"Safe Loans" Provides Alternatives to Predatory LendersCurtis Thomas |
In early 2006, The Works* was grappling with two seemingly unrelated issues. First: How we could be more effective at countering predatory lending in our community, particularly that which was spread through affinity marketing. Second: We wondered if there might be a way to monetize the services our counselors provide to homebuyers. This would create a more diverse funding stream to cover the costs of free counseling services, without negatively impacting clients. The first question was prompted by frustration from several years of counseling victims of predatory lending. The second came about after the realization that our homebuyer education counselors were generating packets of documents covering nearly everything a client’s lender needed to process a loan application, and then handing the information over without compensation. In considering those two issues, we came to realize that they were more closely related than originally thought. By pulling together detailed client files, our counselors were already performing the major, time-consuming portion of a mortgage broker’s work. Why stop at educating clients on the dangers of predatory lending when we could offer them safe, sustainable alternatives out of our own shop? With that new understanding of the problem, The Works began the process of becoming a nonprofit mortgage brokerage in early 2006. Safe Loans (http://theworkscdc.org/safeloans.aspx) opened for business in February 2007 as the first licensed nonprofit mortgage brokerage in both Tennessee and Mississippi. Like many new programs, Safe Loans benefited from outside support early on, including technical assistance from Seedco and a new-initiative startup grant from United Way of the Mid-South. In response to the two issues The Works identified, a nonprofit mortgage brokerage has proven to be an innovative solution. Safe Loans has allowed The Works to capitalize on its existing outreach efforts. We already reach a large portion of the nontraditional borrower market, particularly through our outreach in the faith-based community—the same groups targeted by the affinity marketing of predatory lenders we set out to counter. Also, revenue generated by Safe Loans goes back into supporting our other programs, such as counseling and education services. Finally, as a nonprofit mortgage brokerage, we are mission driven, not profit driven, and that is the true innovation. This novel approach to mortgage lending allows us to truly focus on the needs of clients, working with them as long as necessary for them to reach the point where they are best prepared for successful homeownership. *The Works is a community development corporation serving South Memphis, Tenn., and the Greater Memphis area. We are dedicated to the holistic renaissance of our community through the provision of services that include affordable housing construction, development of high-quality rental housing,
financial wellness education, homeownership counseling, minor home repair and, most recently, a |
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