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Here's another take: possibly the loans are not just below market rate but loans that traditional lenders wouldn't make at all. "Affordable housing" is high ris

Here's another take: possibly the loans are not just below market rate but loans that traditional lenders wouldn't make at all. "Affordable housing" is high risk housing because the buyers/tenants are lower income. If this fund will make possible projects that could not get financed otherwise, then it's a good deal for everyone.

taurath 8y ago
If it brings the price of housing down, then it’s good. If it gets a bunch of people into loans they can’t afford at the top of a record bull market, then it’s bad
- jonknee 8y ago
  They aren't giving out mortgages for single family homes... > The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.
  - taurath 8y ago
    Yes, but to be affordable at least at first there has to be a subsidy for those middle income people to be able to afford it. Either you directly pay developers their profit that they don’t get by charging market rates (a subsidy), or they allow earners to get loans. Median price is 900k on the east side, and even at the top of middle income (124k, family of four) you can’t afford a house anywhere near that median. How do you fill that gap?
    - jonknee 8y ago
      Because they're not building single family homes in Medina? Multi family housing in various parts of the metro (including Snohomish county). The Seattle Times has more information including a bit more about geography: https://www.seattletimes.com/seattle-news/homeless/microsoft-pledges-500-million-to-help-develop-affordable-housing-in-seattle-and-on-eastside/ https://www.seattletimes.com/seattle-news/homeless/microsoft... The key is zoning and it sounds like they have some local buy-in from politicians (see the attached statement of mayors in that article). I'm skeptical that happens, NIMBYs have a way of stalling up zoning, but it's a still a step in the right direction.
jahewson 8y ago
Sub-prime mortgages! What could go wrong?
- idontpost 8y ago
  These are almost the opposite of sub-prime mortgages. A sub-prime mortgage is made at market rate--at an unaffordably high rate as a result of the risk. These are below-market rate loans -- loans at affordable rates for the borrower in spite of the risk. The in-spite part is what makes this philanthropic.
- PierceJoy 8y ago
  When the only party that has exposure is a large corporation for whome the money is a drop in the bucket, not much could go wrong.

taurath 8y ago

If it brings the price of housing down, then it’s good. If it gets a bunch of people into loans they can’t afford at the top of a record bull market, then it’s bad

jonknee 8y ago
They aren't giving out mortgages for single family homes... > The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.
- taurath 8y ago
  Yes, but to be affordable at least at first there has to be a subsidy for those middle income people to be able to afford it. Either you directly pay developers their profit that they don’t get by charging market rates (a subsidy), or they allow earners to get loans. Median price is 900k on the east side, and even at the top of middle income (124k, family of four) you can’t afford a house anywhere near that median. How do you fill that gap?
  - jonknee 8y ago
    Because they're not building single family homes in Medina? Multi family housing in various parts of the metro (including Snohomish county). The Seattle Times has more information including a bit more about geography: https://www.seattletimes.com/seattle-news/homeless/microsoft-pledges-500-million-to-help-develop-affordable-housing-in-seattle-and-on-eastside/ https://www.seattletimes.com/seattle-news/homeless/microsoft... The key is zoning and it sounds like they have some local buy-in from politicians (see the attached statement of mayors in that article). I'm skeptical that happens, NIMBYs have a way of stalling up zoning, but it's a still a step in the right direction.

jahewson 8y ago

Sub-prime mortgages! What could go wrong?

idontpost 8y ago
These are almost the opposite of sub-prime mortgages. A sub-prime mortgage is made at market rate--at an unaffordably high rate as a result of the risk. These are below-market rate loans -- loans at affordable rates for the borrower in spite of the risk. The in-spite part is what makes this philanthropic.
PierceJoy 8y ago
When the only party that has exposure is a large corporation for whome the money is a drop in the bucket, not much could go wrong.