Self-Help to help secure mortgages

BY PAUL BONNER pbonner@heraldsun.com; 419-6621

Self-Help will help secure $2.5 billion in home mortgages for low- and moderate-income families over the next five years, the Durham-based nonprofit lender announced Tuesday.

The announcement of the partnership with Fannie Mae came as Self-Help and others marked the completion of a similar five-year venture that has provided more than $2 billion in affordable home mortgages nationwide.

The affected homeowners in the first round include 30,000 minorities, of whom about 14,500 live in North Carolina, Self-Help said in a release. A study of the first round of financing, with the help of UNC and the Ford Foundation, also bolstered the perceived creditworthiness of Self-Help's target families.

The Ford Foundation commissioned the study, which was carried out by UNC. It found that participating lenders experienced a 0.7 percent foreclosure rate, less than the national rate of 1.1 percent. More than 80 percent were never delinquent with a payment, and 12 percent were never more than 30 days late. The study also showed that home equity increased by an average of more than $20,000 during the five years.

"We wanted to demonstrate to banks that low- and moderate-income borrowers are as able to repay loans as prime borrowers," said Malcolm White, a spokesman for Self-Help. The mortgages are targeted to households earning as little as 62 percent of their area's median income, he said.

Self-Help buys portfolios of the mortgages from banks and other lenders and, in exchange for a portion of their interest payments, guarantees their payment to Fannie Mae. That frees the lenders to make more loans to the target market, which helps them meet goals of the Community Re-investment Act.

"I think it ends up being a good deal all the way around," White said.

In the next five years, Fannie Mae's purchases of Self-Help loans will serve 35,000 more families, said Franklin D. Raines, Fannie Mae's CEO, in a release.

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