There’s new research out on the foreclosure rates on low-income buyers that have participated in an IDA (Individual Development Account). The research study, involving over 800 IDA homebuyers, found that nearly all of these buyers were still in their homes and that they had fared far better than similar homebuyers in terms of foreclosure rates and mortgage terms.
The full report, funded by NeighborWorks America and the Ford Foundation, can be viewed here.
Individual Development Accounts are special savings accounts that can be used only for specific qualifying purchases such as a first home, starting a business, or for educational or job training expenses.
Accounts are held at local financial institutions and contributions/deposits made by lower income participants are matched, in some cases 3-to-1, using both private and public sources.
So what makes an IDA homebuyer different from other low-income buyers? Your input is welcome in the comments… but here are some ideas:
- IDA buyers must take financial literacy classes as a requirement of their participation
- IDA buyers must take an approved homebuyer education workshop (like HomeStretch) before purchasing their home
- IDA buyers, through their participation in the program, have learned to work with support network (volunteers, non-profit staff, bankers, etc.) and so they know where to turn for help when facing a financial struggle