Inadequate FHA

ACORN Financial Justice Ideas and Issues Personal Writings

Albuquerque        The housing relief bill pushing its way through Congress is making its major claim on a $300 Billion appropriation to FHA to push out more home loans again to Americans.  This helps a little, but will not restore the ability for moderate income citizens to once again hope to own homes.

    With the subprime market now totally dead any lending facility by major mortgage companies is through FHA and on their standards.  We heard this again repeatedly from Countrywide as we lobbied to restore the Bank of America program that had allowed us to move 50,000 new homeowners through ACORN Housing counselors over the years.  FHA as the only portal for loans means much higher credit scores with no allowances for the kinds of recognition of alternative income sources and credit history that has been the ACORN specialty.  

    Congress does not seem to fully recognize that there is almost NO way that a low or moderate income family can now buy a home anywhere in the country, barring a miracle or untold savings or winning the lottery.  Without movement to allow home lending to low-and-moderate income families we are going to confront even more galloping inequity and a de facto squeeze that will rival the redlining days when no one would loan in our areas.  We have sat face to face with a number of financial institutions and when we raise the issue of how many of our kinds of loans they can put on their balance sheet and what access they have to their balance sheet, they simply shrug and hang their heads.  If they can’t move the loans to FHA, they are not being allowed to portfolio them in many cases.  This is a crisis!

    Congress on the other hand is arguing about whether or not FHA should increase its coverage to loans in the $750,000 area for Boston and California markets.  Geez!  This is middle and upper middle income relief in admittedly expensive housing markets, but this is ignoring the real scale of the problem.  Furthermore, $300 Billion sounds like a lot but the size of the housing market was in the trillions and if Congress starts sucking up this lending facility with near million dollars a pop loans, $300 Billion is going to be gone in no time.

    We need real relief, not real politics, and this bill falls short on both relief and our politics at the least.