The Community Coalition on Race from its very inception has included a strong focus on residential integration: people of different races living in every neighborhood throughout the towns. Racial integration optimizes housing values because it means that people of all races and backgrounds are all competing for housing in the same places at the same time — racially inclusive, robust demand is ideal. To bring about this desired result, the Coalition on Race developed an economic incentive program to make pro-integrative choices more accessible and attractive. South Orange and Maplewood each awarded the Coalition on Race grants in the amount of $37,500 for pro-integrative financial incentive programming.
The first program, the Pro-Integrative Second Mortgage (PRISM), was a low interest, second mortgage loan incentive program for homebuyers designed to encourage and improve neighborhood racial diversity in particular areas of the community where one race was underrepresented. The program used The Fund for the Future of Shaker Heights in Ohio as its model. The Community Coalition on Race used census tract data to determine eligibility for the loan. No racial quotas were established for census tracts. The loan offered up to $10,000 to first-time homebuyers or homeowners moving within the towns as a second mortgage. Individuals who purchased a home in an area where they were racially underrepresented could apply for a 5-year loan up to $10,000 at rates 2% below current home equity rates, and payments could be deferred for one year.
The Coalition on Race ran that loan program successfully since 2000. PRISM loans were fully administered by Allegiance Community Bank in South Orange from 2003 through 2010:
A total of 16 loans were issued
All loans have been paid in full without default
9 were issued in Maplewood
7 were issued in South Orange
2 were issued to households of color
12 were issued to white households
2 were issued to Asian households
The loans had an impact in the eastern sections of the community, but little impact in the western areas in which $10,000 was not a strong financial incentive. After economic climate changed beginning in late 2006 and, after low interest (subprime) loans became available in 2007, the loan had less appeal as an incentive to our targeted markets. Then, in late 2010, the FDIC ruled that banks cannot offer or support race-based loan programs. At that time, the Coalition investigated other pro-integrative loan programs to meet its mission of improving neighborhood stability and residential integration. The committee researched alternative loan programs, especially loan assistance programs for housing maintenance to support community diversity, and developed a home improvement loan program to foster neighborhood stability.