Wealth-building and Homeownership: New Federal Policies Could Help Drive Equity and Opportunity
The United States is at a homeownership inflection point, and a line-up of federal proposals offers the potential to break down systemic barriers for BIPOC families, while at the same time helping mitigate the housing impact of COVID-19. LISC Senior Policy Director Mark Kudlowitz takes a closer look at promising policies to expand homeownership opportunities for underserved families and communities.
As we celebrate National Homeownership Month, it’s important to recognize the pandemic’s impact on homeowners, especially lower-income and BIPOC households, and what’s needed to sustain and further homeownership opportunities for underserved populations.
Homeownership is the primary way that low- and moderate-income families are able to build wealth and achieve financial stability. Increasing opportunities for homeownership is a key component in combatting historical housing policies that have precluded minorities and others from purchasing a home and widened the racial wealth gap.
The economic impacts from COVID-19 have resulted in more homeowners being behind on their mortgage than at any time since the Great Recession. These distressed homeowners are disproportionately Black and Hispanic, representing 33 percent of borrowers in forbearance, while only 18 percent of the overall population of mortgage borrowers. Research has shown that mortgage forbearance and delinquency rates are also higher in communities of color and lower-income communities.
Even before the pandemic, our nation struggled to provide equitable homeownership opportunities for all people. Since the Great Recession, the gap between Black and White homeownership rates are at their highest in 50 years. These discrepancies exacerbate our nation’s growing wealth inequality.
The federal government has increased assistance to prevent distressed homeowners from losing their homes due to the pandemic’s impacts. We support the Biden administration’s proposal to improve loan servicer practices and extend foreclosure moratoriums. These actions are necessary to keep families stably housed as almost $10 billion in Homeowner Assistance Fund funding and new housing counseling resources start making their way to borrowers who are behind on their mortgage. LISC has identified a number of policy proposals to ensure millions of struggling homeowners are able to keep their homes and scale assistance.
First and foremost, our nation needs additional tools to scale affordable homeownership development activity. We’re pleased that the administration included its support for the Neighborhood Homes Investment Act (NHIA) in the American Jobs Plan. The NHIA would provide a new tax credit to help build and rehabilitate more than 500,000 homes for low- and moderate-income homebuyers in underserved communities over the next 10 years. The tax credit would cover the gap between the cost of building or renovating homes and the price at which they can be sold, thus making renovation and new home construction possible. Over 63 percent of the eligible areas are majority-minority communities, showing the program’s potential for creating homeownership opportunities for BIPOC families.
We must also ensure that we are helping to support minority and first-time homebuyers through the purchase process. One of the biggest barriers to affordable and sustainable homeownership for low-income and minority families is an inability to save enough for a down payment and closing costs. Small investments in down payment assistance support affordable homeownership opportunities for families that can afford a home mortgage but lack the wealth to get their foot in the door. These homeowners, including first-time purchasers, need assistance when preparing to purchase a house. We are pleased that the administration requested additional housing counseling resources in its budget request. Housing counseling provides prospective buyers the financial education and counseling they need to purchase a home they can afford.
Lastly, LISC supports other legislative proposals to further affordable homeownership resources, such as funding increases for the Capital Magnet Fund, HOME Investment Partnership programs, and rural housing programs. These federal housing programs can be used for purchase assistance and, as importantly, homeowner rehabilitation grants and loans that are highly targeted to low- and moderate-income families to help them retain equity in their homes. We also support the Restoring Communities Left Behind Act, which would authorize HUD to support community-based partnerships providing the full array of homeownership programs in underserved areas.
We know that more resources are essential, although the federal government must also be an active partner in fair housing enforcement to ensure that discriminatory practices don’t wrongfully deny homeownership opportunities. LISC supports the Biden administration’s executive order, which directs federal agencies to fully enforce the Fair Housing Act and restore critical regulations weakened in the previous administration.
Our nation is at a homeownership inflection point. We must continue to assist existing homeowners impacted by the pandemic while increasing federal resources to allow new opportunities for underserved families. The moment is ripe for making gains on both fronts and we hope you will join us and our partners in this work.
Mark Kudlowitz, Senior Policy Director
Mark advocates for federal policies which support multiple LISC national programs, including: Affordable Housing, Rural Development, and Transit Oriented Development. Before LISC, Mark worked as the Policy Director of the U.S. Department of Housing and Urban Development’s Office of Multifamily Housing Programs and also worked for over seven years at the Community Development Financial Institutions Fund at the U.S. Department of the Treasury. Mark managed affordable housing and community development programs at the District of Columbia’s Department of Housing and Community Development and held multiple positions at the Housing Assistance Council, a national rural affordable housing organization. Mark earned his B.A. from the University of Florida and M.S.W. from the University of Michigan.