Have we gone too far in promoting homeownership?

Amy D. Klaben, President/CEO
Columbus Housing Partnership

Ohio is facing a foreclosure epidemic that threatens the vitality of our local communities. This holds especially true for Columbus, where more than 6,000 foreclosures occurred last year alone.

Have we gone too far in promoting homeownership at any price?

In their defense, many lenders began creating non-traditional lending options in good faith to increase investment opportunities for those citizens who traditionally have been considered "high risk" for homeownership. While these options have worked for some, they are not the answer for all.

Providing loans with zero down and subprime interest rates can only work if the homebuyer is not housing cost-burdened. According to FHA guidelines, no more than 31% of a person's gross income should be allotted for housing costs.

Clearly, as evidenced in The Columbus Dispatch's "Brokered Dreams" series, these "incentives" are allowing uninformed consumers to purchase more house than they can afford, offering no opportunity to build wealth or maintain the home over the long-term.

To better prepare their clients for successful homeownership, builders and real estate professionals have been increasing their referrals to Columbus Housing Partnership, a private non-profit organization which provides safe, decent and affordable housing and related services to working households in central Ohio.

Columbus Housing Partnership prepares potential homebuyers with the tools necessary to not only achieve but sustain their dream of homeownership.

As a part of our outreach to the residents of Franklin County, we provide pre-purchase education, which is a critical first-step in foreclosure prevention. Through pre-purchase education individuals come to understand the process, are better informed consumers, and can screen themselves out if they are not yet ready for homeownership.

As a second-step to preventing foreclosure we provide individual credit and budget counseling, helping clients build strong credit so as to move in the direction of a more affordable loan product. We also provide down payment assistance for eligible homebuyers to ensure they will have equity in the home and help begin building long-term investment.

As a final step, we provide comprehensive post-purchase counseling, including foreclosure and default prevention counseling, to help the homeowner with an assessment of his or her financial situation, appropriate referrals, budgeting advice and assistance in facilitating interaction with the lender. Mortgage assistance funds are also available to eligible homeowners at risk of losing their homes to foreclosure.

The need for foreclosure prevention services across the state continues to grow, and as it grows, so does the significance of our partnership with The Columbus Board of REALTORS® and its members. As of November 1, 2005, more people had utilized our homebuyer programs than in all of 2004. We estimate that we will see up to 50% more individuals and families in 2006. Please continue to refer clients to our programs so that they, too, can become long-term successful homeowners.

While valuable to ensuring community stability, programs like those offered by Columbus Housing Partnership are only part of the answer. Over the long-term, the issues causing central Ohio's foreclosure epidemic must be addressed systemically by lenders, legislators, builders, real estate professionals and community stakeholders on a local, state and national level.