Should Nonprofits Become Mortgage Brokers?

Nonprofit groups that promote homeownership might reach more underserved families by becoming mortgage brokers themselves, but the broker model used in the private sector would not be appropriate for most nonprofits, according to a study by the Local Initiatives Support Corp.The study, "Nonprofit Mortgage Brokers: Small Step or Large Leap?", identified 34 nonprofit mortgage brokers across the United States that have processed and delivered loans valued at more than $200 million, LISC said. It found that the average nonprofit broker allocated three employees to lending activity and spent approximately $150,000 per year on it. The study concluded that the private-sector broker model is not appropriate for "the vast majority" of nonprofits; that nonprofits should find new ways to retool their work to emphasize their value to mortgage market participants; and that nonprofits should develop hybrid business models that combine the strengths of traditional nonprofit counselors with "the entrepreneurial drive" of nonprofit mortgage brokers. LISC can be found online at http://www.lisc.org.