In 1997,
the Chicago-based National Training and Information Center, a resource
center for grassroots organizations, began working to make the secondary
market purchase CRA eligible loans resulting in an innovative product
called the “NTIC Experiment” and a powerful partnership
with Fannie Mae.
Throughout the mid-nineties, local community organizations had been
reporting to NTIC staff about lenders’ frustrations that the
secondary market would not buy the loans that they were making to
low and moderate-income borrowers.
By late 2002, Julie Gould, Vice President of Fannie Mae’s
National Community Lending Center, considers the “NTIC Experiment”
their most successful pilot product. Based on data collected quarterly,
over $30 million of NTIC Experiment loans have been purchased by
Fannie Mae. As of April 2002, Fannie Mae has also bought $2.2 billion
worth of CRA loans in these six cities.
This product is a low down payment mortgage product targeted to
low-and-moderate income borrowers and allows non-traditional methods
to show good credit history. Community groups wanted the product
so loans would be made in their communities. Lenders wanted the
product because they could get liquidity by selling their loans
to Fannie Mae. NTIC was successful in changing the institutional
behavior of Fannie Mae by convincing them that buying CRA loans
was profitable business.
The partnership organized by NTIC includes an advisory group of
community members from six cities including: Citizens United for
Action in Cincinnati, OH; University Neighborhood Housing Program
in the Bronx, NY; Syracuse United Neighbors in Syracuse, NY; Des
Moines Citizens for Community Improvement in Des Moines, IA; Neighborhood
Housing Services in Chicago and Pittsburgh Community Reinvestment
Group in Pittsburgh, PA. This group developed guidelines of a product
to meet the credit needs of the low-income borrowers in their cities.
Each of the groups in those cities continues to work with a lending
partner and borrowers in their community.
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