Housing Counselor Helps Low-Income Renters Move Toward Homeownership

David Pesch stands near the entrance to a make-shift classroom at the St. Martin Center, in Erie, Pa., surveying the 16 students who have gathered for his weekly class on homeownership.

The students are an eclectic mix of young and old, black and white, male and female. But they share one common trait: They are all low-income renters in Erie’s center city. And they all want to learn how to buy their first home.

“Sweaty palms,” Mr. Pesch says to a visitor, holding up his hands. “I always get sweaty palms before I address a group.”

A minute later — about 6 on a damp Tuesday evening — Mr. Pesch, St. Martin Center’s housing-counseling manager, introduces the night’s featured speakers. For the students, the introduction marks the beginning of a two-hour class in which they will hear presentations from a home inspector and a mortgage officer.

But for Mr. Pesch, the start of the class means he can finally wind down from a grueling day.

It started 10 hours earlier, when he arrived at work at 8 a.m. to solve a problem that has been plaguing him for days. Catholic Charities — the national nonprofit organization that provides his housing-counseling program with about one-quarter of its funds — had decided to streamline its reporting criteria and is now requiring Mr. Pesch’s office to keep its records in Microsoft Excel.

All of the housing program’s records had been logged in an Access spreadsheet database. If he cannot find a way to transfer the records, he will likely spend his upcoming weekend inputting data into the new format.

Such problems are not uncommon for Mr. Pesch, who was hired to start the St. Martin Center’s housing-counseling program in 1998. Because of his small annual budget of less than $160,000, creative problem solving is a big part of his job.

During the past five years, Mr. Pesch and his staff have helped more than 500 families purchase their first homes — generating, by his calculations, more than $30-million in real-estate sales, helping to build property-tax revenue for struggling local municipalities and to stabilize neighborhoods.

Helping Homebuyers

Many of those families never would have made the move from rental housing without outside help, Mr. Pesch says. Low-income renters, particularly those who grew up in apartments or public housing, are often intimidated by the thought of buying a home, he says. Yet, he adds, homeownership is usually the best way for those with modest means to accumulate wealth — in the form of homeequity — and, for some families, can often help end generations of poverty.

While low interest rates and easier access to credit have enabled more low-income renters, like St. Martin’s clients, to buy homes, they have also brought new challenges. Predatory lenders, who aim their pitches at buyers with shaky credit histories, and the illegal practice of “flipping,” in which investors buy and quickly resell dilapidated properties to unwary buyers, are among the factors that have contributed to record-high foreclosure rates. In addition to helping people buy homes, Mr. Pesch’s group works to prevent them from becoming the victims of predatory lenders or settling for substandard homes.

He estimates about one half of his time is spent talking with potential donors and financial partners, trying to forge the relationships necessary to sustain his growing program. The other half is dedicated to making sure he and his colleagues are effectively helping clients find and maintain homes.

The latter part of his job has gotten more complicated over the past five years. When he started the program, Mr. Pesch would meet with his clients personally, talking to them about their finances, their credit, and their goals. He would walk them through the process of buying their first home and outline the government and other incentive programs designed to help low-income renters become buyers. During the program’s first year, Mr. Pesch met with about 300 clients. In the past year, the organization helped 450 clients — and many of those would-be home buyers had more complex needs than those he had dealt with five years ago.

Because of the expanded caseload, he now manages two housing counselors who meet with the center’s clients individually. Mr. Pesch spends much of his time wooing potential donors and corporate partners and keeping up with a growing stack of paperwork. He also teaches the eight-week homeownership class and makes presentations on the subject to organizations throughout northwestern Pennsylvania.

A Blue-Collar Background

Mr. Pesch, now 50, started his career on the factory floor, not in a nonprofit office. He spent more than 20 years at Lord Corporation., in Erie, which manufactures parts for aircraft, motorcycles, and home appliances. He started with a menial job and worked his way through the factory ranks until he was testing highly specialized parts for helicopters. His job offered predictable hours and good pay, but it didn’t offer the intellectual and social challenges he craved.

Factory work was also tough on his body. One afternoon in 1992, as he was tightening a part for a helicopter rotor, his right elbow snapped. When he returned to work, he began leading with his other arm. A few months later, his left elbow snapped.

Rather than hanging on to a job that would probably lead to a permanent disability, Mr. Pesch became certified as a real-estate agent.

He had always had an interest in real estate and had once taken a career-assessment test that indicated he would be suited for the field. The job appealed to him, he says, because he was able to make the transition into it gradually; he remained at Lord full time and sold real estate on the side until he was offered a job in 1993 to run a housing-counseling program at the Martin Luther King Center, a community center in Erie. The opportunity was ideal for Mr. Pesch, who says he had been craving an opportunity to move into a career in which he could help others.

Five years later, he was recruited by the St. Martin Center to start its housing program. Although he says he has received at least six offers to take more lucrative jobs in the business world, he has never left. “At this point in time, money is not a major motivator,” Mr. Pesch says. “If I left, the program would suffer. I created this. I don’t want to let this go. You’re helping people. How can you not want to do that?”

Heading Off Foreclosures

By 10 a.m., after checking in with his staff and meeting with Cheryl A. Weber, the St. Martin Center’s executive director, Mr. Pesch is back behind his metal desk, answering phone calls and reviewing his schedule for the rest of the day.

His office takes up much of the third story of the St. Martin Center building, which is less than two blocks from the Erie County Jail. Downstairs, kids play in a day-care center, workers manage a thrift shop and stock a food pantry, and counselors help families with financial or medical trouble.

The housing-counseling program, Ms. Weber says, helps fulfill the center’s mission of helping those in crisis become financially independent. “We put the Band-Aid on and take it one step forward,” she says. “We show them how not to get cut again.”

Mr. Pesch’s department receives financial support from Catholic Charities, as well as from state and federal grants and donations of goods and services from banks, mortgage brokers, and real-estate companies.

PNC Bank, for example, chips in more than $18,000 to pay for the Tuesday-night homebuyers’ class. The company provides the books, food, and baby-sitting services for participants. It also offers cut-rate mortgages and a free checking account to every student who completes the course.

PNC has been a consistent donor, but most of the charity’s revenue is unpredictable. “It’s too bad we can’t get the solid base of income we need every year,” Mr. Pesch says. “It’s getting to the point where we either have to go a step forward, or we’re going to have to step back and focus on a few services. It’s grown quicker than anyone dreamed possible.”

The program has grown in unexpected ways. At first, it was largely focused on helping renters become homeowners. But with the souring of the economy and the spread of predatory lending, the program has shifted more of its resources toward helping troubled homeowners avoid foreclosure. For much of the past year, Mr. Pesch’s office has been flooded with cases in which homeowners are in danger of losing their homes.

Under Pennsylvania law, lenders are required to provide homeowners who are three or more months behind on their mortgage payments with an Act 91 notice, which informs delinquent homeowners that they have 90 days to enter a counseling program. In northwestern Pennsylvania, most of the delinquent homeowners end up calling Mr. Pesch’s office for help.

“These are not clients you can wrap up in a positive or a negative way in short order,” Mr. Pesch says. “This is a time-consuming process.”

When the housing program started five years ago, it saw only a handful of Act 91 clients per year. On this day in mid-November, the program has 12 active Act 91 cases. And Mr. Pesch fields a call from another new Act 91 client later in the morning. He refers the client to one of his staff members, but the conversation clearly wears on him.

“The phones keep ringing and ringing and ringing,” he says. “I don’t know what to do because that’s not all we do.”

Mr. Pesch takes a break to tend to some of the unexpected details of his job. He walks downstairs and into the cafeteria kitchen and begins sifting through boxes of potato chips and pretzels, making sure enough are on hand for that evening’s homebuyers’ class.

After completing his inventory, Mr. Pesch looks at his watch. It is now nearly lunchtime, and he heads outside to his car, where he breaks for a cigarette and calls his wife, Christine, on his cellphone. It’s the same break he takes every workday — his only opportunity to have a private conversation because of the open setup of his office.

Twenty minutes later, he is back in his office, returning phone calls and contacting the presenters for that night’s class to confirm their attendance.

‘The Last Resort’

By 1 p.m., his phone is ringing again.

First it is the executive director of another nonprofit group asking if Mr. Pesch would be willing to make a presentation to a group of elderly people about reverse mortgages, which allow homeowners who have paid off their mortgages to draw income from their homes’ value. He accepts the invitation.

A few minutes later, the phone rings again. This time it’s a new client who has been referred to his office for help. “We seem to be the last resort,” Mr. Pesch says. “It may seem crazy. But you do what you need to do.”

While many of the day’s calls come from those in crisis, a call early in the afternoon restores his optimism. It comes from a single woman who had at one time been in Chapter 11 bankruptcy, but now plans to buy her first home. She has called to inquire about qualifying for a loan through the Federal Housing Administration.

Between the phone calls and the queries from his staff, the afternoon moves quickly. Shortly after 3 p.m., he heads downstairs to set up tables and chairs for the homebuyers’ class, which will start in less than three hours.

Mr. Pesch says office days are rare, since the charity’s territory covers 13 counties and he is often on the road, meeting with clients and potential donors. “No two days are the same,” he says. “It’s challenging, but it’s fun.”

A Loyal Volunteer

He returns to his office to find that one of his most pressing challenges may soon be resolved.

On his voice mail is a message from the St. Martin Center’s network manager, who says he may have figured out how to transfer data from Access to Excel. Mr. Pesch quickly calls him back and talks through the possible solution.

The homebuyers’ class will soon begin, and Mr. Pesch still has to review his notes and run through the transparencies he will show on an overhead projector. The transparencies are out of order, so he busily reorganizes them. While most presenters now use PowerPoint, he has never had time to learn how to use it, and still relies on an overhead projector, which shines the images onto a solid-white window shade.

At 5 p.m., Christine Pesch arrives. At every one of her husband’s Tuesday classes, she hands out submarine sandwiches to the adults and pizza to their children and stays to help clean up when the students leave about 8 p.m. “That way,” she says, “I get him home before midnight.”

Her husband, meanwhile, is nervously bouncing between the classroom and the front door of the St. Martin Center building. He chats with Mary Lou Brkovich, a community-housing consultant at PNC who will give a presentation tonight. He greets his students and anxiously awaits the start of class.

As 6 p.m. approaches, his palms begin to sweat.

Finding Rewards

Mr. Pesch’s nerves settle when he surveys the classroom and sees that all 16 students are in their seats, ready to learn. He estimates that three or four of the class members will be able to buy a home in the next few months. Another three or four more are months away from achieving their goal. The other half of the students will need more time to repair their credit, save money, and acquire the discipline they need to buy their first homes.

On this night, however, many of the students seem eager to buy, asking questions about aid for low-income home buyers and listening closely to a presentation by Pat Gool, an Erie home inspector.

One student, Dawn Roudybush, listens attentively and takes notes. She is recently divorced and looking for a fresh start. She has never owned a home and holds a low-paying job at an Erie community health clinic. She also has very little credit in her own name.

She found the class by chance while setting up a bank account at PNC soon after her divorce. Now she is using that account to save money for a house for herself and her 13-year-old son.

She says it will probably take her about 18 months to save enough money and build up sufficient credit. But without the class, she says, she wouldn’t have the confidence or discipline to even think of buying. “I had my doubts about the class at first,” she says. “But getting into this program was the best thing that could happen to me.”

The class lasts two hours, and Mr. Pesch stays afterward to talk to a young couple about their house search. The couple had been steered toward foreclosed homes by their real-estate agent — a fact they found troubling when they saw the condition of the homes they were touring. When they tell Mr. Pesch the name of the agent, he shakes his head.

“I knew who it was before you even told me,” he says. He offers some advice, bids them goodnight, then turns to his wife.

His watch reads 8 p.m. Soon, he will head home, more than 12 hours after arriving at the office. He is tired, but happy with what he has been able to accomplish.

“If you get joy in doing something, you get your reward,” Mr. Pesch says. “It may not be in the ways people normally think of. But you get your reward.”