“Part of the problem with these low rates is that you’ve got investors coming in, swooping up even the $150,000 dollar house. If I’m an investor I can come to a mortgage banker and say I’m going to buy 20 houses, they’re $150,000 so here’s my business plan – underwrite me once,” he said.
Last September, the US Government revealed that more than 35% of purchases were made by investors that owned more than 10 properties, often resulting in single-family homes being converted into rental properties and driving up home prices for lower cost homes.
Minority borrowers were also much more likely to experience mortgage distress during the pandemic period, leading to “significantly higher nonpayment and forbearance rates”.
Based on borrowers who were current on their mortgages as of February 2020, 15.6% of Black borrowers missed at least one payment by February 2021, compared with 6.5% of white borrowers.
In a joint interview with MPA last week, Powell and Owens said market solutions, as well as federal legislation and the involvement of national nonprofits working directly with LMI borrowers, were key to achieving long-term solutions to the issue of affordable homeownership.