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Sponsors of the Project met late in January at the Warrensville Senior and Civic Center in Warrensville Heights, Ohio, to inaugurate three new task groups. The groups are reviewing practices in the private mortgage insurance, credit bureau reporting, and property insurance industries. Other goals for Phase II of the Project include implementing the remaining recommendations involved in Phase I, and increasing participation in the Project by involving more organizations from the non-profit and public sectors.
Building on Diversity
The Project represents a commitment on the part of Greater Cleveland firms which provide services relating to home purchases and financing to review and improve the complex process by which market participants disburse residential mortgage credit. Its goals are to strengthen and stabilize the economic foundation of the Greater Cleveland housing market, and realize the community's ambition of becoming an example of a region that builds on the diversity of its people.
Four task groups were established during the first phase of the Project. They addressed the initial contact with real estate agents, the initial contact with lenders, the secondary market, and the appraisal process. Project participants have already begun implementing several of the groups' recommendations. For example, to further the affirmative marketing of new loan products, the real estate agents task group has developed brochures and a training curriculum for real estate brokers.
They have also secured a change in the Multiple Listing Service so that sellers will be less likely to state a preference for buyers using conventional financing instruments. Since low- and moderate-income buyers are more likely to use unconventional financing, this change will encourage them to investigate a broader range of homes in their selection process. Conversely, sellers will have a larger pool of potential buyers for their property.
Along the same lines, the Ohio Association of REALTORS Multiple Listing Committee has agreed in principle that REALTORS should be educated not to use the term "conventional only," so as not to limit options for buyers or sellers. And the Ohio chapters of both the National Association of Real Estate Brokers and the National Association of REALTORS have urged the Ohio Real Estate Commission to amend its Canon of Ethics so as to further secure the participation of real estate agents in the affirmative marketing of all loan products.
Training Sessions
Among the other groups established in Phase I, the secondary market task group arranged for Fannie Mae representatives to conduct training sessions for lenders and appraisers about Fannie Mae's policies for underwriting low- and moderate-income residential mortgage loans. The sessions were held in February, 1995.
The appraisal task group, meanwhile, has made significant progress towards developing a program to better inform appraisers about Cleveland's neighborhoods. One result of their efforts was the joining together of the professional appraisers associations in the Cleveland area to produce an educational program aimed at developing greater consistency in property appraisals in low- and moderate-income city neighborhoods. The program's goal is to develop more uniform appraisal standards in these areas. Separately, a subgroup comprised of underwriters is reviewing the process by which appraisers are chosen, and trying to develop tools for better evaluating the quality and consistency of the appraisals they supply to underwriters.
In March, 1995, the Project formed an evaluation committee, which is developing a process for measuring the effectiveness of the Project's various programs. The committee, along with the task groups, will report on their progress in the fall of this year.
The residential housing and mortgage credit project is sponsored jointly by the Cuyahoga County Department of Development, the Greater Cleveland Roundtable, the Ohio Civil Rights Commission, and the Federal Reserve Bank of Cleveland. The Project was profiled extensively in the Fall 1994 issue of the Federal Reserve Bank of Cleveland's CRA Forum. For a free copy, contact Donna Cotton at the Federal Reserve Bank of Cleveland at (216) 579-2903.
Community Reinvestment Forum Table of Contents--all issues
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