New mortgages are a boon for poor neighborhoods -- and a tool for fraud

mark.schaver@gmail.com (Mark Schaver) — Mon, 12 Oct 2026 17:14:28 -0400

The Wall Street Journal reported this week that “a new type of mortgage is reviving long abandoned neighborhoods.”

Lenders have often been wary of offering mortgages in struggling neighborhoods where income levels and property values are low. The approval process for a traditional mortgage evaluates how likely the borrower as an individual is to pay back the loan, looking at credit score, debt-to-income ratio and assets.

In the new model, a private lender approves the loan based on the property’s value and potential rental income rather than the income of the borrower. Often, proof of personal income isn’t even a requirement.

Economics on Schaver.com

New mortgages are a boon for poor neighborhoods -- and a tool for fraud