Has the Mortgage Pendulum Swung Too Far? Reviving Access to Mortgage Credit

INTRODUCTIONStarting in 2007, the United States experienced a sharp decline in home mortgage originations, leading to a serious overcorrection of credit. The situation is slowly improving, with mortgage originations on the upswing since first quarter 2014 in total dollar volume. (US Mortgage Originations). Nevertheless, lenders are still too risk averse and millions of lower-income and minority households who would normally qualify are unable to get mortgages.Why should we care that the mortgage pendulum swung too far? Obviously, the homeownership proposition has become more freighted since the financial crisis of 2008. The collapse in home values and the ensuing wave of foreclosures were a shocking reminder of the financial risks that come with homeownership and the mortgage debt that most people incur to acquire a home. Yet despite those risks, the evidence shows that purchasing a home remains a powerful path-many would say the most powerful path-to building wealth for families of modest means. (Herbert, McCue & Sanchez-Moyano 2016, 6-7).This symposium issue asserts that society needs to redouble its commitment to access to mortgage credit while doing it smarter. The challenge going forward is to expand mortgage financing to underserved, creditworthy borrowers while boosting the success rate of mortgages for borrowers, lenders, and communities.In this issue, a talented array of housing finance experts diagnose the obstacles to affordable lending today and propose innovative solutions for making mortgage credit more sustainable. Although progress has been made to date (particularly in the area of consumer protection), much more needs to be done. Fortunately, there is a wealth of new data from pilot projects around the country on better ways to underwrite and deliver mortgages and to prepare new homeowners for the financial demands of owning homes. Our symposium authors report on a number of those findings and propose new policies to expand the opportunities for successful homeownership. Their recommendations span the entire lending process, from loan products, counseling, and underwriting to servicing, the business model of lending, and broader macroeconomic and environmental factors. In this foreword, I preview and comment on the contributions to this issue by the symposium authors.This symposium issue grows out of a conference titled Has the Mortgage Pendulum Swung Too Far?, held by the Rappaport Center for Law and Public Policy at Boston College Law School on September 30, 2016. I am especially grateful to the Rappaport Center's founders, Jerry and Phyllis Rappaport, for their heartwarming encouragement and generous support. Many others generously gave of their time and effort to make the conference and this symposium issue possible. Above all, we thank Elisabeth Medvedow, the Executive Director of the Rappaport Center, Professor Michael Cassidy, the Center's faculty adviser, Vincent Rougeau, the Dean of Boston College Law School, Hillary Bylicki, John Gordon, Judy Yi, the superb Brittany Campbell and the other outstanding student editors of the Boston College Journal of Law & Social Justice, Judy Jacobson at the Massachusetts Housing Partnership, and our symposium speakers and commentators.I. TIGHT MORTGAGE CREDIT AND THE DECLINING HOMEOWNERSHIP RATEWhere does access to mortgage credit stand today? The total annual dollar volume of home mortgage originations sharply declined when the housing bubble burst starting in first quarter 2007. But since then, residential mortgage lending in the U.S. has improved in overall terms for the last three and a half years. Originations staged a recovery in first quarter 2014 and have been on the rise ever since. (US Mortgage Originations).However, total origination volumes do not answer the question posed by this symposium, which is the extent to which historically underserved customers, including lower-income households and minorities, are able to get mortgage loans. …