Urban Institute Debunks Myth of Risky Small-Dollar Loans

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Posted To: MND NewsWire

Conventional wisdom, according to the Urban Institute (UI), holds that small mortgages are riskier than large ones. That may be one reason that only one out of four homes sold for $70,000 or less in 2015 was financed with a mortgage compared to 80 percent of those sold for $70,000 to $150,000. Sarah Strochak and Alanna McCargo, writing in UI’s Urban Wire blog say there are more than 600,000 homes for sale nationwide priced under $70,000, but it is hard for buyers to arrange financing because of the perception that the buyers of these homes have worse credit profiles and their loans don’t perform as well. The two analysts have completed research which they say debunk this myth. Looking first at credit profiles, they found that those buyers who have been able to obtain small dollar mortgages…(read more)

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