10/16/2020
Taking to heart MPA's article disclaimer, I personally believe that we could then be more inclusive by broadening this financing discussion to an economic one of rich vs. poor. Lenders' price adjustments and m.i. requirements DO make it more expensive and harder to qualify for all lower income families with less down payment.
Opponents may argue that there IS government insurance available via FHA but it's too expensive also.
Lenders argue that they need loss protection to ensure profitability and to placate stockholders. But stringent underwriting standards since 2009 have resulted in virtually zero losses and exorbitant profits especially for the GSEs since then. Their own data since the early 2000's show that mortgage defaults in the 95% LTV sector have been no higher (if not lower) than other LTVs - even better with proper homeownership counseling! To this point, the formula of FHA insurance and a 620 or lower FICO score will not work either. Proper education and on-going counseling will.
Summary: Adding additional financing and insurance costs to a loan only adds to the risk let's continue with prudent underwriting and work towards providing proper education, coaching and creating positive, sustainable family culture changes. Quick thought for lenders: how about a declining equity sharing program which rewards sustained repayment?
African Americans pay more in interest, property taxes and more – and miss out on refi's
