Thursday, September 6, 2007

Is Homeownership a Right?

Carol Lloyd's column in the San Francisco Chronicle this week reminded me of something my mother said to me when I graduated from college in the early 1990s. She said that “my generation” (I know, not very original) is the first to expect to live as well as our parents from the start. With regard to home ownership though, I’m not sure that it’s a generational thing, so much as it’s been viewed as a vehicle for general economic growth.

One of the things that has gotten us into the current lending crisis has been a determination on behalf of both the government and lenders to structure an economy in which nearly everyone can own a home. To that end I've put recently-settled Russian immigrants who used food stamps as qualifying income into homes; we also have programs that allow for the instability of migrant farm-workers' income so they can purchase homes. And of course, I don't have to tell anyone about the allowances made the past several years for people who have actively demonstrated an inability to make their existing payments, so they could buy homes too.

Once I went head to head with an underwriter who didn’t want to approve a loan application because the borrower’s only income was welfare -- she felt being on welfare actively demonstrated financial irresponsibility. The guidelines allowed for welfare to be used as qualifying income, she just didn’t like it. In the end we won, because she couldn’t discriminate against someone for being on welfare.

These allowances have been made both due to corporate hopes of making more money and because homeownership is viewed as a stabilizing factor. It makes neighborhoods nicer when people care about the property they live in. When I bought my first house my boss joked that I should buy as much house as I could possibly afford – so I would really need to come back to work every day.

Of course when people wake up one day and realize they can no longer afford their house payment -- well, that's not exactly "stabilizing." Which is why now we’re cycling back slightly to the days when some people just couldn’t own a home. But corporations and governments tend to have bad memories, so it will probably come back around soon enough.

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