How Irresponsible is the City’s Loan Program?
The Post's Debbie Cenziper just dropped the latest installment of her investigative series on the nation's subsidized housing foibles, with a particular focus on the District. This one zooms in on D.C.'s Home Purchase Assistance Program, which provides five-year loans with really low interest rates to bring homes within mostly first-time homebuyers' reach. Just like last time, it's worthwhile to ask: Is this a real scandal, or just mildly embarrassing?
Probably more on the latter side. Yes, Cenziper found that 18 percent of 1,300 people who got loans between 2005 and 2009—about 80 percent of the total number—are behind on their mortgages. That's more than double the national average, but it's to be expected: These were loans targeting low-income people already on the margin, for whom conditions often changed dramatically when the economy turned south midway through Cenziper's window.
Did some people buy houses that they really couldn't afford? Sure. Cenziper picks out one woman who spent $399,000 with a city loan in 2008, way more than loan officials estimated she could reasonably pay, and that was probably a dumb decision by both parties (meanwhile, of course, private mortgage lenders were up to much worse). But the average sale price was still $230,000—only $12,000 above city guidelines—which is pretty good considering it's really hard to find homes that cheap in D.C. these days.
There's clearly been a lot of homeownership cheerleading in the District: The view that paying rent is just wasted money if you could be gaining equity in your own house. That mentality resulted in the disaster of Randolph Towers, where tenants tried to buy their building and found themselves in way over their heads.
Still, I don't think Cenziper found evidence of gross mismanagement here. Just the same tragically misguided optimism that screwed over everyone else.
Photo by Lydia DePillis