Affordable Housing

Nancy Pierce
February 5, 2008 | COMMENTS

Homeownership remains the best path to wealth building for most Americans. As home values appreciate and borrowers pay down their mortgage debt, the resulting equity has become a primary method of building wealth.

Whereas innovative mortgage products and subprime mortgage lenders enabled more families to realize the American dream of homeownership over the past few years, for some people that dream is becoming a nightmare. It is reported 2.2 million homeowners will lose their homes as interest rates reset upwards between now and the end of 2008 as a result of some of these innovative and predatory products.

The good news for credit unions and future homeowners is that the mortgage fiasco is bringing home prices down and most credit unions are flush with liquidity to help rescue some borrowers out of their mortgage woes and to help new homebuyers realize their ownership dream.

This paper is divided into two sections. The first is an overview of what led up to the subprime mortgage problem, its potential effect on borrowers caught in these loans, and how some credit unions are responding with “refi rescue” programs. The second section, entitled “Affordable Mortgage Programs,” presents some innovative solutions and responses credit unions are using to make housing more affordable for lower-income families. It exemplifies the uniqueness that exists within credit unions given their fields of membership, geographic locations, and communities within which they participate.

The credit unions highlighted in this paper share their individual responses to challenges their members or potential members face when it comes to homeownership—whether those challenges mean keeping an existing home or purchasing an affordable home. Credit unions have this opportunity to help their communities create healthier neighborhoods through homeownership and to help creditworthy families achieve homeownership through financially sound mortgage products. For the most part, credit unions were not part of the subprime mortgage problem, but the resulting mortgage meltdown has created favorable circumstances for credit unions to confirm their status as trusted advisors to their members by providing sound home loan products. The examples provided here can serve as illustrative guides for those credit unions that want to help more of their members realize homeownership.

This is the executive summary from a CUNA Lending Council white paper by Nancy Pierce entitled “Affordable Housing.” Read the complete paper in the " White Papers" section of the CUNA Lending Council website.