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The transportation-credit mortgage: a post-mortem

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  • Daniel Chatman
  • Niels Voorhoeve

Abstract

“Location-efficient mortgages” and “smart commute mortgages” were sponsored by Fannie Mae and made available by lenders in a large number of US cities beginning in 1999. Participants were given a credit to qualifying income that allowed them to borrow more for homes in neighborhoods with good transit access and high population density. We use the term “transportation-credit mortgage” (TCM) to refer to both programs. The TCM was intended to reduce auto use, decrease sprawl, and increase low- and moderate-income homeownership. But there was little demand. Only about 300 loans were made, and both programs had been discontinued by 2008. Some advocate the TCM's revival. Would this be a good idea? We draw upon interviews with lenders, Fannie Mae officials, and transit agencies; lending data from Fannie Mae; and relevant academic research and theory. The TCM likely generated little market interest because of implementation problems and competitive terms from other loan products. But even if the TCM could be revived, with its implementation problems resolved, it would still be unlikely to meet the intended social goals in most markets. The TCM could even make low- and moderate-income households worse off. More radical changes, and more research, are needed.

Suggested Citation

  • Daniel Chatman & Niels Voorhoeve, 2010. "The transportation-credit mortgage: a post-mortem," Housing Policy Debate, Taylor & Francis Journals, vol. 20(3), pages 355-382, June.
    • Handle: RePEc:taf:houspd:v:20:y:2010:i:3:p:355-382
    DOI: 10.1080/10511481003788786
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    References listed on IDEAS

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    1. Edward L. Glaeser & Joseph Gyourko, "undated". "The Impact of Zoning on Housing Affordability," Zell/Lurie Center Working Papers 395, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    2. repec:ucp:bkecon:9781884829987 is not listed on IDEAS
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    1. Coulombel, Nicolas, 2018. "Why housing and transport costs should always be considered together: A monocentric analysis of prudential measures in housing access," Transport Policy, Elsevier, vol. 65(C), pages 89-105.
    2. Mattioli, Giulio & Lucas, Karen & Marsden, Greg, 2017. "Transport poverty and fuel poverty in the UK: From analogy to comparison," Transport Policy, Elsevier, vol. 59(C), pages 93-105.
    3. Guerra, Erick & Caudillo, Camilo & Goytia, Cynthia & Quiros, Tatiana Peralta & Rodriguez, Camila, 2018. "Residential location, urban form, and household transportation spending in Greater Buenos Aires," Journal of Transport Geography, Elsevier, vol. 72(C), pages 76-85.
    4. Mattioli, Giulio & Lucas, Karen & Marsden, Greg, 2018. "Reprint of Transport poverty and fuel poverty in the UK: From analogy to comparison," Transport Policy, Elsevier, vol. 65(C), pages 114-125.

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