Buffalo area homebuyers studying to get lower mortrgage rates
Sometimes, too good to be true . . . isn’t
Janesa Osieja beamed as she walked through her newly bought, three-bedroom Holland home. Padding across hardwood floors, she stepped over the threshold and leaned against the white porch railing, admiring her view of the rolling Boston hills.
“I love it. I’m so happy,” she said. “I can’t believe we finally did it.”
After nearly two years of disappointing house searches and what she calls “ridiculous” interest rates offered by traditional mortgage lenders, Osieja and her husband, Jim, found a way to move their two young sons into their dream countryside home.
In the aftermath of the sub-prime lending scandal, the Neighborhood Assistance Corp. of America is rising to savior status among homeowners like the Osiejas, politicians and bankers alike. The grassroots nonprofit mortgage broker helps low-and moderate-income workers become homeowners, and helps current homeowners avoid foreclosure by refinancing predatory loans.
The Osiejas gush with gratitude for NACA, which allowed them to buy a house with no downpayment, imperfect credit and a 30-year fixed mortgage at one percent below the prime market rate.
But at first, the promises the company made seemed too good to be true, Osieja said. The bank would pay all closing costs and appliction fees, she wouldn’t need private mortgage insurance and she could even lower her mortgage rate by a quarter of a percent for each percent of the principal she paid in advance.
In return, all she had to do was live in the house, not buy any additional homes for the life of the mortgage, pay a $50 monthly membership fee for five years, and give back to the program by volunteering a few times a year.
“I thought it was a scam,” she said. “I thought, if it was true, why wouldn’t everyone do it?”
The reason may be that not many people know about it. That is part of the reason spreading the word about the program by volunteering is part of the deal.
Who would ever believe Citigroup and Bank of America, the two major banks that fund the program, would offer such drastically different terms through NACA?
“That’s the whole point. We’re trying to show there is another way to do this,” said John Anderson, Buffalo’s NACA director. “You don’t have to pillage the borrower to be successful.”
Founded in 1988 in Boston, Mass., NACA began as the Union Neighborhood Assistance Corp. after helping a hotel workers’ union organize a housing trust fund for its members. In the process, it outed discriminatory lenders refusing loans to minority and low-income communities.
Since then, NACA has been in the public eye fighting predatory lending practices and has been a fixture during the recent sub-prime mortgage crisis.
In fact, the company’s large financial backers — including Citigroup, Bank of America and Countrywide Financial — were once targets of NACA’s predatory lending protests. By committing billions of dollars to funding mortgages for working and middle-class people, they’ve partnered with NACA in the ultimate “can’t beat ’em, join ’em” strategy.
In fact, NACA’s original $140 million in mortgage funding came as part of a settlement it won against Fleet Bank after uncovering a second-mortgage scam it ran against consumers in the 1980s and 1990s. Homeowners and communities received an additional $8.5 billion in the same suit.
NACA’s mission statement continues to put people over profit. It uses in-depth “character- based” underwriting rather than credit scores and debt-to income ratios, analyzing income, credit reports and savings.
“We concentrate on affordability and budgeting,” said Anderson. “If you’ve got some instability and you’re not ready, rather than turn you away we give you a roadmap to get you there.”
In fact, NACA’s foreclosure rate is well below the national average. Proponents attribute that to the company’s step-by-step, hands on process, which continues for the life of the mortgage with housing services and membership assistance programs.
To qualify, homebuyers go through an educational workshop and work with a personal mortgage counselor who educates them on homeownership and personal finance. The idea is that, with a fair interest rate and proper counseling, anyone can learn how to be a responsible homeowner.
“They’re not going to approve you until they know you’re ready. Sometimes it takes time, but it’s worth it,” said Al Ryer, a real estate broker with RE/MAX International. “It’s the best way to go for almost any kind of buyer.”
The process usually takes from three to six months, but it lasted a year for Chris Kinsley of Niagara Falls. He said the company asked for a lot of documentation and watched to be sure he could set aside money regularly the way he would need to as a homeowner. After some initial frustration, he said it was worth the wait.
“There were times there I was actually going to go with other lenders because it was just taking so long,” Kinsley said. “But they saved me tons of money in the long run.”
Though many are low-income, first-time buyers, the program is not limited to them. In fact, NACA’s maximum price limit for Buffalo Niagara is set at $204,250 for a single family home — enough for a 2,400- square-foot, four bedroom, two-and- a-half bath Amherst home.
In line with NACA’s people before profit approach, the company has said it doesn’t believe in poor neighborhoods for poor people, but strong communities for everyone.
“We’re all about neighborhood stabilization. We want to help people who will have a vested interest in the community,” Anderson said.
