As any lender will tell you, putting up good numbers in low-income and moderate-income lending isn't easy.
You can also ask the New York Mortgage Coalition, a partnership of 14 New York banks, the New York Housing Partnership, and 11 nonprofit community groups.
The community groups work to bring in potential homeowners, educate them to the mortgage process, help them clear up credit problems, and support them in preparing a mortgage application. The clients then pick a bank from the 14 in the coalition and send in the application.
The good news is that the process is working, The coalition says 283 applications had been received through the end of April, and that 188 had been approved with another batch still pending.
The number of loans initially rejected was 38, all of which were submitted to a forum of the lenders for a second chance. Only four made the grade. That leaves 34 loans that were finally denied.
The way the statistics were compiled leaves room for error, but the rejection rate appears to be roughly 15%, a significantly low figure considering the concentration of minority applications.
In a press release, the coalition gives the rejection rates as zero for Asiaris, 1-6% for African Americans, 13% for Latins, and 10% for whites. That's also an impressive record, but if an individual bank reported it, the 60% greater rejection rate for blacks than for whites would likely raise a few eyebrows.
And considering the extensive help the consumers get before they turn in an application, why did 34 out of 38 get rejected, even after a second look?
"The community groups are advocates," said Carol Parry, a Chemical Bank executive who serves as vice chairwoman of the coalition. Their zealousness may lead them to be over-optimistic about the prospects of some applications.
Also, she said, the program is aimed "at those [who are] less sophisticated, perhaps cautious about dealing with a bank, and who may have credit issues."
The real success of the program, she says, is that it has so far made homeowners of nearly 200 families, many of Whom would never before have thought about buying.
She also says the learning process has proved to be invaluable to the members of the coalition.
In particular, it now seems evident that mass marketing of home loans is not the way to go in trying to reach the kind of borrowers the coalition is bringing in. "We've always spent on marketing to traditional types of borrowers." Now, she says, some of the effort is being redirected.
Despite the success of the coalition in broadening the base of homeownership, it won't provide much help to members in improving their lending statistics. Ms. Parry said Chemical was lending about $6 million through the coalition, scarcely 2% of the bank's loans to minorities last year.
