Fannie Mae: Closing Costs A Barrier For First-Time, Low-Income Borrowers
Summary
The authors note that homeownership has proven to be one of the most effective ways to improve the financial, social, and generational well-being of individuals, their families, and their communities, particularly for those without the means or savings to engage in other wealth-building activities, such as investing in stocks. “Most notably, the difference in the homeownership rates between Black and white households is not only about the same as it was in 1968, when the Fair Housing Act was signed into law, but in 1900, too, when explicit segregation was legally protected,” the report states. Based on Fannie Mae’s ongoing research into this topic, the authors believe there are several areas where policymakers, regulators, and the mortgage industry could work together to reasonably reduce origination costs for first-time homebuyers without adding undue credit risk. • For mortgages to first-time and low-income homebuyers, require lenders, investors, insurers, the GSEs, and other mortgage-market participants — not borrowers — to pay for services needed to manage risk. They argue that such interest should be balanced “against the real (if longer-term) benefits of expanding opportunities for people of color, low-income families, and others” whose pathway o wealth creation through homeownership is difficult at best.