Banks need to be leaders in the drive to increase homeownership, top state and federal officials told hundreds of bankers at an affordable- housing meeting in New York on Tuesday.
The government "is prepared to be there to help, but you need to take the lead," said Nicholas Retsinas, assistant secretary of housing, at the Neighborhood Housing Services gathering. The group works with banks to stabilize declining neighborhoods by helping lower-income people buy homes.
The future will bring an increasing "Wal-Mart-izing" of housing finance, Mr. Retsinas said, as mortgages become even more commoditized.
The shift threatens to leave lower-income people behind, he said, and banks need to reach out to them because government agencies can't. "Government works least well on a retail level," he said.
Welfare reform is also going to force banks to work harder to build homeownership, said Bill McDonough, president of the Federal Reserve Bank of New York. "Our society is going through a transition, and communities are going to be neglected," he said.
In addition, the shrinking of many social programs threatens to disrupt the fragile economies of inner-city communities, said Francine Justa, executive director of the housing group.
Last year it opened its seventh neighborhood office, in the South Bronx. The offices provide education in housing finance and help homeowners secure loans.
Participation in the group's programs can help banks satisfy Community Reinvestment Act requirements, said Elizabeth McCaul, acting superintendent of the New York Department of Banking.
New York is redefining its Community Reinvestment Act requirements, she added. In areas where housing is extremely expensive, banks will receive CRA credit for making loans to some middle-income homeowners.
