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Helping communities get on track for homeownership

by Maura Kennedy, Writer

Brick-style row homes in Baltimore, Maryland
Buying a home is a big step for most people, but it can seem like an impossible goal for people with poor credit, student loan debt and other financial challenges. NeighborWorks America and its network of nearly 250 organizations in every state, the District of Columbia and Puerto Rico help people get on the road to homeownership and that they indeed can navigate the homebuying process. 

Neighborhood Housing Services (NHS) of Baltimore's Fast Track financial coaching program, led by Kareema Pinder, is a highly successful effort that helps clients learn how to increase their savings, reduce their debt and improve their credit score so that they can achieve the dream of buying — and keeping — a home. Some three-quarters of program graduates are successful. NeighborWorks America offers network organizations like NHS of Baltimore access to resources such as robust, highly respected training programs in financial education, counseling and coaching.

NHS of Baltimore manages a network of resources aimed at helping the city's residents achieve and maintain homeownership. Every client begins with an eight-hour course in financial education. Upon completion, they receive a homebuyer education certificate, which many mortgage lenders require of prospective borrowers. 

Clients are asked to gather basic financial documents such as pay stubs and tax returns, and to complete a detailed household budget. They then meet with a financial counselor who reviews the documents with them and helps them decide whether they are ready to begin the purchasing process. 

Getting on the Fast Track

If clients are not ready to buy a home, the counselor determines whether they would benefit from NHS of Baltimore's Fast Track program. Most people selected for Fast Track lack one or all of the basic qualifications for getting a mortgage: Their credit score is below 640; their budget is out of balance and they are spending more money than they are taking in; or they have less than $2,500 in savings. The program is offered in English and Spanish.

These challenges can't be solved overnight. With coaching on financial goals, help prioritizing bills and other support, however, most clients can get on the right track in as few as 90 days. But many take longer — in some cases, it takes a few years. "That's OK," Pinder said. "They are in different lanes on the same highway. All we ask is that they keep moving forward."

It's not often easy to change old habits and teach new financial behaviors, according to Pinder. "We let them know that we don't want them to stop their lives. We just want them to be responsible." 

One key is to assist people in identifying and addressing behaviors that are sabotaging their efforts to gain control of their financial health. Some challenges are obvious, such as spending more money than they are making. Others are less apparent and may stem from complicated family financial arrangements and commitments. A counselor helps clients attack these issues and others that stand in the way of getting on track.

Another key is to provide motivation so that clients can see tangible results of their efforts. NHS of Baltimore has an Earn program, funded in part by a NeighborWorks America grant, that provides a dollar-for-dollar savings match for those who graduate from the program. Clients who save $1,250 receive an additional $1,250 to be put toward their home purchase. 

Clients become part of a homebuyers club that meets once a month. They exchange information with others who are undergoing the same process on successful approaches to common challenges. Program graduates come by to relate their own experiences and provide encouragement and advice. Expert speakers also address the club. Tours of the city familiarize clients with neighborhoods and areas with which they may not be familiar and with new developments.

The final motivation, Pinder said, is a "big, festive graduation ceremony. It's just the best." 

"Graduates celebrate their own accomplishments, but they also get to show them off to their families and friends," Pinder continued. "It's always a very emotional event."

All in the family

The impact of developing financial capabilities can spread across an entire family. Pinder shared the story of a mother and her adult daughter who came to NHS of Baltimore on the recommendation of a family member who had been helped to buy a home. They had worked for two years with another organization and were frustrated to find themselves no closer to being able to purchase the larger home they desperately needed. 

The mother owned a small, two-bedroom home that was entirely inadequate for the eight family members now living there. Both she and her daughter were disabled and in substantial debt. 

"I told them, 'If you trust me and truly want a home, you will have it,'" she said. 

Mother and daughter were enthusiastic about the process. Pinder put them in the Fast Track program and worked with them to contact creditors in order to lower interest rates or devise a repayment plan. Through the Earn program, their savings were matched. Working with the homebuyers club, they learned of a financing program for disabled people through which they could buy without a down payment.

In six months, their credit score went from about 550 to 670. In seven months, they bought a four-bedroom house with a finished basement.

"When the daughter walked into her new home, she fell to the ground crying," Pinder said. "I was so happy for her."

Tracking success

Graduates of the Fast Track program have more than doubled their savings amounts, increasing their savings accounts to $3,300 on average. Their household debt has, on average, gone down by $4,200. As a result, most graduates have raised their credit scores enough to buy a home.

NHS of Baltimore doesn't stop support of Fast Track clients when they graduate. The agency has a variety of partnerships and programs to help with down payments and closing costs. 

They hold a post-purchase workshop to link new homeowners to important resources, from home repair classes and a tool lending library to sources of financing for home repairs and rehabilitation. Clients often stay in touch with NHS of Baltimore and one another, keeping the circle of information flowing.

"Every homebuying experience is different," Pinder said. "But the first step is always education, and the last step is celebration."