Monday, August 31, 2015

Expanding Homeownership

Fannie Mae is rolling out a new program designed to help poor and minority borrowers qualify for mortgages:

This week, the government-sponsored enterprise unveiled plans for a new loan product. HomeReady is specifically targeted toward low-income and minority households, and it allows prospective buyers to pay just a 3 percent down payment up front, provides a homeowner’s education course, and the biggest boon—the program will allow applicants to count income from those who won’t actually be borrowers, toward their gross income. That means in multi-generational households, the contributions of children or grandparents—and for younger borrowers, financial assistance from parents, or aunts and uncles—could be included. For current owners who rent a room or portion of their home for extra income, the money they receive from tenants would count as income if they decide to move.

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Wow. What short memories. The housing crisis wasn't entirely caused by policies that encouraged the poor to buy houses on unrealistic terms, and Fannie Mae wasn't the only agency to suspend disbelief about creditworthiness, but both were pretty sizable factors in the housing meltdown and the recession of 2008. The Atlantic article to which this directs seems overly optimistic about both problems.

Posted by: Bill Fischel | Sep 1, 2015 10:37:55 AM

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