Loans Help Couples Afford Adoption

Loans Help Couples Afford Adoption

By JOHN HENDREN

Published: February 18, 2001

WHEN Gus and Maria Teixeira brought a baby girl from South Korea to their Newark home in October, they faced adoption costs totaling $14,000. Although that is roughly half the price of some international adoptions, it rivaled the bill for the couple's Nissan Altima. So they turned to a familiar source for financing -- a bank, namely MBNA.

Now the Teixeiras are paying for their family expansion the same way they are paying for their 1997 Altima -- by the month. The couple's adoption loan, which was for $14,000 and was structured as a home equity loan, was for four years at a rate of around 12 percent -- about three percentage points above the prevailing rate on an average new-car loan.

''I didn't have that kind of money saved up,'' said Mrs. Teixeira, 36, a saleswoman for a truck leasing company. She said the adoption was the couple's second; the first, about five years ago, cost $12,000, and they paid cash.

Susan Soon-Keum Cox, vice president of the Holt Children's Foundation in Eugene, Ore., an agency that helped the Teixeiras with the adoption of their infant daughter, Emily, said that many other couples found themselves in similar situations. ''When you're talking about an outlay of $10,000 or more, a lot of families aren't able to simply write out a check,'' she said.

The bulk of the Teixeiras's expenses were agency fees and air fare. Some families travel to the child's country of origin and stay there for an extended time -- the Chinese government, for example, requires a two-week stay.

With some couples paying $25,000 or more to be parents, some lenders are quietly stepping forward to help with domestic and international adoptions. But do not expect to see ''adoption loans'' advertised on television or ''Ask me about adoption loans'' signs on loan officers' desks.

''If you walk into most banks and say you want to borrow $25,000 to finance an adoption, they look at you like you've got two heads,'' said Norman Hecht, a father of four adopted children who pioneered the adoption loan program at First Union when he was a vice president there in 1996. That year, Mr. Hecht's office made 100 adoption loans totaling $1.8 million.

Another trailblazer is MBNA, which began making the loans after the National Adoption Foundation in Danbury, Conn., offered to refer thousands of parents in mid-1997. The bank does little to market the loans, yet it has made about 2,000 of them, averaging $9,000 each.

Some smaller banks have joined the niche, including Colombo Savings Bank in Bethesda, Md., where Mr. Hecht is now a vice president. Last year, Firstrust Bank in Ardmore, Pa., began offering a ''pink plan,'' an unsecured three-year loan up to $25,000, and a ''blue plan,'' a 5- to 15-year home equity loan up to $10,000.

The rates and terms for adoption loans vary greatly, usually depending on borrowers' credit history, income and assets. Often, the loans are structured like those for cars or home repairs: a home equity loan, a home equity line of credit, an unsecured loan or a loan secured by, say, the family car or other property.

Mr. Hecht agreed that the loans were something of ''a marketing gimmick.'' But, he added, ''offering adoption loans was a way of saying, 'We're ready to hear your story.' ''

The potential market is impressive and largely untapped, adoption agents say. An estimated one million children live with adoptive parents in the United States, and Americans adopt more than 120,000 children a year, domestically and abroad.

''I'm not sure the financial services industry recognizes what a huge market this is,'' said Maureen Hogan, director of the National Adoption Foundation. ''There are hundreds of thousands of kids ready for adoption today, but families cannot afford to get to them.''

Yet many banks turn away people who ask specifically for adoption financing. Mr. Hecht recalled the response from a competing banker when he posed as a customer seeking adoption financing: ''The guy pulled out a book. It said, 'auto, home,' '' Mr. Hecht said, adding that the banker then told him, ''Sorry, we don't do adoptions.'' Bankers who do offer the loans say adoptive parents are good customers, although in need of cash. At MBNA, for example, about 62 percent of applicants qualified for the unsecured loans. The default rate is less than 0.5 percent, according to the National Adoption Foundation.

''They're 35 to 45, they're literally middle America,'' the foundation creator, Norman Goldberg, said. ''Their credit cards are maxed out, their checkbooks are strained to the limit.''

Parents earning as much as $115,000 can take advantage of a federal adoption tax credit of up to $6,000 until Dec. 31. Many can also turn to their employers for help -- nearly 65 percent of Fortune 1000 companies offer some adoption benefits, often including grants, according to a report by the Dave Thomas Foundation for Adoption, an advocacy group founded by the president of the Wendy's hamburger chain.

Still, for some parents, adoption remains out of reach.

After spending $20,000 on fertility treatments, Brenda and Kenny Beuchert of Gaithersburg, Md., incurred costs of about $15,000 when they adopted Grace, a Korean-born girl. So they borrowed $9,000 in 1995 and earned the rest by working second jobs cleaning, painting and landscaping. Although the Beucherts earn a combined $100,000, lingering debt has left them unable to qualify for a second adoption loan to adopt a boy, whom they had hoped to name Lee.

''I see kids and I say, 'There's $45,000 walking down the street,' '' Mrs. Beuchert said with resignation. ''We're probably going to end up having one kid.''