The FHA 203k Renovation Loan Will Be Critical In Revitalizing Lower-Income Neighborhoods That Were Targeted By Subprime Lenders That “Stripped Equity” From Homeowners With Expensive, High Margin ARM Loans

• Proposals to reform the housing finance market via increased down payments and higher credit standards may disqualify many lower-income borrowers
• A large share of these borrowers are minorities and people of color
• It is now clear that the subprime mortgage and foreclosure crisis centered around otherwise-qualified borrowers were steered into subprime loans
• Statistics show that only 9% of subprime loans went to first-time homebuyers during the housing boom
• Most subprime loans were equity re-financing loans that stripped equity in lower-income communities 
• Many mortgage brokers knew that these communities were ripe for exploitation after thirty-plus years of redlining
• Subprime lenders stepped into this credit void with products that were confusing, unsustainable, and more expensive than they needed to be
• These brokers and lenders targeted vulnerable borrowers with higher-cost loans that were exploding ARMS with expensive pre-payment penalties
• It may take homeowners several generations to recover, if they ever can, from the fallout
• The benefits of high-property-value neighborhoods include better services, more parks, and high-performing schools
• FHA 203k renovation loans will be an important tool in the long-term process of revitalizing America's Neighborhoods
• Homes purchased with renovation loans will "add value" to homes that will be upgraded and improved

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