) -- An atypical argument was presented in the halls of Congress on Wednesday regarding mortgage-finance reform: Help out renters.
Michael Bodaken, president of the nonprofit rental group National Housing Trust, offered two important data points to lawmakers during a hearing on housing finance. They showed rentals are more profitable for stakeholders and more costly for dwellers than home mortgages.
Mortgage borrowers who own multifamily units have defaulted at much lower rates than single-family borrowers throughout the mortgage crisis. While 11.5% of
loans are delinquent or foreclosed, multifamily unit delinquencies represent less than 1%.
Renters in those multifamily buildings are also paying a lot more than homeowners, according to Harvard University's Joint Center on Housing Studies, despite lacking equity in the residence. About 45% of renters spend at least half of their income on housing, versus 30% of homeowners. No U.S. household earning the minimum wage is able to afford an apartment considered "fair market value" by the Department of Housing and Urban Development (HUD).
"As foreclosures on homes and apartment buildings continue to unfold, a growing number of renters are competing for a limited supply of affordable housing," said Bodaken. "Many of these families will be seeking apartments at the lower end of the of the cost spectrum, where there is already a shortage of affordable rental housing for the poorest households."
The hearing was held to get expert opinions on restructuring the system around Fannie, Freddie and other government-sponsored enterprises. Homeownership has long been the cornerstone of the "American dream," though sentiment seems to have shifted as millions of borrowers have fallen behind on payments, been foreclosed upon or ended up owing more than homes are worth.
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Bodaken said the federal government needs to maintain an active role in the mortgage market via explicit guarantees on mortgage debt. But he urged lawmakers to prioritize rentals as part of assistance for low-income families.
-- Written by Lauren Tara LaCapra in New York
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