Crain’s Detroit Business
Dec. 8, 2022
Detroit has been selected as one of four cities where the Rocket Community Fund plans to invest millions of dollars in an effort to help residents improve credit scores and save money towards emergency funds, homes or other large purchases.
The $2 million fund will be divvied up between Detroit, Cleveland, Milwaukee, and Atlanta, and will go to residents in the city limits who are trying to enhance their savings. The impetus of the program, called the Rocket Wealth Accelerator, is to help “drive systemic change” for minority families in particular who have systemic barriers to accumulating generational wealth, said Laura Grannemann, the Vice President of the Rocket Community Fund. The community fund is the philanthropic partner of Rocket Companies.
“We truly, deeply understand the power of a stable home,” she said. “Our stable home is the foundation of everything else that we do.”
The program will match up to $500 in savings for large purchases, or $300 in savings for emergency savings goals. Additionally, it will provide clients with coaches who can help them take steps to improve their credit scores or make other changes to improve their financial situations. Participants also will receive a free three-month subscription to Rocket Money, a program that manages subscriptions, helps people budget and lowers their bills.
How does it work?
Luke Londo, a spokesman for the community fund, said the accelerator is meant to be a “proactive solution” to help people improve their financial standing, instead of waiting until someone is denied a loan before they begin a remedial credit-building program.
“That intervention is too little, too late,” he said.
The funds and coaching are not immediately available and Londo said it would take several months before the program was up and running. Many details of the program are still in the works, including how matched funds will be handled and when people will have access to the money, but Grannemann said the hopes are that it reaches nearly 3,000 families with coaching over the three years it will be funded, with the intention that 80% are people of color. The goals include increasing the credit scores of 500 clients, increasing the short-term savings of 750 clients — including increasing savings by at least 25% for more than half of those participants — and creating savings goals and spending plans for 1,000 clients.
The program will be administered with the Local Initiatives Support Corporation and will be offered in Detroit by SER-Metro Detroit, the Wayne Metro Community Action Agency, and International Institute of Metropolitan Detroit.
“This allows us to take a step forward and be more proactive before they get that denial, before they get that sense of defeat,” Grannemann said of participants in the program, which she said “aims to address systemic racism.”
While there are no specific income or race requirements, Rocket said it specifically aims to increase Black wealth; Black Americans are twice as likely as white Americans to be denied for credit, a statement announcing the program said. It added that more than 40% of Black households have no emergency savings and almost 45% have less than a month of income saved.
Detroit Mayor Mike Duggan said in a period of rising wages and decreasing unemployment, there is “more opportunity than ever” in the city, though some people are still paying more in rent than they would be on a mortgage in Detroit. He said the program could help increase Detroit’s homeownership rate and make things easier for people who continue to “suffer a hangover from the recession.”
“We’ve moved a lot of people from poverty to the middle class,” he said.
The fund will provide opportunities for economic mobility in the city, said Seung Kim, Senior Vice President of National Programs for LISC.
Laura D’Alessandro, Director of Financial Health for LISC, said she expected the program to connect and reconnect with people as needs emerged. While she said there are no income requirements for the program, the median income of people who connect with LISC is $10,400.
She said that, sometimes, it helps people who have a mental block against saving to begin to participate in a program like this. Londo said the fund was a purely philanthropic endeavor and Rocket Companies didn’t stand to benefit from an increase in people saving for homeownership.
And Rob Lockett, the Housing Stability Team Leader with the Rocket Community Fund, said since people will self-identify what they’re saving for, they have the opportunity to direct the terms of their own interactions with the program.
He said the goal is to get participants who are “outside the funnel” to consider saving. The program is considered a pilot, he said, and, if successful, could be expanded elsewhere in the country.
“We’re dedicated to dismantling these systems that have been unjust and unfair,” he said. “We’re dismantling the system in a number of different ways.”