Justine Petersen expanding lending assistance in Metro East

    GRANITE CITY — The nation’s second-largest SBA microlender and one of its strongest advocates for first-time homebuyers is looking to expand its footprint in Metro East to assist more people in building their dreams.
    The Justine Petersen organization, which recently opened an office in Granite City as a complement to its longtime operations based in St. Louis, has a dedicated loan pool for businesses located in Madison and St. Clair counties through a partnership with Bank of Edwardsville.
    While the goals are pretty simple, the methods to achieve them are fraught with challenges, especially for potential clients not used to dealing with banks and governments. Justine Petersen, named for a woman who spent much of her life developing special mortgages for first-time homebuyers in the St. Louis area, has been cutting through red tape for the past 18 years.
    Housing is one of three focuses of the agency, including first-time homeownership,  refinancing and loan modification. And housing is not Justine Petersen’s primary focus.
    “Microlending is,” said Galen Gondolfi, chief communication officer. “We’re the nation’s second-largest microlender for the Small Business Administration. For both business and consumer lending. We’re now dipping our toe into consumer lending.”
    The third major focus “is credit building, and it permeates all that we do,” Gondolfi said. “When we’re talking to a client about buying a home, be it home prep or refinancing, it’s all about restoring the credit score. We do a lot of credit-building activity. It’s part of a national movement advanced by Credit Builders Alliance, which seeks to enlist microfinance organizations like Justine Petersen to support this idea of building credit scores.”
    The agency’s “big message” stresses good credit as a solid foundation for just about everything.

    “Addressing poverty and transforming lives, we feel, can be based on the credit score paradigm, which is bottom-up,” Gondolfi said. “Take individuals, build their credit scores. Renters become home owners. Homeowners buy the investment property next door. Eventually the credit scores are so high that the shuttered corner store can get a small business loan. That’s literally how we work, a very grassroots approach.”
    Building credit scores sometimes is little more than encouraging people to buy something on credit and pay for it on time – not always an easy accomplishment, even for people with money.
    The organization has a four-county microlending footprint in Southern Illinois (St Clair, Madison, Jersey and Clinton) and is looking to expand. It also includes the entire state of Missouri and 29 contiguous counties in Eastern Kansas.
    Justine Petersen helps both start-up and existing businesses, with business plans, lending expertise, a review of credit history and financial education. The  nonprofit organization assists individuals of all income levels.
    “We are seeking to enlarge our footprint of service and mirror the nine-county area” of the Small Business Economic Development Center at Southern Illinois University Edwardsville, with which it has been working on various client referrals and resource-sharing, Gondolfi said.
    To further lending partnerships with mainstream financial institutions, Justine Peterson created a lending fund called Community Development Financial Institution (also known as Great Rivers Community Capital). Banks get credit for investing into that fund through the Community Reinvestment Act (CRA).
    The agency’s housing footprint, on the other hand, has no boundaries, he said, because it works within  guidelines established by federal Housing and Urban Development.
    “We’ve closed over 5,000 home loans in our history. Prepping families and individuals to close with bank loans. We truly don’t lend the money, we connect you to a bank. An A-paper loan is what you’re getting — portfolio loans, CRA loans or FHA. There’s no subprime lending going on,” Gondolfi said.
    Destini Lednicky, the agency’s housing manager in Granite City, said foreclosure counseling cases are down from their peak of a few years ago.
    “We probably see around five (foreclosure) customers a week (in Granite). We saw a rapid decline in the numbers when the Hardest Hit (funding) program dried up with the state of Illinois. I think that the financial assistance was a key component of people seeking our involvement,” Lednicky said. Loan servicers, too, have gotten better about dealing more directly with those issues.
    Justine Petersen is a HUD-certified housing counseling agency and offers foreclosure mediation services.
    “We can provide the counseling assistance and help them package loan modification applications for their lender, which is helpful, but when they are in arrearage from being off work for 12 or 18 months, they still have that large debt. There’s not a lot of financial resources left any more for those types of activities.”
    Still, banks are increasingly willing to work with people because they, too, don’t want to be in the foreclosure business, Gondolfi said.
    “It’s been almost a sea change when it comes to the perspective of the lender. There were so many complaints about the loan-mod process. It’s been a learning experience from both sides, for the consumer and the lender. I think going forward you’re going to see a different customer service approach from the lender any time there’s a delinquency.”
    The agency’s most significant housing development program was a few years ago, called Twenty First Homes, which involved the leasing of 20 single-family homes scattered throughout downtown and West Granite City. American Recovery Act funds were used.
    “It was structured similar to the low-income housing tax credit deals, and then we received essentially a buyback of the tax credit allocation from the federal government,” Lednicky said.
    The hook is that owners must commit to leasing those properties for 15 years before they are able to sell to tenants at a discounted rate.
    Three years ago, Justine Petersen also participated in the Neighborhood Stabilization Program, also in Granite City.
    “We were a subgrantee from Madison County. Those were state of Illinois dollars, administered to us,” she said. “We did four, single-family acquisition rehabs. But these were acquisition/rehab/resale. We rehabbed them to sell to low- to moderate-income families. It was one of the first projects completed and sold to eligible homebuyers in the state of Illinois so we were pretty proud of that.”
    The program focused on vacant and abandoned properties.
    “We are emulating that idea in that we are a participant under the National Community Stabilization Trust program in which Bank of America, Wells Fargo and other big banks donate foreclosed properties to nonprofit or government entities. We have ‘purchased’ 20 or so properties, several in Madison and St. Clair counties. A large portion are in Alton, Wood River, Hartford and Granite City.”
    The are partnering with Carrollton Bank on the program, which is providing some conventional financing but importantly also helping leverage additional funding from Madison County Community Development.
    The agency also received a million-dollar grant from the Illinois Attorney General’s Office, by way of a lawsuit settlement that will be used for rehabilitation of single-family homes and housing counseling.
    The agency is also formalizing a relationship with the East St. Louis Housing Authority for first-time home ownership there. A HUD-supported, Family Self-Sufficiency Program in East St. Louis is working to build interest. Its coordinator, Sheron Stepney, was many years ago client of the same program, and she’s bringing a real passion to the concept, getting large turnouts at meetings to discuss it all, Gondolfi said.
    Justine Peterson is also now partnering with Madison County Community Development on a homebuyer rehab program in which 17 area households will be assisted, both with acquisition assistance and up to $20,000 in rehab funds, after they buy the home. Illinois Housing Development Authority financed the program, and the first applications will be taken this summer.
    “It’s a wonderful deal, because the $20,000 rehab money is forgiven after five years of staying in the home, which is awesome,” Lednicky said.
    Madison County will manage the homebuyer portion of the program, and Justine Petersen will manage the rehab part.
    The state is unveiling more mortgage assistance all the time, and it never hurts simply to inquire what’s available, Lednicky said.
    “It’s great to go to your local bank, but some of these programs can’t be beat. Mortgage tax credits and that type of thing. We want people to come to us, even if they have great credit and they can buy tomorrow, we’d love to see people so we can talk to them about other financing options that they might be eligible for,” she said.
    Gondolfi said  some of the programs are so beneficial that participants can end up buying a home for what they could rent for, but there are many myths about housing that are still keeping people away.
    “There is a lot of taboo out there, people hear the recession happened because of homeownership and say, ‘Well, why would I want to deal with that?’ That’s the new myth we have to deal with; it wasn’t even a myth before. Or they think there are new evils,” as with the recent predatory lending controversies, he said.
    The agency assists clients in moving up and down in home size depending on their needs.
    The Justine Petersen office is at
1324 Niedringhaus Ave. in Granite City. Call (618) 570-1865 or go to www.justinepetersen.org.