Financial Systems
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For a low-income neighborhood, homeownership may seem out of reach, stymied by extensive legal and financial obligations associated with this process. Loans granted to home-buyers require extensive planning and some prior knowledge of the system. The act of buying a home, often associated with the middle and upper classes, requires good credit scores and an ability to come up with earnest money and down payments. The financial burden placed on new homeowners is high and low-income families are often left behind.
A home for sale in a neighborhood like Washington Park carries a level of risk higher than a home in a higher-income neighborhood because of factors such as crime rate, default rates, and poverty levels. Standard banks are financial institutions whose primary goal is to make profit for their shareholders. Taking risks with low-credit candidates in struggling neighborhoods is not always in the best interest of these institution. This reality often leaves many families behind, with renting as the only real option. However, banks too have an incentive to offer loans to struggling urban communities so that they can acquire Community Reinvestment Act credits. What would it look like if this financial process was amended and altered to make homeownership more accessible? What would it look like if banks were willing to work with those who have bad credit or those who cannot come up with large deposit funds? Who would then be able to own their own home, and what would communities be able to accomplish because of the stabilizing factor of home-ownership? ACTS Housing has reinvented the financial lending process by pairing nontraditional candidates and abandoned homes. In doing so, this organization makes homeownership accessible to a wider population and helps create long-lasting, sustainable communities. |
Photo credits: ACTS Housing Facebook page.
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