Polygon Research Blog

Bridging the Homeownership Gap with SPCP

Fair Lending Strategy

How do you bridge the homeownership gap?

This is a difficult question that usually produces complicated answers. However, one answer that seems to be favored by regulators is -- through Special Purpose Credit Programs (SPCP). Yesterday, HUD and its Office of Fair Housing and Equal Opportunity (FHEO) issued a guidance on Special Purpose Credit Programs (SPCP). In its statement, FHEO encouraged stakeholders “to review current and historic barriers to credit and homeownership” and “to help resolve these inequities” through SPCP.

How would you use SPCP to do that?

You may find the answers in the CFPB Advisory Opinion explaining how to create an SPCP. Summarizing, a lender must have a written plan that establishes and administers a SPCP.

Where does the content, research and data come for the SPCP written plan come from?

Home Mortgage Disclosure Act (HMDA) data along with demographic data for a bank's assessment area or a lender's market area are the main sources of research and data that may be appropriate to inform a for-profit organization’s determination that a special purpose credit program is needed to benefit a certain class of persons.

Clearly, to design, administer, and realize the benefits of such a program, lenders and non-profits need to use data to measure the gaps, to create competitive and responsible credit products, to grow the opportunities for homeownership in local community, and to invite/educate previously excluded communities about the homeownership opportunities and access to credit. We believe that when experts and stakeholders use data to enhance their hard-earned experience and intuition, then we will see the best answers and most innovative solutions to the difficult question, "How do we bridge the homeownership gap?".

We have been thinking and blogging about SPCP since January 2021. Read our blogs for more insights Mind the Gap: Minority Lending Landscape - Vivian Horvath (polygonresearch.com). You can also visit our Free Resources to get insightful white papers, e-books, and infographics: Free Resources (polygonresearch.com).