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Special Reports
Emerging Markets
Countrywide to Fund $600B of Affordable Housing
By Jennifer Harmon
CALABASAS, CA -- With products, education and services, Countrywide Home Loans
Inc. here is finding more ways to say "yes" to financing home mortgage loans for minority and low-income
consumers, thus closing the homeownership gap which exists between whites and minorities.
Countrywide has extended its One Hundred Billion Dollar Challenge, begun two years
ago. The company will fund $600 billion in home loans to previously underserved Americans through the end of the
decade.
Countrywide's strategy is to focus on minorities and low- to moderate-income communities,
which make up 20% of its business, according to Rodolfo Saenz, executive vice president of emerging markets.
Over the past 30 years, the percentage of homeownership for minorities has increased,
Mr. Saenz said. Forty-eight percent of the Hispanic population owns a home, as do 48%-49% of African Americans,
compared to 75% of white homeowners.
"We've seen this gap of about 25% that has been in existence for the last
10 years. Now, we're trying to reduce the gap by 20% to 25%," Mr. Saenz said.
"In the case of Hispanics, for example, you have immigration. People are
coming into the country, and the rate of new households and homeownership is growing so fast, it's still difficult
to catch up."
The company's House America initiative continues to help prospective homeowners
through its toll-free telephone counseling center. Its 25 designated retail branches offer bilingual support to
individual communities located in major metropolitan cities across the U.S.
Education is the key to reaching success, according to Mr. Saenz. From applying
for the loan, to closing and servicing, Countrywide goes through the entire loan process with the consumer.
"Every case is different. Many products expect the borrower to meet certain
requirements. We try to be flexible, to offer additional features to say 'yes' to the customer," he said.
"We look for what is an effective way to go about paying it and affording
it. We don't just say, 'Here's a loan, but you can't afford the payments.' We want to prepare the customer for
what is coming after the closing."
Through its House America products, it's possible to buy a home with only 5% down
and even as low as 1% in some cases. Countrywide provides a multitude of options. For instance, with the EasyWay
Community 100 program, the borrower must contribute 1% of the sales price or $500, which may be used for closing
costs, prepaid items or the downpayment.
"I'm amazed at the number of customers who don't know what happens when the
loan closes. Fees from the title - they didn't expect this. This allows the percent volume of the loan to pay for
closing costs."
In many areas, first-time homebuyers can receive assistance with downpayment and
closing costs from local community agencies in government, nonprofit organizations, as well as faith-based groups.
These loans are known as community seconds.
In recent years, affordability has been a big issue and challenge for Countrywide.
"The average price of a home is $500,000. Who can afford that? Many people don't have the income to buy. We
can do everything we can, but that's the reality we face. We don't control the prices on houses," he said.
"What we can control is help with the downpayment, offer program flexibility,
making sure people qualify and closing the gap."
Every couple of years, the company plans to increase its goal in this emerging
market and keep track of the number of people who get loans. He says it's important for consumers to know about
the programs Countrywide offers.
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