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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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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Life After HAMP: What Kind of Mortgage Relief Can Struggling Homeowners Expect in 2017?

Last week the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac announced the release of the Flex Modification, a foreclosure prevention program that follows on the heels of the expiring Home Affordable Modification Program (HAMP). HAMP, introduced in 2009, was designed to help homeowners who fell behind on their mortgage payments to get relief and avoid foreclosure. Leading up to the recession, many homeowners, particularly in communities of color, were targeted by predatory lenders who offered unsustainable mortgage products. HAMP allowed homeowners to get relief by providing them with a permanent adjustment to their monthly payment that would make their mortgage more affordable. Homeowners could access this adjustment by seeking guidance from a HUD-certified housing counseling agency, and completing an application to their mortgage servicer.

With HAMP set to expire on December 31, 2016, stakeholders in the housing industry have rolled out proposals for the post-HAMP loan modification program. The Mortgage Bankers Association has led the industry’s efforts and developed the One Mod proposal. This universal or one-size-fits-all loan modification approach aims to replace HAMP, which was based on an individualized assessment of a homeowner’s financial situation.

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Dept. of Housing and Urban Development Makes Progress for Latino Families

Photo: HUD

HUD Secretary, Julian Castro. Photo: HUD

In his first congressional hearing since being confirmed last summer, Julián Castro, Secretary of Housing and Urban Development, testified before the House Financial Services Committee today on his agency’s progress and accomplishments.

This hearing couldn’t come at a more critical time, given that Latino families are still struggling to rebuild the wealth they lost during the Great Recession. Though an economic recovery is now under way, Latinos are not necessarily seeing improved outcomes in access to mortgage credit. Just last year, Hispanic home-buyers made up only 6 percent of the conventional mortgage market, despite comprising 17 percent of the population.

Fortunately, the U.S. Department of Housing and Urban Development (HUD) has the means to make mortgages more affordable for all creditworthy homebuyers through the Federal Housing Authority (FHA), which it oversees.

Thus far, Castro has helped FHA pivot toward a new focus on affordability and homeownership promotion. Just three months after taking office, he announced a new plan for HUD to expand mortgage credit access, which included measures affecting borrowers and lenders alike. In an effort to boost lenders’ willingness to make more loans, FHA will give lenders clarity on HUD policies and compliance issues. To the direct benefit of prospective homebuyers, FHA also lowered mortgage insurance premiums for all FHA loans by an average of $900 annually.

Castro also directed Ginnie Mae, a government corporation that creates mortgage-backed securities, to begin a new pilot program to give more mortgage lenders access to the secondary market and stimulate increased lending to borrowers.

While HUD has accomplished much during Castro’s tenure, the agency can do more to support homeownership and prevent foreclosure. Though the worst of the foreclosure crisis has subsided, far too many Latino families still risk losing their homes to foreclosure today. HUD should take concrete actions to keep struggling families in their homes and prevent needless foreclosure, including by continuing to require firms participating in its Distressed Asset Sales Program (DASP) to ensure that communities are stabilized.

HUD can also extend access to DASP properties to housing nonprofits, which are eager to help struggling homeowners stay in their homes. These properties have recently been prohibitively expensive for nonprofits, compared to for-profit investors. Under Secretary Castro, for the first time loans insured by FHA will be eligible for consumer relief that includes principal reduction as an option. This could also help prevent many foreclosures.

Finally, Congress should vote to restore full funding for the Homeowners Armed With Knowledge (HAWK) program, which would expand mortgage credit to homebuyers who complete pre- and post-purchase housing counseling. Housing counseling is a proven practice that works, providing families with certified professionals who can answer their crucial questions about mortgages and homeownership and help them avoid pitfalls.

As Secretary Castro continues implementing practices designed to boost homeownership and improve the housing sector, we urge him to consider the needs of struggling homeowners and prospective homebuyers from traditionally underserved communities. With half of all first-time home-buyers expected to be Latino by 2020, we cannot delay in ensuring that the American Dream remains accessible to all.

President Obama Officially Taps Julian Castro to Join Cabinet

Photo: Wikipedia

San Antonio Mayor Julian Castro. Photo: Wikipedia

Earlier today, the president formally announced the nomination of San Antonio Mayor Julian Castro to lead the Department of Housing and Urban Development. The popular mayor of the country’s seventh largest city will replace outgoing Secretary Shaun Donovan, who has held the post since President Obama took office.

We’re thrilled the president has nominated yet another highly qualified Latino candidate whose experience serving as a three term mayor has undoubtedly prepared him to lead the nation’s top housing agency.

“As we have said, the president hit a home run with this nomination,” said NCLR President and CEO, Janet Murguía in a statement. “Julian Castro has become a respected and nationally acclaimed leader on urban revitalization and economic development, the issues at the heart of the Department of Housing and Urban Development’s work”

The Senate should move quickly to confirm Mayor Castro. He would join the Small Business Administration’s Maria Contreras-Sweet and Labor Secretary Tom Perez as the third Latino in the president’s cabinet.

We look forward to working with Mayor Castro in the coming years.