Research Report Using Mortgage Reserves to Advance Black Homeownership
Laurie Goodman, Janneke Ratcliffe, Katie Visalli, Rita Ballesteros
Display Date
File
File
Download Report
(601.77 KB)

Continuous improvement in the foreclosure prevention process is essential to closing the racial homeownership gap because the wealth-building effects of homeownership depend greatly on how long it is sustained. One promising solution is helping less affluent borrowers establish mortgage reserve accounts (MRA) that can be tapped to weather a financial shock. We have looked at several alternatives and believe mortgage reserves could meaningfully preserve homeownership for vulnerable homeowners because of their unusual combination of product features and flexibility. This report offers a blueprint for a pilot MRA program that lenders could implement to help answer critical questions. The value of the pilot will be to test critical aspects of the MRA product before going to scale. Capturing early lessons from the pilot and establishing proof of concept will form the basis for expansion and exploring models that can facilitate standardization and greater liquidity. Whatever the approach, if the foreclosure rate for Black mortgage borrowers decreased to the average foreclosure rate among white mortgage borrowers, an estimated 300,000 more Black homeowners would keep their homes and have the opportunity to build generational wealth.

Research Areas Housing finance Race and equity Wealth and financial well-being
Tags Housing finance reform Housing stability Homeownership Racial homeownership gap
Policy Centers Housing Finance Policy Center