The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the category “mortgage relief”

Community Reinvestment Act

The Community Reinvestment Act was a piece of legislation passed in the seventies which has had a very positive effect on urban development. This law required all regulated financial institutions to lend in non traditional areas and develop underwriting standards to allow this to happen. It has resulted in millions of minorities and minority communities receiving home loans. The program has also made money for banks and contrary to conservative ideology was not the cause of the housing collapse.

The Trump administration is trying to weaken the law. With everything else going on, this has not received much attention. We should be paying attention to this whole issue. Written by Paul Dribin


Character Based Loans

I read an article today in Shelterforce Weekly which talked about “Character Based Loans”. This type of loan would be made by a financial institution to individuals who did not quite meet up to credit standards but had good character, whatever that means. As the article points out, loans of this nature used to be made all the time in a racially discriminatory manner, never to people of color. It seems to me this program is simply grasping at straws to get people into homeownership who do not deserve it.

With my work at HUD, I can say with certainty that bad credit scores were a strong predictor of failure. Loan officers should and do consider mitigating circumstances but cannot overlook really bad credit. Written by Paul Dribin

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