Housing Complex

D.C. Still Can’t Help You Get a Mortgage

The growth curve of DCHFA mortgage lending.

Among the D.C. Housing Finance Agency's many functions is providing long-term mortgages at affordable rates, mostly to first-time homebuyers, funded through city bonds. That came to an abrupt halt last November, when DCHFA's master servicer Bank of America got out of the servicing business, and the agency hasn't yet found anybody to replace it.

Still, DCHFA wasn't issuing many loans even before Bank of America bailed. The number of declined from 208 in 2007 to 31 in 2010 and 40 in 2011. That drop loosely tracks the general slowdown in home purchasing over that period, but the absolute numbers represent a tiny, tiny fraction of the overall market. If DCHFA's mortgage program was useful at all, shouldn't it have been more productive?

I wondered about this in the context of other housing finance agencies in the area, specifically Arlington, which is on the hunt for upwardly mobile first-time homebuyers. The Virginia Housing Development Authority hawks their programs all over the state, issuing 2,600 single family loans in 2011 (that's still better performance than D.C., given the population difference). Right now, interest rates are so low that homebuyers might not even need help from DCHFA, but that won't be the case forever.

Harry Sewell, DCHFA's CEO and the guy in charge of crafting a new housing policy for the District, knows that his mortgage program has a P.R. issue. In the past, they've used everything from ads on the side of buses to presentations at employee orientations for major businesses, and still not gotten more people to apply. In 2009, they started seeing folks with higher incomes—in the $70,000 range—and more white people. The pendulum shifted back in 2010, Sewell says, to more African Americans and people with lower incomes. That might be a symptom of a perception problem.

"Sometimes people automatically excluded themselves, thinking that's only for low-income people," Sewell says. "If they're in their first job, likely they would be income qualified."

Getting that sorted out, and letting people know about it, would be a pretty important piece of encouraging homeownership—which everybody says they want.

Bonus graph! This is the Office of Tax and Revenue's data for all D.C. home loans, including refinances and lines of credit, between 2007 and 2011.

Comments

  1. #1

    This is a craptastic graph. Even my 7th graders know to add axis and chart titles.

  2. #2

    Jesus. This data tells us nothing wrt the article.

  3. #3

    The problem with these programs and it exists in just about every city in the US, is that they're design not to work. If they worked, it would be a huge, huge drain on the city's finances.

    The income levels and aid are set so that there are virtually no houses at the intersection of "Here's a house that's affordable for my income, and I make so little that I qualify for the program"

  4. #4

    I tried going through the employee housing assistance program (EHAP), which is supposed to encourage city employees to buy in DC. I did not end up getting the assistance.

    The first problem was that EHAP was basically not available for fixer-uppers, many of which still cost in the $300s in DC. The second problem was that there was a home purchase price cap of $412k (which the program only disclosed to me after I made an offer on a house slightly over that mark). The third problem was this program was in my view very mismanaged, with poor communication, copious paperwork, and onerous bureaucracy at each step.

    I ultimately closed, no thanks to their last minute disclosure that I didn't qualify. However, if the programs tailored toward upwardly mobile, working age people are to work, they need to reduce the friction and difficulty of the transaction.

    So I concur with "Name" that the program fails in finding an intersection of home affordability at a given income level, but it also fails on the economic side of what the city willing to spend to secure the residency of middle class workers, and the tax revenue that will come from their presence.

  5. #5

    They have not updated the calculations in years.

  6. #6

    Sewell is dead wrong and obviously doesn't understand real estate.

  7. #7

    Let me tell you why this article is a little more troubling than it lets on.

    Harry Sewell, DCHFA's CEO is the head person in charge of fixing this problem...and he thinks its a PR issue. Yes, money has a PR issue. Let me tell you something you give away free ice cream and the line is down the block.

    It is a bad approach issue.

    Lets take this statement

    "Sometimes people automatically excluded themselves, thinking that's only for low-income people," Sewell says. "If they're in their first job, likely they would be income qualified."

    Lets examine this "If you are in your first job, not only are you not economical stable to buy a house, no bank will give you the money. In addition, most in DC (because he wants the upwardly mobile--wink-wink) are new to DC and would not in any demographic profile want to buy a house as they just arrive to town. There is no sane consumer survey that would tell him this. Data driven agency I think not.

    Equally here is a bigger issue there would be no available housing stock that met that need. Where is the last time you saw a condo in that price range...in a neighborhood that has the neccessary amenities that 20somethings with no car seek. Any MBA/MS/MPS in their first year of school would see this flaw in reasoning. But the Chief guy in charge does not.

    And that is the biggest criticism of Mayor. Few really think he is crooked. But where does he get his people is a constance refrain..to counteract the Fenty complaint he gets these long in the tooth guys but short on experience to head these agencies and it is crazy.

  8. #8

    I got a loan through DCHFA 11 years ago on the recommendation of a homebuying class administrator. The process was slow, the woman who was doing the paperwork didn't seem to be in any hurry to return calls. But the percentage rate was sweet and seemed worth the trouble.

    I was in my first professional job, and determined that DC had enough opportunities to keep me here for at least 5 or more years. I disagree with Brahmin on this point. Savers like me and people with access to family funds are economically stable even if they are only a year or two in their first professional job.

    But a problem with these programs are there are some strings attached and conditions that make them unattractive to the upwardly mobile.

  9. #9

    DC's housing market was a lot different 11 years ago, Marie.

  10. #10

    Marie,

    11 years ago...the median home price in the District was around 125K. Today the media home price is around 460,000K.

    The average salaries have not kept pace....so even the most driven 20 something year old would not find this easy to overcome.

    In addition, credit restrictions have increase in wake of the 2008 crash, employment opportunities have decreased...this is the toughest market for young people.

    In addition the outlyers such as yourself...is not the median. One or two (I bought young and so did my friends) are not the mode, median or mean. Nor would I think a few stories disqualifies the data.

  11. #11

    I was in my early 30s, since then I have seen much younger people buy in to the hood at way higher prices. Someone is still granting loans to these whippersnappers. They still keep buying houses and moving in. Maybe they are youngish looking 30somethings.

    DC is filled with outliers. And despite the high unemployment and housing crashes out in the rest of America, DC (for now) is different. Besides we need someone to gentrify Anacostia.

  12. #12

    Marie... the first job purchasers Mr. Sewel spoke of would be in their early 20s. You are talking about people in their 30s --that is a different kettle of fish regarding finacial stability.

    The housing income requirements for his agency is no more than 28K roughly.

    That is an extremely small pool hence why he mention those with their first job. But that is grasping at straws expecting instead of revamping the guidelines.

    No newly hired teacher could qualify for this program. Or new police recruit. A 20 something on the hill could meet the income requirement but would struggle with the credit requirements. And may not be here to stay. And once qualified would not find a house in their hip locale.

    By the way, nothing is wrong with Anacostia but 20 sometihng would not move to a neighborhood with ameneities and Metro.

    Mr. Sewell is suppose to know that but blaming it on the lack of PR for free money is crazy.

  13. #13

    They must have changed the program or it is a completely different program than the one I signed up for. Because back then, I don't remember any age requirement and I had an income that was a smidge less than a GS-9 step one back then ($36K or $38K, 2001 dollars). Current GS-9/1 make about the same as an entry level teacher or police officer. The income requirement was based on HUD's formula, based on a percentage of the AMI.

    I qualified for the loan with the low rate because I was low-moderate income. The $28K figure sounds like the really low income that qualifies for the down payment assistance program, which is different than the BOA loan program. It sounds like we might be talking past each other about totally different programs.

  14. #14

    No one said there is an age requirement, Marie please reference the article.

    "Sometimes people automatically excluded themselves, thinking that's only for low-income people," Sewell says. "If they're in their first job, likely they would be income qualified."

  15. #15

    Yeah, we are talking past each other. You can have the last word but I must share that this weekend I met a single (late) 20-something teacher who bought a house in my neighborhood this year. DC has a lot of outliers.

  16. #16

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