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ProfitWise News and Views, No. 1, 2016
Residential Mortgage Lending for Underserved Communities: Recent Innovations

As the United States continues to recover from its worst financial crisis since the 1930s, housing finance leaders from both the public and private sectors have diligently worked to develop programs, products, and services to safely expand access to affordable homeownership. Despite persistently low interest rates, relatively modest growth in home prices, and a strengthening labor market, purchase mortgage volume remains low compared to the pre-crisis and pre-bubble years, and the homeownership rate continues to fall. Factors contributing to the homeownership decline include the still weakened credit profiles of the 7.9 million households who experienced a short sale or foreclosure during the downturn, elevated lending standards due in large part to the mortgage industry’s response to post-crisis regulatory measures, and reduced demand for homeownership among younger householders. Meanwhile, low- and moderate- income (LMI) individuals struggle with access to affordable rentals due to severe shortages of housing supply, rental subsidies, and bank financing for smaller rental buildings in lower-income areas.



Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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