Magazine article Mortgage Banking

Building the Next American Century

Magazine article Mortgage Banking

Building the Next American Century

Article excerpt

God bless the child that's got his own.


DESPITE VOLATILITY IN THE MARKETS and rising rates, this is a time when America's prosperity is the envy of the globe; when jobs can be had for the asking; when upward mobility has never been so available to the middle classes; and when access to goods, services and information via technology empowers us as never before. It's a time that could easily make us complacent about the future.

We shouldn't be. Our glorious 21st century is under construction--and America's future will rise or fall on the economic participation of all segments of our increasingly diverse society. One key to universal participation is property, or more specifically, homeownership. This key can open many doors--to better schools, better jobs, safer cities and a more vibrant business climate.

Since the Great Depression, private lenders, the U.S. government, philanthropists and community activists have worked, often in partnership, to ensure that affordable housing is available to every American. In many cities, rental housing, sometimes on a huge scale, has been built to meet the need. But affordable rental housing has a problematic history. Today, much subsidized rental housing stock is decaying--sometimes to the point of requiring demolition--and government regulations for construction and rehabilitation, not to mention budget cuts, have discouraged new construction. Disturbingly, the last 30 years have seen some large-scale public housing projects become crime-ridden, drug-infested symbols of urban hopelessness--ironic reminders that even in these unparalleled good times, many American families are being left behind.

What is being done about this? In our industry, rather a lot of late--and I see many opportunities for lenders, their investors and business partners and their nonprofit allies in local communities t do even more.

Financing for first-time homebuyers has never been so widely available. In the last 10 years, technology has lowered the cost of extending tailored credit to consumer segments; mortgages have become more widely available to borrowers with bruised credit. Buoyed by a low interest rate environment, low-to-moderate-income (LMI) and minority homebuyers have responded enthusiastically to products and programs developed by lenders in support of their community reinvestment objectives. Now, as rates and property prices are rising, we are challenged to sustain the hopeful momentum toward homeownership that accelerated so remarkably in the 1990S.

Rates are not the only sticking point. While Asian, African-American, Hispanic and immigrant segments of our population are having a huge impact on our demographic mix, they can perceive--with reason, in some cases--that their ethnicity makes it harder to get a mortgage. And many low-to-moderate-income borrowers just don't feel confident when they start a process that can daunt the most affluent and sophisticated American consumer.

To overcome these obstacles and reach the underserved in new ways, our industry must do more in its own community--and we are.

Today, there are more community loans available across the country than ever before. These innovative and targeted programs include prepurchase counseling, flexible credit guidelines and cash-assistance alternatives. It should be noted, though, that as wonderful as these programs are, they could be much more "affordably" priced. …

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