The little downpayment savings policy that could: revisiting building and loan societies and their products in times of the tight credit box and the pending housing finance reform

Abstract

In the United States, homeownership is an important part of wealth building, especially for low- and moderate-income people, many of whom are of color. Interestingly, savings products geared towards downpayment are scarce and public support for downpayment is minimal. The current tight credit box, the pending housing finance reform, and the possible elimination of the Mortgage Interest Deduction (MID) will make wealth building through homeownership more challenging in the future. Thus, the author of this paper argues that products geared towards saving for downpayment should be revisited and that downpayment savings policies should be implemented. These products and policies, possibly modeled after the products of building and loan societies (B&Ls), will facilitate access to homeownership, in particular for low- and moderate-income people and people of color.

Keywords:

• building and loan societies (B&Ls)
• saving
• downpayment
• homeownership
• housing

ORCID

Katrin Anacker http://dx.orcid/0000-0002-3423-6738

Notes

1. For example, interest on the Livret A, France’s popular, all-purpose savings account, currently capped at a balance of €22,950, is exempt from tax and social security contributions (HSBC France, n.d.). Interest on the Sparbuch, Germany’s equivalent, is exempt from taxes up to €801 for single and €1602 for joint filers (Sparkasse, n.d.).

2. The Black/African American homeownership rate peaked at 49.7% in the second quarter of 2004 and stood at 42.1% in the fourth quarter of 2014; the Hispanic/Latino homeownership rate peaked at 50.15 in the first and third quarters of 2007 and stood at 44.5% in the fourth quarter of 2014 (US Bureau of the Census, n.d.a).

Additional information

Notes on contributors

Katrin Anacker

Katrin B. Anacker is an Associate Professor in the School of Policy, Government, and International Affairs at George Mason University in Arlington, VA. She is the current North American Editor of the International Journal of Housing Policy, the current Review Editor of the Journal of Planning Education and Research, and the former Co-Editor of Housing Policy Debate. She is the editor of the book The New American Suburb: Poverty, Race, and the Economic Crisis (Ashgate, 2015). Her work has been published in the Journal of Urban Affairs, Housing Policy Debate, Housing Studies, the International Journal of Urban and Regional Research, and Urban Geography, among others. She received a Ph.D. in City and Regional Planning from The Ohio State University.