HomeSight, a NeighborWorks organization in Seattle, Washington, offers an anti–predatory lending workshop, “Money for Nothing — Predatory Tactics,” as part of its financial-education program. The workshop is designed so it can be taught either as a component of a broader financial literacy series or as an independent session.

HomeSight was founded in 1990 as a community development corporation. Its mission is to revitalize communities through affordable housing strategies, such as education and counseling, purchase assistance and building affordable homes for sale. HomeSight’s financial-education workshops teach participants to overcome their financial fears and obstacles. An in-depth session on predatory lending is included so that consumers can avoid predatory lending abuses, which erode assets and essentially break down communities. Training ideas for the predatory lending session stemmed from programs at Salisbury (Maryland) Neighborhood Housing Services and NeighborWorks America.

The Financial Series.  HomeSight’s Financial Series is part of its overall homebuyer-education process. New customers attend a fundamentals class where they learn about all of the organization’s services, participate in one-on-one counseling, and then attend a set of financial and home-buyer-education workshops. The series consists of four classes that are scheduled once a month. Each concentrates on basic financial-literacy issues, with a special emphasis on home purchase as a long-term goal.
 
Part one of the series is the predatory-lending workshop, “Money for Nothing — Predatory Tactics.” It defines predatory lending, the tactics predatory lenders use, and how these tactics work. The instructor provides questions borrowers should ask when obtaining a loan. They cover such topics as the total amount financed, the total monthly payment, the term of loan, the annual percentage rate, and contingencies regarding balloon payments or prepayment penalties. The instructor also discusses good and bad credit deals, and identifies questions that consumers should ask when looking into credit offers. Finally, HomeSight identifies legal resources that consumers can contact for help. The 90-minute session includes multimedia presentations, lectures and participatory exercises.
 
Part two covers mortgages and associated paperwork. The objective is to increase participants’ familiarity with the legal documents for home purchase such as promissory notes, deeds and so on.
 
Part three is designed to increase participants’ financial awareness and their ability to make sound financial decisions. The session covers budgeting, savings tips, useful Web sites and retirement planning.
 
Part four covers home maintenance, neighborhood and community issues, and responsibilities of home ownership.

Marketing.  The Financial Series is advertised in HomeSight’s general marketing campaign. HomeSight uses a variation of the “Kiss Your Landlord Goodbye” campaign developed by NeighborWorks America.

Program Costs.  Class expenses are figured into the overall educational budget, and include staffing, materials and refreshments. Initial program development and implementation costs are estimated at about $5,000.

• The first Financial Series workshop was attended by 45 people. HomeSight also presented the workshop to 45 professionals from the local finance industry.
   
• HomeSight has received very positive feedback regarding the predatory-lending session from both class participants and lending industry professionals. Participants are gaining a wealth of information (and are very grateful for it), and lenders are pleased that HomeSight is providing this information to consumers.
   
• The session is a very powerful piece and can be adopted for a variety of audiences. HomeSight has received such positive feedback that it is planning to offer the session as a stand-alone class twice a year.

• When teaching about predatory lending, it is best to provide real and visual examples of predatory-lending practices. Illustrate how expensive these deals are and how they are not worthwhile. It also helps to provide local case studies. If available, look at local video clips that describe predatory-lending tactics in the community. This makes the issue more real and demonstrates to participants that there are local predatory lenders and local victims.
   
• Predatory lenders often target people with limited literacy skills. Thus, it is important to use visual training materials as much as possible in presenting information. Using a variety of training methods will help make the information clearer. It is also important to stress that even though predatory lenders typically target certain groups, predatory lending really is a broader community problem that can affect anybody.
   
• What may appear to be a predatory tactic to one person may be the only viable financial solution to another. For example, people who are “bankable” typically do not use check-cashing or payday-loan establishments. But many consumers who have no alternative do use these. So, though these fringe financial services are not economical, they do have value for a segment of the community.
   
• It is important to realize when discussing predatory tactics that legislative changes are not the sole answer. Raising consumer awareness also should be a key priority.

Agency interview with: Alice Coday