Through the voices of community residents, this project explores the transition from renting to homeownership across two former Low Income Housing Tax Credit (LIHTC) developments in Detroit. By collecting their experiences with credit, money management, household finances, and more, we will be able to recommend ways lenders can evaluate mortgage applications to make housing finance available to more families in Detroit and around the country.
LIHTC is an important policy tool to aid in the development of new single-family and multi-unit housing in Detroit. This project also considers the extent to which the presence of LIHTC developments improves the overall quality of the housing stock, thus making it easier for borrowers to obtain financing to purchase a home.
Through a $2.5 million donation our community partner on this project, MiSide, developed a special purpose mortgage product that allowed residents in the Newberry Homes development to purchase their units. Using credit-blind underwriting, the 53 mortgages MiSide has originated thus far have performed comparably to conventional mortgages in Detroit. Combined with pre- and post-purchase counseling, MiSide's approach could serve as a model to make homeownership accessible to individuals with difficult credit histories.
This project was one of 3 projects awarded funding by the U.S. Department of Housing and Urban Development to study homeownership gaps in the United States.
Project Goals
- The Center For Equitable Family and Community Well-Being received $330,000 from the Department of Housing and Urban Development to close gaps in mortgage financing. The $330,000 award will focus on the role of specialized mortgage products to achieve homeownership for former low income housing renters.
- The community partner on this project, MiSide (formerly Southwest Solutions) developed a mortgage product in 2018 to help the tenants of the Newberry Homes development in East Chadsey Condon, Detroit, purchase their residences. Importantly, these tenants would not have qualified for conventional mortgage financing, and this HUD research project will allow the partnership to delve deeper into the impact of homeownership by comparing Newberry residents to another cohort of low income housing renters who did not have access to similar mortgage products. The findings will allow the Center to examine how conventional approaches to determining creditworthiness overlook candidates that could afford and sustain homeownership.
