within Reach
Since its inception, affordable housing loans originated through the PSP Lending Program have been used to fund the construction, rehabilitation or preservation of over 51,000 affordable housing units in all 50 states. Our investments in multifamily, senior and special-needs housing have achieved competitive, risk-adjusted rates of return while improving the quality of life for thousands.
Under the program, we generally acquire a senior position in mortgage loans from independent third parties, usually nonprofit organizations. The completed housing units provide homes for individuals and families earning less than the area's median income.
Investing to Build Stronger Communities
The PSP Lending Program takes a holistic view of community investment, going beyond housing loans to foster commercial and social development and a positive environment, which we believe is essential to creating a strong community. We invest in community facilities that work for or provide services to low- and moderate-income people, including homeless shelters, health care centers, community centers and charter schools.
Our network of third-party loan providers specialize in lending to these types of facilities, increasing access to capital for borrowers who face challenges in the marketplace while also providing credit enhancement to Wespath. As with our affordable housing program, we have been able to successfully partner with these providers to achieve attractive, risk-adjusted rates of return.
Sowing the Seeds of Success in Developing Countries
Microfinance lending makes money available to those in developing countries who have little or no access to traditional financial services. Microfinance loans generally are small – sometimes no more than a few hundred dollars – and usually require no collateral.
The PSP Lending Program participates in microfinance by providing capital to qualified financial organizations. The organizations that we have helped to fund have serviced more than a million people in Latin America, Eastern Europe, Southeast Asia and Africa.