The House Equity Lending Program

BACKGROUND

More than two years ago, Senator Charles E. (Chuck) Schumer approached the New York Bankers Association about leading a series of discussions among lenders and faith-based community leaders aimed at determining the causes of apparent racial disparity in mortgage lending and the expansion of predatory lending in Southeast Queens and Central Brooklyn. After more than a year, these discussions revealed that the bank lending process had become overwhelming for many members of these communities.

Despite the banks’ concerted efforts to increase visibility and enhance services in these neighborhoods over the past several years, a "communications gap" persists. H.E.L.P. (House Equity Lending Program) was developed to not only the bridge the gap, but to reverse the normal communications sequence between lenders and potential borrowers – eliminating the client’s fears about approaching a bank by having the bank approach the client.

HOW H.E.L.P. BEGAN

H.E.L.P. began with eight participating lenders and two faith-based organizations, under the leadership of Senator Chuck Schumer and the New York Bankers Association. The lenders were Citibank, J.P. Morgan Chase, The Bank of New York, M & T Bank, North Fork Bank, HSBC USA Bank, GreenPoint Financial and FleetBoston Financial. The faith-based organizations were Allen AME (Queens) and Bridge Street Development Corporations (Brooklyn). Fannie Mae has been involved with H.E.L.P. since the initial discussions and provided a grant to launch the program. The lenders subsequently contributed additional funds.


HOW H.E.L.P. WORKS

Potential borrowers contact H.E.L.P. through a toll-free hotline. When potential borrowers call H.E.L.P., they are asked for permission to share their contact information with the program’s participating lenders via a private website whose password is known only to the banks. In addition, there is a financial education component of the program. Homebuying and credit management guides, underwritten by Fannie Mae, are sent to the caller, along with more detailed information about H.E.L.P. A brochure listing credit counseling agencies, provided by the New York Mortgage Coalition and a tip sheet for avoiding predatory loans are also included in the information package.

The first three lenders to claim a caller’s name from the web site are granted permission to contact the caller and to begin discussing the bank’s rates and products. No credit information is collected by H.E.L.P. and once the lender and the caller connect, H.E.L.P. makes a "customer service" call to the caller about two weeks after the initial contact. To date, callers’ experience with the program has been very positive, owing to the banks’ prompt and thorough attention.
After a kick-off press conference with Senator Schumer and Reverend Jesse Jackson in the Spring of 2001, H.E.L.P. tested its operation with a pilot phase which yielded a 22% loan approval rate from fifty-eight callers. Initially, the hotline number was "marketed" through the ministers and their church bulletins. Senator Schumer announced a citywide rollout of the program on April 3, 2002, resulting in more than one thousand calls from all over the country.

THE VALUE OF H.E.L.P.

While NYBA member banks are active in the program’s targeted neighborhoods individually, H.E.L.P. is banking’s coordinated industry-wide response to the persistent perception of the bank mortgage process as arduous and invasive. H.E.L.P. also seeks to weaken the grip of predatory lenders in vulnerable communities, complementing the New York Bankers Association’s opposition to predatory lending practices.