What major policies will we see in the next four years that address the wealth gap?
The future of the housing market is the single source of wealth creation for the typical American household, regardless of race and ethnicity. That has been the case throughout the 20th century. We need to make sure that we're looking at policies of revamping or replacing Fannie Mae or Freddie Mac that actually serves first-time homebuyers and minorities. The housing market after the collapse is very different than the housing market before the collapse. We need to ensure the 30-year fixed mortgage continues to be available to families.
What initiatives would allow these groups to access homeownership?
We need to find ways to bring new homeowners [to the market] who may not necessarily have the same financial characteristics they had before the housing bubble -- people who had unfair and deceptive mortgage products, such as subprime loans, and are still ready for homeownership, meaning they are financially fit and have the right motivation but simply had the wrong product so they lost their home. Many of those families still have good jobs and are responsible. But they may not have the credit because their home was foreclosed. For some people, [an option might be] a longer-term sustainable model, such as a lease-to-own option that enables their rent to go toward a down payment. After a period of time, they will have already paid the down payment and show they have the best credit history because it will be documented how and when they paid the rent. If they have a stellar repayment history on that rent, then it should be transformed into a 30-year or 25-year fixed rate.
Shared equity [where both the lender and the borrower share in purchasing a home, with the understanding that the borrower will give the lender a share of the profit when the house is sold] is another initiative. We also have to look at the fact that we have 11 million vacant and abandoned properties littering communities across the country and the lowest interest rate in history. Why are we not leveraging that for moderate-income households and people of color? Currently, only those who are wealthy are able to purchase homes because they can afford the 20-percent down payment and have [credit] scores in the high 700s.
You spoke about a pilot infrastructure bank to help the housing market and job creation. Can you explain?
In general, housing leads an economic recovery. This housing market is not leading nor following. It's dragging the economy because it just isn't working well. An important and innovative piece is that we need to have a pilot community infrastructure bank. President Obama talked about it in 2008 before the worst of the housing downturn. Now, after the crisis, do we not need it? An infrastructure bank would invest in roads and sewers. This would create jobs, ones that can't be exported overseas. This is not just to rebuild individual wealth and rebuild communities, but it's also a way to drive the economy.