Stabilizing Home Stabilizing Home Ownership in a Post-Ownership in a Post-

Foreclosure Foreclosure EnvironmentEnvironment

Implications for Lenders, Implications for Lenders,

Homebuyers and NeighborhoodsHomebuyers and Neighborhoods

Based on findings from the 2008 Home Mortgage Based on findings from the 2008 Home Mortgage Disclosure Act analysis and other housing market Disclosure Act analysis and other housing market

research.research.

June 2010June 2010

Presented by CBANA in Presented by CBANA in collaboration with the collaboration with the

Community Development Community Development CouncilCouncil

Supported by the City of Supported by the City of Memphis Memphis

Division of Housing and Division of Housing and Community DevelopmentCommunity Development

Phyllis Betts, DirectorPhyllis Betts, DirectorCenter for Community Building and Neighborhood ActionCenter for Community Building and Neighborhood Action

University of Memphis University of Memphis pbetts@memphis.edu

Carol Gothe, Project Research AssistantCarol Gothe, Project Research Assistantcgothe@memphis.edu

Integrating Information Integrating Information to Create to Create Actionable Actionable

KnowledgeKnowledge• Home Mortgage Disclosure ActHome Mortgage Disclosure Act• Register of Deeds: sales, mortgages, Register of Deeds: sales, mortgages,

foreclosuresforeclosures• Memphis Daily News and Chandler Memphis Daily News and Chandler

ReportReport• CBANA-HCD Neighborhood by Neighbor CBANA-HCD Neighborhood by Neighbor

SurveySurvey• HUD Market ReportsHUD Market Reports• Census, Internal Revenue Service, and Census, Internal Revenue Service, and

other government data other government data

Key Issues Key Issues I. I. Subprime Lending Dries Up: the new demographics of Subprime Lending Dries Up: the new demographics of

lending, borrowing, and homeownership in the wake lending, borrowing, and homeownership in the wake of the 2008 mortgage meltdown. of the 2008 mortgage meltdown.

II. Disparate Impact on Aspiring Homeowners: II. Disparate Impact on Aspiring Homeowners: borrowers, Memphis demographics, and the future of borrowers, Memphis demographics, and the future of African American homeownership. African American homeownership.

III. Homeownership Erosion: emerging business model III. Homeownership Erosion: emerging business model for local and non-local lending and impact on for local and non-local lending and impact on homeownership in Shelby County.homeownership in Shelby County.

IV. Changing Character of Neighborhoods: IV. Changing Character of Neighborhoods: Foreclosures, investors, and neighborhood stability. Foreclosures, investors, and neighborhood stability.

V. Action Planning: What resources do we already have V. Action Planning: What resources do we already have

and what do we need to implement homeownership and what do we need to implement homeownership restoration and neighborhood housing market restoration and neighborhood housing market stabilization policies? What do we need from local stabilization policies? What do we need from local banks? From policy-makers?banks? From policy-makers?

Shelby County ZonesShelby County Zones

I. Subprime Lending Dries I. Subprime Lending Dries UpUp

• Applications down 39% 2007Applications down 39% 2007→ 2008→ 2008• 39,526 applications→ 17,239 39,526 applications→ 17,239

originationsoriginations• Originations down but approval about Originations down but approval about

the same as last year at 43%the same as last year at 43%– Approvals dropped 2006→ 2007Approvals dropped 2006→ 2007

• Local banks capture majority market Local banks capture majority market share of diminished market: 54%share of diminished market: 54%

• Local lending dominated by Zone 3 and Local lending dominated by Zone 3 and investor loans in Zones 1 and 2 investor loans in Zones 1 and 2

Loan Dollars Originated By

Local and Non-Local Lenders

2008

54%Local Lenders

Non-Local Lenders and

Mortgage Companies

46%

Local and Non Local Lenders / Mortgage Companies By Zone, 2008

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Zone 1 Zone 2 Zone 3 Zone 4

Num

ber

of M

ortg

ages

Non Local and MortgageCompanies

Local DepositoryLenders

Post-Subprime Lending Post-Subprime Lending LandscapeLandscape

• Subprime purchase lendingSubprime purchase lending↓↓– 2007: 21%2007: 21%– 2008: 13%2008: 13%

• Subprime refinance lendingSubprime refinance lending↓↓– 2007: 31%2007: 31%– 2008: 18%2008: 18%

• Piggyback purchasePiggyback purchase↓↓– 2005 high: 39%2005 high: 39%– 2008: 2%2008: 2%

Post-Subprime Lending Post-Subprime Lending LandscapeLandscape

• Low-moderate buyers↓Low-moderate buyers↓• African American buyers↓African American buyers↓• Female-headed households ↓Female-headed households ↓• Zones 1,2, 4 homeowner purchases↓Zones 1,2, 4 homeowner purchases↓• Zones 1,2, 4 refinancing↓Zones 1,2, 4 refinancing↓• Zone 3 proportionate share of market Zone 3 proportionate share of market

activity ↑activity ↑– 55% of market activity in 2008 55% of market activity in 2008 – 9,536 originations9,536 originations

Investor Loans ↑Investor Loans ↑

Total Number of All Applications 2008 By Zip Code

II. Disparate ImpactII. Disparate Impact• Demise of non-local lending and Demise of non-local lending and

subprime lendingsubprime lending

• Approvals disproportionately down for Approvals disproportionately down for African Americans in Shelby CountyAfrican Americans in Shelby County

• Buyer and borrower profile shifts toward Buyer and borrower profile shifts toward white borrowers and white neighborhoodswhite borrowers and white neighborhoods

• Lending in predominantly African Lending in predominantly African American neighborhoods shifts to American neighborhoods shifts to investorsinvestors

• 51% of all 2008 Shelby County 51% of all 2008 Shelby County mortgage applications were from mortgage applications were from minority applicantsminority applicants

• 32% of all 2008 Shelby County 32% of all 2008 Shelby County originated loans were to minority originated loans were to minority applicantsapplicants

Disparate ApprovalDisparate Approval

Percent African-American Owner-Occupied Purchase Applications (1st Lien) 2008 by Zip Code

Approval Rates For Black and White Approval Rates For Black and White Applicants, Shelby County 2005 - 2008Applicants, Shelby County 2005 - 2008

YearYear African AmericanAfrican American WhiteWhite

20052005 58%58% 77%77%

20062006 56%56% 77%77%

20072007 47%47% 75%75%

20082008 43%43% 74%74%Source: 2005 – 2008 HMDA DataSource: 2005 – 2008 HMDA Data

• African AmericanAfrican American

– 29% subprime loans29% subprime loans

– 41% applicants low 41% applicants low income <80%AMIincome <80%AMI

– 43% single female 43% single female applicantsapplicants

– 18% >3:1 loan-to-income 18% >3:1 loan-to-income ratios or higherratios or higher

– Median loan value Median loan value $90,000$90,000

– 62% applications Zone 262% applications Zone 2

Application and Lending Application and Lending ProfilesProfiles

• WhiteWhite

– 10% subprime loans10% subprime loans

– 19% applicants low 19% applicants low income <80%AMIincome <80%AMI

– 22% single female 22% single female applicantsapplicants

– 17% >3:1 loan-to-income 17% >3:1 loan-to-income ratios or higherratios or higher

– Median loan value Median loan value

$141,000$141,000

– 66% applications Zone 366% applications Zone 3

Role of Local Lenders?Role of Local Lenders?

• Local LendersLocal Lenders– 41% of all applications were from minority 41% of all applications were from minority

applicantsapplicants– 31% of all mortgages were to minority borrowers31% of all mortgages were to minority borrowers– 36% of minority applications were denied36% of minority applications were denied

• Non-Local Lenders and Mortgage Non-Local Lenders and Mortgage CompaniesCompanies– 57% of all applications were from minority 57% of all applications were from minority

applicantsapplicants– 42% of all mortgages were to minority borrowers42% of all mortgages were to minority borrowers– 52% of minority applications were denied52% of minority applications were denied

Reasons For Denial By RaceReasons For Denial By Race

Primary Reason For DenialPrimary Reason For Denial African AmericanAfrican American WhiteWhite

Debt-to-income ratioDebt-to-income ratio 612612 17%17% 339339 16%16%

Employment historyEmployment history 3131 1%1% 2525 1%1%

Credit historyCredit history 1,3381,338 37%37% 484484 23%23%

CollateralCollateral 718718 20%20% 548548 26%26%

Insufficient cashInsufficient cash 7575 2%2% 4141 2%2%

Unverifiable informationUnverifiable information 119119 3%3% 9191 4%4%

Credit application incompleteCredit application incomplete 323323 9%9% 365365 17%17%

Mortgage insurance DeniedMortgage insurance Denied 1818 1%1% 88 0%0%

OtherOther 358358 10%10% 238238 11%11%

TotalTotal 3,5923,592 2,1392,139

Source: 2008 HMDA data.Source: 2008 HMDA data.

Percent of HUD Median Percent of HUD Median IncomeIncome

African AmericanAfrican American WhiteWhite

DifferenceDifferenceCompleteComplete

ApplicationsApplications Denial RateDenial Rate

Completed Completed ApplicatApplicat

ionsions Denial RateDenial Rate

30% and below30% and below 345345 74%74% 108108 69%69% 5%5%

>30% and <= 60%>30% and <= 60% 2,5612,561 64%64% 970970 44%44% 20%20%

>60% and <= 80%>60% and <= 80% 2,5262,526 57%57% 1,5361,536 30%30% 27%27%

>80% and <= 120%>80% and <= 120% 3,6113,611 59%59% 2,9722,972 30%30% 29%29%

120% and above120% and above 3,9503,950 52%52% 8,4218,421 22%22% 30%30%

TotalTotal 12,99312,993 58%58% 14,00714,007 26%26% 32%32%

Source: 2008 HMDA data.Source: 2008 HMDA data.

Denial Rates By Race and Income Denial Rates By Race and Income CategoryCategory

III. Homeownership III. Homeownership ErosionErosion

• Foreclosure notifications up 4% 08-09 Foreclosure notifications up 4% 08-09 – 4/100 single family homes in 2009 4/100 single family homes in 2009 – 13,327 notifications13,327 notifications– Zone 2 still high but decreasingZone 2 still high but decreasing– Zone 3 up: Pushing the envelope Zone 3 up: Pushing the envelope

foreclosures foreclosures

• But completed foreclosures down 16% But completed foreclosures down 16% – 6,3916,391

• 2008 foreclosures still bank owned: 24%2008 foreclosures still bank owned: 24%– REO inventory appears to hold steady and influence pace of completed REO inventory appears to hold steady and influence pace of completed

foreclosuresforeclosures

Foreclosure Notifications 2009 by Zip Code

Shelby Co Assessor,Memphis Daily News Data

Meltdown-driven Recession:Meltdown-driven Recession:

Secondary Effects on Secondary Effects on HomeownershipHomeownership• Credit for business investmentCredit for business investment↓↓

• Employment and earningsEmployment and earnings↓↓• Household formationHousehold formation↓↓• Residential developmentResidential development↓↓• Stagnant real estate marketStagnant real estate market↓↓

Market RealitiesMarket Realities

• Memphis: immigrants maintain Memphis: immigrants maintain population growth since 2000population growth since 2000

• ““Baseline” poverty: 20% + or –Baseline” poverty: 20% + or –• ““Top ten” bankruptcy, credit ratings Top ten” bankruptcy, credit ratings

and delinquency, use of tax refund and delinquency, use of tax refund anticipation loans, disability anticipation loans, disability payments, and labor force drop-outspayments, and labor force drop-outs

• One of two families with children One of two families with children are low income*are low income***up to 200% federal poverty line, which is typically less than the 80% up to 200% federal poverty line, which is typically less than the 80%

AMI guideline for low-incomeAMI guideline for low-income

• Virtual no growth scenario Shelby Virtual no growth scenario Shelby CoCo

Potential Homeowners?Potential Homeowners?

• Typical White: nuclear family with Typical White: nuclear family with two children @ 120% of AMI two children @ 120% of AMI attempting to buy in Zone 3attempting to buy in Zone 3

• Typical Black: female-headed Typical Black: female-headed (extended family) with two (extended family) with two children @ =<80% AMI children @ =<80% AMI attempting to buy in Zone 2 or 3attempting to buy in Zone 2 or 3

Applicant CharacteristicsApplicant Characteristics African American *African American * White *White *

CountCount Percent/ Percent/ Summary Summary StatisticStatistic

CountCount Percent/Percent/Summary Summary

StatisticStatistic

Total ApplicationsTotal Applications 15,64215,642 ---- 16,45916,459 ----

Low Income: = < 80% AMI Low Income: = < 80% AMI 6,2866,286 41%41% 2,9722,972 19%19%

Very Low Income: = < 50% AMI Very Low Income: = < 50% AMI 2,0892,089 14%14% 692692 4%4%

Poor/Near Poor: = < 30% AMI Poor/Near Poor: = < 30% AMI 381381 3%3% 133133 1%1%

Moderate Income: 81- 120% AMI Moderate Income: 81- 120% AMI 4,3014,301 28%28% 3,4393,439 22%22%

High Income: over 120 AMI High Income: over 120 AMI 4,6234,623 30%30% 9,5339,533 60%60%

Median Borrower IncomeMedian Borrower Income ---- $49,000$49,000 ---- $77,000$77,000

Male w/ Female Coapplicant*Male w/ Female Coapplicant* 2,2732,273 15%15% 5,6325,632 35%35%

Female w/ No Coapplicant *Female w/ No Coapplicant * 6,6536,653 43%43% 3,6153,615 22%22%

Owner-Occupied Owner-Occupied 13,73913,739 88%88% 13,78613,786 84%84%

Zone 1 - Distressed NeighborhoodsZone 1 - Distressed Neighborhoods 3,1693,169 20%20% 929929 6%6%

Zone 2 - Vulnerable NeighborhoodsZone 2 - Vulnerable Neighborhoods 9,6839,683 62%62% 4,3594,359 26%26%

Zone 3 - Stable NeighborhoodsZone 3 - Stable Neighborhoods 2,6952,695 17%17% 10,92710,927 66%66%

Zone 4 - Uptrending NeighborhoodsZone 4 - Uptrending Neighborhoods 9595 1%1% 247247 2%2%Source: HMDA 2008 dataSource: HMDA 2008 data

* Percentages exclude cases for which data were not available.* Percentages exclude cases for which data were not available.

Applicant Characteristics African American and White 2008

Market Sheds Market Sheds Potential HomeownersPotential Homeowners

• Memphis down 7000 homeowners Memphis down 7000 homeowners since 2005since 2005– Shelby county down 4000Shelby county down 4000

• Foreclosures Foreclosures and and failure of new failure of new households to formhouseholds to form

• Memphis down 17000 households Memphis down 17000 households since 2005since 2005– Shelby county down 7500Shelby county down 7500

Investors Take Up SlackInvestors Take Up Slack

• 59% 2008 foreclosure bank sales to 59% 2008 foreclosure bank sales to investors investors – Bank sales 24% of county-wide market 2009Bank sales 24% of county-wide market 2009

• HMDA data: 19% investor loansHMDA data: 19% investor loans– Baseline ~10% 2004Baseline ~10% 2004– Excludes cash sales and underestimates Excludes cash sales and underestimates

package deals package deals

• Wide Zone and zipcode variationWide Zone and zipcode variation• Growing vacancy in Zone 1 into Zone 2Growing vacancy in Zone 1 into Zone 2

Shelby Co Assessor Data

Percent Investor Purchase Originations (1st Lien) 2008 by Zip Code

Number Owner Occupied Purchase Originations (1st Lien) 2008 by Zip Code

IV. Changing Character of IV. Changing Character of NeighborhoodsNeighborhoods

• Zone 1 neighborhoods increasing Zone 1 neighborhoods increasing vacancy and population lossvacancy and population loss

• Zone 2 neighborhoods increasingly Zone 2 neighborhoods increasingly shifting to rental with clustered shifting to rental with clustered increases in vacancyincreases in vacancy

• Foreclosures/investor-owned Foreclosures/investor-owned properties associated with blight in properties associated with blight in Zone 2Zone 2

USPS Percent Vacancies By Tract 12/31/2009

Shelby Co Assessor Data

• Foreclosures much more likely to Foreclosures much more likely to be vacantbe vacant

• Vacant properties more likely to Vacant properties more likely to be neglectedbe neglected

• Do foreclosures “drive” blight?Do foreclosures “drive” blight?– Depends on the neighborhood . . . Depends on the neighborhood . . .

• 2007/08 Foreclosures: 952007/08 Foreclosures: 95

• Blight Rate:Blight Rate:•All residential properties: 38.2%All residential properties: 38.2%•Foreclosures: 67.4% Foreclosures: 67.4%

• Vacancy Rate:Vacancy Rate:•All residential properties: 6.8%All residential properties: 6.8%•Foreclosures: 36%Foreclosures: 36%

• 2007/2008 Foreclosures: 1152007/2008 Foreclosures: 115

• Blight Rate:Blight Rate:•All residential properties: 18.5%All residential properties: 18.5%•Foreclosures: 60.8% Foreclosures: 60.8%

• Vacancy Rate: Vacancy Rate: •All residential properties: 2.5% All residential properties: 2.5% •Foreclosures: 35.7%Foreclosures: 35.7%

Selected Shelby County Foreclosure Notifications, 2000 – 2009HUD-LISC High Foreclosure Risk ZipcodesZone 1Zone 2Mixed Zone

Zip Zip CodCod

ee20200000

20200101

20200202

20200303

20200404

20200505

20200606

20200707

20200808

SubstituSubstitute te

Trustee Trustee Deeds Deeds 20082008 20092009

SubstituSubstitute te

Trustee Trustee Deeds Deeds 20092009

% Increase % Increase NotificatioNotifications 08-09ns 08-09

% % IncreaIncrea

se se Sub Sub

Trust Trust 08-0908-09

3813810606

232355

272722

353588

363666

373733

454533

505099

505077

555500 388388

333388 200200 -39%-39%

--48%48%

3813810909

383855

393922

505011

606033

626255

656544

828299

909044

838366 504504

676799 339339 -19%-19%

--33%33%

3813811111

282833

313199

383866

393977

444499

393911

464699

494900

515111 323323

595900 293293 15%15% -9%-9%

3813811414

202066

232388

292977

343477

272722

353522

434333

464644

434377 293293

393911 205205 -11%-11%

--30%30%

3813811515

292922

262600

313100

323222

363644

383855

545488

636344

585844 346346

575722 281281 -2%-2%

--19%19%

3813811616

252566

222266

363600

373711

393966

434300

545411

585811

606044 324324

606000 245245 -1%-1%

--24%24%

3813811818

333388

323299

464622

484888

494999

525277

717100

757533

808066 455455

808000 405405 -1%-1%

--11%11%

3813812525

131388

191999

252588

313199

383811

474777

575766

838344

949488 468468

1,01,06969 358358 13%13%

--24%24%

3813812727

454522

444499

565633

696911

717144

737311

969699

989800

999999 672672

969644 575575 -4%-4%

--14%14%

3813812828

313100

343422

454599

464633

494944

525299

666699

878711

949400 552552

898988 470470 -4%-4%

--15%15%

3813814141

272711

313100

434355

404033

424288

454577

595922

707099

767666 421421

797911 363363 3%3%

--14%14%

ShelbShelby y CounCountyty

4,614,6166

5,055,0566

6,686,6822

7,297,2966

7,627,6244

8,248,2411

10,510,51515

11,911,92222

12,812,85555 7,5917,591

13,313,32727 6,3916,391 4%4% -16%-16%

Source: Memphis Daily News, Shelby County Assessor Files, 2009

Zip Zip CodesCodes

% African % African American, American, 2000 2000 22

% Purchase % Purchase Apps That Apps That Are Low Are Low Income, Income, 2008 2008 11

% All % All Purchase Purchase Apps Apps Originated, Originated, 2008 2008 11

% Purchase % Purchase Apps With Apps With African African American American Applicant, Applicant, 2008 2008 11

% Purchase % Purchase Apps With Apps With Hispanic Hispanic Applicant, Applicant, 2008 2008 11

% Originated % Originated Purchase Purchase Loans That Are Loans That Are Investor Investor Purchases, Purchases, 2008 2008 11

% Tax % Tax Returns, Returns, EITC EITC Credit, Credit, 2006 2006 33

% Tax % Tax Returns, Returns, Income Income Below Below $20,000, $20,000, 2006 2006 33

3810638106 97%97% 68%68% 37%37% 89%89% 1%1% 35%35% 55%55% 60%60%

3810938109 96%96% 49%49% 46%46% 90%90% 0%0% 43%43% 48%48% 50%50%

3811138111 45%45% 35%35% 72%72% 20%20% 1%1% 22%22% 31%31% 43%43%

3811438114 95%95% 46%46% 40%40% 75%75% 0%0% 38%38% 52%52% 58%58%

3811538115 60%60% 45%45% 49%49% 75%75% 3%3% 39%39% 42%42% 43%43%

3811638116 91%91% 53%53% 48%48% 89%89% 1%1% 24%24% 44%44% 47%47%

3811838118 76%76% 43%43% 49%49% 81%81% 3%3% 25%25% 47%47% 48%48%

3812538125 41%41% 42%42% 51%51% 81%81% 3%3% 22%22% 20%20% 28%28%

3812738127 72%72% 49%49% 48%48% 71%71% 2%2% 62%62% 53%53% 55%55%

3812838128 59%59% 48%48% 46%46% 73%73% 3%3% 33%33% 43%43% 45%45%

3814138141 61%61% 61%61% 43%43% 82%82% 4%4% 37%37% 34%34% 33%33%

TotalTotal 49%49% 30%30% 63%63% 41%41% 3%3% 17%17% 29%29% 39%39%

Neighborhood Housing Market Trends Race, and Income Indicators

Zip CodesZip Codes

% African % African American, American, 2000 2000 22

% Owner % Owner Occupied Occupied Housing Housing Units, 2000 Units, 2000 22

Single Single Family Family Home Home Ownership Ownership Rate, 3/2010 Rate, 3/2010 55

% Single % Single Family Family Parcels Parcels w/ FC w/ FC Notices, Notices, 2009 2009 4,54,5

% 2008 FCs % 2008 FCs Still Bank Still Bank Owned, Owned, 3/2010 3/2010 55

% 2008 FCs % 2008 FCs Sold Now Sold Now Investor Investor Owned, Owned, 3/2010 3/2010 55

% Res % Res Bank Bank Sales, Sales, 2009 2009 4,54,5

Vacancy Vacancy Rate, Rate, 3/2010 3/2010 66

3810638106 97%97% 56%56% 59%59% 2.7%2.7% 38%38% 62%62% 29%29% 19.2%19.2%

3810938109 96%96% 76%76% 71%71% 3.4%3.4% 29%29% 52%52% 35%35% 11.9%11.9%

3811138111 45%45% 58%58% 64%64% 3.4%3.4% 28%28% 80%80% 14%14% 10.4%10.4%

3811438114 95%95% 51%51% 60%60% 3.4%3.4% 30%30% 79%79% 49%49% 21.8%21.8%

3811538115 60%60% 35%35% 72%72% 6.4%6.4% 26%26% 70%70% 37%37% 9.9%9.9%

3811638116 91%91% 48%48% 83%83% 5.2%5.2% 25%25% 46%46% 32%32% 12.3%12.3%

3811838118 76%76% 56%56% 71%71% 6.3%6.3% 28%28% 88%88% 26%26% 12.2%12.2%

3812538125 41%41% 88%88% 89%89% 7.6%7.6% 13%13% 44%44% 40%40% 4.7%4.7%

3812738127 72%72% 65%65% 61%61% 5.9%5.9% 31%31% 69%69% 43%43% 14.4%14.4%

3812838128 59%59% 60%60% 71%71% 6.4%6.4% 18%18% 75%75% 42%42% 7.2%7.2%

3814138141 61%61% 89%89% 80%80% 8.2%8.2% 18%18% 80%80% 46%46% 5.0%5.0%

TotalTotal 49%49% 63%63% 77%77% 3.6%3.6% 23%23% 59%59% 24%24% 9.1%9.1%

Neighborhood Home Ownership, Race and Vacancy

V. Action PlanningV. Action Planning

• Where do we stand with local Where do we stand with local lenders? lenders?

• Zone 3,4 model for homeownership Zone 3,4 model for homeownership – Higher income white homebuyers and Higher income white homebuyers and

limited number of black homebuyers limited number of black homebuyers (~16% of total)(~16% of total)

• Weaker Zone 2 model for black Weaker Zone 2 model for black homebuyershomebuyers

• Zone 2 model for white investorsZone 2 model for white investors• Zone 1 -2 model for African American Zone 1 -2 model for African American

investorsinvestors

Stabilizing Homeownership and Stabilizing Homeownership and Restoring Neighborhoods: Critical Restoring Neighborhoods: Critical

ConsiderationsConsiderations• Racial disparities remain in local Racial disparities remain in local

lendinglending– 44% of local lending to African Americans 44% of local lending to African Americans – higher local than non-local approval but still lower than for higher local than non-local approval but still lower than for

white applicantswhite applicants– African American (Hispanic?) borrowers growing share of African American (Hispanic?) borrowers growing share of

potential borrowerspotential borrowers

• Marginal buyers account for Marginal buyers account for disappearing homeownership demand disappearing homeownership demand with high impact in Zone 2 and with high impact in Zone 2 and potential impact in Zone 1 potential impact in Zone 1 redevelopmentredevelopment– Marginal buyers supported Zone 2 market activityMarginal buyers supported Zone 2 market activity– New realities of investor-driven marketsNew realities of investor-driven markets

Summary ConsiderationsSummary Considerations• Bottom line: excess supply compared Bottom line: excess supply compared

to effective demandto effective demand• Building and homeownership demand Building and homeownership demand

will rebound in Zones 3 and 4will rebound in Zones 3 and 4• Homeownership outreach and Homeownership outreach and

support system for marginal buyers support system for marginal buyers key to stabilization and restoration in key to stabilization and restoration in Zone 2 and affordable redevelopment Zone 2 and affordable redevelopment in Zone 1in Zone 1

• Rental quality assurance key in Zone Rental quality assurance key in Zone 1 pending ground up redevelopment1 pending ground up redevelopment

Local Strategy Local Strategy ImplicationsImplications

• Rethinking products for lower Rethinking products for lower income buyersincome buyers– Emerging products?Emerging products?– Alternative financing pools?Alternative financing pools?

• Loans with strings attachedLoans with strings attached– Pre-purchase counselingPre-purchase counseling– Credit repair and buildingCredit repair and building

• New options with lease purchaseNew options with lease purchase• Incentives for local investors Incentives for local investors

toward rental quality assurance: toward rental quality assurance: entrepreneurship development? entrepreneurship development?

Promising PracticesPromising Practices

Home Ownership Preservation: Lease-Home Ownership Preservation: Lease-Purchase and CDFI financingPurchase and CDFI financing

• Community Land Trust Network at Community Land Trust Network at www.cltnetwork.orgwww.cltnetwork.org

• National Housing Trust at National Housing Trust at www.nhtinc.orgwww.nhtinc.org

• Community Development Law Center Community Development Law Center (Portland) at (Portland) at www.cdlcweb.orgwww.cdlcweb.org

Promising PracticesPromising Practices

Rental Quality Assurance: Rental Quality Assurance: Entrepreneurship and best practices Entrepreneurship and best practices for property ownersfor property owners

• Enterprise Community Partners at Enterprise Community Partners at www.enterprisecommunity.orgwww.enterprisecommunity.org

• Neighborworks Real Estate Programs Neighborworks Real Estate Programs and Asset Management training at and Asset Management training at www.nw.org/network/neighborworkswww.nw.org/network/neighborworksprogsprogs