An Overview of the QCD™ Project from H.0.M.E.S.,
designed to solve the income and racial disparities in American Homeownership.
HomeOwner Makers Educational Services (H.O.M.E.S.), based in Philadelphia, PA has developed a new national program for home buyers making it easy to purchase their homes before obtaining a traditional third-party mortgage. This was done by standardizing and upgrading the little-used contract for deed/installment sale ownership method.
We’ve begun to teach current investor/owners of separately deeded rental homes how to immediately sell those rentals to eligible tenants, using our “Qualified” Contract for Deed (QCD™.) We’ll train Real Estate Professionals to use the QCD™ with an interactive, cloud-based ‘learning management system’ (LMS) qualifying them as being QCD™ Certified. That site is located at the following link: Homes QCD Training Courses.
We are pleased and excited to present this simple solution for making immediate homeownership achievable for the millions of long-term minority and low-income renters, who under our current mortgage system would never become owners. Our Free Website is available at www.HomeownerMakers.com.
The Problem:
In 2014, in response to the national housing collapse, Federal Regulators created “Qualified” Mortgages, hoping to protect consumers against predatory homeownership practices and problems. However, the changes and requirements of the resulting mortgage approval process has now made it nearly impossible to qualify for a mortgage to buy a home for most minority renters. The National Association of Realtors report showed 2019 homeownership rates at about 69% for whites, 42% for blacks. (Summary and full report are available on our Free website under the “Articles of Interest” tab.) The major mortgage qualification problem is usually that these renters spend more than 30% of their income for housing costs. Down payments and closing costs also present significant problems in obtaining purchase mortgages.
The Answer:
By creating and defining the elements of a new “Qualified” Contract for Deed (QCD™), many renters won’t need an initial purchase mortgage to buy their first home. We anticipate that this method will be offered by investor-landlords on existing rental homes, with recommended 1-2% down payments, no closing costs, a market interest rate on the QCD™ balance, and a 30-year financing term for the buyer. As with the deed/mortgage form of ownership, paid interest and property taxes will be tax deductible to the new QCD™ owner. They will also immediately begin receiving any value appreciation, and with a fixed monthly payment including amortization amounts that will build paid-in equity.
Home and contract valuation between the buyer and seller will be negotiated freely and will rely more heavily on the income method using the existing home and area rental information. This process may result in a higher valuation than market comparable sales, since rental increases for tenants who cannot qualify for mortgages have many of them now paying much higher housing costs than homeowners. We believe this will also quickly help buyers who have budgeted and paid rent as “good tenants” to move into immediate ownership.
Buyers may also be able to refinance to a conventional mortgage to replace the initial 30-year term QCD™, under current GSE and FHA guidelines after a minimum one year of contract ownership. Our recommendation is for at least two years of QCD™ ownership, and we will be educating and working with various mortgage providers to help arrange those refinances when appropriate for the buyers and sellers.
Our Free educational website at www.HomeOwnerMakers.com has information for buyers, investor-landlord sellers, realtors, and other program users, and includes legal and other affiliate home resources.
We are joined in this effort by various corporate affiliate sponsors, who will provide the new owners with various products and services. They include Comcast/Xfinity, Rocket Lawyer, Legal Shield, Home Depot, Lexington Law, and American Home Shield. We expect to add many more soon in various categories, to help these new owners.
We are also aware – and support – recent banking initiatives and government proposals to help with down payment assistance, but those programs are not necessary to use a QCD™. Those programs create a mortgage relationship which can hurt the new homeowner if a change in circumstance occurs, and the two major bank initiatives and the recent HUD program only envision creating about 165,000 new owners. Our program could help many, many more!
Our Goal:
Our goal is to create millions of new homeowners in the U.S. by moving rental homes to “Owner Occupant” status, especially in the large Northeastern cities, where overall homeownership rates are below 50%, and racially unequal in even larger ratios than the national averages.
We also expect that some apartment buildings will use this QCD™ buyer financing to convert to condominium unit ownership. This financing method was used in the 1992 conversion of three popular Old City Philadelphia apartment buildings into condominiums, and they remain successful projects to this day, with largely owner-occupied homes.
The numerous benefits of creating homeownership in what are currently predominately rental neighborhoods will have major social benefits for everyone, including positive impact on a neighborhood’s quality of life through achievement by its residents of the “American Dream”. We believe that it is simply wrong that so many of our citizens cannot become homeowners under our current systems.
Additional Benefits:
Our program will also allow any renter who is in a “Rent-To-Own” or “Lease Purchase” arrangement to quickly upgrade to immediate homeownership with a QCD™. By replacing the rent-to-own with a QCD™ they will get immediate ownership rights at signing, income tax advantages, and a clear path to a future mortgage refinance when appropriate.
Contact us at Info@HomeownerMakers.com
