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Cleveland, Ohio — Homeownership should not be viewed as a risky or suspect venture, despite the highly publicized problems associated with subprime loans, UNC Center for Community Capital Associate Director Janneke Ratcliffe told policymakers convened for the Federal Reserve Bank of Cleveland’s Community Development Policy Summit today.

“If undertaken for the long-term cycle, by both investor and borrower, housing can still ultimately be an effective wealth-building strategy,” Ratcliffe said as a panelist in a plenary session on “How Do We Safely Reach the Other Side?”

Ratcliffe outlined some key strategies policymakers can pursue to promote best practices in homeownership finance that will both strengthen and help develop more U.S. households and communities. Ratcliffe is an expert on mortgage lending and community development and manages the Center’s projects on community development financing and financial services.

The Cleveland Fed’s sixth annual policy summit focused primarily on consumer-finance issues linked to the mortgage-lending crisis, including subprime borrowing, unfair and deceptive lending practices, financial education, credit scores and their impact on the cost of credit, and reaching the “unbanked.” Ratcliffe’s panel discussed financial policy reforms that would provide more stability during the present mortgage-lending crisis, address looming household-debt problems, and improve consumer financial security.

Ratcliffe pointed to the success of Self-Help, a North Carolina-based community development financial institution, which partnered with Fannie Mae and the Ford Foundation to fund nearly 50,000 loans. “We need to apply lessons learned from the Self-Help program to offer a legitimate response to Community Reinvestment Act [CRA] mortgages,” Ratcliffe said.

Such lessons include the need for full underwriting — thus avoiding the pitfalls that often come with no-documentation or stated-income methods of underwriting — as well as the benefits of linking risk management to institutional capital and creating loan servicing that adapts to the underwriting.

Ratcliffe urged greater public availability of data, which would both provide a shadow regulatory function in the CRA market and enable lenders and regulators to anticipate the next problem areas, such as student debt or credit-score cycles.

View the full text of Ratcliffe’s remarks.

Homeownership finance is a key area of research and analysis for the UNC Center for Community Capital, the leading center for research and policy analysis on the transformative power of capital on households and communities in the United States. The Center’s in-depth analyses help policymakers, advocates and the private sector find sustainable ways to expand economic opportunity to more people, more effectively. For more information, visit

Topics(s): Affordable Homeownership, Housing Policy, Mortgage Finance
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