Self-Help Perspectives - Issue 2

Welcome to the second issue of Self-Help Perspectives, where we'll provide a different take on lending to low-income borrowers than what you have been seeing in recent headlines.

Our vision is an America of thriving families, businesses, and communities, where everyone has the economic opportunities he or she deserves. Toward that end, we make responsible home and business loans, primarily to low-income borrowers. We develop affordable housing and revitalize neglected downtown buildings. And we advocate for responsible lending practices.

Most of our home and commercial borrowers would not qualify for loans on conventional financing terms. Their credit history may be imperfect or they may have less experience or collateral. Eighty-six percent of home loans financed by Self-Help since 1980 were made to low-income families and individuals earning at or below 80% of their area median income. But we evaluate applicants on a case-by-case basis, and often see opportunity where others see only risk. For more than 25 years our borrowers have proven that they can and will pay back their debt. For us, and for the public and private partners who support our lending, investing in them is a sound business practice. To learn more about our work, download the new Community Impact Statement.

We welcome your comments and suggestions for topics of interest.

Thank you for your interest and support.

Providing Access to Responsible Loans

All subprime lending is not the same

By most definitions, Self-Help is a subprime lender, making home loans to borrowers whose credit, income, or other circumstances place them outside the bounds of conventional loans. Our secondary market for home mortgages increases the capacity of other lenders to serve these borrowers, who might otherwise end up in predatory subprime loans. The term subprime has taken a beating lately, and has even become synonymous with the foreclosure crisis. Along with the connection has come a perception that subprime lending is in and of itself a bad thing. But the majority of low-income borrowers facing foreclosure are victims of loose underwriting and predatory terms that made it easy to get people into loans, but did nothing to help them stay in their homes. Subprime lending is not the problem; reckless underwriting and abusive loan terms is.

Read more  

Self-Help Community Impact

1980 - 2007

Total Financing

$5.24 billion to 60,130 families, individuals, and organizations

• 30,243 jobs created or maintained
• 27,509 childcare spaces created or maintained
• 22,683 charter school spaces created or maintained
• 2,016 supportive and/or affordable housing spaces created or maintained
• 53,478 home loans financed

See more Community Impact

Focus on: Center for Responsible Lending Research

Real-world data, reliable methodology

Self-Help affiliate Center for Responsible Lending (CRL) has published an array of reports on mortgage lending, payday lending, and abusive overdraft loans that quantify the cost of predatory lending to communities and families.  Among others, the Federal Reserve has praised CRL's research, saying "CRL has produced ground-breaking research on the subprime mortgage market and has been a key advocate for state and federal protections that reasonably balance consumer interests with the goal of increasing sustainable homeownership with affordable loans."  

Real-world market data and diverse perspectives  We analyze large databases of financial transactions to identify issues and market trends.  These include databases of millions of mortgage loans, house price forecasts in every U.S. market, data on tens of thousands of payday loans and over three million checking account transactions. These datasets, developed by federal and state regulators and commercial firms like Forrester Research and Moody's Economy.com, are publicly available, in contrast to proprietary datasets used by some industry-sponsored researchers.  Finally, our research team cumulatively has decades of experience in the areas of financial services, housing, consulting, law, asset building, and statistical analysis.

Strong statistical research methods and peer-review Our research methods are rigorous and fully-documented in our studies, and we adopt the most conservative assumptions possible when compensating for incomplete data or adjusting for other market conditions.  Our research has been published in peer-reviewed journals, including Housing Policy Debate, and our Research Advisory Council includes respected academics and leaders from major universities and research institutes. 

Learn more about Center for Responsible Lending research and reporting

Featured Borrower: Ruby McKinzie

New Life Child Care Center

When Ruby McKinzie adopted her four children in 1994, she and her husband were overjoyed but also faced with a dilemma: how to pay for childcare while they worked.

And then the answer came to her - literally. "I was working at a bookstore at the time," Ruby says. "And a lady walked in, talking about how she was getting her garage redone for an in-home child care center."

Ruby and her family were living in a house in Goldsboro that was previously owned by a ceramics sculptor with an at-home studio. "I jumped on the phone and called my husband," Ruby says. "I told him 'I know what we can do with that big room!'"

Read more
 

Featured Partner: The Family Foundation

Fighting Payday Lending in Virginia

"A free market is a fair market--a market where similar businesses play by the same rules.  Payday lenders play by their own rules--and families suffer." -The Family Foundation

For the past several years, payday has had a heyday in Virginia, as payday lenders took advantage of loose consumer protections to fill the state with hundreds of lending traps, a.k.a. payday stores.  The Washington Post has reported that the state now has more payday shops than Starbucks or McDonalds restaurants.  This is bad news for low- and middle-income families in Virginia, who are hard-pressed to avoid a these loans designed to keep them trapped in debt. 
The Center for Responsible Lending supported the work of a strong and diverse coalition of Virginia organizations whose aim is to strengthen protections in Virginia.  Among our partners was the Family Foundation, a group based in Richmond that is dedicated to "strengthening the family through accurate research and education, prompting civic activism and affecting public policy outcomes."

"We really appreciate the Family Foundation's commitment and support," said Jennifer Johnson, legislative counsel for CRL who has led our efforts in Virginia.  "The leaders at the Foundation understand how the payday trap damages families and communities, and they were key allies in standing up for a better law."
The support and commitment from the Family Foundation and other vocal, respected organizations helped highlight payday issues and kindled debate throughout the state.  The Foundation coordinated with us at strategy meetings and lobbied throughout the legislative session for meaningful payday reform. The pending bill is not as comprehensive as we would like, but the Family Foundation has a strong commitment to the issue, and has assured us that they will continue their support until their goal is met. 

Learn more about The Family Foundation

News: Institute for Foreclosure Legal Assistance - Helping Americans Keep Their Homes

Institute Announces $6.5 million in Legal-Aid Grants to Help Families Caught in the Foreclosure Crisis

The Institute for Foreclosure Legal Assistance announced that it has awarded $6.5 million in grants to 27 legal-aid offices in 19 states and the District of Columbia. The grants are the first step in a multi-year program to bolster local groups nationwide who provide legal assistance to the growing surge of borrowers facing foreclosure. The funds awarded will enable these organizations to hire additional attorneys specializing in foreclosure prevention.

Learn more abut the IFLA grant awards

Self-Help is a community development lender and real estate developer headquartered in Durham, North Carolina, with offices throughout the state and in Washington, DC, and California. Visit our Locations Map for contact information or email us with your comments.

Self-Help: Creating and protecting ownership and economic opportunity for people of color, women, rural residents, and low-wealth families and communities.