Development Finance and Economic Security

Safe at Home

Op-ed published by The New York Times: August 3, 2009
By Dalton Conley

The financial crisis has given rise to all sorts of wrongheaded ideas, among which is the notion that we should not subsidize the "losers" who can’t make their mortgage payments. In fact, the solution to our troubles is not to restrict homeownership, but to expand it...

We could improve the housing market as well as the security of poor families by making homeownership more attainable. Currently, the biggest policy to support homeownership other than the mortgage interest deduction is the Federal Housing Administration's mortgage program, which works by insuring loans made to buyers through traditional lenders (that is, it decreases risk to lending agencies by underwriting the loan). However, many of the most disadvantaged Americans, and minorities in particular, do not qualify for F.H.A. loans because of their low net worth and other factors.

Into this breach stepped a South Carolina organization called Self-Help. In 1998, Self-Help received a $50 million grant from the Ford Foundation. The money was used to insure the mortgages of low-wealth families that aspired to homeownership, but had trouble getting loans in the private market. More than $2 billion in mortgages were guaranteed over five years, making homeownership possible for 27,000 families that might not have qualified for conventional loans.

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Learn more about the Self-Help initiative.