Benchmarking a New Affordable Home Mortgage

32 Pages Posted: 27 Aug 2021

See all articles by Jaclene Begley

Jaclene Begley

GW CWAS; Federal National Mortgage Association (Fannie Mae)

Hamilton B. Fout

Kansas State University; Federal National Mortgage Association (Fannie Mae)

Michael LaCour-Little

California State University at Fullerton; Federal National Mortgage Association (Fannie Mae)

Nuno Mota

Federal National Mortgage Association (Fannie Mae)

Date Written: August 24, 2021

Abstract

Expanding sustainable homeownership opportunities for lower-income households has long been a housing policy goal. In this paper, we benchmark performance of HomeReady®, a new product targeted at such households, against other low-down payment loan types. Results show that HomeReady® loans have lower relative odds of 90-day delinquency or prepayment compared to FHA or VA loans, and similar performance to HFA loans. Robustness tests focusing on lower income borrowers, lender specialization, and loans to borrowers on the margin between FHA and HomeReady® in terms of pricing yield similar results. Together, these findings suggest that well-designed conventional products to address low- and moderate-income household needs can promote sustainable homeownership.

Keywords: sustainable homeownership, mortgages, low-to-moderate income homebuyers

JEL Classification: R21, R31, G21

Suggested Citation

Begley, Jaclene and Fout, Hamilton B. and Fout, Hamilton B. and LaCour-Little, Michael and LaCour-Little, Michael and Mota, Nuno, Benchmarking a New Affordable Home Mortgage (August 24, 2021). Available at SSRN: https://ssrn.com/abstract=3910816 or http://dx.doi.org/10.2139/ssrn.3910816

Jaclene Begley (Contact Author)

GW CWAS ( email )

GW CWAS
Washington, DC 20016-2892
United States

Federal National Mortgage Association (Fannie Mae) ( email )

GW CWAS
Washington, DC 20016-2892
United States

Hamilton B. Fout

Federal National Mortgage Association (Fannie Mae) ( email )

3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States

Kansas State University ( email )

Manhattan, KS 66502-4001
United States

Michael LaCour-Little

Federal National Mortgage Association (Fannie Mae) ( email )

1100 15th St NW
Washington, DC 20005
United States
202-752-3318 (Phone)

California State University at Fullerton ( email )

5133 Mihaylo Hall
Fullerton, CA 92834-6848
United States
314-374-9626 (Phone)

Nuno Mota

Federal National Mortgage Association (Fannie Mae) ( email )

3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
United States

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