INDIANAPOLIS – In a housing market with high demand and the lowest inventory in nearly 15 years, fair housing experts expressed concern that some buyers’ credit history is preventing them from competing for homes.
Shay Morris, 31, was looking to buy her first home, so she got pre-approved a federally supported FHA loan and started making bids earlier this year. The loans, which are used by more than one in five Hoosier homebuyers, typically require less money and a lower credit score than traditional loans.
After bidding for multiple homes and enduring many multiple bid situations, Morris contacted the National Fair Housing Alliance after suspecting their FHA loan might put her at a disadvantage.
“I didn’t get a chance to fight, not with people who were selling $ 35,000 above the asking price,” said Morris. “I’m not being considered and … it’s really frustrating, it’s really daunting, it’s really daunting.”
“We heard a lot of complaints,” said Lisa Rice, president and CEO of the National Fair Housing Alliance.
Rice pointed to demographics showing that more black and Latin American homebuyers, many of them first-time homebuyers, are using FHA or other government-supported loans. She believed sellers across the country could devalue the loans as it took longer to close and stricter inspection and evaluation requirements.
“There are so many consumers who depend on FHA funding who rely on the fact that it is not fair for many, many hard-working families to shut them out from the market,” said Rice.
According to the Indiana Association of REALTORS, the percentage of properties sold in Indiana to buyers with government-backed mortgages such as FHA or VA loans has dropped from 29% in January through April in 2017 to 22% in the same period in 2021 The proportion of conventional loans rose from 43% to 56% over the same period.
“Realtors are committed to protecting the American dream of owning a home for everyone. Homeownership is a path to individual prosperity, family security and strong communities. We work every day to protect and empower our clients’ ability to own, buy and sell real estate. That work includes advocating preserving and improving the federal government-sponsored mortgage programs that are helping so many own homes. “
Roger Lundy, President 2021, Indiana Association of REALTORS
In addition, government data shows that inventory levels have steadily declined since 2007 and have reached historically low levels in recent months.
Regina Jones, president of the Indiana MIBOR Realtor Association, agreed that this is a tough market for buyers, but said she doesn’t believe FHA or government-backed mortgage borrowers will be selected. However, she acknowledged that with the increase in multiple listing situations, buyers often need extra cash to compete for homes.
“Whether you’re an FHA loan, a conventional loan, or a VA loan, cash is tough to compete, especially when a cash buyer is willing to go above market value or list price,” said Jones.
Jones noted that she has helped buyers, including those on FHA loans, secure homes despite the tough market.
“I don’t want people to be degraded to the point where they feel like if I don’t have extra cash on the side, I can’t get a house, you absolutely can get a house,” Jones said.
Still, first-time buyers like Morris may weigh up whether the stress and months of effort are worth it, and whether they get a fair chance at all.
“If I really want to do this, I might have to go conventional and save a little more, but I hope to get back to it later this year,” said Morris.
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