The Current Affordable Housing Crisis

It is often easy to castigate large cities or third world countries as failures in the field of affordable housing, yet the crisis, like an invisible cancer, manifests itself in many forms, plaguing both urban and suburban areas. Reformers have wrestled passionately with the issue for centuries, revealing the severity of the situation in an attempt for change, while politicians have only responded with band aid solutions. Unfortunately, the housing crisis easily fades from our memory, replaced by visions of homeless vets, or starving children. Metropolis magazine explains that “…though billions of dollars are spent each year on housing and development programs worldwide, ? At least 1 billion people

The Federal Housing Administration, otherwise known as the FHA, is a government agency created to help alleviate the case of homelessness in the country. The agency is under the authority of the Department of Housing and Urban Development (HUD), set up in 1934 after the Great Depression. The primary purpose of establishing the FHA is to oversee different insurance programs for single family mortgages, insuring mortgage loans provided by HUD-approved lending institutions. In order to get FHA loans, buyers are required to have a satisfactory credit rating and make a down payment.

The Federal Government needs to make sure to enforce strict guidelines on who can and cannot be accepted for a home loan, and not allow big investors to borrow excessive money at low interest rates to inflate the investor’s financial advantage. If the government starts allowing lower standards on mortgages, we are going to end up in the same catastrophe once again. In an article written by U.S. News and World Reports entitled Should the Federal Government Provide Support to the Mortgage Market?, the Federal government and the President attempted to get involved with the housing market. The passage implicated that Obama wanted to do away with federally funded conglomerates Fannie Mae and Freddie Mac and implement another type of government assisted program ("Should the Federal Government"). The program would prevent the mistakes made by Fannie and Freddie which created the original “housing bubble burst” ("Should the Federal Government"). One of the Senate bills suggests the government create “a new agency, the Federal Mortgage Insurance Corporation to replace Fannie and Freddie” ("Should the Federal

The chapter of this book takes us on a tour of our government and housing policies through the twentieth century and how they affected our lives. The first time the American government started intervening with housing was in 1918 when Congress gave 110 million for two programs for housing war workers. Some people, like Senator William Calder of New York, felt that the government was not made to build houses and saw early housing acts like these as opposite to what the government should be doing with it 's power. Despite these feelings

The National Housing Act created the Federal Housing Authority (FHA), which provided long-term mortgages with low down payments, making homeownership more accessible to a larger portion of the population. The Emergency Banking Act closed and reorganised banks to restore confidence in the banking system and prevent further bank failures. These measures helped stabilise the financial sector and restore public trust in the banking system. The legislation that Congress passed to ease mortgage distress helped the farmers and homeowners of America, by easing the debt that hung over their heads (Doc

The regulation that I have chosen for this paper is amendment in the Regulation X i.e. “Real Estate Settlement Procedures Act” and Regulation Z which is for “Truth in Lending”, for establishing the new disclosure requirements and forms in Regulation Z for the most closed-end consumer credit transactions secured by the real property. This regulation is controlled by the Bureau of Consumer Financial Protection. The role of the Consumer Financial Protection Bureau (CFPB) is to provide consumers information related to the terms of their agreements with financial companies during their application for a mortgage, choosing among credit cards, or using any number of other consumer financial products. The mortgage market is the single largest market for the consumer of financial products and the services in the United States, with approximately $10.4 trillion in loans outstanding. Since last decade, market went through an unprecedented cycle of the expansion and the contraction that was fuelled in the part by securitization of mortgages and the creation of increasingly sophisticated derivative products. This led to the collapse of financial system in 2008 and sparked the most severe recession in United States.

The Federal Housing Administration (FHA) Program standardizes construction of houses and insures loans for building homes.

A brief history into its creation is when this all began when the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was put into place July 21, 2010 by President Barrack Obama, in order to combat the Great Recession. This act requires the Consumer Financial Protection Bureau (CFPB) to issue rules and systems that organize certain disclosures provided to consumers when applying for and closing a mortgage loan under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The Truth in Lending Act (TILA) was brought into effect May 29, 1968 as a United States federal law, which was designed to promote informed use of consumer credit, by requiring disclosures about its terms and cost to standardize

During the early 2000 's, the United States housing market experienced growth at an unprecedented rate, leading to historical highs in home ownership. This surge in home buying was the result of multiple illusory financial circumstances which reduced the apparent risk of both lending and receiving loans. However, in 2007, when the upward trend in home values could no longer continue and began to reverse itself, homeowners found themselves owing more than the value of their properties, a trend which lent itself to increased defaults and foreclosures, further reducing the value of homes in a vicious, self-perpetuating cycle. The 2008 crash of the near-$7-billion housing industry dragged down the entire U.S. economy, and by extension, the global economy, with it, therefore having a large part in triggering the global recession of 2008-2012.

Home Owners’ Loan Corporation (HOLC) and Fair Housing Administration (FHA) are the roots to create housing discrimination toward minority especially for African American; they help the mortgage lender to make excuses to deny the loan to African American because they do not meet the requirements. During 1928, there was a huge crisis in stock market and caused many banks close and people faced foreclosure. In order to respond the crisis, president Roosevelt signed the Homeowners Refinancing Act to slow down the rate of housing foreclosures during 1930s (Hillier). This policy helped a hundred million people who was suffering from the depression and facing to lose their houses (Hillier). In addition, it also help many people refinanced their mortgage with low interest rate (Aalbers). The Federal Home Loan Bank Board (FHLBB) used HOLC to establish a program to “appraise real estate risk levels in 239 cities” (Hillier), which “produced detailed reports for each city along with a series of now infamous security maps that assigned residential areas a grade from one to four” (Hillier). Because of the neighborhood rating system, “the HOLC was also instrumental in implementing and institutionalizing redlining practices” (Aalbers) that do not

Statistically, one out of seven families live in severe physical deficient housing. In fact, the housing and stock market revealed in July of 2009 that the Great Recession further widened the gap and income disparity between the average, hard-working Americans and the top 1% of wealthy Americans. Edward N. Wolff suggests that the average American produced a massive 36.1% drop in overall marketable assets while the top 1% of wealthy Americans only lost 11.1%. This income gap disparity ensures that ever-increasing need for affordable housing as the economic crisis worsens.

California’s housing situation is severe compared to the rest of the United States. California is included in the top three states with the most “housing cost burdened individuals” (Joint Center for Housing Studies of Harvard University, 2015). In a list of 20 cities where rents were highest compared to income, 10 of the 20 cities were in California with Los Angeles, CA topping the list (Dewan, 2014). Opponents might say that households in poverty could never afford housing due to their impoverished state but poverty measures of California show that the abnormally high cost of housing in California makes matters more severe and causes the amount of households that are severely cost afflicted to increase. Furthermore, when poverty measures take into account California’s uniquely expensive and insufficient housing supply, the results show that housing costs contribute significantly to poverty. For example, when housing costs were included in the California Poverty Measure as well as federal Supplemental Poverty Measure, the poverty rates rose substantially (Wimer, Mattingly, & Levin, 2013) (Short, 2015). And when high housing costs were artificially substituted with low housing costs, poverty rates significantly dropped (Bohn, Danielson, & Levin, 2013). And it’s not just the poor who are affected! Even those who are moderate income earners are becoming financially burdened by high housing costs. Those who are moderately well off compared to low income earners are financially burdened by rent costs in expensive cities like San Francisco and Los Angeles, CA (Joint Center for Housing Studies of Harvard University,

The lack of affordable housing in the United States is a problem that doesn 't receive nearly the attention that it necessitates. This absence of affordable housing became especially prevalent following World War II when suburbanization spread across the country like wildfire. Although the sheer number of homes increased, Jim Crow segregation influenced housing policy, meaning that white institutions prevented blacks from obtaining the mortgages needed to afford such homes. Therefore, rather than accept subprime loans, which often result in foreclosure, many black people have been pigeonholed into paying exorbitant rates for dilapidated rental properties located in inner-cities, thereby creating the affordable housing problem. Although the situation seems bleak, with careful planning and execution, we can solve the affordable housing problem. Specifically, my proposal involves the following two components: the government must first revise and draft three forms of legislation that create strict yet concise standards that landlords must follow, and then allocate federal funding to health and wellness programs within poor communities. By examining the contributing societal factors to the lack of affordable housing in Milwaukee, Wisconsin, and then implementing the proposal mentioned above, one could potentially solve the affordable housing problem there and transpose the plan to other impoverished cities across the country.

FHA loans FHA loans are loans are obtained through the Federal Housing Administration, a government arm that helps homebuyers by providing mortgage insurance to cover lenders and enable them to provide loans that require a smaller down payment. FHA loans require only around 3 percent down and this smaller amount makes it easier for first-time homebuyers to save enough for a home. To qualify for an FHA loan, you need a good credit history and sufficient income that your monthly housing costs won't represent more than 29 percent

The government has instituted a variety of programs to help alleviate the crisis. Various tax bills have been passed with an aim of encouraging people to buy houses and also to help the low income renters. In 2007 the government initiated a foreclosure prevention program dubbed FHA secure. The initiative is handled by the Federal Housing Administration and is an insurance program aimed at mortgages taken by those who have good credit