Divine Providence

May 27, 2005
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GRAND RAPIDS — For the last 31 years, the Inner City Christian Federation has been giving low-income families the educational resources they need to become successful homeowners. Now it will be giving them the money, too.

Technically, Providence Home Mortgage Inc. will provide the funding. The newly formed mortgage brokerage is a wholly owned, for-profit subsidiary of the nonprofit ICCF. According to ICCF Executive Director Jonathan Bradford, the formation of Providence came in response to two demands.

First, ICCF was spending a great deal of time and money to prepare underprivileged individuals for home ownership. “Then we were handing them off to a lender and, for the most part, it was like a hot knife through butter. I mean: ‘There they are. They’re ready,’” he said. “And the lender was, of course, reaping the financial benefits.”

Bradford also realized that streaming ICCF’s knowledge of the homeowner education process into a for-profit mortgage firm would appeal to the general public, not just the low-income individuals the organization serves.

“Since our work has resulted in success for several hundred families of lesser economic ability, why couldn’t we adjust that — position it just slightly differently — so that we helped all families?” Bradford said.

So in 2001, that is what ICCF set out to do. Bradford tried three times to obtain funding and support through a national program sponsored by the Yale School of Management and the Goldman Sachs Foundation. Although he was unsuccessful, the business plan and strategies that came out of those attempts did land the group other funding. Bradford said ICCF was able to generate initial operating capital from the Michigan State Housing Development Authority (MSHDA) and the Great Lakes Capital Fund “at very advantageous terms.”

Providence Home Mortgage opened its doors in December 2003, and has been closing 10 to 15 loans each month since. About 25 percent of those loans have been directly related to ICCF.

When Bradford hands a homebuyer over to Providence, he is confident that his client will continue to receive the same care given at ICCF.

“We know that every ounce of their involvement in (a given family) is going to be rooted in the same values of respect and service. We know that (clients) are not going to be mistreated or taken advantage of. We know that what we have provided for the families in terms of their new-found skills and their polished-up self-confidence, we know that is going to be fed and expanded upon by the product Providence has put in their hands.”

Providence CEO David J. Rozendal oversees that service. Rozendal sold his own mortgage company in order to become involved with nonprofits and give back to his community. He consulted with ICCF for about a year before being offered the head spot at Providence

Bradford feels that Rozendal’s personal philosophies as well as his professional experience make him an ideal match for Providence

“In the mortgage business, especially in the last several years, there are so many companies that are focused on how to pad their bottom line, how to make as much money as they possibly can,” Rozendal said. “Certainly, I want to make money. I’m a for-profit business. I’m very open about that with my clients. But I can’t do that while sacrificing service and the ability of the borrower to get into a good loan product.

“There are often times where we need to structure something with a transaction that I could do it to just purely benefit myself and nobody would ever know,” he said. “That’s one of the things about the industry, that so few people really understand this thing. But I won’t do it if it doesn’t benefit the client. If it doesn’t benefit the client, we have to figure out another way to do it to make it so it does benefit them.”

“That is simply not a common standard,” Bradford said. “That is clearly the thing that distinguishes Providence.”

As the sole shareholder in Providence, ICCF will benefit when the company profits and pays dividends. Bradford hopes that ICCF will be able to cash in on another angle with its ownership of Providence. About one third of the organization’s $4.8 million budget comes from charitable giving. Bradford hopes that some of those ICCF donors will also become Providence borrowers.

“If somebody was willing to write us a check for $100 or $500 or $1,000 as a gift, a significant number of them might say, ‘Hmm. I could take my mortgage needs to them. I hear that their prices are very competitive. Their service is beyond reproach.’ And guess what? What modest profits are going to be generated are going to stay in Grand Rapids to benefit these families,” Bradford said.

Attracting that higher-end business will be crucial in expanding the service Providence will offer. The larger borrowers’ business would help subsidize low-profit, labor-intensive products. Rozendal said MSHDA loans for low-income individuals are a good example.

“MSHDA loans are, in my opinion, one of the best options available for anyone who qualifies,” he said. “The downside (for mortgage lenders) is that you don’t make a whole lot of money at it. But, because it’s the best option available, I have to make it available — I want to make it available — to our clients.”

“Serving low- to moderate-income families is labor-intensive. Doing it in a way that truly enhances their own economic future is not something that happens like falling off a log,” said Bradford. “Providence is able to provide something — and to succeed at providing something — that (other mortgage lenders) aren’t real good at.”   

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