011305MLK

NeighborWorks

For Immediate Release
January 13, 2005
Contact: Becky Fleischauer, 202-220-2360; bfleischauer@nw.org

Neighborhood Reinvestment Corporation Marks Martin Luther King Jr. Day with Call for Increased Homeownership Education

Neighborhood Reinvestment CEO Recalls King’s Legacy of Empowerment

Washington, D.C. – On the eve of the January 17th Martin Luther King Jr. holiday, Neighborhood Reinvestment Corporation CEO Kenneth D. Wade called on citizens to draw on King’s legacy of empowerment. “The dream of homeownership is part of Dr. King’s vision of equality and empowerment,” Wade said. “Yet even today too few homebuyers get the education and counseling they need to make the biggest financial transaction of their lives.”

Without access to quality information and guidance, many consumers miss opportunities to get the most of their investment or worse, fall into mortgage traps that eventually lead to foreclosure and financial ruin. “We’ve found that many consumers assume that banks are required to give you the best rate available. This isn’t true. We want to create a seismic shift in power and information toward the consumer,” Wade said.

More than 35 years after King's death, and nearly 20 years after the day became a national holiday, the number of minority homeowners is at an all-time high of 1.7 million new homeowners created in the last year. Between 1994 and 2003, two out of five new homeowners were minorities. “We are more than an “emerging market” as often described – we are the future,” Wade said. “For the first time this past April, blacks in America achieved a homeownership rate of above 50 percent. While an improvement, blacks still lag about 20 percentage points behind whites in achieving homeownership.”

Wade has committed to tripling national capacity to provide more consumers with homeownership education and counseling. The number of consumers who need such homeownership education and counseling is growing at a pace too fast to serve, creating a ‘counseling gap.’ At the current rate, from 2005 to 2025, 15.8 million first-time buyers will go uncounseled, including 3.2 million African-Americans, 3.0 million Hispanics, and 6.3 million lower-income households.

Those receiving high-quality homeownership education and counseling have half the default risk as those who did not. And borrowers who complete education and training courses cut delinquent payments by 30 percent. Despite its proven advantages, only 15 percent of current first-time homebuyers receive adequate counseling and education.

Wade said the pay-off for educating more homebuyers and closing the gap in homeownership will be enormous. “An informed buyer is an empowered neighbor whose wealth and contribution to his or her community multiplies. One survey of consumer finances found that low-income homeowners had a net worth 12 times that of renters at the same income level. Other studies found that children of homeowners are more likely to graduate from high school and college and more likely to go on to own homes of their own. Homeownership also improves neighborhood safety, generates higher property values, stable employment and other economic activity. As we honor the enormous contributions of Dr. King, let us work toward more Americans realizing the dream of homeownership.”

About Neighborhood Reinvestment Corporation
The NeighborWorks network is a nationwide network of more than 235 community development organizations working in nearly 2,700 urban, suburban and rural communities across America. These organizations engage in revitalization strategies that strengthen communities and transform lives. Neighborhood Reinvestment Corporation provides financial support, technical assistance and training for the NeighborWorks network. In the last year alone NeighborWorks organizations have generated more than $2.2 billion in reinvestment and in the last 5 years helped more than 500,000 families of modest means purchase or improve their homes or secure safe, decent rental or mutual housing.