A sign of the times: Homeless mothers join forces to squat in homes

Happy New Year! We are now taking your favorite mortgage finance community to the NEXT level with the launch of our opt-in email information service. And it couldn’t come at a more critical time in our markets. We are facing a looming housing crisis that is extending from construction all the way to financing. And it’s getting desperate for some out there. 

One movement that is receiving no attention from our trade press is the Moms 4 Housing movement. This is a collective of mothers in California who are joining together and essentially squatting in homes to house their families. “Before we found each other, we felt alone in this struggle,” their website states. 

“But there are thousands of others like us here in Oakland and all across the Bay Area. We are coming together with the ultimate goal of reclaiming housing for the community from speculators and profiteers.” In the latest development, an Oakland judge is allowing the mothers to occupy these homes, without the owner’s permission. It’s a bold, controversial move and we’ll see if Moms 4 Housing will be allowed to continue for much longer.

Is cohousing catching on in the US?

As the desperation for access to housing continues, there remains one solution that seems to be catching on: cohousing. Cohousing is exactly what it sounds like. Families are housed in larger groups so they can pool their resources, take turns cooking large dinners, and generally rub shoulders with one another, well, much more than the average, housed American. And if it sounds like a foreign concept to you, well, that’s because it is. Cohousing began in Denmark decades ago and is adopted here and there around Europe.

According to the Austin Daily Herald, there 170 cohousing communities across the country and there are about 140 in planning stages. Here’s how one cohousing facility is described: “eight apartments in a nearly century-old three-story Edwardian mansion that once served as a nursing home.” 

“Seven townhomes are connected by a tunnel to the main building, on a 2.25-acre wooded site. Shared amenities include two guest rooms, a woodworking shop, library, formal living room, vegetable gardens and a kids’ playroom.”

However, one critic in the piece calls cohousing “confusing” to some as it sounds like a more affordable alternative, which may or may not be the case for some. For example, you can be up to date on all your rent and fees and request a modification to your living space. It only takes 2 of your co-residents to block the request. So cohousing is only for those who are open to communication and compromise. WCGW?

More new home loan applications, more risk of defective applications

According to First American, the defect risk on new mortgages is back on the rise, up nearly 3% and marking a “turning point” in the market according to their chief economist Mark Fleming. 

Why would more potential homeowners misrepresent themselves on their mortgage application? Why is the risk of an application being defective on the rise, after months of decline? First American cites two reasons.

The first is the recent slowdown in house-buying power appreciation lessens the confidence of home buyers, so they may be more inclined to misrepresent information on a loan application, leading to an increase in the defect index for purchase transactions. The second reason is the market is moving out of the recent refi boom and this shift is resulting in the share of new mortgages increasing their share of originations. More new home loan applications, more risk of defective applications.

“Looking ahead to 2020, mortgage rates are expected to remain below 4 percent. At that level, there are still 6.8 million borrowers today who could benefit financially by refinancing to a lower mortgage rate,” writes Fleming in his blog. “As a result, the direction of defect risk in 2020 is in large part dependent on mortgage rates and how many homeowners that are “in the money” choose to refinance.” 

By the numbers, and after falling since March, the Defect Index for purchase transactions increased 2.7 percent compared with October, while the Defect Index for refinance transactions fell by 1.6 percent, its eighth straight month of declining risk. 

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