Senator Clinton Announces New Legislation to Help Working Families Own Their Own Homes
Senator Clinton Announces New Legislation to Help Working Families Own their Own Homes
Bill Represents the Second Phase in Clinton's effort to Expand Access to the Federal Housing Administration's Mortgage Program
In an address to local Chambers of Commerce, business and community leaders at a breakfast hosted by the Greater Mahopac-Carmel Chamber of Commerce, Senator Hillary Rodham Clinton today announced that she has introduced the 21st Century Housing Act of 2006, (S. 3173) legislation designed to strengthen the Federal Housing Administration and increase the availability of FHA insured mortgage products across the country.
"The 21st Century Housing Act will provide hundreds of thousands of additional families with safe and affordable home ownership opportunities. At the same time, this proposal will help preserve a critical Federal initiative that has a strong tradition of service to low and moderate income participants by providing greater program and management flexibility, as well as stronger financial accountability," said Senator Clinton.
The legislation, which represents the most comprehensive attempt at FHA reform since 1990, is the second part in Senator Clinton's effort to help working families achieve the American dream of home ownership. After more than 70 years of existence, the FHA has helped over 34 million families realize the dream of home ownership. The FHA has been particularly effective at reaching first time home buyers, low and moderate income households and minority home buyers by providing an effective alternative to the sub-prime and predatory lending market that often results in increased monthly mortgage payments of hundreds and thousands of dollars. However the FHA has been hampered by a lack of investment in personnel and technology infrastructure, and structural inefficiencies that have made it increasingly uncompetitive in many housing markets.
The Senator's bill makes several proposed changes to the structure of the FHA including:
Allowing the FHA to offer loan terms up to 50 years (instead of the current limit of 30 years). This would have the effect of reducing the monthly mortgage payments and allowing families of more modest means to achieve home ownership.
Providing the FHA with the flexibility to offer reduced and zero down payment products, mirroring private market practices, to reach families that have good credit but that lack the upfront cash for a down payment.
Allowing the FHA to make investments in both personnel and information technology infrastructure to help meet the market demand for affordable mortgage products.
Increasing the FHA's loan limits for multifamily housing in high cost areas by 45 percent which will help create more home buying opportunities in high cost-of-living states like New York.
"Today, there are virtually no FHA loans being granted for multifamily homes in high cost areas in New York or across the nation. By increasing the number of these loans that are available and by providing this additional flexibility, more affordable opportunities will be created for those who live in areas like New York City and other parts of our state where the cost of home ownership is very high," said Senator Clinton.
"On behalf of more than 61,000 New York Realtors, I strongly endorse Senator Clinton's legislation to modernize a critical link for many low and moderate income homebuyers to achieve the dream of homeownership. Whether it's the purchase of a co-op in Manhattan, a colonial in Rochester or a bungalow in Saratoga, FHA has given New Yorkers the chance to own a home and a piece of the American dream. Specifically, Senator Clinton's bill makes thoughtful, creative and flexible additions to update FHA and prepare for the housing challenges of the 21st Century," said Gregory Connors, President, New York State Association of Realtors (NYSAR)
In April, Senator Clinton initiated the first part of her home ownership effort, introducing legislation to enable home buyers in high cost-of-living areas to take advantage of the Federal Housing Administration loan program. Senator Clinton's bill, the Federal Housing Fairness Act of 2006, increases the Federal Housing Administration's (FHA) loan limits so that working families living in high cost-of-living states like New York can enjoy the benefits of the program. The bill ensures that the program reflects the generally higher median prices of homes that exceed the FHA loan limit.
The Federal Housing Fairness Act of 2006 would raise the FHA loan limit for single family homes to 100 percent of the conforming loan limits offered by Government Sponsored Enterprises like Fannie Mae or 100 percent of the area median home price, allowing families in high housing cost areas to utilize the FHA program. While home ownership rates are at historically high levels on a national level, for many areas of the country, including many areas of New York, the advantages of a home mortgage insured by the FHA are denied because the loan limits are often smaller than the median price of a home in a high cost-of-living area. For example, according to the National and New York State Association of Realtors, the median home price is $446,500 in New York City, $505,750 in Nassau County, $413,000 in Suffolk County, $550,000 in Queens, $422,000 on Staten Island, $395,750 in Putnam County, $522,500 in Rockland County and $662,000 in Westchester County. In contrast however, under current law, the FHA loan limit is effectively $362,790, which means that working families, teachers, police officers, firefighters and other public servants are either closed out of the housing market where they work, driven into risky home purchase products or continue to make monthly rent payments, losing out on the opportunity to grow equity and family wealth.
http://clinton.senate.gov/news/statements/details.cfm?id=256431&&