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Kevin Smith, president and CEO, Community Ventures
Challenge: Barriers to homeownership make it particularly difficult for low-to-moderate income families to achieve their goal. Homebuyer education helps people responsibly purchase a home and many lenders now require education courses for potential buyers. However, many homebuyers are unable to meet with local housing agencies due to time and money constraints.
Travel cost and time as well as childcare and work schedules challenge the ability of families to meet for traditional one-on-one counseling. Counseling agencies have limited resources, staff, and time. Rural housing agencies have to strategically locate where they can serve the most clients in a cost-effective manner, leaving some potential homebuyers without access to homebuyer education courses.
Community Ventures created eHome America in 2009, an online homebuyer education course that helps homebuyers make informed choices and achieve their dream of homeownership. Born out of the subprime lender crisis and originally funded by NeighborWorks America, eHome America is the most comprehensive online homebuyer education course in the nation. It is used by more than 450 housing agencies in all 50 states, Puerto Rico and Guam. eHome America benefits homebuyers and allows nonprofit partners to serve more clients at a lower cost. Its revenue-sharing model has brought over $7.5 million in shared revenue to partner agencies, allowing them to have a greater impact in the areas where they serve.
When first-time homebuyers start this daunting and confusing transaction, many are undereducated and exposed to the predatory lenders in the mortgage industry. The housing crisis taught people that buying a home takes more than a dream and a few signatures.
New post-crisis regulations and higher expectations for compliance hit low-and-moderate-income families the hardest and many are disqualified from homeownership. With income, wealth and credit scores on average lower for minorities, access to mortgage credit for low-income borrowers will likely have major implications for the ongoing severity of wealth disparities.
Homebuyer education is proven to reduce the potential for foreclosures by 29 percent and counseled borrowers are 67 percent more likely to remain current on their mortgages.
Community Ventures President and CEO Kevin Smith realized how necessary homebuyer education is after meeting with a client who wanted the company to release his second mortgage. The client had a 30-year fixed-rate loan at one percent interest and was planning to switch to a loan with a lender who was offering $500 at closing. However, the fine print stated that this was an adjustable rate loan that could adjust up to a 14 percent interest rate.
“We were able to help this client, but I knew we were missing so many more,” said Smith. “We had to do something to reach a wider audience so we had the idea to create eHome America.”
eHome America’s online course gives people the option to take homebuyer education courses on their own schedule and at their own pace. eHome is approved and accepted by NeighborWorks, HUD, the USDA and 16 State Housing Finance Agencies.
As of June 2016, eHome has provided over 185,000 prospective homebuyers with high quality education. Broken into chapters so consumers can start and stop as desired, the program uses multiple adult learning techniques and has a completion rate of over ninety-five percent.
Through its revenue-sharing model of splitting the $99 course fee, with $74 going to agency partners and $25 to eHome America for administrative costs, eHome has funneled over $7.5 million to its nonprofit partners. The shared revenue is used for multiple services, including offsetting the high-intensity counseling that some customers require as well as strengthening core housing services.
eHome America also creates cost efficiencies because agencies are able to serve more clients at a lower cost. Among its administrative tools, eHome offers Spanish translation enhancements, an online chat feature and new counselor tools that are constantly updated.
Homebuyer education is a win for lenders, consumers and governmental entities. eHome America lessens the need for regulation, creates sustainable revenue for nonprofits, and raises financial literacy nationwide. Buyers receive a high-tech experience combined with one-on-one counseling, providing both convenience and personal guidance.
Overall, homebuyer education is expected to play a greater role in the home buying process in the years to come as lenders, consumer advocates and local governments recognize that education is a significant deterrent to foreclosure. Homebuyer education leads to better-performing loans made to better-qualified borrowers, builds consumer confidence and communities, strengthening the essential foundation of our economy.
“Working with our partners in eHome America, we can shape a housing market that is stronger and safer than before,” said Smith. “In doing so, we continue to restore the dream of homeownership, creating a stronger middle class and a stronger America.”
