Nearly half of all subprime loans were made in low-income communities, often to borrowers who did not understand fully the loan terms and may have little or no capacity to repay them. Despite the high rates of foreclosure so far, industry experts predict that loans originated in 2006 and 2007 will be the most foreclosure-prone in history. While some families will be able to stay in their homes or purchase others, many will join the increasing ranks of renters, putting even greater pressure on the shrinking supply of affordable homes and apartments.
We need to address the effects of the subprime mortgage “meltdown,” but we also need to acknowledge a simple truth. Virtually all of us are renters at some time in our lives—either by choice or because it is the only workable option. We need to strip the myth from homeownership, restore respect to rental housing, and seek and sustain a more balanced national housing policy.
Such a policy would make affordable homeownership possible, without exposing borrowers to devastating penalties and changes in terms. It would provide incentives for the construction of new homes and rental apartments for people of modest means. It would encourage residential development near places of employment and transportation. It would help local communities to keep homes in productive use, and neighborhoods stable, as markets change over time. And a balanced housing policy would stem the loss
**Portions of this piece appeared first in Illinois Issues magazine (September 2008).