Urban Policy Brief, Number 2
The National Homeownership Strategy
For over 60 years, the Federal Government has played an important role in making the American Dream of homeownership a reality for millions of families. It created the Federal Housing Administration (FHA) and Government-sponsored enterprises such as Fannie Mae to enhance the availability and affordability of home mortgage funds. HUD and other Federal agencies have provided billions of dollars in grants and loans to support affordable home construction and rehabilitation and to aid low- and moderate-income families in buying their first home. Incentives for homeownership have been written into the Nation's tax code.
However, Federal institutions, policies, and programs alone cannot meet President Clinton's goal of record-high levels of homeownership within the next 6 years. Under the leadership of Secretary Cisneros, HUD has forged a nationwide partnership that will draw on the resources and creativity of lenders, builders, real estate professionals, community-based nonprofit organizations, consumer groups, State and local governments and housing finance agencies, and many others in a cooperative, multifaceted campaign to create ownership opportunities and reduce the barriers facing underserved populations and communities. The National Homeownership Strategy is committed to:
CUTTING HOUSING PRODUCTION COSTS.
Although the high cost of building and rehabilitating housing is a nationwide dilemma, the National Homeownership Strategy recognizes that the specific causes and thus many of the solutions vary significantly among local and regional markets. Accordingly, the National Partners have en-dorsed a wide range of complementary strategies to:
MAKING FINANCING MORE AVAILABLE, AFFORDABLE, and FLEXIBLE.
- Reduce regulatory barriers that can significantly increase the cost of producing and rehabilitating affordable housing, including high-quality manufactured housing.
- Encourage the production of modest "starter homes" that would be affordable to first-time homebuyers.
- Stimulate the development of new building technologies, materials, and processes that could make homes more efficient to produce and operate.
The inability (either real or perceived) of many younger families to qualify for a mortgage is widely recognized as a very serious barrier to homeownership. The National Homeownership Strategy commits both government and the mortgage industry to a number of initiatives designed to:
TARGETING ASSISTANCE TO UNDERSERVED COMMUNITIES.
- Cut transaction costs through streamlined regulations and technological and procedural efficiences.
- Reduce downpayment requirements and interest costs by making terms more flexible, providing subsidies to low- and moderate-income families, and creating incentives to save for homeownership.
- Increase the availability of alternative financing products in housing markets throughout the country.
Decline and disinvestment have left many pockets of urban and rural America without the mortgage capital, infrastructure, and economic opportunity needed to make homeownership feasible for current residents and attractive to prospective ones. The National Homeownership Strategy urges government, employers, lenders, insurers, and nonprofits to undertake strategies that will:
OPENING THE HOMEBUYING MARKET TO UNDERSERVED POPULATIONS.
- Build the capacity of local actors to foster affordable homeownership in their own communities.
- Promote homeownership opportunities in areas easily accessible to employment.
- Revitalize distressed urban neighborhoods so that they can attract and retain homeowners.
- Expand homeownership in rural America through initiatives that recognize the unique challenges and resources of nonmetropolitan areas.
Discrimination, inflexibility, and lack of information continue to keep homeownership out of reach for many Americans, including racial and ethnic minorities, people with disabilities, and others. The National Homeownership Strategy acknowledges a special need and presents a special opportunity to reach out to historically underserved populations through actions that:
- Promote fair housing and fair lending by removing barriers that deter many Americans from seeking buying, insuring, or maintaining a home in the neighborhood of their choice.
- Increase employment diversity in the homeownership industry.