Nuestra Comunidad Development Corporation of Boston is participating in the “Don’t Borrow Trouble” campaign, a national public-education campaign sponsored by Freddie Mac to help borrowers resolve predatory-lending issues. As a participating NeighborWorks organization, Nuestra does intensive counseling with customers, and then coordinates and packages loan refinances through Wells Fargo, if necessary. Freddie Mac then buys the loans from Wells Fargo.

Incorporated in 1981, Nuestra Comunidad Development Corporation was founded by residents of the Dudley Street neighborhood of the Roxbury and Dorchester sections in the city of Boston. These residents aimed to take control of the land, build new housing, and combine their energies for a better future for the community. Nuestra’s board is representative of the neighborhood it serves in its ethnic and cultural diversity, and is composed of residents, local merchants, community advocates, and representatives of government, nonprofit and social-service sectors. Nuestra Comunidad is devoted to building the wealth and enhancing the physical, economic and social well-being of Roxbury through a community-driven process that promotes self-sufficiency and neighborhood revitalization.
 
Nuestra Comunidad provides NeighborWorks Full-Cycle Lending services, including pre- and postpurchase counseling, house rehabilitation and homebuyer education.

Boston’s “Don’t Borrow Trouble” Campaign.  The “Don’t Borrow Trouble” campaign was created by Boston Mayor Thomas M. Menino and the Massachusetts Community Banking Council to address local predatory-lending practices and the dangers of excessive debt. Through advertising and counseling, the campaign strives to help prevent foreclosures and reduce the number of predatory loans, thereby preserving the growth of home ownership in the city. All advertisements include the phone number for the Boston HOME Center, whose staff counsel homeowners on the risk of high-cost loans and refer callers to housing agencies that can help with additional counseling or loan restructuring.

National Campaign.  In August 2000, Freddie Mac decided to sponsor a nationwide campaign, based on Boston’s “Don’t Borrow Trouble” effort, in 12 major U.S. cities. The national campaign informs borrowers of the dangers of predatory lending through a combination of ads, billboards, Web sites and public-service announcements. Victims are directed to call a toll-free hotline where they can report problems and get counseling to better understand and resolve their credit problems.
 
Freddie Mac hopes to show lenders that it does not support predatory-lending practices by refusing to purchase high-cost loans with unfair terms, and providing funding and technical support to help launch local campaigns. Local campaigns are carried out by a wide range of partners, including NeighborWorks organizations, government agencies, nonprofit housing organizations, credit-counseling agencies, fair-housing associations, industry groups and responsible lenders.

HELP Program.  In November 2000, NeighborWorks America, along with Freddie Mac and Wells Fargo Home Mortgage, created the home-equity, loss-protection (HELP) initiative, an anti–predatory lending product with special long-term education and counseling, to be piloted in six of the 12 national campaign cities, including Boston. The program is designed to protect homeowners from predatory lenders by providing an affordable mortgage refinance.
 
Freddie Mac will purchase up to $20 million in HELP loans originated by Wells Fargo Home Mortgage and insured by Mortgage Guaranty Insurance Corporation of Milwaukee and PMI Mortgage Insurance Co. of San Francisco. Services provided by NeighborWorks affiliates will include financial literacy training, credit counseling and affordable loan alternatives.
 
Two NeighborWorks organizations, Nuestra Comunidad and Neighborhood of Affordable Housing (NOAH) of East Boston, are leading the pilot in Boston. They offer their loan and counseling services citywide.

Nuestra Comunidad’s Involvement.  Once Freddie Mac became the lead sponsor of the national “Don’t Borrow Trouble” campaign, Nuestra Comunidad was able to apply for funding and participate along with NOAH and the city of Boston. Local advertisements conducted by the city encourage homeowners with credit problems to contact the city’s HOME Center for help. Individuals are then referred to Nuestra Comunidad or NOAH, depending on the neighborhood in which they live (Nuestra Comunidad concentrates on the southwest, while NOAH serves the remainder). The NeighborWorks organizations do intensive counseling with customers, and then coordinate and package a loan refinance through Wells Fargo, if necessary. Freddie Mac then buys the loans from Wells Fargo.

Nuestra Comunidad’s Additional Product.  Nuestra Comunidad also allows customers to borrow an additional amount to pay up to three months of back mortgage payments. These are to help prevent foreclosure while the homeowner is in the process of refinancing and/or repairing credit issues. The entire amount is included in the refinance through Wells Fargo.

Funding.  Freddie Mac is providing $50,000 a year for three years for both Nuestra Comunidad and NOAH to staff the program.

• Thirty referrals have been made to Nuestra Comunidad thus far, and all customers have started counseling. Ninety percent of these customers are not in foreclosure, but have second mortgages and very high interest rates.
   
• Nuestra Comunidad has created three loans so far to help customers with back mortgage payments avoid an impending foreclosure.
   
• The program is still relatively new, but Nuestra Comunidad expects loan refinances to begin within a couple of months.

• Any anti–predatory lending campaign must include a hotline for counseling and information on alternative loan sources, or else it will simply create a large number of frustrated borrowers with no place to turn to for help.
   
• Nuestra Comunidad felt it could easily participate in this program since the organization had a foreclosure-prevention program already in place. Participating organizations do need to prepare for an increase in customers.
   
• It is important for each organization to be flexible in order to provide services to as many customers as possible. Nuestra Comunidad believes most program participants will come from its traditional target areas, but organizations may need to adjust the areas they serve, depending on program needs.
   
• Counseling and assisting victims of predatory lenders are labor-intensive efforts. These are difficult situations to remedy. In most cases, the borrower’s credit rating has been damaged, and some households may even have started bankruptcy proceedings. Participating organizations must be able to spend a good amount of time with each individual.
   
• The state of the economy directly affects the number of people falling prey to predatory lenders. An economic slowdown affects people’s finances and often causes hardship for many. This can result in more predatory-lending situations and more financial problems for families. Nuestra Comunidad recommends staying informed on what is happening in the economy, both locally and nationally.

Agency interview with: Evelyn Friedman