Baptists, Freddie Mac form aid venture Church conventions' holding company will originate mortgages

March 14, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Tapping into the enormous influence of the nation's Baptist churches in minority neighborhoods, Freddie Mac launched its first business venture with a religious group yesterday to make home mortgages for at least 150,000 low- and moderate-income families by the end of the decade.

Teamed with a corporation of the National Baptist Convention of America Inc. and the National Baptist Convention USA Inc., Freddie Mac will finance mortgages for homebuyers in predominantly minority neighborhoods with low ownership rates, working with borrowers until they qualify for loans.

"We won't rest until we have put every creditworthy borrower into homes they can afford and keep," said Leland C. Brendsel, chairman of the Federal Home Loan Mortgage Corp., commonly known as Freddie Mac. It is a stockholder-owned, congressionally chartered corporation that buys mortgages from originating lenders.

Freddie Mac announced an alliance with the Minority Enterprise Financial Acquisition Corp. (MEFAC), a for-profit holding company owned by the Baptist conventions. A second, separate alliance with HomeFree-USA, a Washington-based nonprofit group, will target, educate and counsel homebuyers.

Both programs, operating through local alliances, will be kicked off in Baltimore, Washington and six other cities.

MEFAC, in a newly announced partnership with PHH Mortgage Services, will operate as a national mortgage banker to originate loans, drawing borrowers from the congregations of the Baptist conventions' 50,000 church affiliates.

"This is a monumental and almost unbelievable occurrence in the life of black people in America," said Hyman L. Jarrett, president of MEFAC. "By using critical mass and monolithic buying power, we can change the way we do business. Housing is the first step."

Besides purchasing home loans to repackage and sell to investors, Freddie Mac will invest an undisclosed amount of capital, technology and manpower so MEFAC can make more loans and even find ways to develop and rehabilitate housing, said Dan Russell, Freddie Mac vice president of community development and lending.

Stable institutions

"This will allow MEFAC to quickly begin to provide mortgage access to all of the pastors and members of the congregations as well as the residents of those communities," Mr. Russell said. "This is the fastest way to those underserved communities. The most stable institutions that have been there, that are there and will be there are the churches."

The churches are ready to tackle the job of developing homeowners and revitalizing communities, said E. Edward Jones, president of the National Baptist Convention of America.

"I can see a radical decline in crime," Mr. Jones said. "I can see the person who never felt he had an opportunity to get a house his self-esteem going up."

Church network

HomeFree also will target buyers through a network of churches now in the Washington metropolitan area and, by May, in the Baltimore area as well, said Marcia Griffin, president.

Clients pay a fee for counseling, classes and extensive follow-up. The program helps those who need to clean up poor credit and save for a down payment, and demystifies the mortgage application experience.

Since its inception in July, HomeFree has helped 21 people through settlement, Ms. Griffin said. With Freddie Mac's financial backing, HomeFree expects to help about 50,000 by the end of 1997.

Pub Date: 3/14/96

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