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Minority Home Loans

INTRO: Freddie Mac, a stockholder-owned corporation that has purchased one in every six loans in the United States released some details of a proprietary survey this week about minority home buying. It's using the information to dare minorities to become homeowners in Las Vegas with a new nation-wide initiative. KNPR's Ky Plaskon reports.

PLASKON: Minority households are 25 percent less likely to own a home than whites according to the census, but the answer to why and what to do to change that has been elusive. So Freddie Mac conducted a proprietary study. Craig Nickerson, Vice President of Expanding Markets for Freddie Mac, says the low home ownership rates have nothing to do with income, or family size or length of time in the country.

NICKERSON: Things like a lack of trust in the system and the fact that there are gross misconceptions.

PLASKON: 40 percent of Hispanics think a 20 percent down payment is necessary to buy a home.

NICKERSON: That hasn't been the case for probably 15 years.

PLASKON: 60 percent think lenders share personal financial information with the government; 50 percent think buyers must be a U-S citizen and need perfect credit.

NICKERSON: Frankly that's far from the truth. I don't have perfect credit.

PLASKON: More than 40 percent of minorities also believe they could loose their life savings by purchasing a home. Nickerson says that's a traditional belief carried over from places like Latin America, where on average only 1 out of every five people have a relationship with a bank. The fear of loosing money to lenders is real according to Charlene Peterson of Fannie Mae Nevada Partnership another federal purchaser of loans. She say predatory lenders target minorities.

Support comes from

PETERSON: For example, maybe a purchaser doesn't realize that the going interest rate is about 5 and a quarter and we see this a lot in the Hispanic and African American markets where a letter will come in. Here is a 8 percent loan, we will get you in with zero down, you don't even have to have a job to qualify when in fact they probably could.

PLASKON: But some minorities even have trouble with lenders in general. Kieth Bowen is a single African American father that has tried 4-5 times to get a home loan.

BOWAN: What the problem is that they walk you through half of it and then they leave you all this paper work and expect you to fill it all out.

PLASKON: To try to tap into what Freddie Mac calls an emerging market, it has teamed with Chase Manhattan in Las Vegas. Nickerson says.

NICKERSON: Many lenders have been using 20th century marketing techniques to reach the 21st century buyer. In fact we predict that more than half of all first time home buyers in this country will be minority families. But only if we get them the right information.

SOUND: People celebrating

PLASKON: At the roll out of a new national program Chase's Sharon Winter explains it's 21'st century method to prove credit worthiness for minorities who may be used to keeping money in the mattress.

WINTER: We use alternative credit, their land lord, their power bills their phone bills, lots of times they will pawn something and then buy something back. They can use that as credit. So that's how it's changed.

SOUND: Radio Add

PLASKON: This radio add is one way Freddie Mac and Chase are getting the word out about educational classes on its program to be offered in two dozen cities. The message aimed at re-gaining trust is based on Freddie Mac's survey too. It found different messages appeal. Let the Truth Move You works for African Americans, but Dare to Believe that You Too Can Own a Home works better for Hispanics. The messages appear to be working.

SOUND: Phone ring and answer

PLASKON: Patricia is one of 20 people answering the phones for the program in Atlanta. She's already received 50 calls only one city and a week into the campaign.

Ky Plaskon, News 88-9 KNPR

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Thursday, October 28, 2004