Access to Residential Mortgages

Access to Residential Mortgages

Home ownership is a cornerstone of what is referred to as “the American Dream.” Home ownership, however, has become an increasingly difficult objective to attain for low- and moderate-income families, individuals, and households in the contemporary United States. In response to this problem, federal agencies, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), have developed and implemented programs designed to improve access to residential mortgages for low- and moderate-income families, individuals, and households.

A research study is proposed to investigate the effectiveness of these programs. Throughout the remainder of this study, the term “households” is used to encompass families, individuals, and other household structures that qualify for residential mortgages. In this introductory chapter, the problem statement, research questions, study purpose, significance of the study, definition of terms, delimitations of the study, and an overview of the remainder of the study are presented.

A study conducted in 1996 found that low- to moderate-income earners continued to experience substantial difficulties in gaining access to the benefits of the secondary mortgage market. New policies and programs aimed at improving access to residential mortgages for low- and moderate-income households were introduced by the 1990s; however, the success of those programs in meeting the objectives of higher levels of home ownership for low- and moderate-income households continued to be questioned. Data for 1998 indicated that, while 89 percent of households with annual incomes of $120,000 or more lived in homes that they owned, the proportion dropped to 23 percent for households with annual incomes in the $5,000-to-$9,999 range. While these variations at income extremes are hardly surprising, the survey also found that, for all households with annual incomes les…

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