Mortgage crisis imperils new affordable housing developments

The mortgage crisis is really beginning to bite into affordable housing production programs.

I just learned of a community development corporation which has completed an affordable housing development that it has been working on for many years only to find out that mortgage financing cannot be obtained to sell the units in the development. With the project completed, the interim financing lender is expecting for the units to be marketed and sold quickly. Yet all of the clients who easily qualified for loans when the project began construction (before the mortgage crisis) are no longer eligible for mortgage financing under new more restrictive underwriting terms despite the fact that the corporation has access to substantial down payment assistance grants for each buyer.

So the nonprofit is in the position now of having the interim lender foreclose and losing the property as an affordable housing development.

Chalk this up as one more high priority item for the new administration in Washington to take up. We need a new definition for a creditworthy lower income home buyer and we need a federal mortgage guarantee program for loans issued to them.