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

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

3. 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

4. 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 , 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.

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

10. Michigan SF Housing Permits

11. 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.

12. 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.

14. 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.

15. 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

16. Best Practice: Homewise Delinquency Rate

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

19. Doug Ryan Senior Director, Affordable Homeownership
@douglaslryan