WASHINGTON — About 200 people struggling to become homeowners filled the pews of Plymouth Congregational church on a recent Saturday morning. Some were self-employed, others short on a down payment, many branded by credit problems. Mortgage lenders would have thrown money at them a decade ago. Now, the chastened industry turns them away.
Bruce Marks, the unconventional lender who organized the gathering, is determined to demonstrate that the rest of the industry is wrong.
Mr. Marks’s nonprofit organization, the Neighborhood Assistance Corporation of America, has $10 billion in funding from Bank of America to make loans on its own terms over the next decade. It does not require down payments. It does not consult credit scores. Its loans all carry interest rates below 4 percent.
It has enough money to mint about 50,000 homeowners, but Mr. Marks has a larger goal. He wants to show that it is possible to lend to lower-income borrowers on terms that are profitable and sustainable. He wants to expand homeownership. He wants to redeem the original idea behind subprime lending.
“I think that everybody should have an opportunity to own a home,” he said in a recent interview. “We’ve got to rekindle hope in people, especially minorities who threw everything into the dream of homeownership and lost it.”
The great recession unsettled Washington’s longstanding commitment to homeownership. Mortgage companies are reluctant to lend to anybody but the safest of borrowers, and the government — led by the Consumer Financial Protection Bureau, an agency created largely to protect mortgage borrowers — has raced to formalize that new caution. Public policy has shifted from expanding homeownership to preventing bubbles.
Even some advocates for lower-income families have reassessed the importance of helping people buy homes.
“I’ve seen too many neighborhoods devastated, too many families devastated by giving them credit that they could not afford,” said Ira Rheingold, executive director of the National Association of Consumer Advocates, an umbrella group for legal aid providers. “We need to build communities and wealth so that people can then go ahead and build sustainable homeownership.”
Mr. Marks, an energetic 58-year-old with a salt-and-pepper beard, has little patience for such fears. He says low interest rates and housing prices have created a second chance — an opportunity to help lower-income families buy homes, but this time on terms they can afford.
He is part of a growing chorus in the housing industry warning that the government’s push toward safety is reviving an earlier era when homeownership was beyond the reach of too many families, particularly minorities.
“I find that in this overall discussion, the borrower sort of gets left on the sidelines,” Teresa Bryce Bazemore, president of the mortgage insurance company Radian Guaranty, said at a December event here organized by the Bipartisan Policy Center. “You can protect the market and the government to the point where no one can buy anything.”
Mr. Marks has a reputation as a flamethrower. He mounted a series of confrontational campaigns in the 1990s demanding money from banks to make loans in underserved communities. He once publicized the extramarital relationship of a recalcitrant bank executive by distributing leaflets to his neighbors. In 1999, then-Senator Phil Gramm, a Republican of Texas, denounced Mr. Marks as an “extortionist” on the Senate floor.
During the housing crash that began in 2006, Mr. Marks used similar tactics to press banks for the authority to modify loans, transforming his nonprofit intoone of the largest sources of help for homeowners facing foreclosure.
But this time, he says, he is focused on making his point by making loans. “We’re going to see how many people we can make homeowners,” he said, “and can we make this a new way of doing business.”
via:http://www.nytimes.com/2014/02/26/business/a-nonprofit-lender-revives-the-hopes-of-subprime-borrowers.html?partner=rssnyt&emc=rss
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