Blocking the pathway to responsible home-ownership
March 19, 2013
I believe in the housing market. I believe that home mortgages
are a doorway to opportunity – when used responsibly. Risks of litigation,
regulation, and agency policies are forcing homeownership opportunity into
retreat. With all the challenges in today’s economy, it’s time to harness the
demand-engine of the U.S. housing market—not leave it idling in neutral.
Right now, a very fragile housing recovery is under way, but great
opportunity lies before us with growing purchase demand, stabilizing home prices
and improving mortgage performance. The key to a sustainable, successful housing
system is finding the right balance between owner-occupied and rental housing.
Creating imbalances either way will disrupt the housing marketplace. President Obama made some of the most important statements in recent history regarding housing in his February State of the Union. His focus on credit and access speaks volumes about where we are today and the issues we face. He said, “But even with mortgage rates near a 50 year low, too many families with solid credit who want to buy a home are being rejected.”
The face of the first-time homebuyer has significantly changed over the past decade. By identifying these new homebuyers and recognizing their needs, opportunities for an economically balanced real estate finance system will abound. For example:
- The Echo Boom generation, at 80 million strong, is just beginning to turn 30 – prime home buying age.
- A recent study from the Research Institute for Housing in America, Immigrant Contributions to Housing Demand in the United States, projects that between 2010–2020, immigrants nationwide will account for 32.2 percent, or ONE-THIRD, of the growth in all households, including 35.7 percent growth in homeowners and 26.4 percent growth in renter households.
- Minorities will drive household growth between 2010-2020 with Hispanic, Asian and Black household growing by over a staggering 65% compared to white households only growing by nearly 25%.
- Tight credit standards exclude qualified borrowers with marginal risk characteristics. This will impact housing in potentially disparate ways, especially for first time homebuyers and demographic groups that may have been traditionally left out of economic opportunity. The current regulatory atmosphere is putting greater pressure on these potential homebuyers and presenting greater challenges for these very different, fast-growing segments of the population.
- Down payment requirements create wealth boundaries that become the single greatest barrier to home ownership for immigrants and minorities. While the primary borrower may have multiple incomes, many do not obtain gifts or inheritance from family members like other wealthier demographic segments of our nation. Additionally, new household formations with other family members or renters contributing to the mortgage are not traditionally accounted for in underwriting standards. The higher the downpayment requirements, the more likely these potentially qualified borrowers will face trouble qualifying for any non-government insured loan program.
In the U.S., we have the fundamentals for a stable, balanced
housing system, but regulatory mandates are creating barriers to entry in an
otherwise recovering housing market. We must have a balanced housing society
between homeowners and renters for long-term, sustainable growth and a stable
housing finance system.
There is no question - consumer protections are needed.
However, when these protections go far beyond their intent and
block the pathway to home-ownership for so many potential borrowers, we must
question, have we gone too far?
Posted by:
No comments:
Post a Comment