20/20 Vision

In 1989, Bank of Boston developed a mortgage program called "First Step" and executives there no doubt thought the program would be a suitable response to the Federal Reserve study on racial disparities in Boston mortgage lending. But the program fizzled with not many homebuyers and many less good reviews.

One of the reasons that the program didn't last is that it was developed without the benefit of the wisdom of residents of the neighborhoods it was supposed to serve. Purchase price limits were too low, downpayments and interest rates were too high. Neighborhood residents were telling bankers this since the Fed study was leaked to the Globe in January of 1989. Diana Strother, one of MAHA's women of color who were leading the effort for a truly affordable mortgage program focused on underserved neighborhoods, told bankers that monthly payments needed to be affordable if the program was going to be successful.

This Saturday, MAHA will celebrate the 20th anniversary of a program that was developed by bankers, government officials AND homebuyers from neighborhoods like Dorchester, Roxbury, and Mattapan. SoftSecond mortgages have been part of the Boston mortgage lending landscape for two decades now and the program has changed the lives of more than 15,000 homeowners but perhaps just as importantly, it has changed the relationship between banks and communities of color.

This Saturday, MAHA will dedicate a 20/20 Vision Wall to 20 extraordinary female leaders who have dedicated countless volunteer hours to ensuring the long-term success of the SoftSecond mortgage program. From Adrianne Anderson, Diana Strother, Anna Young, and Juana Gayle-Flores who fought hard for a place at the negotiating table back in the key months of 1989-90 when it was unclear whether banks would agree to anything to the work of a new generation of leaders like Acia Adams-Heath, Esther Maycock-Thorne, Symone Crawford, and LaTanya Ramsey who have organized grassroots support to make sure the program remains strong in an increasingly hostile lending environment. Congratulations to all!

Milton's Town Farm

In 1701, Royal Governor William Stoughton deeded a 40 acre parcel of land in Milton "...the whole improvement thereof to be for the benefit of the poor of the town." Three hundred and ten years later, Milton's selectman have released a RFP that seeks to find an appropriate use for the parcel.

Developers, planners, preservationists, community farming and open space advocates, and yes, affordable housing supporters should all rejoice at this opportunity. How often does such a parcel of land come into play? There is a tremendous opportunity to be creative and build a real community at the site which could respect the historic landscapes, restore farmland, and build housing affordable for lower income residents in perpetuity.

Throughout its history, the land has been used to benefit the poor. It was the site of the first poor house in 1805 and was used as transient housing for the poor in the late 1800's. More recently, it was a distribution center for federal aid during the Great Depression. Currently, there are a handful of buildings - most in severely deteriorating condition. Market rent from one of the properties is used to contribute to a trust that provides modest benefit to lower income Milton residents.

Just a year ago, the town of Milton had two very active debates about two critical parcels of land in town and both revolved significantly around the possibility of affordable housing at each location. This past week has brought news that the first parcel, the Temple Shalom site on Blue Hill Avenue, has been sold to the Concord Baptist Church presumably to continue as a religious institution. In a little over a month, the selectman will begin reviewing proposals about what to do at Town Farm. Land is a valuable - some would say precious - commodity in a town that is still has less than 5% of its housing stock considered affordable. With the temple site off the market, Town Farm becomes the best remaining hope as a site for affordable housing in the town in some time. Come on Milton, let's create a great place on Town Farm for generations to come.

Fannie, Freddie and the future

Recently, our friends at Annaly Capital Management blogged about the future of our housing finance system - a subject that many of us at MAHA are more than a little interested in.

You can read the full Annaly post here (http://annaly.com/blog/2011/01/07/AKindWordForHomeowners.aspx). It is a thoughtful and balanced analysis of our current system and offers the view that a housing finance system without a government guarantee would be "smaller, more expensive, and less liquid. "

They also offer the following - "The current housing finance system, certainly the one that prevailed until underwriting standards started to slip around 2004, is the most efficient credit delivery system in the world."

We agree! That's why the upcoming debate about what to do about Fannie and Freddie is so interesting - and important. On one hand, most everyone agrees that the current GSE's are as toxic politically as those subprime, negative amortization, pick-a-payment mortgages of just a few years ago. No elected official is likely to take to the floor of the Congress and defend Fannie and Freddie - not this year or in the near future.

However, millions of Americans have benefited from our federal government's role in the mortgage market. Lower rates and provisions for making sure Fannie and Freddie responsibly serve all communities are some of the benefits that everyone enjoys with the current system. Admittedly, the current system is flawed and regulations to protect against investing in high-risk mortgages either weren't there or weren't adequately enforced - or both.

Tea Party-types will undoubtedly call for letting an unfettered Wall Street firm(s) be our secondary market but we expect that cooler heads will prevail. From investors to lenders to real estate brokers to homebuyers and owners, we all have a stake in that government guarantee.

As someone who works for a non-profit that seeks to educate buyers and owners and connect them to affordable and sustainable mortgages, the real question from our perspective is whether the new housing finance system will provide for the under-appreciated success story of the last twenty years.

Since 1990, tens of thousands of homebuyers across the country have achieved the American Dream of owning their own home with a combination of aggressive pre- and post purchase community-based education and counseling efforts and an affordable mortgage. These mortgages are usually originated at slightly-below market interest rates, often because of a Community Reinvestment Act agreement between banks and community organizations.

In Massachusetts alone, we have seen over 15,000 low and moderate income purchase their home this way. Delinquency rates are below statewide averages for all mortgages and are equal to delinquency rates for owners with prime, fixed rate loans. Nearly half of the loans are to borrowers of color whose homeownership rates lag behind those of whites. 40% of the loans in recent years have been in communities with the highest rates of foreclosure - ensuring that these neighborhoods still have a good shot at recovery even when some lenders are reluctant to lend.

Will Congress acknowledge the vital role that these affordable products play in under-served communities? A recent proposal by the Center for American Progress (http://www.americanprogress.org/issues/2011/01/responsible_market.html) calls for creating a Market Access Fund to "develop and establish a market for these innovative products." Too much progress has been made in the last twenty years to take a step back. We know how to do homeownership the right way for lower income buyers. The housing finance system just needs to provide the right tools to make it happen in the future.

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Welcome

Welcome to our new blog here at MAHA! We hope you enjoy our commentary from various MAHA staff and board members. Feel free to post comments and keep the dialogue going strong.

MAHA is a non-profit organizaton, based in Dorchester MA, that works to break down the barriers for low and moderate income homebuyers and encourages public and private sector investment in affordable housing. Our campaigns since 1985 have resulted in more than $5.7 billion in investment in Massachusetts and the creation of the state's most affordable - and sustainable - mortgage program, the SoftSecond loan program for first-time homebuyers. Over 15,000 homebuyers have purchased their first home with the SoftSecond program and the program features delinquency and foreclosure rates well below the average for all MA mortgages.

MAHA offers comprehensive homebuyer and homeowner education classes, at our beautiful new headquarters in Dorchester and throughout the greater Boston region. We have graduated over 17,000 people from these award-winning classes since 1991.