SNHS: A JEWEL IN OUR OWN BACKYARD

By Marjorie J. Hurst

One does not have to be an economics major to know that income does not equal wealth. But assets do! And one of the most durable, reliable and secure assets is investing in real estate, beginning with owning your own home. Building up equity in one’s home opens the door to all types of other economic possibilities, from paying for your kids’ college educations to buying a vacation home to opening your own business to enjoying your retirement.

And one does not have to be a genius to know that when people in a community invest in home ownership, the community prospers along with the individual homeowners. For some strange reason, when we own it, we are proud of it and we take good care of it. And the reverse is also often true for some strange reason. If we don’t own it, it can fall down around us and we often don’t seem to care.

Recognizing this phenomenon and adding to it the fact that for many urban poor minorities, home ownership seemed out of reach, the Springfield Neighborhood Housing Services (“SNHS”) was established in 1978 as a non-profit organization with the mission of “transforming families and revitalizing distressed neighborhoods.”

Starting out by concentrating its efforts in the Upper Hill as the Upper Hill Neighborhood Housing Services, the organization soon expanded into the Old Hill and Bay Street neighborhoods, changed its name to SNHS, and began offering mortgages to low-income people who were looking to purchase homes within the Enterprise communities. Further expanding its reach, low-income persons looking to purchase homes throughout Springfield became eligible for mortgages.

And now SNHS offers mortgages to persons without regard to income levels who are looking to purchase a home in Springfield or in Holyoke. A full cycle lender who provides a range of products and services with interest rates as low as some banks and lower than most mortgage companies, we wanted to know why SNHS is such a well-kept secret.

Led for the past five years by Executive Director, Charles H. Rucks, SNHS’s statistics and commitment are impressive. Willing to invest its own capital in acquiring blighted properties in the targeted communities of Mason Square and either renovating them or tearing then down and rebuilding, SNHS is making a difference in helping to bring back neighborhoods. A particularly rewarding home ownership program engaged in by SNHS is called The Phoenix Project.

Aided by a combination of federal, state, city and private funds, SNHS was able recently to build 10 new homes, two in the Old Hill neighborhood and eight in the Bay Street area. The private funds came from the Federal Home Loan Bank of Boston in the form of a $350,000 competitive grant awarded to SNHS out of a field of 77 applicants in which 22 awards were made. SNHS scored #3. This 1.7 million dollar project made it possible for very low-income families, four of whom were Section 8 voucher participants, to own new 3-bedroom, 1-1/2 bath, central air, energy efficient homes. They also received a new computer upon moving in!

Anyone can access SNHS’s 95% LTV (loan to value) first mortgages for purchase of a home anywhere in Springfield or Holyoke. In addition, however, low-income and very low-income families are also able to receive down payment and closing cost assistance in the form of a second mortgage as long as they have $1,000.00 of their own money to invest. And although it is true that anyone can qualify for a home mortgage, your credit rating does play an important role in your interest rate.

According to Charles Rucks, “Sub-prime lending, or risk, is a very valid concept and interest rates, whether its investments or mortgages, are a function of risk (and are) some sort of measure.” So he does not object to the fact that people with certain types of credit delinquencies may pay a higher rate of interest. But he does object to the fact that “the biggest predictor of who has a sub-prime or predatory mortgage is not income but race.”

Using figures gathered from the refinance market where there is more data, Charles points out that “30% or less than a 1/3 of low-income white families have sub-prime or high-cost mortgages (whereas) nearly ½ of other-income Black families, families making more than 115%, have high cost mortgages and studies show that roughly between 30% and 50% of these families who have these high-cost mortgages could have qualified for prime mortgages and didn’t realize it.”

Rucks goes on to say, “That is important in the long term because we show that for every additional point of interest rate somebody pays that’s $20,000 extra in payments that they are making over the life of the loan. And when you consider that those interest rates are 3 to 4 points higher that’s an extra $80,000-90,000 in payments that they are making so it’s defeating the purpose of accumulating wealth.”

So what SNHS is trying to do is to get its message out. They are changing their operating model to become more of a mortgage broker. They are entering into more partnerships with conventional lenders and they are being recognized for their efforts. Charles was recently recognized by the Veteran’s Brain Trust for his leadership role at SNHS. He was also one of less than 100 people who were invited to participate in the first White House Conference on minority home ownership.

One really refreshing thing about SNHS is that they are willing to look critically at their products and their operating model to continuously improve their services to make sure that their customers are not paying a penalty tax in additional time and frustration. Rucks readily admits that SNHS has not been even remotely competitive in getting that “yes” to the customer and getting it to them quickly and that’s why they are moving to the brokerage model and automating and streamlining their processes so that they can compete on the efficiency of their processes, as well as with the variety of products they can offer.

With the creation of a 5-year strategic plan geared toward ensuring the financial sustainability of the organization, SNHS is continuing to keep its focus on its social mission of impacting the revitalization of the Mason Square neighborhoods. Charles is very proud of the fact that many of the staff was brought up here in Springfield. (Almost all of his immediate family have homes in the area as do several of the staff members.) Many of the staff live within walking distance of the agency and are really committed to the work that they do.

The message SNHS wants you to remember is, “If you are buying a house in Springfield or Holyoke or refinancing a house and you haven’t come here—SNHS—first, you are leaving money on the table!” n