More than Just Streamlining the Mortgage Process
Posted by:
Sarah McKinley
In his State of the Union address, President Obama said that our “housing market is healing.” Still he conceded that more needs to be done for families struggling to buy a home and to simplify regulations that prevent them from doing so. All of which negatively impacts our entire economy in the process. He added that a bill before Congress would streamline the process of refinancing for responsible homeowners and urged Congress to take action to pass the bill.
The full picture of the housing market is significantly more complex than the one painted by the president. Simply making it easier for people to get a mortgage and buy a home will not address all the deepseated problems within the housing market. While overall numbers may show a strengthening housing market, foreclosures are still a huge problem in many communities across the country with detrimental side-effects for both individuals and communities, as well as for the greater economy. Affordable housing options are still elusive for many Americans — a problem compounded by increased transportation costs and stagnant incomes. A spate of recent writings shed light on these continuing challenges and remind us that there is still plenty of work to be done to create a healthy housing market for all.
In an article for the October issue of Shelterforce, James Carr of the Opportunity Agenda cautions that the way the mortgage finance system is rebuilt after our current housing collapse will have a profound effect on the housing market for years to come. Carr argues that a vibrant and healthy housing market is one that offers affordable and equitable homeownership opportunities to all American families as well as quality rental options. While other proposals for a secondary mortgage market would create eligibility hurdles or a dual credit market, Carr calls for a single institution that can pilot innovative products and services and push the envelope on comprehensive community investment as the only means of solving our current housing woes while making the American dream more equitable.
The fourth in a series from the Center for Responsible Lending, this report examines the economic impact on homeowners living in neighborhoods suffering from foreclosures. Relying on Home Mortgage Disclosure Act (HMDA) and Lender Processing Services (LPS) data, the authors find that $1.95 trillion in property value has been lost by residents living in close proximity to foreclosures, over half of that loss is experienced by communities of color, and that families affected by nearby foreclosures have lost, or will lose, more than $21,000 in household wealth by virtue of their proximity. In addition to the immediate financial consequences for families that lose their homes, such as a loss of equity and financial cushion, communities with high rates of foreclosures also suffer long-term consequences, such as a loss of tax revenue and a proliferation of blight.
Enterprise Community Partners released this update to its National Mortgage Settlement report which shows that less than half of the $25 billion from the National Mortgage Settlement is being allocated for housing related uses. Researchers Andrew Jakabovics and William McHale found that while the majority of states are directing most, if not all, of their funds toward housing activities, the largest recipients are not. Instead, these states have directed their share to state general funds or left the final use undetermined. Among the states that did allocate their share of funds to housing related uses, most set aside funds for homeowner legal assistance and housing counseling programs. However, they also found that for these states, the actual process of disbursing the funds is more complicated, and lengthier, than might be assumed.
The Center for Housing Policy and the Center for Neighborhood Technology’s new report by Robert Hickey and Jeffrey Lubell measures how combined housing and transportation costs burden moderate-income households. Looking at the 25 largest metro areas in the United States and using newly available data, the report finds that the problem has not only gotten worse in the last decade but also that moderate-income households are disproportionately saddled by these heavier costs. Notably, transportation costs vary greatly and influence the overall affordability of metro areas significantly. Moderate-income homeowners also carry heavier cost burden than renters. The report offers policy implications of these trends and highlight promising approaches available to local and state governments that help make the combined costs of place more manageable for moderate-income.