Van Hollen and colleagues introduce legislation to help first-generation homebuyers and close the racial wealth gap
September 22, 2021
Homeownership is the primary means for middle class families to build wealth and achieve economic stability; New LIFT program will help first-generation homebuyers build equity and wealth at twice the rate of a conventional 30-year mortgage
Today, U.S. Senators Chris Van Hollen (D-Md.), Mark R. Warner (D-Va.), Reverend Raphael Warnock (D-Ga.) And Jon Ossoff (D-Ga.), Members of the Senate Committee on Banking, Housing and Urban Affairs, with Senator Tim Kaine (D-Va.) Presented the Low Income Home Buyers Act (LIFT) establish a new program to help first-generation homebuyers – mostly Americans of color – get rich 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.
“Homeownership is a key tool for Americans to increase their wealth and strengthen economic stability, but for far too many people, especially people of color, that goal remains elusive. This is a direct result of the systemic racial discrimination that has affected our country’s housing policies for generations. It is time to correct this mistake and implement policies that will allow us to close this gap. I am proud to present this bill which will help all first time home buyers to successfully accumulate more wealth through home ownership with a 20 year mortgage. I will work to pass this crucial bill to help bring more economic opportunity and prosperity to all ”, said Senator Van Hollen.
“The primary way middle-class Americans create wealth is through homeownership, 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 a tenth the size of their white counterparts, ” said Senator Warner. “The LIFT law will help close the racial wealth gap by allowing skilled homebuyers to build equity – and wealth – at twice the rate on a conventional 30-year mortgage.
“For too long, too many of our neighbors have been excluded from our country’s housing market, unable to establish equity and security after buying and moving into their first home,” said Senator Reverend Warnock. “Accumulating home equity is one of the best ways to build generational wealth for hard-working families in Georgia and across the country, and close the racial wealth gap. For this, I am proud to be alongside Senator Warner to present the LIFT law, which will help level the playing field by making it easier for first-time home buyers to build wealth while boosting our national and national economies. “
“It’s about helping first-time buyers pay off their mortgages and enrich their homes faster. I’m teaming up with Senator Warner to help low-income Georgians and first-time buyers build generational wealth, ” Senator Ossoff said.
“As a former lawyer specializing in fair housing, I have long been passionate about the access of a greater number of families to stable housing and economic mobility” Senator Kaine said. “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 law establish a program within the Department of Housing and Urban Development (HUD), in consultation with the Department of the Treasury, to sponsor 20-year low fixed rate mortgages for first-time homebuyers with equal incomes or less than 120 percent of their regional median income. Working through Ginnie Mae, the Treasury would subsidize the interest rates and origination 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. (FHA). 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 invoice is available here. The text of the legislation is available here.
“The LIFT law 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, executive director of the Harvard Joint Center for Housing Studies.
“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. “