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Milwaukee program brings home ownership to heart of city.

Since May 1990 a collaborative effort between state and city agencies in Wisconsin has registered more than $10 million in inner city single-family mortgages in Milwaukee, allowing more than 300 low-and moderate-income families to become homeowners.

With the aid of Assemblywoman Gwendolyn Moore and State Sen. John Plewa, the Wisconsin Housing and Economic Development Authority (WHEDA) joined forces with the city to create the Special Opportunity Mortgage Program, a combination of its $10 million pledge to guarantee loans in the target area and the city's ability to offer technical assistance and identify problem areas.

The organizers faced one formidable challenge: many of the low income residents who would benefit from the program did not believe they could establish credit and acquire the necessary resources to purchase a home. Raising their confidence was difficult, WHEDA spokesman Jim Langdon said, because very few loans ever had been made in Milwaukee's inner city, where more than 90 percent of the state's non-white residents live.

WHEDA and Milwaukee each had tried "conventional" methods - which usually meant having potential home owners contact and work with lenders on their own - with limited success. They ultimately decided "a radical approach was needed."

The 13-square-mile federally-designated "inner city target area" in Milwaukee was re-named the "Heart of the City." The slogan became the essence of the program's marketing strategy: "Promoting unique architecture, great value and an opportunity for revitalization of historically strong neighborhoods." "A vision for what the area could again become," Langdon called it. But, given the difficult mortgage market and the applicants' economic histories, it would probably take many of these Milwaukee renters up to three years before they could purchase a home.

The plan called for $10 million in mortgage loans over three years in the "Heart," an area where previously WHEDA would loan only about $1 million per year.

Realtors lenders, black ministers, Hispanic leaders, neighborhood groups, community organizations and prospective buyers were included in the plans to develop the new mortgage program. "We learned from them what had been tried and failed," Langdon said. And they learned that "a huge education gap" existed.

WHEDA decided to open a branch office in Milwaukee "to market our programs and establish a highly visible, accessible presence in the city. In addition, we hired people for that office who were well connected with the communities we wanted to serve."

They urged their insurer, General Electric Mortgage Insurance Co., to familiarize its underwriters with the neighborhoods and with the cultural differences of the applicants.

"We needed lots of people in the pipeline fast to get long-term results," Langdon said. "We learned that our target population was media driven. We made a decision to take a dramatic media approach to marketing our program to attract a media oriented audience. Our media objective was to catch them where they are with a flash message that says: This might work for you."

The program's organizers flooded the market with advertising: airing radio commercials, circulating flyers and running supplements in daily and community newspaper.

They began hosting a series of Homebuyers' Seminars, where applicants learned how to select a home and apply for a mortgage loan, learned about credit records, home inspections, maintenance, community services, and how to go about using the Special Opportunity Mortgage Program. Child care was provided to discourage absenteeism.

After the first round of seminars, registrants were asked to complete a survey on the format and value of the seminars. The response overwhelmingly suggested that applicants needed more specialized information and individualized attention.

This resulted in the creation of the Homebuyers' Club, where smaller groups of applicants worked with lenders and community organizations to overcome the obstacles they faced to home ownership. These meetings were held every three weeks on topics such as credit, budgeting and home selection. At the credit meetings, for instance, members received copies of their credit reports, (provided free of charge by a Milwaukee credit reporting agency), and met with volunteer representatives from various Milwaukee banks who reviewed their reports, and, if necessary, referred them to community-based organizations that could provide financial counseling which could eventually help them buy a home.

WHEDA produced a live, one-hour TV show on Milwaukee public television, fielding calls and questions form the audience, to spread awareness of the program and to tell people how to use it. The show was followed by eight seminars (two conducted in Spanish) by the Homebuyers' Club at "carefully selected locations" in the African-American, Mexican-American and Puerto Rican communities over a two month period.

The total marketing budget for the year was $76,000, including the cost of all advertising (TV, radio and print) and promotions (seminars, mailings, printing, child care, mugs, refreshments and rental equipment). The program solicited only Milwaukee-based business for services, and minority vendors were used whenever possible, WHEDA marketing specialist Tom Schrader said.

"Our first goal was to generate interest in the program," Langdon said. The marketing campaign drew over 1,200 people to the seminars during the first two months, and 2,900 within the first year. "Equally important, we gained the attention of the community groups, lenders and realtors who pulled together to make the seminars so successful."

"Our marketing efforts were event driven," he said, "consequently tailored rather than patterned. Ours was a difficult problem and we addressed it by submerging ourselves directly into the market. We view this ... as money very well spent. Courtship has its costs. But, as witnessed by the results, our message was heard."

In one year the Special Opportunity Mortgage Program closed 113 "Heart of Milwaukee" loans worth almost $3.5 million. (Another 10 are approved and set to close soon.) Seventy Milwaukee target area loans worth $2.5 million closed during this period. Target area loans, though they do not qualify for the Special Opportunity Mortgage Program, are an important element of the campaign, Langdon said. Nevertheless, together they amount to a 500 percent increase in inner-city lending over the previous year.

According to figures provided by WHEDA, the average "Heart of Milwaukee" loan was $30,000. The average home purchase price was $33,995, though some cost as little as $12,000. Sixty-eight percent of the 310 borrowers needed and received closing cost assistance from WHEDA and the city, with the average grant amount being $639.

The average annual income of program borrowers was $22,400, but was as low as $5,900. Sixty-four percent of households were minorities, and 16 percent of them were headed by single parents.

This year, the percentage of loans made to minorities in Milwaukee rose from 13 to 26 percent. The denial rate for minorities decreased from 17 percent in 1989 to 7.4 percent in 1991. The denial rate for whites remained at 8 percent.

"With 700 members in our Homebuyers Club, we except to reach our $10 million mark easily within two years' time instead of three. And we look forward to dedicating another $10 million to the Heart of Milwaukee when the first $10 million is gone."

"One of our sweetest goals achieved was the respect we earned from the city of Milwaukee," Langdon said.

Added Schrader: "We realized that we could get things done by unconventional methods."

"At a time when the news coming from America's inner cities is all too often devastating," said Wisconsin Gov. Tommy G. Thompson, "here is a program that has had great success."
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Author:Murph, Quinn
Publication:Nation's Cities Weekly
Date:Jul 27, 1992
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