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Mar 12, 2013
Portland Housing Center Helps Launch National "Home Matters" Movement
Apr 30, 2012
I Agree Secretary Geithner!
[US Treasury Secretary Timothy] Geithner said Wednesday the number of families that would benefit from principal forgiveness is significant. "Not overwhelming, but significant," he added. (American Banker, April 18, 2012)
I will admit I got an A in Economics. I saw the principle of supply and demand in everything. Now working in homeownership I still have the lens of supply and demand. So Secretary Geithner’s comment that principal forgiveness would be significant is an immediate, ‘hell yes!’
In the mid to late 2000’s there were a lot of folks buying homes. That means they bought at the height of the housing market and now likely live in a home with a value less than their mortgage amount. It is called ‘underwater’. I have a relative who bought in 2006 and his mortgage is almost 40 percent higher than the tax value of the property. He is current on his payments, but after 6 years of payments, he has no equity to borrow against to do house repairs or improvements. When his daughter is ready for college in 15 years, he will have some equity but not enough to pay for her tuition for the first year of college.
I decided to look at Portland Housing Center customers who bought during that same time period 2005 to 2009. I started with Bank of America borrowers because I wanted to send them a flyer of an upcoming event in May hosted by Bank of America to assist homeowners. For 188 Bank of America homeowners, I compared the property tax value against the original mortgage amount. I found that 60 percent were ‘underwater’. As near as I could tell 5 percent had a foreclosure; another 4 percent I grouped as unknown. The remaining 31 percent had a home value that was greater than the mortgage amount. They were the ‘overwater’ homeowners.
Imagine if my relative and the other 60 percent had principal forgiveness. I assume that means more construction jobs since every home needs repairs. I also think it means more houses for sale on the market. Most people do not choose to do a short sale – which is another means to get principal forgiveness. They wait for the market to improve. When I hear that affordable homes in the $100,000 to $175,000 range have multiple offers and a house in Gresham had 36 offers, I know there are not enough affordable homes for sale. If we had principal forgiveness, I bet there would be a lot more homes for sale as people traded up or across town or for another bedroom. That means supply and demand and it is significant.
Apr 16, 2012
'Get It' and Act!
At a recent symposium held by Stanford Graduate School of Business, studies were shared on ‘getting people to do good’. The context was recycling however the messages apply to any cause. One of the findings was to focus on good news and pair it with the broader philosophy of why the action is important. The pairing of good news and philosophy will help people to ‘get it’ and act.
Dr. Lisa K. Bates, of Portland State University and Portland Housing Center Board member, demonstrated that kind of messaging in her testimony to City Council on April 11th. The City Council is considering next year’s budget. The Office of Management and Finance recommended cutting all the homeownership education and counseling support. Homeownership advocates are asking funding support be continued and at $500,000.
The good news Dr. Bates told City Council was, “Through funding homeownership education and counseling, the City can ensure access to the benefits of homeownership is available to a broad spectrum of Portlanders –making these opportunities real for first generation buyers, moderate income households, women, and communities of color.”
The broader philosophy of why this is important according to Dr. Bates is “A thriving city is one that people both figuratively and literally ‘buy into’- owning a home as a commitment to community and an investment in the future. Owning a home gives people a tangible stake and an opportunity to benefit from economic development. Research shows that children of homeowners (even low income owners) have better health and do better in school and future employment.”
Now let’s hope City Council ‘gets it’ and reinstates $500,000 to fund homeownership education and counseling. If you ‘get it’ and want to act contact City Council and let them know you support homeownership services. Then join the Portland Safety Net and let everyone know.
Dr. Lisa K. Bates, of Portland State University and Portland Housing Center Board member, demonstrated that kind of messaging in her testimony to City Council on April 11th. The City Council is considering next year’s budget. The Office of Management and Finance recommended cutting all the homeownership education and counseling support. Homeownership advocates are asking funding support be continued and at $500,000.
The good news Dr. Bates told City Council was, “Through funding homeownership education and counseling, the City can ensure access to the benefits of homeownership is available to a broad spectrum of Portlanders –making these opportunities real for first generation buyers, moderate income households, women, and communities of color.”
The broader philosophy of why this is important according to Dr. Bates is “A thriving city is one that people both figuratively and literally ‘buy into’- owning a home as a commitment to community and an investment in the future. Owning a home gives people a tangible stake and an opportunity to benefit from economic development. Research shows that children of homeowners (even low income owners) have better health and do better in school and future employment.”
Now let’s hope City Council ‘gets it’ and reinstates $500,000 to fund homeownership education and counseling. If you ‘get it’ and want to act contact City Council and let them know you support homeownership services. Then join the Portland Safety Net and let everyone know.
Feb 27, 2012
It Is Sweet and Pink!
An article in the Wall Street Journal asks “For Women is Home Really so Sweet?” (February 18, 2012). The writer’s conjecture is women buying homes may be swapping one rite of passage, marriage, to another means of feeling settled by buying homes. It may be true that some women are choosing homeownership. As a single woman who bought her house twenty years ago, I didn’t consciously make the choice of homeownership over marriage, but I am still in my house and I am not married. I must say I am glad I made those choices. I like that my home’s value is 3 times what I paid for it and my loan is nearly paid off. I am not sure if the net monetary value of my partner has increased as much.
If homeownership is a ‘right’ of passage that is fine by me as long as it is an option. It wasn’t so long ago that a woman in the Portland Housing Center home buying class said she thought she needed a husband to be able to buy a home. Before 1981 and the Equal Credit Opportunity Act it was NOT illegal for lenders to discriminate based on sex or marital status. Then it had been necessary to have a husband to purchase a home. The former Mayor Vera Katz tells her story about buying her first home before 1981 as a divorced single mom. She was asked in the loan interview if she was using contraceptives.
I can appreciate the writer questioning why women make the decision to buy a home. But then she goes too far – “ . . . one that, as the housing crisis has proved, can too easily end in calamity.” Just when it is possible to dream about homeownership on one’s own, the writer throws the wet blanket – you’ll lose it, you’ll lose the home. That is fear mongering. Instead of promoting the fear, I wish the writer promoted quality home buying education and counseling, good loans, and women’s option to purchase regardless of whether it is a rite of passage or a desire to paint the walls pink and have a dog.
If homeownership is a ‘right’ of passage that is fine by me as long as it is an option. It wasn’t so long ago that a woman in the Portland Housing Center home buying class said she thought she needed a husband to be able to buy a home. Before 1981 and the Equal Credit Opportunity Act it was NOT illegal for lenders to discriminate based on sex or marital status. Then it had been necessary to have a husband to purchase a home. The former Mayor Vera Katz tells her story about buying her first home before 1981 as a divorced single mom. She was asked in the loan interview if she was using contraceptives.
I can appreciate the writer questioning why women make the decision to buy a home. But then she goes too far – “ . . . one that, as the housing crisis has proved, can too easily end in calamity.” Just when it is possible to dream about homeownership on one’s own, the writer throws the wet blanket – you’ll lose it, you’ll lose the home. That is fear mongering. Instead of promoting the fear, I wish the writer promoted quality home buying education and counseling, good loans, and women’s option to purchase regardless of whether it is a rite of passage or a desire to paint the walls pink and have a dog.
Feb 2, 2012
Don't forget the 'h' word!
I have listened to local politicians and public officials talk about what he/she is going to do to make Portland a better place to live. What I haven't heard is the 'h' word, homeownership. Why is it when house prices are at a 7 year low and interest rates on a 30 year mortgage are 4 percent, that none of them say, "buy a home"? If he/she so believes in Portland and its opportunities, then encourage people to buy homes and share the opportunities. When rents are on par with mortgage payments, then it makes common sense to buy a home. Furthermore, if politicians make all these improvements in Portland, then new homeowners will see their houses appreciate.
For years, I heard from media pundits and politicians say that homeownership wasn't such a good idea. Well it isn't a good idea if its a bad loan and no one checked to see if the borrower could afford it. Homeownership can be done the right way. And when it is, neighborhoods, families and cities all benefit because homeowners invest into the fabric and economy of Portland. But somehow that has gotten forgotten in the past few years. It is time for those running for offices and those in office to use their 'bully pulpits' and use the 'h' word. Take the fear out of home buying and remind people that Portland is home. Buy one.
For years, I heard from media pundits and politicians say that homeownership wasn't such a good idea. Well it isn't a good idea if its a bad loan and no one checked to see if the borrower could afford it. Homeownership can be done the right way. And when it is, neighborhoods, families and cities all benefit because homeowners invest into the fabric and economy of Portland. But somehow that has gotten forgotten in the past few years. It is time for those running for offices and those in office to use their 'bully pulpits' and use the 'h' word. Take the fear out of home buying and remind people that Portland is home. Buy one.
Jun 28, 2011
PHC and Friends Celebrate Two Decades of "Homeownership Done Right"
Our 20th Anniversary Event last Thursday was chock full of wonderfulness. About 300 guests—board members (current and former), funders, customers, City officials, and other partners—joined us at the Nines Hotel in downtown Portland for an evening of appreciation, education, and celebration.
There was great music from Lloyd Jones and his band, and endless trays of tasty food and drinks. The Silent Auction and the Golden Ticket Raffle were both popular and successful. And Portland Mayor Sam Adams presented us with an official Proclamation declaring “July 15th to be the Day of Appreciation for the Portland Housing Center!”
Our keynote speaker, Dr. Melissa Harris-Perry, professor of political science at Tulane University, author, and political commentator, educated and impressed us all with her presentation on “Home, Civil Rights, and the Challenge of Post-Racial Organizing.”
I was especially impressed with her ability to take the “long view” of political, social, and economic progress in America, and for reminding us that we all have a role in history—whether high history or low. She told us about her father, a long-time political activist and educator. Instead of signing her birthday cards, “Love, Dad,” she said, he’d sign them, “The struggle continues.”
The significance of that, particularly as we move through challenging economic and political times, is profound, for all Americans committed to equity and fairness, and who may sometimes face a momentary waning of our passion for righting wrongs.
Here’s one of my favorite Dr. Harris-Perry quotes from that speech:
“What’s useful with growing up with “the struggle continues” as a basic mantra is that it serves as an excellent act of humility to remember that you are just a part, just a moment of a struggle, that has gone on long before you, and that will continue long after you.
There is much hubris required for you to believe that you have to live during the winning time. No, you might be living during the losing time. The winning time might come at some earlier point or some later point—you don’t always get to choose what your era is—but certainly, inevitably, the struggle continues.”
We received some excellent press coverage in The Oregonian, too. Writer Connie Potter did an extensive profile of PHC customer Demetria Peterson, with excellent background on our founding and recent successes.
I think Demetria best summarized the value and importance of what we do. She said of us, “They were a constant resource for me…If it wasn’t for the Portland Housing Center, I wouldn’t have been able to buy. I wouldn’t have known what steps to take, who to trust, who not to trust.” Thank you, Demetria. That’s what we call “homeownership done right.”
Events like this celebration take untold hours of hard work, so my sincere thanks to the 20th Anniversary Event Committee and volunteers for their limitless supplies of determination, creativity, and massive attention to the many details our party demanded. We owe big thanks to Event Committee Chair Raejean Sly (whose 3-tier “house” cake was the best-dressed item at the event!). Shout outs are due, also, to Lead Volunteer Carol Hushman and our Auction Procurement Wiz Mary Mayther-Slac.
So, now we’re 21--and “the struggle continues.” Important words for us to remember as we step into our third decade of helping our customers make real the dream of homeownership.
There was great music from Lloyd Jones and his band, and endless trays of tasty food and drinks. The Silent Auction and the Golden Ticket Raffle were both popular and successful. And Portland Mayor Sam Adams presented us with an official Proclamation declaring “July 15th to be the Day of Appreciation for the Portland Housing Center!”
Our keynote speaker, Dr. Melissa Harris-Perry, professor of political science at Tulane University, author, and political commentator, educated and impressed us all with her presentation on “Home, Civil Rights, and the Challenge of Post-Racial Organizing.”
I was especially impressed with her ability to take the “long view” of political, social, and economic progress in America, and for reminding us that we all have a role in history—whether high history or low. She told us about her father, a long-time political activist and educator. Instead of signing her birthday cards, “Love, Dad,” she said, he’d sign them, “The struggle continues.”
The significance of that, particularly as we move through challenging economic and political times, is profound, for all Americans committed to equity and fairness, and who may sometimes face a momentary waning of our passion for righting wrongs.
Here’s one of my favorite Dr. Harris-Perry quotes from that speech:
“What’s useful with growing up with “the struggle continues” as a basic mantra is that it serves as an excellent act of humility to remember that you are just a part, just a moment of a struggle, that has gone on long before you, and that will continue long after you.
There is much hubris required for you to believe that you have to live during the winning time. No, you might be living during the losing time. The winning time might come at some earlier point or some later point—you don’t always get to choose what your era is—but certainly, inevitably, the struggle continues.”
We received some excellent press coverage in The Oregonian, too. Writer Connie Potter did an extensive profile of PHC customer Demetria Peterson, with excellent background on our founding and recent successes.
I think Demetria best summarized the value and importance of what we do. She said of us, “They were a constant resource for me…If it wasn’t for the Portland Housing Center, I wouldn’t have been able to buy. I wouldn’t have known what steps to take, who to trust, who not to trust.” Thank you, Demetria. That’s what we call “homeownership done right.”
Events like this celebration take untold hours of hard work, so my sincere thanks to the 20th Anniversary Event Committee and volunteers for their limitless supplies of determination, creativity, and massive attention to the many details our party demanded. We owe big thanks to Event Committee Chair Raejean Sly (whose 3-tier “house” cake was the best-dressed item at the event!). Shout outs are due, also, to Lead Volunteer Carol Hushman and our Auction Procurement Wiz Mary Mayther-Slac.
So, now we’re 21--and “the struggle continues.” Important words for us to remember as we step into our third decade of helping our customers make real the dream of homeownership.
May 4, 2011
Whose Skin?
The implosion of the national housing market and the resulting financial meltdown that began in 2007 stripped American families of $11 trillion of wealth—including home equity, family savings, and retirement accounts. Millions, too, lost jobs. Now the solution Congress designed may soon be transformed into a major block to homeownership for creditworthy families.
Last year Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act to reduce the risk of another such economic catastrophe. The legislation eliminates most prepayment penalties and places limits on certain fees homebuyers pay. It also aims to protect mortgage market investors by requiring those who package and sell mortgage loans to hold 5 percent of their value. This is known as risk retention, or ensuring that they keep “skin in the game.”
Dodd-Frank, however, exempts from this risk retention requirement “qualified residential mortgages” (QRMs), low-risk loans meeting high underwriting standards. Congress left it up to the Treasury Department and other federal agencies to devise those standards.
The agencies’ proposed QRM standards could have required private mortgage insurance, requirements for prudent underwriting, and prohibitions on balloon payments and other high-risk features. Instead, they focus on extreme and onerous financial burdens for potential homebuyers, such as requiring a borrower to make a down payment of one-fifth (20 percent) of a home’s purchase price.
We know that down payment requirements can prevent households of modest means from obtaining a mortgage. In Portland, for example, the current median price for a home is about $200,000. A purchaser using a QRM would have to make a down payment of $40,000 to purchase that home.
The proposed down payment requirement also would increase significantly the time necessary for families to become homeowners, and bar thousands of creditworthy homeowners from a mortgage with low rates and attractive terms. According to the Center for Responsible Lending, a typical family earning the median income would need 14 years to accumulate the 20% down payment on a median priced home.
We know, too, that first time homebuyers have driven much of the recent recovery in the residential real estate market. First time buyers (assisted by a federal tax credit) were the source of the 2009 increase in home sales, including the purchase of thousands of distressed properties, and were vital to the increase in 2010 of the purchases, as well (The State of the Nation’s Housing 2010). Many of those buyers, including PHC customers, purchased their homes via programs requiring mortgage insurance and down payments of one to five percent.
The median down payment amount Portland Housing Center customers paid in FY2010 was $7,652.85, or 4.29 percent of the purchase price. If QRM down payment requirements had been in place, thousands of first time homeowners would not have been able to contribute to the fragile revitalization of the housing market, and the nation’s economy. Those are some of the reasons the National Association of Home Builders, the Consumer Federation of America, and the Center for Responsible Lending oppose the QRM proposal.
There are a number of ways to structure QRMs to help borrowers and reduce risks for mortgage product investors, such as requiring borrowers to have income to support monthly mortgage payments for the life of the loan, and prohibiting risky underwriting features like balloon payments and negative amortization. Burdening borrowers with unreasonable down payment requirements is punitive, unnecessary, and will close the door to homeownership and wealth creation for millions of qualified and creditworthy Americans.
Over the last 20 years, the Portland Housing Center has done one thing very well: provided education, access to resources and support to more than 6,000 families purchasing their first home. We believe “homeownership done right”—intensive education, access to resources, and other support—and not more “skin in the game” helps our customers make good, long-term financial choices, and our mortgage delinquency rate of less than 1 percent bears that out.
This burdensome down payment requirement and other elements of the proposed QRM standards could undermine the 20 years of work the Portland Housing Center has done to assist first- time homebuyers find and use safe and affordable financial tools. If put into place, they will, I believe, also have long-range negative effects on our families and communities.
The proposal is now available for comment for the next six weeks; the agencies expect to adopt them by summer. We urge all of those who support the Portland Housing Center, and value the benefits of homeownership, to become educated about the issue, and express to members of Congress your alarm about the serious and very negative effects these standards, if adopted, will have. America’s families and neighborhoods deserve no less.
Nov 23, 2010
A Blast from the Past. A Return to Redlining?
We have been looking back lately at the Portland Housing Center. That’s what happens when you’re 20 years old and about to be an ‘adult’. In the course of it, I have reminisced about how people couldn’t get bank loans in inner NE Portland because a practice by banks was not to make loans for less than $50,000. The catch was house prices averaged about $35,000. So a lot of people said redlining and a lot of people were shamed and the Portland Housing Center was created.
In our early years, we spent our time telling people they could buy homes and here is how to do it. We worked with committed loan officers, who also had to explain these were good borrowers and good loans, these community loans. Then in our teen years, a hullabaloo of lending took off, so we started telling people that not all loans are good, even if you qualify. We wished for shame to happen again but the greed in the marketplace was stronger. A lot of people got loans that never should have been made.
Now the lenders who made some of those bad loans have flipped their practice. They make loans but only if there is very little risk by requiring the borrowers to have higher credit scores.
Most of us don’t spend time thinking about credit scores – unless you work here – and a lot of us are sure our credit score is pretty good. Why my guy Mike told me his credit score was 897 (the top FICO score is 850). But credit scores get affected by all sorts of things. Many of us pay our bills on time but once in awhile we send the check on the date due so it arrives late – ding on the score. Messy divorces – ding, ding. Or we close a credit card account – ding. Or we open a credit card account to get 10 percent off – ding. Or we have a lot of credit cards or we just have credit cards and not different types of debt such as installment loans and a mortgage – ding and ding. The exact formulation by FICO is secret. Remember Fair Issac is not ‘fair’. It is the last names of a couple of guys who came up with the calculation.
Well some lenders have set a minimum credit score requirement on FHA insured loans – those are the loans designed back in 1934 during the Depression to encourage lenders to make loans. FHA requires a minimum credit score of 580 to qualify for an FHA loan with a 3.5 percent down payment. The big lenders raised the minimum credit score on those FHA-insured loans to 640 – just a 60 point jump from what FHA requires. According to FICO, about 6.3 million people fall within that range. “Raising the minimum required credit scores to 640 may exclude as much as 15 percent of otherwise eligible FHA loan applicants. Minorities and borrowers in communities hardest hit by the recession are most likely to lose based on FICO scores”, says David H. Stevens FHA Commissioner.
So just when we have reduced home prices in Portland and record low interest rates, credit gets tightened. I understand risk assessment because the Portland Housing Center is a lender. We are proud of our 400 loans with a delinquency rate of 1 percent. It also makes me confident to say that the big lenders should use FHA’s credit guidelines and not add an additional hurdle to buying homes. Isn’t that how it all began – raising ‘something’ so that ‘some’ people couldn’t buy homes? I could have sworn that happened 20 years ago.
In our early years, we spent our time telling people they could buy homes and here is how to do it. We worked with committed loan officers, who also had to explain these were good borrowers and good loans, these community loans. Then in our teen years, a hullabaloo of lending took off, so we started telling people that not all loans are good, even if you qualify. We wished for shame to happen again but the greed in the marketplace was stronger. A lot of people got loans that never should have been made.
Now the lenders who made some of those bad loans have flipped their practice. They make loans but only if there is very little risk by requiring the borrowers to have higher credit scores.
Most of us don’t spend time thinking about credit scores – unless you work here – and a lot of us are sure our credit score is pretty good. Why my guy Mike told me his credit score was 897 (the top FICO score is 850). But credit scores get affected by all sorts of things. Many of us pay our bills on time but once in awhile we send the check on the date due so it arrives late – ding on the score. Messy divorces – ding, ding. Or we close a credit card account – ding. Or we open a credit card account to get 10 percent off – ding. Or we have a lot of credit cards or we just have credit cards and not different types of debt such as installment loans and a mortgage – ding and ding. The exact formulation by FICO is secret. Remember Fair Issac is not ‘fair’. It is the last names of a couple of guys who came up with the calculation.
Well some lenders have set a minimum credit score requirement on FHA insured loans – those are the loans designed back in 1934 during the Depression to encourage lenders to make loans. FHA requires a minimum credit score of 580 to qualify for an FHA loan with a 3.5 percent down payment. The big lenders raised the minimum credit score on those FHA-insured loans to 640 – just a 60 point jump from what FHA requires. According to FICO, about 6.3 million people fall within that range. “Raising the minimum required credit scores to 640 may exclude as much as 15 percent of otherwise eligible FHA loan applicants. Minorities and borrowers in communities hardest hit by the recession are most likely to lose based on FICO scores”, says David H. Stevens FHA Commissioner.
So just when we have reduced home prices in Portland and record low interest rates, credit gets tightened. I understand risk assessment because the Portland Housing Center is a lender. We are proud of our 400 loans with a delinquency rate of 1 percent. It also makes me confident to say that the big lenders should use FHA’s credit guidelines and not add an additional hurdle to buying homes. Isn’t that how it all began – raising ‘something’ so that ‘some’ people couldn’t buy homes? I could have sworn that happened 20 years ago.
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