Last summer, some much needed innovation came to the mortgage industry – ironically, by an organization that is not part of the mortgage industry. The American Enterprise Institute, a Washington-based think tank, introduced a residential mortgage called the Wealth Building Home Loan. The product was designed to provide low-income borrowers with a strategy for building wealth based on a 15-year, fully amortizing fixed-rate loan, and it was introduced involving the Neighborhood Assistance Corporation of America (NACA) and Bank of America.
“This will be a game changer for generating wealth by making a 15-year mortgage affordable for working people,” said Bruce Marks, CEO of NACA, in a press statement for the new loan product. “The majority of the mortgage payment will now go to the equity in the home, effectively providing debt-free homeownership.”
On November 20, this product was the focus of a news article in the New York Times. That article carried the headline “Equity-Building Mortgage Challenged” – but that was not entirely truthful. The challenge was actually an isolated blog posting from the Urban Institute’s Housing Finance Policy Center from November 13 – and the language of that posting was anything but challenging.
“Some people have made it sound like a solution to everybody’s problems,” said Ellen Seidman, a senior fellow at the center and the author of the blog posting. “There are a lot of good things about it, but the payments are higher than on the 30-year. And if you try to get the payments down to the same level, it requires a big interest rate subsidy.”
Yes, Seidman has a right to her opinion – although no one ever said the product was a “solution to everybody’s problems” – and she raised some questions that would benefit from a healthy exchange of intelligent ideas. But the tone of the article made it clear that the newspaper felt the product was a stinker, which it certainly is not.
Still, one can easily understand why the limousine liberals of the New York Times were eager to find fault with the product – they openly identified the American Enterprise Institute as “conservative-leaning” and they snidely insisted that the product was the “so-called Wealth Building Home Loan” – especially since the newspaper did not bother to devote any space in its 2014 coverage to the lack of innovation in home loan development.
But the New York Times is not alone in either missing the bigger story or bending the facts to meet their political agenda. Last year was a dismal 12-month stretch in terms of mainstream media coverage of the housing market. In-depth coverage on the dismal state of affordable housing, the rising numbers of foreclosures, the deleterious impact of Dodd-Frank Act regulations on encouraging new homeownership and the shrinking quantity of residential mortgage originators was virtually nonexistent.
The few times that housing-related stories became the center of mainstream media coverage involved nonsense of no value to the general public, most notably in Sen. Elizabeth Warren’s increasingly shrill speeches and her grandstanding attack on Federal Housing Finance Agency Director Mel Watt in a November hearing on Capitol Hill. And when there are stories that demand serious investigation – such as the Federal Housing Administration’s insistence that it has miraculously returned to great health after years of losing too much money – there is nary a peep of suspicion from the mainstream media.
I would love to see 2015 become the year when the mainstream media starts to pay serious attention to housing-related issues. And I would especially like to see a harsher spotlight focused on several issues: the new Congress’ attempts (or lack thereof) to tackle the question of the government-sponsored enterprises, the question of whether the Consumer Financial Protection Bureau is abusing its unprecedented authority, the impact that student loan debt has on potential young homeowners, the evaporation of affordable housing, the Dubai-worth housing prices that dominate too many urban markets, and the question of why the Obama Administration refuses to call for expanding the Fair Housing Act to protect gay and lesbian Americans.
And I would also like to see some dignified and intelligent coverage of developments like the introduction of the Wealth Building Home Loan – as well as a questioning of why there have been so few innovative home loan creations over the past five years.
In short, I would like the mainstream media to do its job in 2015. Hey, it’s asking a lot – but news coverage has to be better than it was in 2014!
About The Author
Phil Hall has been (among other things) a United Nations-based radio journalist, the president of a public relations and marketing agency, a financial magazine editor, the author of six books and a horror movie actor. Also, as you will discover, he is not shy about stating his views.