PHOENIX – There's no shortage of low- and moderate income housing needs in Phoenix these days, and Desert Schools FCU wants to make sure that situation doesn't continue. DSFCU, the state's largest, has committed to fund $100 million in home loans over the next two years to low- and moderate income families, with a focus on underserved areas. Robin Simmons, director of first mortgage lending for the $2 billion credit union, said 25% of that money is earmarked for minority borrowers. The balance will go to any low- or moderate-income member. According to Simmons , Desert Schools has always had a commitment to the underserved community. Initially, she explained, the credit union began by opening branches in most Wal-Mart stores in the area. On the lending side, Desert Schools looked for opportunities to do mortgage lending in underserved communities, "and put people who never thought they could own a home, into a home. The challenge is to get people in the door. "That's where our relationship with Fannie Mae has been so important," she continued. "They have a lot of contacts with community leaders and various initiatives that are going on to help people become homeowners. Fannie Mae has approached us on many of their projects." In fact, Fannie Mae has already agreed to purchase the eligible loans Desert Schools will make from its recent $100 million commitment. In addition to the Community Lending Agreements Desert Schools has already signed with Fannie Mae which make it possible for borrowers to buy a home with as little as a $500 downpayment, the CU is involved with other initiatives to make minority renters become minority homeowners. Among those are conducting home buying seminars in Spanish and offering various community services in the neighborhood. Through its relationship with Fannie Mae, Desert Schools also offers expanded approval loans to people who are credit impaired or who have higher than usual debt-to-income ratios and are typically considered risky. "The rates on these loans are somewhat higher than our conventional loans, but they're still light years lower than any subprime loan these people might get," said Simmons. As part of its initiative, Desert Schools FCU is also moving forward with plans to assist with revitalization efforts for the Palomino District Housing Project which will involve targeted home buyer education and outreach opportunities. Simmons explained that Palomino is a small, very low income area in Phoenix. The majority of people who live there are Hispanic and many are undocumented residents of the U.S. "There are many housing issues there," she said. "All the people who live in Palomino are renters. It's not good housing, there are many apartment complexes and trailer parks in disrepair. There has been a lot of political pressure to shut them down, but several non-profit groups are trying to find ways to clean up the area and help the people there buy homes." In addition to these initiatives, Simmons said Desert Schools is also in the process of creating a mortgage product for people who don't have an established credit score. The product would consider an alternative, non-traditional credit source such as rent or utility checks to show the applicant is credit worthy. According to Simmons, Desert Schools became a Fannie Mae seller/servicer in late 1999 and is currently servicing just over 5,500 mortgages worth $650,000. In 2004, about 20% of the CU's first mortgage loans were to minority borrowers, and Desert Schools is looking to increase that figure to 25% in 2005. -

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