FLORENCE HAGINS
Credit important to all
Following a public awareness campaign that warns against the dangers of predatory lending, a new citywide financial literacy campaign designed to help Bostonians become homeowners by building strong credit has been launched.
Called CreditSmart, the program was developed by lending giant Freddie Mac and various national and local community organizations to educate consumers about the importance of credit and money management. It already has assisted thousands of families across the country, according to Freddie Mac.
In a separate effort to boost homeownership, the city’s Department of Neighborhood Development announced last week a pilot program that would enable first-time buyers to build their own homes. The program, called Boston Build Home, will offer 12 sites for sale for $1,000 each in Dorchester, Mattapan, Roxbury and Roslindale to eligible first-time buyers so they can build a home.
The CreditSmart curriculum, which includes materials and books, provides an overview of credit and credit management and insight into how lenders assess credit histories. It also explains the role credit plays in the homebuying process and in achieving other financial goals.
The Department of Neighborhood Development will offer free CreditSmart financial literacy workshops to Boston residents. In addition, several community organizations are incorporating the CreditSmart curriculum in homebuyer classes that they already offer.
The Massachusetts Affordable Housing Alliance, a nonprofit group based in Dorchester that encourages private and public investment in affordable housing, is planning to implement the CreditSmart curriculum into its first-time homebuyer workshops. MAHA conducted 22 workshops last year and plans to have 32 this year.
‘Economic Justice’
“Credit, I think, is so important to all people, not just first-time homebuyers,” said MAHA Assistant Director Florence Hagins, who added that credit scores affect many aspects of people’s financial lives.
The CreditSmart curriculum will be especially helpful to immigrants who don’t have a credit history and may not understand the importance of building a strong credit background, explained Hagins.
“We applaud Mayor Menino and Freddie Mac for launching this,” said Hagins.
A study done by Freddie Mac revealed that pre-homeownership counseling is effective in helping borrowers make their mortgage payments and in reducing mortgage delinquencies by as much as 34 percent.
Nuestra Comunidad Development Corp. in Roxbury already has incorporated much of the CreditSmart curriculum in its first-time homebuyer classes, according to Kevin Winn, the group’s director of lending and technical assistance. The community development corporation offers homebuyer classes once a month and conducts them in English, Spanish, Cape Verdean Creole, Haitian Creole, Vietnamese and even American Sign Language.
“When people are about to buy a house they need to make sure their credit is in good order,” said Winn. Homebuyers need to understand why budgeting is important, said Winn, as well as how credit reports can hurt or improve their chances of obtaining a mortgage loan.
The Allston Brighton Community Development Corp. is planning to offer separate CreditSmart classes starting in the fall. The community group offers homebuyer workshops and has provided a financial literacy class called “Talking Dollars, Making Sense” for at least five years. Elizabeth Palma-Diaz, the homeownership program manager for the CDC, said that class will most likely be replaced with the CreditSmart curriculum.
“The aspect that we like about our class “Talking Dollars, Making Sense,” is that it has some pieces of economic justice that CreditSmart doesn’t, so we’ll probably integrate that into CreditSmart,” she said.
In addition to providing materials, Freddie Mac is offering some funding to launch the initiative in Boston. The campaign comes after Freddie Mac, in collaboration with the city of Boston, developed a national campaign several years ago called “Don’t Borrow Trouble” that cautions against lending scams and has been adopted by more than 30 other cities and states. As part of that effort, 30-second public service announcements in English and Spanish warning people about predatory lenders have aired in Boston, and newspaper and billboard advertisements have appeared in areas where there has been an increase in predatory lending.
The CreditSmart campaign is expected to reach about 3,000 Boston residents through various community organizations. In addition to MAHA and Nuestra Comunidad, participating groups include the Association of Community Organizations for Reform Now, Allston Brighton Community Development Corp., Asian Community Development Corp., City Life/Vida Urbana in Jamaica Plain, International Institute of Boston, Homebuyers’ Initiative, Financial Education Associations, Neighborhood of Affordable Housing, Urban Edge, Veterans Benefit Clearinghouse and the Vietnamese American Initiative for Development.
The Boston HOME Center will offer training in partnership with the Asian CDC, the Black Ministerial Alliance, the Boston Housing Authority, CityLife/Vida Urbana, the Codman Square Health Center, the Dorchester House, the Lena Park Community Development Corp., the Mattapan Community Development Corp., Veterans Benefits Clearinghouse and the Vietnamese American Initiative for Development.
“Teaming up with Mayor Menino and the city of Boston to make CreditSmart classes available throughout the city will help more Boston families build strong credit on a bedrock of sound information about personal financial management, banking and homeownership,” said Freddie Mac Chief Executive Officer and Chairman Richard F. Syron, in a press release announcing the program’s launch in Boston. “CreditSmart has helped more than 25,000 families across the nation down the path to homeownership and we are delighted to join Mayor Menino to make this effective program work in Boston.”
Last week, the city also launched the Boston Build Home pilot project. The city is gearing up to accept applications from qualified applicants. Applicants must be first-time buyers who have completed a certified homebuying class. They also must be able to finance and obtain construction bids. Preference will be given to Boston residents earning less than 130 percent of the area median income.
In addition to offering the land at the reduced cost of $1,000, the city will provide model house designs and specifications, a builder resource directory, ongoing technical assistance and workshops.
The following sites are being made available for the pilot program: 14-16 Evans St., 16-18 Greenbrier St., 7 Half Moon St., 17-19 Helen St., 31 Rill St., 17 Tremlett St., 61 Wentworth St. and 65 Wentworth St., all of which are in Dorchester; 36 Goodale Road and 46 Westmore Road in Mattapan; NWS Sherman St. in Roslindale; and One Otisfield St. in Roxbury.
A mandatory applicant conference will take place July 17 at 10 a.m. at 26 Court St. in Boston.
