Homeownership is the largest marker of equity and leads to generational wealth-building. With that in mind, Prosperity Now collaborated with JPMorgan Chase to pilot a Mortgage Reserve Account (MRA) savings match program providing downpayment assistance to low-to-moderate income first-time homeowners. Read on for 3 key findings that can help design programs that ensure homeownership is affordable and sustainable. 

Use Historical and Community Context to Inform Program Design  

The HomeReserve Program, the second MRA pilot administered by Prosperity Now, was piloted in Detroit and Washington D.C. Both cities have their own unique challenges in the marketplace, even with a similar high population of economically vulnerable and underserved populations. For comparison, Detroit’s median home value is $51,600 with a median household income of only $31,283, while Washington D.C.’s median housing value of $617,900 is 7.7 times higher than the median income for Latinx families, 11.1 times higher than that of Native families and 13 times higher than that of Black families.  

The histories of both cities greatly influence the current market and issues confronting homeowners today. Detroit was one of the most beautiful cities in the country, a far cry from the blighted abandoned buildings that produce “ruin porn” now. The Detroit Riots of ’67, city bankruptcy and housing crisis all had a substantial impact on the housing market and supply today. Foreclosed, abandoned, and renovation homes readily outnumber and directly juxtapose the resurging supply of move-in ready higher valued homes offered today. The history of Detroit informs the current situations for buyers and sellers. 

Partnering with local Detroit providers showed us that we can enhance program delivery in the following ways:  

• Integrate services specific to the community's needs like home rehabilitation support funding or help set appropriate match rates for down payment assistance.  

• Develop programs in partnership with their communities. Such insights can guide match rates, savings timelines, enrollment, and data collection.  

• Integrate existing resident services, homebuyer education, and loss mitigation programs.  

Account for Changes in Policy and Current Market Trends to Guide Services  

Home values in the D.C. market have been on a steady incline over the past eight years as incentives to develop more housing for large corporations relocating to the area, like Amazon, grow. With that, competition for residential development becomes steeper. Entire neighborhoods, often residents of color, are experiencing extensive redevelopment, pricing hikes, and higher rates of denial for mortgage applications.  

Low-to moderate-income homebuyers often have trouble obtaining loans due to qualification measurements that create additional barriers. Updating eligibility qualifications can create compounded ways to build equity for communities of color.  

Advocating for Policy Change Can Create Opportunities for Lenders and Homeowners:  

• Using MRA participation as a requirement for its homeownership programs could meet HUD’s “ability to accumulate savings” definition for Federal Housing Administration loan programs.  

• Add an MRA feature to existing Fannie Mae and Freddie Mac loan products. 

Recognize Individual Spending and Saving Habits 

Throughout the administration of this program, Covid-19 played an enormous role in the financial standing of participants and the capacity of partner organizations. The pandemic only exasperated existing issues. Programs and studies have taken individual saving habits into account, found that given the opportunity to save and recover from negative income shocks, they are able to recover. Given the chance, homeowners with a flexible repayment plan can afford to stay in their homes. 

Forty percent of homeowners in the program who accessed their savings used it to make a mortgage payment, and the same was true for stimulus checks.   

• Short-term liquidity was a driving factor in default.  

• Matched-savings programs create liquidity by reducing dependency on high-interest loans for emergencies providing long-term recovery.  

• Extended time to replenish savings for future payments is necessary. 

In summary, designing programmatic solutions that create opportunities for affordable housing requires insight into all the systematic and environmental factors that contribute to its unaffordability. Adding more inclusive products to mortgage lenders like Fannie Mae and Freddie Mack, in addition to flexible repayment options for those in default, help providers learn to customize products based on customer behavior. Using inclusive and equitable evaluation practices like these found below are core to impact and scale. 

• Use Historical and Community Context to Inform Appropriate Programmatic Measures    

• Account for Changes in Policy and Current Market Trends to Guide Services  

• Recognize Individual Spending and Saving Habits