Lenders are learning that if they want reach some segments of the first-time homebuyer market, they have to involve themselves in a community organization.
Spiderwebbed across the country are loosely linked not-for-profit groups of banks and mortgage insurers serving borrowers who fall through the cracks of normal mortgage origination processes.
Companies are often involved in several of these organizations at a time, each with varying methods and results. "With all the focus on HMDA data, it is a way to improve the number of minority loans you make, while doing the right thing," said Warren Lasko, executive vice president with the Mortgage Bankers Association of America.
Case in point: Mortgage Guaranty Insurance Corp., which through affordable housing vice president Charlotte Moore participates in five different community associations. Ms. Moore works with the National Conference (formerly the National Conference of Christians and Jews), Chicago, to target underserved potential homeowners in the area.
She works with Home Free, Washington, which goes through established religious social service organizations to educate potential homeowners - training the homeowners pay a fee for.
The Spanish Coalition of Chicago concentrates on pre- and post-purchase counseling. Right now, Ms. Moore is helping the organization find alternative funding outside of the Office of Housing and Urban Development umbrella.
And through an extension of the University of Wisconsin, Ms. Moore and a professor have put together a program to certify individuals to be homebuyer counselors.
In the next six months, Ms. Moore is going to continue to focus on educating homebuyers - an important way to keep delinquency rates low, she says.
"There's a real concern about quality in affordable housing lending, and there's a need for that concern," Ms. Moore said. Her mission is to foster a consistent message to investors and lenders: Affordable housing loans don't necessarily mean poor performance.
Statistics back her up - the most recent figures from the Neighborhood Reinvestment Corp., a Washington, D.C.-based national network committed to increasing the number of homebuyers in the U.S., show a 1.7% 30-day delinquency rate, and 0.7% 90-day rate.
Lenders not committed to some sort of community network may be left behind. "I talk to a lot of loan officers who wish their bank was involved when they see the results we've had, " said Mariadele Priest, director of housing for the Brooklyn Chapter of Neighbors Helping Neighbors.
The nonprofit housing organization prepares potential homeowners for the obligations of a mortgage, and draws new individuals into the system. "We do outreach to people who may never have thought about buying a home - we're potentially sourcing a whole new group of clients," Ms. Priest said.