PRESIDENT BUSH pledges down-payment assistance to help low-income Americans buy their first homes. But he is moving rashly with support for legislation that promotes access to federally insured mortgages with no money down.
Zero-down-payment mortgages are seductive to low-income renters. But the prospective homeowner risks waking up with unmanageable monthly payments and costly mortgage insurance. The Congressional Budget Office wisely warns of the unintended consequence of excessive defaults and foreclosures. In such cases, families could come to financial ruin, and abandoned houses could destabilize neighborhoods.
There are better ways to help homeowner hopefuls. A recently published paper by the Joint Center for Housing Studies of Harvard University recommends a flexible homeownership tax credit aimed at bringing the first mortgage down to 80 pecent of the home value. The credit, according to the authors, could be distributed by state housing finance agencies.
Access to decent housing deserves a prominent place in the upcoming presidential debate. An estimated 2.5 million American households with children live in substandard housing. Health problems and poor academic performance often coexist in such environments.
Senator John Kerry is a longtime proponent of a national affordable housing trust that would use portions of the Federal Housing Administration mortgage insurance reserves to create a fund for 1.5 million rental apartments for low-income families. The authors of the bipartisan Harvard study, which included two former heads of the US Department of Housing and Urban Development, Henry Cisneros and Jack Kemp, reinforced the need for such a trust. Their version would provide both rental and homeownership opportunities for extremely low-income households.
The president concentrates primarily on new homeownership opportunities. But the affordability crisis cannot be addressed without preserving what housing for poor people already exists. Threats by the Bush administration to reduce the Section 8 rental voucher program and efforts to reduce the reserves that local public housing authorities keep on hand for emergencies hinder efforts to provide safe and decent housing. The situation is made worse by landlords of multifamily properties who raise their rents dramatically after prepaying their federally subsidized mortgages.
Solutions won’t be simple or grab the attention of a no-money-down mortgage program. A thoughtful national housing policy requires the kind of careful attention to detail that good homeowners pay toward their homes. There is a problem of deferred maintenance in the White House. Solutions won’t be simple or grab the attention of a no-money-down mortgage program. A thoughtful national housing policy requires the kind of careful attention to detail that good homeowners pay toward their homes. There is a problem of deferred maintenance in the White House.