Opportunity Finance Network launches
By MortgageDaily.com staff
2/21/2006

A network of 167 lenders announced plans to combat predatory lending by funding at least $1 billion of the subprime industry's annual mortgage originations.

Each year, low-income borrowers lose more than $25 billion in wealth due to predatory loans, including mortgages, according to the Center for Responsible Lending.

To minimize the problem and maximize on the borrowing power of "emerging markets," the Opportunity Finance Network, a new $4 billion group of 167 financial institutions nationwide formerly known as the National Community Capital Association, announced the first phase of its Fair Mortgage strategy, a multi-billion-dollar partnership it created with responsible mainstream mortgage lenders for responsible subprime lending.

"We are developing a national responsible subprime mortgage platform to challenge predatory lenders who are stealing wealth from homeowners," Mark Pinsky, president and chief executive of the network, said in the written statement.

After a pilot launch in 2006, Pinsky expects to originate $1 billion or more per year of Fair Mortgages by 2010 and grow from there. Partners include a major investment bank, a prominent wholesale mortgage lender, and a national bond issuer.

"While community development has won countless important battles, the reality is that we are losing the war," Pinsky said. "Too many of the problems we are supposed to be solving instead are growing worse, not better. We need a new approach to financing opportunities for underserved people, neighborhoods, communities, and markets.

"What is at stake here are critical emerging markets -- many of which will drive economic growth in the U.S. for the next 20 or more years."

Such "opportunity markets" need more private capital than traditional government-backed community development strategies can provide, Pinsky explained, noting that Opportunity differs from community development because is accountable to its financial investors and its consumers -- not primarily to the government.

"We need to leverage the capacity of mainstream financial systems using the proven market expertise of special-purpose financial institutions -- the 'tugboat lenders' that exist to steer capital into hard-to-reach markets," he added.

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