Quontic’s status as a US Treasury certified Community Development Financial Institution, and our adaptive mortgage loan products like our Community Development Loans, are helping us make an impact with low-income families and small business owners. Here’s how.
Our mission as a CDFI, or Community Development Financial Institution, has an impact that can’t be measured solely by numbers. But we can certainly try. We, of course, report on units, loans, and dollars that back our mission. But how does one measure the impact we can make on people’s lives? That’s priceless.
A huge part of what we do revolves around providing mortgage loans to low-income families—Not just low-income, but also low-wealth.
The second subset of folks we’ve also been able to help falls into another box: the underserved. Namely this includes offering loans to small business owners who have especially been in need of assistance during the pandemic.
So what goes into impacting a life, in terms of home or property ownership?
For the most part, for households with low-income and low-wealth, we offer government insured FHA loans of up to 96.5% of the purchase price of the home. And, for eligible borrowers, we can also layer on top of that a forgivable 3.5% second mortgage in order to bridge the down-payment gap for those who do not have sufficient funds themselves. Then, we use a Quontic grant, or concession, to cover some of the closing costs. The last piece of that puzzle, the thread that ties everything together, is homeownership education and counseling. Our theory is—If we can’t help somebody right away, we can at least provide education. So we work with the Neighborhood Housing Service to get people of color and low-income people into homes.
We’ve found that an overarching story is that customers who were told “no problem” by a big bank’s loan officer looking to make a commission get strung along, then denied. Then, they come to us and we fix it. We’ll help people raise their credit and give them counseling. And oftentimes when we do that, we find that people don’t yet understand their eligibility for home ownership.
Changing that perception is a gamechanger. Higher homeownership rates result in higher high school graduation rates, lower levels of crime, and more wealth for that family and neighborhood.
The main loan that we offer in order to serve the first subset of customers, low-income underbanked individuals, is called our Community Development Loan. Our CDL has been instrumental in providing home loans for self employed borrowers, especially during the pandemic. These borrowers are people who have the right credit score to buy a house and a reasonable down payment either from savings or family contributions, but face a common problem: other banks require their last 2 years of tax returns. And for many people, 2020 just wasn’t a good year. Even if they had their best year in 2019, this past year may have pulled them back down. It’s not their fault, obviously. People weren’t allowed to go into retail establishments for the longest time. But we were able to help these businesses. For our customers, we were able to provide a mortgage forbearance. And as our economy starts to rebound, we’re helping many more small businesses recover.
For example, we recently helped a small business owner named Daniel, who had a startup that was losing money, but another business that was successful. Well, when regular banks look at both his businesses, one successful and the other in trouble, he doesn’t qualify. He was despondent because he tried to get another loan with another bank, and they initially told him, “no problem.” After months, it didn’t work out. He came to Quontic, and we fixed it for him. We got his application clear to close in 12 days. That kind of impact feels good.
Even during the pandemic, history proves that our Community Development Loan makes sense. Out of the thousand loans we’ve done over the years, less than 1/10 of 1% have defaulted. We won’t lose any meaningful money on those given how much equity our borrowers typically have in their homes. The program is working phenomenally well and our volumes are growing fast. The sky’s the limit.
We may be the only bank in the country that makes loans like this, but it’s working. When others look at us, they marvel at what we’re doing because it’s so unconventional. It may seem risky on the surface and, believe me, we know why. The reason we’re able to make these loans safely is because we’re able to have faith in our customers, and because we are able to view the entirety of our customers’ financial circumstances beyond what appears on the tax returns. The data speaks for itself.
Like with Daniel, we know so many self-employed people who have resources to commit to a home, whose small businesses are highly viable, and who are credit worthy—these are great indicators of ability to pay despite any income volatility shown on the tax return. And we know how to help our customers make the right decisions. The program works and is great for so many different people.
It makes an impact. And that’s what matters.
If you’re interested in getting started, go on our website and on the homepage, click “prequalify now or speak to a mortgage specialist.”