A Boon for Shared Equity Homeownership

Shared-equity homeownership programs just had a big win: Fannie Mae and Freddie Mac (“the Enterprises”) committed in their Underserved Markets Plans to increase access to mortgages for shared-equity homebuyers over the next three years.

These Underserved Markets Plans (UMPs) were approved at the end of 2017, and are a part of the implementation of the Federal Housing Finance Agency’s (FHFA) Duty to Serve program. The intent behind the new program is to bring liquidity to underserved markets and increase access to financing. This is precisely the issue that many shared-equity homeownership programs have faced, especially in the midst and aftermath of the foreclosure crisis: their mortgage-ready buyers have been unable to obtain financing for home purchase.

The barriers to mortgage financing for homebuyers in community land trusts and below-market-rate housing programs has—in large part—been explained by the lack of lender confidence that they could sell these loans on the secondary market, coupled with the greater administrative burden of underwriting these relatively small loans. In the multifamily space, resident-owned communities (ROCs)—in which residents cooperatively own the land on which their manufactured, or “mobile,” homes sit—have faced their own challenges to accessing financing.

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