Hilbert Morales | EL OBSERVADOR
Photo Credit: Unsplash

Recently I learned when listening to National Public Radio (NPR) that a very large financial firm had bought 80,000 single family dwellings (Atlantic Coast locations) which were being rented to occupants who experienced a periodic increase in rental rates.

The consequence was that there were not many single-family dwellings on the market in those communities which ordinary home buyers could purchase. Now I think that is carrying free market capitalism too far. The Federal Housing Administration must not extend its financial supportive policies to corporations.

The U.S. Congress must inquire in order to enact legislation which facilitates FHA policies which facilitate and encourage ‘occupant home ownership’. It would be appropriate to give special considerations to single moms who are raising their kids alone. Those kids end up being the next generation, i.e., the future skilled labor member.

Homeownership is the most effective way to generate wealth which backs up a family’s fiscal standing and growth. Back during 1960 I purchased a Palo Alto home for $19,800 which today has an assessment of $2.4 million! I call that ‘funny money’. But nonetheless, I took advantage of it. When financial firms would not approve a small business loan back during 1986, I used the home equity to obtain the business loan needed to implement our plans to own and improve El Observador (EO).

And all this was enabled by my mortgage contract which permitted the purchase of a three bedroom-two bath Eichler single family home in Palo Alto. I became very familiar with home mortgages which I read several times. But here is my assessment about home mortgages.

First, let me convey an anecdote: During 1960, Enrique, a maintenance & operations engineer, proudly informed me that he had successfully purchased a home for his family. He had a mortgage! Following a few questions, I asked Enrique if he would let me read his mortgage, which he agreed to. After I read it, I informed him that he had a home purchase contract instead, which was not a mortgage (insured by the Federal Housing Administration (FHA).

Enrique was stunned; but went to a real estate lawyer who fixed things. That home purchase contract contained a contract ownership transfer clause which would have given The Lender full ownership of that home if ever Enrique missed two monthly payments. It is important to learn to read so that you (or your trusted agent) can verify what your mortgage really says. It is after all a contract!

Today’s mortgages still protect the real estate agent, the lender or bank, and the agency that administers collection of mortgage payments. Now traditionally mortgages are for 15 years or 30 years duration. During those years much can and does happen.

I highly recommend that Home Ownership Associations make a point to consult with the appropriate local real estate agency to learn how to add these suggestions to the traditional home mortgage contract:

1) The only responsibility of a home purchaser who signs a mortgage contract is to make the monthly mortgage payments over that 15-year or 30-year contract period. What consideration is allowed if the homebuyer gets sick? Is it permissible to make interest payments only during that illness? Could mortgage payments be suspended for a maximum of six months without losing that home (property) ownership?

What if the homebuyer becomes unemployed through no fault of his/her own? The job could have been relocated offshore. In this scenario, the homebuyer could be allowed time to relocate to a new job (which may require some job-training time allowance). Could the FHA or HUD (Housing and Urban Development Agency) assist that family? Would it not make sense to devise some default process which would permit that homebuyer (and his family) reman in that home? The school children would certainly benefit from that stability.

Now, let’s imagine that after many years of occupancy which builds up equity the homebuyer has an illness or becomes unemployed (loss of income). How can current practices help that homebuyer not lose that accrued equity? Through hearsay I am aware of families who did lose their equity and ended up as renters who had not accumulated any wealth (but really had). There needs to be a systematic analysis of these issues so that a fair share of equity (wealth) remains with the family that generated it. There exist real estate agents who are constantly seeking distressed home mortgages. Why? Distressed mortgages contain an opportunity to transfer equity-wealth to someone other than the homebuyer who serviced that mortgage with all those prior payments!

Now home ownership is the best way for a family to accumulate wealth. It also supports the American Consumer economy with purchases of durable home equipment (washers, dryers, dishwashers, refrigerators, freezers, etc.). It would seem logical to have this American nation systematically investigate those issues (above) so that more families end up owning their home. It is time to devise legal language for those ownership processes which happen during the 15 year or 30-year mortgage time spans. Home purchasers are the most essential of all consumers in this American Consumer economy.

Currently, the home mortgages totally protect the real estate agent, the lender (banks), and the mortgage administrative firm.

I do not think it is unreasonable to devise transition standards which permit a home-buyer to retain that mortgage when a severe illness happens; job loss or economic recession happens which makes it very difficult for the homebuyer to continue to make mortgage payments during these events.

Home ownership has declined, especially in the middle-class sector of our society because the individual who is responsible for making all those mortgage payments is not given the same level of protective considerations as may be reasonable. If our nation, with its diverse communities, wants to encourage the development of stable communities, then it is reasonable to undertake studies which permit the establishment of reasonable processes which allow the homebuyer to retain the equity accrued or to end up owning that home.

Corporations will benefit by having a stable skilled workforce whose middle-class wage earners live in a stable safe and secure community. Recently one major firm (Facebook) encumbered enough fiscal support to build 20,000 homes for their employees. When several Silicon Valley corporations reveal plans to create employment centers requiring 40,000 new skilled employees, it behooves them to include a line item for employee affordable home development.

The database exists which permits the study of those home purchases which failed. It is just that financial corporations and real estate organizations have no interest in protecting the homebuyer or even providing some humane considerations when an illness or job loss happens. If, as a nation, home ownership is to be favored, then it seems logical that acceptable remedial processes must be created and implemented. The consequence will be the re-establishment of the American Dream (at least regarding home ownership).

Many issues will be mitigated once families are housed in a home owned by that same family. Many mental and behavioral health issues are mitigated. Homelessness itself will be reduced. Development of children will be enhanced by letting that happen in a stable community. Mortgages need to be updated by inclusion of home-buyer protective clauses presented here.