Residential Magazine

Doug Ryan, Prosperity Now

The mortgage industry can confront the nation’s challenges

By Jim Davis

Two major crises shook the U.S. early this summer: the ongoing coronavirus pandemic and the widespread protests over racial injustice. Each will have ramifications for years.

The economic downturn caused by the outbreak of COVID-19 will likely force millions of Americans to abandon or delay homeownership. It’s similar to what happened after the Great Recession, said Doug Ryan, senior fellow at Prosperity Now, a nonprofit that aims to help people of color or limited income attain financial security. 

Although recent unrest has been about police brutality, housing always has played a central role in civil rights. The Fair Housing Act was signed into law in 1968, one week after Martin Luther King Jr.’s assassination. 

Ryan argues that the Trump administration is undermining anti-discrimination rules, making it harder for people of color to buy homes and amass wealth. These actions include proposals to weaken disparate impact (an enforcement tool that prevents even unintentional discrimination in housing policies) and to effectively end affirmatively furthering fair housing, a legal doctrine that requires localities to track and address racial bias in housing.

He also points to the move to undercut the Community Reinvestment Act (CRA), which calls for banks to invest in poor communities and lend to low-income individuals. Ryan spoke with Scotsman Guide about these and other issues.

What does the economic fallout of the pandemic mean for people on the lower rungs of the income ladder?

I do think the housing crisis is just starting to bubble to the surface as moratoria on evictions and mortgages and foreclosures fade. We’re going to start seeing that impact pretty significantly. For low- and moderate-income families, the virus does a couple of things. It’s going to have a disproportionate impact on their health because of access and cost of health care. These individuals and families are in the jobs that have been most deeply impacted: retail, hospitality, health care and tourism. 

What do you think this will mean long term for housing?

The credit tightening after 2008 basically lost us about 8 million new homeowners. I think you’re going to see that again. If you couple the overlays and the credit tightening in the mortgage market with people going through their savings or being less prepared for downpayments, all of those kinds of things are going to make homebuying more difficult. 

What about the suggestion that housing hasn’t been deeply affected thus far because people who buy homes are not the ones most affected economically by the coronavirus?

I think that’s right. That’s a further example of the bifurcation of the housing market, the haves and the have-nots. We’ve seemed to come to a point that we just assume that certain people should not become homeowners, however you want to define certain people — by income, by FICO, by race, by part of the country where they live. I think we’ve made that decision a couple of years ago and we seem to be kind of calcifying it. That’s worrisome.

What should be done?

It’s multiple levels of public policy. We certainly have to do a better job protecting the people who are homeowners now and who are experiencing income loss. It’s not just forbearance on (Fannie Mae and Freddie Mac) or (Federal Housing Administration) — it’s the rest of the market, too. We have to be absolutely assured that we’re helping people stay in their homes. 

The administration is coming out with a number of rules that I would view as problematic. The (Office of the Comptroller of the Currency’s proposed) CRA rule is just a disaster, underscored by the fact that the FDIC (Federal Deposit Insurance Corp.) chose not to get on board.

Are there other solutions you support?

Zoning is really a problem in this country. Without building more housing, more densely in communities that can handle it, we are not going to get out of this housing crisis. We’re also not going to create new homeowners. That’s a local and state thing, but the federal government can also help by tying federal dollars to best practices in zoning or density. 

Is the mortgage industry doing enough?

If the fact is that certain communities are unable to attain homeownership as others can, clearly they haven’t done enough. I don’t think by any stretch the mortgage industry is intentionally discriminatory. But the mortgage industry should advocate for some clarity on rules. On the fair-housing stuff that’s coming out of the Trump administration, they should push back. My understanding is that some players have opposed some of the changes, which is good. The industry is very influential. ●


You might also like...