Warner and Kaine introduce bill to help first-generation homebuyers
US Senators Mark R. Warner and Tim Kaine (D-VA), Chris Van Hollen (D-MD) and Rev. Raphael Warnock and Jon Ossoff (D-GA) introduced the New Low Income Buyers (LIFT) Act.
The legislation aims to establish a new program to help first-generation homebuyers – mostly Americans of color – get rich much faster. By offering new homeowners a 20-year mortgage for roughly the same monthly payment as a traditional 30-year loan, LIFT will allow them to grow their equity twice as quickly.
“The primary way middle-class Americans create wealth is through home ownership, an opportunity that, due to racism and structural inequality, has been denied to too many families of color. Today, black families in this country have an average net worth barely one-tenth the size of their white counterparts, ”said Senator Warner. “The LIFT Act will help close the racial wealth gap by allowing qualified homebuyers to build up equity – and wealth – at twice the rate on a conventional 30-year mortgage.”
“As a former fair housing advocate, I have long been passionate about giving more families access to stable housing and economic mobility,” said Senator Kaine. “This bill will help families in their pursuit of the American dream by making homeownership more accessible to first-generation homebuyers and allowing them to build equity faster. I will continue to work in the coming weeks to make historic reforms for Americans to make housing more affordable. “
The LIFT Act will establish a program within the Department of Housing and Urban Development, in consultation with the Department of the Treasury, to sponsor 20-year low fixed-rate mortgages for first-generation first-time homebuyers who have incomes equal to or less than 120 percent of their regional median income. Working through Ginnie Mae, the Treasury would subsidize the interest rates and set-up costs associated with these 20-year mortgages so that the monthly payment would be in line with a 30-year mortgage insured by the Federal Housing Administration. .
By allowing borrowers to increase their home equity at twice the rate of a comparable 30-year loan without significantly increasing the monthly payment, LIFT will improve homeownership power for millions of families. . Coupled with well-targeted down payment assistance, the LIFT program will make significant strides in bridging the racial wealth gap, broadening and dramatically enhancing the wealth creation benefits of homeownership. in communities left behind for too long by our existing financial structures.
A two-page summary of the bill is available here. The text of the law is available here.
“The LIFT Act would be a revolutionary new approach to help close the nation’s large and troubling homeownership deficit among people of color and the substantial racial wealth gap that is associated with it. By focusing eligibility on first-time homebuyers, this help would target families and individuals who need it most, while narrowing the racial home ownership gap. And using grants to make a 20-year mortgage as affordable as a 30-year loan puts homebuyers on the path to quickly building up equity in their home while making homeownership more affordable. less risky. The proposed approach is also very cost effective by leveraging federal grants to allow homeowners to build wealth over time more quickly and efficiently, ”said Chris Herbert, CEO of the Harvard Joint Center for Housing Studies.
“Homeownership is the primary source of wealth and assets for most American families. The LIFT law proposed by Senator Warner is a laudable initiative that can help families build equity faster and Opportunity Finance Network is pleased to endorse this legislation, ”said Jennifer A. Vasiloff, Director of External Affairs, Opportunity Finance Network.
“Homeownership is the best way to build wealth, especially for low and moderate income households and families of color, and LIFT supercharges that wealth creation. By helping homeowners secure a 20-year mortgage with a lower monthly payment compatible with a 30-year mortgage, LIFT not only preserves affordability and supports homeownership, but also allows homeowners to quickly accumulate income. equity in their home, ”said Mark Zandi, chief economist, Moody’s Analytics. “LIFT is one of the most effective means available to policymakers to tackle the nation’s pernicious problem of large and growing economic disparities. “
“The Virginia Housing Alliance applauds Senator Warner’s leadership and commitment to making the homeownership wealth creation opportunity a reality for many more Americans through the Homeownership Act. first low-income buyers (LIFT Act). In Virginia, the homeownership rate for non-Hispanic white households is 73%, compared to just 48% for black households. The LIFT Act will provide a transformative opportunity to bridge this gap and make the American dream of home ownership a reality for thousands of first-time buyers in Virginia, ”said Brian Koziol, executive director of Virginia Housing Alliance.