The Un-Standardized, Politically Incorrect Mortgage...

Father Uncle
Knows Best...!

Referenced on Monday a 4/24/2013 NYTimes article ("Down Payment Debate At Heart Of Mortgage Debate") which discussed one key component of the political fist fight over mortgage lending which is currently raging in D.C. 

Want to show you a little more detail on the North Carolina based mortgage project which was referenced in the article.  As you will note from the range of comments on these mortgage posts, "the best way" to make a mortgage loan is not "uncontroversial"! Want to point out why many commenters are being misled into trying to formulate intelligent answers to idiotic questions!

But before we take a look at that, take a look at this:

A Summary Chart of the N.C. Mortgage Project

Here's a little more detailed, independent  commentary on the scope of the study:

"From 1994-2011, SF Ventures Fund a non-depository community development financial institution, purchased nearly 51,000 single-family mortgages with a total original principal balance of $4.58 billion from 39 different banks and credit unions.  This mortgage program was part of a Ventures Fund initiative to increase the national supply of high-quality mortgage financing for disadvantaged communities, particularly low-income families and communities, minority families and/or female-headed households.  Program participants included the largest national banks such as Bank of America and Citibank, super-regional banks such as SunTrust and BB&T, as well as regional and statewide lenders such as ["an unnamed N.C. credit union"]. "* (... this has to be kept "secret" or  NCUA might find out about this "high-risk" mortgage lending.)

"["An unnamed N.C. credit union"] was one of the largest lenders in this program. selling 3,897 mortgages with a total balance of $310 million. The ["unnamed N.C. credit union"] loans were high-mission loans for the Ventures Fund, and carried greater credit risk than most of the credit union's mortgage portfolio.  The average household income was only 74% of area median; 39% of the credit union loans went to female-headed households; and 18% to minority households.  26% were in rural areas, which is twice the average for the Ventures Fund program."

A Cooperative At Work !!

"Only 1% of the ["unnamed N.C credit union"] mortgages ever went to foreclosure (called "incidence" on the chart!), compared to 4.71% of the overall portfolio.  ["The unnamed N.C. credit union"] also substantially out-performed its peers in collateral quality, as the average loss on foreclosure (called "severity" on the chart!) was 26.70%, which was about half of the overall portfolio average of 50.79%.  As a result losses on the ["unnamed N.C. credit union"] portfolio totaled $776,267, resulting in a charge-off ratio of .27% from origination-to-date compared to the program average of 2.39% loss.

For Credit Unions...
Black Is Beautiful!

... low/no downpayment, skin-in-game, fair, affordable, locally underwritten mortgages to folks of "modest means" resulting in more stable families, more prosperous communities ... resulting in an overall loss ratio of about 1/4 %... without any need for a federal, taxpayer-funded mortgage guarantee.... 

ISN'T THIS WHAT CREDIT UNIONS WERE CREATED TO DO?