Counseling is a key element in the new minority homeownership initiatives that were announced last week by Fannie Mae, Freddie Mac, and the National Association for the Advancement of Colored People.

The program will be launched in Maryland, Virginia, North Carolina, South Carolina, Georgia, Florida, and Texas, states where the NAACP runs community development resource centers.

CDRCs provide counseling for consumer lending and business development.

Scott Van Dellen, senior vice president for developing markets for Countrywide Home Loans, said counseling in similar programs has paved the way for long-term relationships with borrowers.

Minority lending "is very profitable," Mr. Van Dellen said. "If you bring in customers now, when they are starting out, you can then show them what other services you offer down the road-things like home equity and insurance."

After potential minority borrowers are provided with information on lending, the partnerships will provide financing to black borrowers with as little as 3% down payment, as part of a drive to narrow the gap between the 46% homeownership rate for African-Americans and the 66.8% national rate.

Fannie Mae said it will provide up to $110 million in special financing products, which will include $50 million dedicated to an underwriting experiment tailored to the credit needs of NAACP clientele.

According to the agencies, BankAmerica Corp. will be the principal lender in the new program. Barry Zigas, the executive director of Fannie Mae's National Housing Impact Division, said the underwriting pilot program will be available only through the NAACP.

"It will be a 97% loan-to-value product, with only 2% of the down payment required from the borrower. The remaining 1% can come from somewhere else, like a gift or a grant," Mr. Zigas said. He added that reasons for credit problems, such as medical debts, will be taken under consideration when evaluating loans.

Mr. Zigas said the program will require borrowers to have only one month, rather than the usual two months, of mortgage payments reserved in savings.

"The remaining $60 million pledged to the project is not a ceiling, it is just an estimate," Mr. Zigas said. He also said the continuation of the initiative after its planned five years depends on its success.

Freddie Mac agreed to buy up to $500 million in mortgage loans associated with the NAACP program. There will be no limit set on the amount of mortgage financing the NAACP can access using standard Fannie Mae products.

Fannie Mae said it has helped the NAACP generate more than $120 million of mortgage financing for its clients in the past five years, and it expects this initiative to double or triple that amount over the next five years.

Fannie Mae has also committed $250,000 each year for the first two years of the five-year pilot toward the upgrading and support of these centers, according to Mr. Zigas.

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