NTIC partnership
with Fannie Mae results in company’s most successful product
By Gail Parson
In 1997, the National Training
and Information Center began working to make the secondary market purchase CRA
eligible loans resulting in an innovative product called the “NTIC Experiment”
and a powerful partnership with Fannie Mae.
Throughout the mid-nineties,
local community organizations reported to NTIC staff about lenders’
frustrations that the secondary market would not buy the loans that they were
making to low and moderate-income borrowers.
By late 2002, Julie Gould,
Vice President of Fannie Mae’s National Community Lending Center, said the
“NTIC Experiment” was their most successful pilot product. Based on data collected quarterly, over $30
million of NTIC Experiment loans have been purchased by Fannie Mae. As of April 2002, Fannie Mae has also bought
$2.2 billion worth of CRA loans in these six cities.
The NTIC Experiment is a low
down payment mortgage product targeted to low-and-moderate income borrowers and
allows non-traditional methods to show good credit history. Community groups wanted the product so loans
would be made in their communities.
Lenders wanted the product because they could get liquidity by selling
their loans to Fannie Mae. NTIC was
successful in changing the institutional behavior of Fannie Mae by convincing
them that buying CRA loans was profitable business.
The partnership organized by
NTIC includes an advisory group of community members from six cities including:
Citizens United for Action in Cincinnati, OH; University Neighborhood Housing
Program in the Bronx, NY; Syracuse United Neighbors in Syracuse, NY; Des Moines
Citizens for Community Improvement in Des Moines, IA; Neighborhood Housing
Services in Chicago and Pittsburgh Community Reinvestment Group in Pittsburgh,
PA. This group developed guidelines of
a product to meet the credit needs of the low-income borrowers in their cities. Each of the groups in those cities continues
to work with a lending partner and borrowers in their community.
Considering the success of the
“NTIC experiment” and the need to encourage more lenders to make CRA loans,
NTIC believes that expanding to additional cities is critical. NTIC has always used the successful strategy
of involving community leaders as the true experts on the credit needs of their
community. NTIC will continue using
this strategy as we expand the product into new cities.
Gail Parson came to NTIC as a community reinvestment
organizer in July 2001. She brought
with her the experience on conducting research on banking and consumer
protection issues, building coalitions and using both of those tactics
to win important policy changes. Parson
graduated from Indiana University with a B.A. in Psychology and a certificate
in labor studies.
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