Preparing, Closing, Retaining The Lifecycle of Sustainable Homeownership Building Michigan Communities Conference Lansing, Michigan April 30, 2019 Doug Ryan Senior Director, Affordable Homeownership

The Prosperity Now mission is to ensure everyone in our country has a clear path to financial stability, wealth and prosperity.

Benefits of homeownership Better physical and psychological health Children more likely to perform better in school and graduate Homeowners move less frequently than renters Residential stability significantly contributes to better school outcomes Homeowners are more actively involved in voluntary organizations, like neighborhood and parent-teacher associations, as well as political activities than renters

Tight Lending Standards Limit Mortgage Access Leading question(s) for Carmen: You’ve talked about the impact that parity in homeownership would have on the racial wealth gap. What barriers exist today that are keeping us from achieving more parity? Downpayments White households 3X more likely to rely on family assistance (inheritances, etc.) from family members or friends 9 out of 10 Black households cover the entire DP by themselves White HH’s purchase homes 8 years earlier than Blacks HH’s Quality Credit Infographic – PEW numbers from 2017 One study comparing CRA with subprime showed borrowers with similar risk profiles – 70% default rate with subprime Aggressive Marketing One study found HALF of minority HH’s qualified for safer mortgages Between 2004-2014, conventional loans for Blacks decreased by 82% while nonconventional loans increased by 60% during the same timeframe Mainstream Banking – Lower rates of unbanked and underbanked for Blacks and Hispanics Ongoing Discrimination HUD 2012 Audit – More than 8000 matched pairs – Blacks shown 17-18% fewer homes and denied appointments more often than whites Note: Data include only conventional first-lien purchase mortgage originations. Source: JCHS tabulations of CoreLogic data.

S&P CoreLogic Case-Shiller Detroit Home Price NSA Index

Michigan SF Housing Permits

Millions could buy homes with moderate assistance Nearly 16 million people could buy a home with $7,000 or less in downpayment assistance.* $3,500 could assist 6.6 million people.​ $10,500 could assist 19 million people. * Figures based on housing values at the 50th percentile .Source: (2019) Perkins et. al “The Potential for Shared Equity to Expand Homeownership” Joint Center for Housing Studies of Harvard University.

McKernan, Rademacher, Ratcliffe, Wiedrich, and Gallagher, Weathering the Storm: Have IDA's Helped Low-Income Homebuyers Avoid Foreclosure? (April 1, 2010). Housing Policy Debate, Vol. 21, No. 4, 2011.

McKernan, Rademacher, Ratcliffe, Wiedrich, and Gallagher, Weathering the Storm: Have IDA's Helped Low-Income Homebuyers Avoid Foreclosure? (April 1, 2010). Housing Policy Debate, Vol. 21, No. 4, 2011.

Best Practice: Homewise 3.5% Downpayment Program On a $175,000 home purchase: Homewise FHA Conventional 20% Cash required at closing $3,500 $12,250 $41,125 Years required to save 4 15 51 Years of Equity/Appreciation Lost n/a 11 47 In 11 years, the Homewise buyer will build over $72,000 in equity through principal paydown and 2% annual appreciation. The Center for Responsible Lending estimates the typical American family can save 2% of income for a downpayment each year

Best Practice: Homewise Delinquency Rate

Savings helps reduce defaults Source: JP Morgan Chase Institute. October 2018

Doug Ryan Senior Director, Affordable Homeownership dryan@prosperitynow.org 202-207-0155 @douglaslryan