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Revising federal assistance rules could expand homeownership

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A new move by the mortgage industry to lower income levels for government-backed down payment programs could benefit cities like Detroit.

The Mortgage Bankers Association, a Washington, D.C.-based real estate finance industry trade group, said the federal government is “wisely expanding eligibility” for Fannie Mae Homelady and Freddie Mac Home Possible low down payment services. While these programs currently require eligible borrowers to have an income greater than 80% of the regional median income, the MBA states that the federal government At the very least,” it said, the program should be returned to its previous standards.

  • Allow up to 100% of AMI borrowers to qualify for these programs.
  • Removes income limits on real estate in low-income census blocks.

Housing affordability is a serious issue in Detroit. This is because whether a unit is considered affordable is measured based on the area’s median income, a federally designated metric that considers household income in Detroit and its suburbs. In some cases, even housing that is considered affordable based on strict bureaucracy is not affordable for the poorest residents of a city.

The Federal Housing Finance Agency, which administers the low down payment program, has already eliminated upfront fees, according to the letter, which the MBA applauds.

“Even with this positive step, increasing AMI limits to broaden access to these programs is still beneficial because we have not received enough services, such as a 3% down payment, to date. Home Ready and Home Possible loans are key features that enable borrowers to achieve home ownership,” MBA President and CEO Robert Broeksmit said earlier this month, FHFA Director Sandra Thompson. I wrote in a letter I sent to Mr. “Recent changes that increase affordability, coupled with greater access, could have a considerable impact.”

The FHFA did not respond to a message from Crain seeking comment on the changes requested by the trade association. But officials at a local policy think tank say raising the program’s income standards could go a long way toward addressing a myriad of problems within Detroit’s residential real estate market.

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