Panel: Homebuying Regulation, Education, and Access to Credit: Protecting Low-Income Homebuyers from Exploitation and Removing Barriers to Home Ownership
(Housing and Community Development)

Friday, November 7, 2014: 1:30 PM-3:00 PM
Tesuque (Convention Center)

*Names in bold indicate Presenter

Panel Organizers:  Scott Brown, Vanderbilt University
Panel Chairs:  Stephanie Moulton, The Ohio State University
Discussants:  Jonathan Spader, Abt Associates, Inc.

Debt, Credit, and Savings: Barriers to Affordable Home Purchase
Christina M. Plerhoples1, Brett Theodos2 and William Monson1, (1)The Urban Institute, (2)Urban Institute

Homeownership remains a goal for many low-to-moderate income households. However, the path to homeownership can be challenging and perilous. Low-income borrowers may have difficulty accessing credit and may be targeted for high risk forms of credit that increase their financial vulnerability. The papers in this session explore the barriers faced by participants in affordable mortgage programs, the unintended consequences of regulation designed to protect borrowers from potentially predatory financial arrangements, and the effects of homebuyer education on both access to credit and protection from undesirable mortgage outcomes. Affordable homeownership programs represent one mechanism for enabling access to credit for borrowers that may not otherwise be able to obtain a mortgage. Even within these types of programs, however, borrowers may still face multiple barriers to purchasing a home, such as high debt, low credit scores, and low savings levels. The first paper in this session will explore the degree to which each of these barriers impedes or delays home purchase and how they interact with each other to prevent borrowers in an affordable mortgage program from obtaining their ownership goals. Homebuyer education is also frequently a component of affordable mortgage programs and can foster low-to-moderate income homeownership, but its effectiveness in preventing negative mortgage outcomes has been understudied. The second paper in this session presents findings from a natural experiment from an affordable housing program at a state housing finance agency, which indicates that homebuyer education may influence the prevention of foreclosure more strongly than the reduction in late payments. Outside of affordable mortgage programs, borrowers may enter into arrangements that leave them highly vulnerable to home repossession, such as contract for deeds where borrowers make direct payments to sellers. The third paper in this session presents findings from research on attempts to regulate this practice in Texas and the unintended consequences that resulted in increased borrower vulnerability.
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