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Friday, April 18, 2014

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Study Recommends Revisions to U.S. Housing Policy

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Contact: Katherine Dibling, E-mail senior media representative, (215) 574-4119

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Philadelphia, Pa. — In a discussion paper PDF Document released today by the Community Development Studies and Education Department of the Federal Reserve Bank of Philadelphia, Visiting Scholar Alan Mallach argues that it is more important to increase the sustainability of homeownership, once entered into, than to create new homeowners.

Under scrutiny since the bursting of the housing bubble and the unraveling of the subprime mortgage market, U.S. housing policy should shift toward supporting sustainable homeownership for lower-income groups and away from the long-standing goal of using public resources to turn lower-income households into homeowners, says Mallach, who is also a nonresident senior fellow at the Metropolitan Policy Program of the Brookings Institution in Washington, D.C.

“I argue that public policy and resources should be directed less toward maximizing the number of lower-income homeowners and more toward maximizing the quality and stability of the homeownership experience for lower-income owners, by creating an environment in which homeownership becomes a more stable and sustainable experience, rather than a revolving door fraught with risk and uncertainty. This proposition should be a starting point for designing specific programs and initiatives at the federal, state, and local levels.”

— Alan Mallach, Building Sustainable Ownership: Rethinking Public Policy Toward Lower-Income Homeownership.

Based on a review and assessment of the literature on the costs and benefits of homeownership, Mallach provides a framework for public policy toward lower-income homeownership by analyzing how those costs and benefits are affected by the homebuyer's income.

Mallach also makes recommendations to policymakers on the criteria for mortgage lending and public subsidies for lower-income homeownership and provides recommendations designed to help increase housing quality and foster sustainable homeownership. Read Mallach’s specific recommendations to further sustainable lower-income homeownership.

“If the American political system places a value on expanding homeownership, it should ensure, to the extent possible, that the expansion of lower-income homeownership takes place in ways that clearly benefit both the families involved and the communities in which they live.“

— Alan Mallach, Building Sustainable Ownership: Rethinking Public Policy Toward Lower-Income Homeownership.

Mallach is a senior fellow at the Center for Community Progress, a nonresident senior fellow at the Metropolitan Policy Program of the Brookings Institution in Washington, D.C., and a visiting scholar at the Federal Reserve Bank of Philadelphia. He has been engaged in housing, planning, and community and economic development as a public- and private-sector practitioner, advocate, and scholar for over 40 years. He served for nine years as director of housing and economic development in Trenton, New Jersey; has taught at Rutgers University, the Pratt Institute, and the New Jersey Institute of Technology; and is serving as a Brookings scholar at the University of Nevada, Las Vegas for the 2010-2011 academic year. He is a member of the College of Fellows of the American Institute of Certified Planners and received a bachelor’s degree from Yale University.

The Community Development Studies and Education Department conducts research that examines issues of affordable housing, community and economic development, financial education, and consumer credit and payments that affect low- and moderate-income people and communities.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Federal Reserve Bank of Philadelphia serves eastern Pennsylvania, southern New Jersey, and Delaware.

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