Is Homeownership Just a Dream for Latino Millennials?

By Agatha So, Policy Analyst, Economic Policy Project, NCLR

Family in front of home

While American families who bought a home before the Great Recession were likely most concerned with the interest rates of their home loan, today’s millennials might be more preoccupied with the interest rates and repayment plans on their student loans.

Nearly 70 percent of bachelor’s degree recipients leave school with debt. Student loan debt is one of the largest burdens carried by Americans today, second only to mortgage debt. As a result, it comes as no surprise that student loan debt may be holding back millennials, especially older millennials, from buying a home.

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Six Trends That Show Latino Homeownership is Important to the Housing Market and the Economy

By Agatha So, Policy Analyst, Economic Policy Project, NCLR

Headlines about the nation’s housing market have focused on the low homeownership rate, currently stalled at 63%, compared to a high in 2001 of more than 73%. Yet, little attention has been paid to the impact of the low Hispanic homeownership rate on America’s ongoing economic recovery, and in turn, the future of the nation’s housing market.

Overlooking this impact is a huge oversight, given that the majority of new households formed in the next two decades will be made up by homeowners of color. In fact, Latinos are expected to account for 40% of those new households. At the end of 2016, the Hispanic homeownership rate increased to 47%, but remained much lower than the peak of 50% nearly 10 years ago. With significant household growth on the horizon, creditworthy Latinos need access to homeownership to ensure that the opportunity to build wealth is available to all Americans in the decades to come.

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How Will Secretary Carson Engage Latino Homebuyers?

By Agatha So, Policy Analyst, Economic Policy Project, NCLR

Many questions remain for Dr. Ben Carson, who last month was officially sworn in as our newest Secretary of the U.S. Department of Housing and Urban Development (HUD). Since his January 12 confirmation hearing, many are still wondering how Dr. Carson will fulfill HUD’s mission and carry out the critical task of providing affordable rental and homeownership opportunities—free from discrimination—for all Americans.

On March 28, Secretary Carson had an opportunity to discuss his housing policy priorities at the National Association of Hispanic Real Estate Professionals Conference. It was an important audience for Secretary Carson—the Association represents the largest group of Hispanic real estate professionals, whose primary mission is getting Latinos into homes. This is a critical constituency, because Latinos are expected to form more than 40 percent of new households in the next decade. By 2020, Latinos are expected to account for half of new homeowners. Yet today, only 46 percent of over 14 million Hispanic households own their home, well below the rate in 2006, before the housing crisis, when nearly half of over 12 million Hispanic households owned homes.

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Small Steps to Revive the American Dream of Homeownership

Family in front of housePresident Obama recently gave a speech in Arizona announcing a reduction in mortgage insurance premiums charged by the Federal Housing Administration (FHA). This much-needed policy change will save homeowners with FHA loans an average of $900 a year on their mortgage payments while making the dream of homeownership more affordable and easier to reach for many Americans, including Latinos.

Unfortunately, the key message and potential benefits to hard-working Americans were lost following the announcement. Conservative policymakers were quick to invoke a deeply entrenched false narrative that attributes the collapse of the housing market to unqualified borrowers. For example, House Financial Services Committee Chairman Jeb Hensarling (R–Texas) released a statement calling the reduction in FHA premiums disappointing and warned against “the destructive cycle of boom, busts, and bailouts that poor decisions in Washington produce.

Regrettably, comments like this from Hensarling and others distract from the large body of evidence confirming that the foreclosure crisis was a result of unscrupulous lenders steering minority borrowers into costly subprime loans. The Financial Crisis Inquiry Commission, studies by economists at the Federal Reserve, and a number of other independent investigations have all shown that the housing crisis stemmed from private-sector lenders chasing profits by producing large volumes of unsustainable loans without regard for borrowers. The Department of Justice reached historic settlements with large lenders charged with steering Black and Hispanic borrowers into predatory subprime products, even when these borrowers qualified for safer conventional mortgages. Additionally, a recent study by a private consulting firm refutes the idea that mortgage credit was easily attainable leading up to the housing market’s collapse. Using 10 years of mortgage originations, the study finds denial rates were actually higher before the crisis than they are in today’s tight credit market. Yet, just as banks and other financial institutions received taxpayer bailouts, they responded by restricting access to affordable mortgage credit to only the most pristine borrowers.

This restrictive environment is where we find ourselves today. Access to affordable mortgage credit continues to be a real barrier to homeownership, especially for qualified Latinos and other underserved markets. The reduction in mortgage insurance premiums from the FHA is expected to provide some relief to put many qualified Americans on the path to homeownership and better financial prospects. We hope that in the future, policymakers stop blaming victims of the foreclosure crisis and we encourage the Obama administration to continue doing more to put the dream of homeownership back within reach of Latino families.

Low-income Borrowers & Minorities Need Other Sources of Mortgage Credit

By Enrique Lopezlira, Senior Policy Advisor, NCLR Policy Analysis Center

Sold Home For Sale Sign in Front of New HouseThe financial health of the Mutual Mortgage Insurance Fund, a fund that insures mortgages made by the Federal Housing Administration (FHA) on single-family homes, has improved substantially, according to a recent report by the agency.  Although the fund is still in the negatives, FHA expects the fund to meet its 2 percent capital reserve ratio by 2015—two years earlier than predicted by an independent actuary last year.

This improvement is more impressive when considering the countercyclical role FHA played during the housing crisis.  FHA saw its share of the housing market balloon fivefold during this time.  As private capital fled the industry, FHA continued to ensure that families had access to mortgage credit.  By carrying out this role, FHA prevented a further erosion of both housing prices and jobs.  Continue reading