Habitat for Humanity International has found a home for its bonds on Wall Street.

On Feb. 4, Americus, Ga.-based Habitat for Humanity closed its second securitization deal to help raise capital for its mission of building affordable homes using volunteer labor.

The nonprofit ecumenical housing ministry hopes eventually to securitize $100 million of its $500 million portfolio of no-interest, nonprofit loans.

Since 1976, Habitat for Humanity has built more than 60,000 houses in 57 nations, including nearly 20,000 in the United States. The average cost of a Habitat home in the United States was less than $43,000.

"Charities are looking for more nontraditional sources of cash across the board, and this is one way which we can have the opportunity to raise more cash other than from straight donations," said Regina M. Hopkins, general counsel for Habitat for Humanity.

Only U.S. mortgages are being securitized, Ms. Hopkins added.

The securitization program is seen as a way to create liquidity and help affiliate offices get more capital to invest in houses, she said. "In that sense, we're like any other mortgage lender," Ms. Hopkins said. "The advantage is to convert a stream of cash into a pool of cash up front."

The first securitization, which closed on March 31, 1996, involved nine affiliate offices and more than 250 mortgages. Investors included Prudential Insurance Co. of America, Chase Manhattan Corp., Norwest Mortgage Inc., PMI Mortgage Insurance Company, and MetLife. The deal raised about $2 million, said Ms. Hopkins.

This month's deal involved 17 affiliate offices and 237 mortgages. It raised approximately $2.5 million, said Ms. Hopkins. Investors included Prudential, MGIC, Citicorp, Chase Manhattan, and Norwest.

Habitat for Humanity has plans for a third securitization in the third quarter, said Ms. Hopkins. Habitat for Humanity hopes to issue the $100 million of bonds over the next five years.

"It's a new program for us. We've been trying to start it off a little slow and build it up with the affiliates," said Ms. Hopkins. "Obviously, it is not something that is traditional for us to do. The goal is to have it grow over a period of time."

Habitat for Humanity's securitization plan was done in collaboration with New York law firm Willkie Farr & Gallagher and Limac, an affiliate of Local Initiatives Support Corp.

Norwest Bank Minnesota owns the collateral and makes payments on the bonds as the indentured trustee for both deals.

David S. Wolin, a partner at Willkie Farr & Gallagher, said the deals were similar to other securitizations, requiring due diligence.

But the challenge for the deals was to covert no-interest mortgages into interest-bearing securities to be sold in the capital markets to institutional investors at a below-market rate, said Mr. Wolin.

This was accomplished by a two-step over-collateralization, where the no-interest mortgages were converted into cash and then recalculated for payments of interest and principal. This two-step structure had not been previously done, said Mr. Wolin.

Investors in the Linda Mae bonds-named for Linda Fuller, Habitat for Humanity's co-founder-receive a below-market interest rate on the bonds, added Mr. Wolin.

"It is a technique that other not-for-profit organizations can use to the extent that they have assets," said Mr. Wolin. "It's taking an illiquid asset and then converting that into cash so the nonprofit organization can further its mission."

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