s than $35,000, the home ownership rate is only 36 percent.
Obviously, as late as 1998, low- and moderate-income households were continuing to experience difficulties in obtaining residential mortgages. Two programs implemented to address these problems were based on the concepts of risk-based pricing and increased mortgage loan limits. The effectiveness of these two programs in increasing access to residential mortgages by low- and moderate-income households will be investigated in the proposed study.
Three research questions will be investigated in the proposed study. These research questions will be as follows:
1. Did risk-based pricing policies lead to an increase in the residential mortgage approval rate for borrowers with annual incomes less than $35,000?
2. Did policies providing for increased mortgage loan limits for low- and moderate-income households lead to an increase in the residential mortgage approval rate for borrowers with annual incomes less than $35,000?
3. Did risk-based pricing policies or higher mortgage loan limit policies for low- and moderate-income households have the greatest effect on the residential mortgage approval rate for households with annual incomes under $35,000?
The purpose of the proposed study will be to assess the effectiveness of risk-based pricing and increased mortgage loan limit polices for low- and moderate-income households in improving the mortgage approval rates for such households. The assessed effectiveness of these policies will indicate whether the policies need to be revised or if new policies need to be developed.
The findings of the proposed study will be significant for public policy development, the mortgage finance industry, low- and moderate-income households, and society generally. Home ownership, as a policy goal, is on trial in the contemporary United States.
The term "risk-based" pricing is defined as a mechanism whereby payment histories an...