Strategy for Sustainable Homeownership Outlined in New Report
Though some have questioned whether “the elevated status of homeownership” caused the housing crisis, the Bipartisan Policy Center’s Housing Commission says it was more a problem with lenient underwriting practices, predatory and abusive lending practices, and the instance of unqualified buyers submitting incorrect credit information. Further complicating things, credit issues have now moved from being too loose to too tight.
The report states that sustainable homeownership is still possible for low-and moderate-income buyers if they receive prime, fixed-rate or adjustable rate mortgages that have clear terms and limits on the maximum payments allowed. Counseling also plays a critical role. One study from the North Carolina’s Center for Community Capital looked at 46,000 low-income homeowners who received traditional, prime loans: 95 percent of those borrowers were still in their homes and making payments. Another study from the Federal Home Loan Banks touts the success of housing counseling programs, as only 1.7 percent of its lower-income first-time buyers (a program where counseling is required) were in foreclosure. Read the article
SOURCE: DS News