Making new mortgage markets: Case studies of institutions, home buyers, and communities

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Abstract
America's housing and mortgage markets are undergoing a dramatic transformation, as urban reinvestment and attempts to tap underserved markets of new homeowners alter historical processes of redlining and discrimination. This article synthesizes findings from case studies of private lenders, lender consortia, and nonprofit community organizations that are active in underserved markets and analyzes the strategies these organizations use to attract and qualify mortgage applicants and retain new homeowners. The case studies reveal a diverse array of strategies designed to address market imperfections related to information, discrimination, and household financial characteristics. Although these strategies expand homeownership opportunities, challenges remain. They reflect inherent tensions between the industry trend toward standardized, efficient business practices and the customized, often expensive programs needed to address the multiple obstacles to homeownership and community development faced by underserved households and communities. They also reflect the historically unequal distribution of risks and rewards in America's central socioeconomic institution—homeownership.