Families with fewer resources without access to bank loans and other financial products within the United States, can find ways to acquire decent housing through our program, which maintains the same structure as banks use, benefiting our investors, but with social responsibility.

Jason Fernando of Investopedia.com defines it as:

“Corporate social responsibility (CSR) is a self-regulating business model that helps a company to be socially responsible to itself, its stakeholders and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be aware of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Engaging in CSR means that, in the ordinary course of business, a company operates in a way that improves society and the environment rather than negatively contributes to them.”

In the case of Equity & Help, it is through philanthropic activities as an investment model, unlike other companies where they only focus on growing enough to be in a position to adopt this philosophy. The monetary growth of our investors results in a very good incentive, since it has a snowball effect multiplying their annual net return, which motivates them to reinvest and buy more houses, which eventually translates into more families that we can help.

With this in mind, let’s go back to our previous post.

If there are families with the ability to obtain a traditional mortgage and then finance themselves with a second mortgage or a HELOC, what happens to those we cover under our program? You know, those who don’t have access to these financial vehicles.

When you become a Philanthroinvestor (PI), you will be in constant communication with our PI Services Consultant (PISC). Not only will they be the person who delivers and explains the monthly performance reports and other statistics of your portfolio, but will also be the communication bridge between you and the families in your properties.

Those individuals who live in your properties and who find themselves in need of carrying out a major renovation, emergency repairs or simply an out-of-pocket improvement, can come to you with the budget for said tasks through the Service Consultant, and it would be up to you to study the case as the banks do, and with a return equal to the interest of the contract, but from a more personal approach and with the advice of the PISC.

You could reject it, if after studying it you decide that it does not suit you. But in case of accepting it, this extra help to the family would be delivered after signing an addendum that is added to the initial loan, at an interest of 10% to 12% according to the contract, which opens up two possibilities that, again, depend on your Final decision as a PI: Raise the monthly payment a little until the entire debt is met, or maintain the value of the monthly payment but extending the loan for a few more years until completion.

And we’ve seen it happen both ways!

We have had several of our PIs extend credits to responsible families that have committed to improving their homes, being responsible with each of their payments. And in most of these cases Equity & Help has contributed by granting a portion of these loans to families when the PI has not been able to do so or has not been able to cover the full amount, as it is important for us as a company to see them emerge.

And furthermore, one of our best Philanthroinvestors often goes the extra step by giving away HomeDepot gift cards, without demanding anything in return because he is aware of his social responsibility.

But we also know that granting credits and loans has a risk factor, and just as there are families that have committed to buying a house using our system and then have defaulted and had to be evicted, we had a case where one of the families requested an additional $5,080.00 from the FI, which was added to their loan to repair the gas and heating pipes in her home. It turned out to cost more than the initial amount, so E&H covered the rest.

This particular case ended in them falling behind on their payments with no plan on their part to catch up, so they had to be evicted and the house put up for sale again to another family.

It is not common to see this type of occurrence in all the years that we have been helping families, but we are aware of the possibility, so it is always a factor of analysis and study between the PI and their trusted consultant to arrive at the best solution. And we also remind you that although it may be seen as a loss for the investor, the repairs will be done in the house and will not be a problem in the future for another family, bringing the value of the property a little closer to its After Repair Value (ARV). So the next loan would be beneficial for you.

It is necessary to clarify that our families are not completely unable to enjoy a traditional mortgage, a second mortgage or a HELOC through a bank, but it is a factor that requires time. Another of the benefits they enjoy as part of our social responsibility is that we report each of their monthly payments to the credit bureaus to help them build and improve their record.

Which means that in five or seven years in the future they can refinance with a bank if they wish and pay you the rest of the debt, recovering your investment in less time than expected.

Banks also go through all these processes and analyzes when offering their products, and it is something that you can also do with your portfolio in a much more personalized way and focused on the family in question, being socially responsible.

See you next week!