MReport April 2020

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36 | M R EP O RT FEATURE wise deemed creditworthy yet are having trouble saving money to clear the down payment hurdle. Currently there are more than 2,500 privately sponsored and government-funded down pay- ment assistance (DPA) programs nationwide, according to the Harvard Joint Center for Housing Studies, which found that 43% of all FHA first-time homebuyers received some type of DPA. Multiple studies have also found that DPA programs have been especially beneficial for racial and ethnic minority borrowers. In fact, Harvard found that DPA programs were particularly helpful for minorities. The center found that African American borrow- ers were more likely to get DPA help through either a government program, a community grant, or a second mortgage. In fact, my company, CBC Mortgage Agency, released a nationwide DPA study last year which found that nine out of 10 homebuyers who used DPA would not have been able to buy a home without it. While DPA programs are incredibly powerful tools for closing the homeownership gap, lately they've come under attack. For some, they symbolize the carefree lending that took place prior to the Great Recession, when buyers were allowed to receive down payment help from sellers in exchange for agreeing to a higher sales price. Some equate those practices with any kind of assistance provided to borrowers today—even when the evidence shows today's carefully underwrit- ten programs are not harmful but actually helpful. Another pervasive myth is the notion that borrowers that receive DPA are higher risks for default. However, a recently released Harvard study found that DPA programs do not have a substantial impact on defaults. Yet another unfortunate miscon- ception about DPA programs is that many borrowers think they are hard to qualify for. The reality is that there are many different programs for many different bor- rowers, even programs for those with imperfect credit and low income. Some programs involve loans with deferred payments, while others come in the form of a second loan that the borrower pays down with the first. Indeed, there are some aspects of the homeownership gap and wealth gap between African American and white households that are difficult to explain. But we do know these gaps exist, and we know that DPA programs have been proven to bridge this gap for many. With them, millions of Americans have been able to move past the down payment obstacle. Providing down payment assistance to people who need it most does much more than help deserving borrowers get into the housing market. It helps them generate wealth as well as financial security and well-being. Decreasing the wealth gap carries the added benefit of reducing the racial tensions in the nation. That's why it's so important that our industry continues advocating for DPA programs and increas- ing education about them, so that more Americans can take advan- tage of them and start building wealth through homeownership. Maybe one day there will no longer be a homeownership gap. But until that day comes, support- ing DPA programs is the right thing to do. . RICHARD FERGUSON is President of CBC Mortgage Agency, a nationally chartered housing finance agency and a leading source of down payment assistance that helps low-income consumers, often in minority neighborhoods, achieve the dream of homeownership. He can be reached at The truth is that some of us are better positioned for homeownership than others.

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