Since its inception 13 years ago, Mercy Investment Services has aligned its investments with the critical concerns of the Sisters of Mercy. Building on the success of the climate-focused Environmental Solutions Fund, Mercy Investment Services recently launched a new initiative within the Mercy Funds and 80/20 Sponsored Ministry Fund to address the ongoing concern for racial equity and justice.
The Inclusive Opportunities Fund invests in groups who have been shut out of traditional capital markets and overlooked by mainstream investors including:
- funds owned and/or led by women, people of color and other disenfranchised groups;
- racial, gender, and other diverse-owned founders and/or diverse-led managers;
- companies addressing the unmet needs of underserved populations, and/or communities seeking responsible social and economic inclusion in the developing world.
The first Inclusive Opportunities Fund investment is in Blackstar Stability Fund (Blackstar), which purchases Contracts for Deed (CFDs), Lease to Own (LTOs) and other similar products and then converts them into traditional mortgages for residential borrowers. CFDs are legal agreements for the sale of single-family homes (usually unrecorded) in which a buyer takes possession and makes payments directly to the seller; however, the seller retains full title to the property until the last payment is made. The buyer is responsible for the cost of homeownership (taxes, insurance, repairs & maintenance) with none of the benefits of homeownership (title, equity, wealth preservation).
Although CFDs offer a home-financing option for borrowers unable to obtain a traditional mortgage, they typically offer higher monthly payments and more severe penalties than traditional mortgages. A borrower who misses one payment can lose years of equity paid into the home and face foreclosure. Blackstar helps borrowers build equity by transferring the title to the buyer and offering lower monthly payments. Blackstar’s model has reduced foreclosures, increased homeownership and stabilized communities. Watch this video to hear more about how Blackstar has helped homeowners.
Mercy Investment Services believes that the Inclusive Opportunities Fund is another way to use our investments to address the critical concerns and create positive impacts for underrepresented groups. Look for more stories on investments through the Inclusive Opportunities Fund in the future.