Tuesday, June 10, 2003 | 11:02 a.m.
Freddie Mac, the second-largest buyer of U.S. mortgages, and the U.S. Department of Housing and Urban Development committed on Monday to a $100 million program to increase minority homeownership in Southern Nevada.
The program will be coordinated with Las Vegas-area banks, nonprofit agencies and governments.
Craig Nickerson, vice president of Freddie Mac, said U.S. Census statistics show 62 percent of all families in the Las Vegas metropolitan area own homes.
Still, only 46 percent of Las Vegas-area Latino families own homes and just 41 percent of black families own homes.
"Unfortunately, some families are being left behind," Nickerson said.
He said a key factor in the Catch the Dream Southern Nevada program will be an aggressive community outreach and education program.
"There's a lot of misinformation about the home buying process in these communities," Nickerson said. "This program is very comprehensive in its outreach and education. It's not just adding another mortgage product."
The involved nonprofits, government agencies and banks will be involved in working on a community level to explain the process, address credit issues and develop financial plans for prospective home buyers, Nickerson said.
The program also includes new mortgage products allowing flexibility when dealing with credit scores and down payment requirements as low as $500, Nickerson said.
Freddie Mac has committed to buying $100 million in Southern Nevada mortgages written through the program. There is no time limit on the commitment, Nickerson said.
Over the last five years, Freddie Mac has purchased $11.6 billion in mortgages in Southern Nevada, or about 94,200 mortgage loans, said Brad German, spokesman for Freddie Mac.
The $100 million commitment will be additional funds coming into Southern Nevada dedicated to loans written through the minority lending program, he said.
"It guarantees there will be funding for families going through the program," German said.
Michael Ponce, regional emerging markets manager for Wells Fargo Bank, said the partnership between the different agencies sets the new program apart from past efforts to bolster minority ownership.
"That's what makes this different, the scope of services that are being brought together," he said.
Ponce said the lenders and nonprofit agencies involved each bring different community relationships to the program. Combined, those relationships will create broad inroads into the minority communities.
Wells Fargo and U.S. Bank are providing mortgage products for the program. Involved nonprofit agencies include the Nevada Fair Housing Center, Community Development Programs Center of Nevada, Women's Development Center, Tech Start and Consumer Credit Counseling Services of Southern Nevada.
Gail Burks, president and CEO of the Nevada Fair Housing Center, said the effort will hinge on education. Many of the potential buyers reached in the program have little knowledge of credit scores or the home buying process. The program includes funding for laptop computers and software that will allow the agencies to take the products into the communities to recruit buyers.
"Technology is a key component," she said.
A reduced emphasis on credit scores will also be a key factor in the program, Burks said.
"This program allows us to work with someone without a minimum credit score," she said.
Similarly, Nickerson said many minority buyers must also overcome a lack of credit.
"Some buyers just have no credit because they live in a cash environment," he said. "The new programs match the borrowers needs to the products."
The commitment from Freddie Mac to buy the mortgages will take the pressure off of the lenders making loans in those situations.
The education also includes discussion of expenses related to home ownership, like budgeting for future repairs and costs to reduce the potential for future financial difficulty.
"We're not successful unless people stay in the home," Ponce said.
Michael Liu, assistant secretary for public and Indian housing with the U.S. Department of Housing and Urban Development, praised the program for its efforts to convert families on rental assistance programs to home ownership.
"This is a unique partnership," he said.
Ultimately, Burks said the program will create a stronger link between the minority communities and traditional lenders, easing a reliance on unregulated lenders that market high-interest loans to those communities.
"We want to take back the business from the predatory lenders," she said.
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