The housing finance market is a dynamic ecosystem. It is a complex mix of institutions that lend money to people to buy homes. The current state of the housing market makes it necessary to devise solutions that can promote health and sustainability. This article explores some of the options available to borrowers. It also examines the role played by commercial banks in the housing finance industry.
Housing plays a vital role in society, as it represents the main form of wealth for the poor in many developing countries. According to the UN, the global population will reach 8.5 billion by 2030, with more than 60% of people living in urban areas. In the same period, about 3 billion new homes will be needed to meet this demand. Rapid urbanization is placing tremendous pressure on the housing delivery system. Without proper housing finance solutions, many of the urban poor will not be able to afford formal housing.
As Congress begins the process of reforming the housing finance system, there are many questions to address. Those in Congress who are seeking to overhaul the system should focus on long-term goals. They should be guided by a clear history and examine the weaknesses of the current system. This approach can help protect aspects of the housing finance system that have served the American people well while addressing the shortcomings of the system.
The State Housing Finance Agencies (HFA) are state-chartered organizations whose mission is to address the affordable housing needs of their respective states. Each HFA has a unique relationship to the state government. Most HFA boards are appointed by the governors of each state. Their mission is to administer a variety of affordable housing and community development programs. These agencies use Housing Bonds to finance housing development, and they also administer several federal housing programs.