Are Post-Crisis Policies Holding Down Home Ownership?

October 17, 2013

Policies enacted in the wake of the housing crisis are holding down rates of home ownership at historic lows, according to Robert Couch, a lawyer with Bradley Arant Boult Cummings LLP and member of the Bipartisan Policy Center’s Housing Commission.

"Many of the policies we are pursuing as a nation are having the unintended consequence of reducing the ranks of homeowners in the United States," Couch wrote in a commentary on "In raw numbers, this means that over 60% of Americans and a much higher percentage of newlyweds do not qualify for mortgages today based solely on average credit scores and required down payments."

Couch says that it is the policies enacted to clean up after the housing crisis, and not the crisis itself, that have "caused lenders to become very conservative in approving home loans." He added that potential home owners "are paying the price for policies designed to ease the burden on those who have failed to comply with the terms of their home loans.  In fact, they are paying for it twice—they can’t get loans and they have already had to pay to bail out their neighbors."

These policies are hitting Americans in a demographically-uneven way, according to Couch's commentary, deepening already stark divides in haves and have-nots.

"African-Americans, Hispanics, young people, and low-to-moderate income families tend to have lower credit scores and less cash to inject into a home purchase. Accordingly, the new and stricter lending paradigm will be felt more by the borrower groups that historically have tended to have lower homeownership rates, thus widening a gap that has existed for years," he writes.

Source: Federal Efforts To Help Homeowners May Be Strangling Them, (Oct. 15, 2013)

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