Affordable lending is the key to a housing recovery
Why doesn’t anyone understand that affordable lending to LMI and minority homebuyers is the key to the housing recovery? Lenders, GSE’s and mortgage insurance companies are all curtailing their affordable lending goals and initiatives at the worst possible time and in the process are exacerbating an already dire housing market. If there is a “silver lining” in today’s housing meltdown it is that thousands of potential homebuyers that were priced out of the market two years ago have a second chance to fulfill their dream of homeownership, but the mortgage lending industry in response to record default rates have tightened their lending guidelines to the point where most of these credit-worthy families cannot get a home loan. The irony is that these more conservative lending parameters are drastically reducing the pool of potential homebuyers at a time when there is an unprecedented glut of homes on the market. This is causing further downward pressure on home prices, more foreclosures and at the end of the day will cause more bank failures, and more government bail-outs.
There is no question that in recent years lending standards got far to lax, but the pendulum is now swinging too far the other way. The recovery will only come when sensible lending returns to the marketplace. GA
Tags: banks, Fannie Mae, foreclosures, Freddie Mac, GSE's, home loans, Housing bill, lending, mortgages