July 30, 2021

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Mortgage News

HUD Aims to Help Black Homeowners

Housing Secretary Marcia Fudge is planning a major new move to tackle housing discrimination, which includes a $ 100 million initiative to encourage black home ownership in areas historically closed to minorities.

The pilot program, part of the $ 6 trillion budget request The planned clearance by President Biden on Friday would pay for higher down payments from federal housing authority loan recipients and provide borrowers with instant equity on par with their wealthier neighbors and white homeowners.

The increased down payments from around 3 percent to 10 percent do not seem to be a major change. but recent studies have shown that even that small boost is often the difference between a marginal owner who succeeds or fails to keep up with mortgage payments.

Homes are the main source of wealth for black families and home ownership rates have declined in recent years despite rising incomes.

The housing agency’s plan, devised by administrators recruited from the Urban Institute, a Washington-based policy think tank that is tacitly becoming a major player in the Biden White House, would target “redlined” neighborhoods, that are subject to biased local zoning laws or discrimination by banks, officials said.

The government sees the effort as part of a larger undertaking to combat the persistence of racial discrimination in housing. Ms. Fudge has already announced her intention to renew an Obama-era program to reverse segregation in the suburbs while steps are being taken to improve enforcement of existing fair housing laws.

In the competitive department for fair living, the funding of Mr. Biden’s budget will be increased by around 20 percent, which, according to the agency’s planning documents, will enable around 150 new employees to be hired.

This is a 180 degree change. Ms. Fudge’s predecessor, Ben Carson, gutted fair housing law enforcement and backed former President Donald J. Trump’s claim during the 2020 campaign that democratic attempts to integrate separate neighborhoods were a war on white suburbs.

Ms. Fudge, a former Ohio congressman, is also leading one of the financially most significant reboots of any government agency.

President Biden asks an increase of $ 9 billion in the budget for the Housing and Urban Development department, the largest increase in funding for the agency in over two decades from year to year This 15 percent increase comes on top of that $ 27.4 billion in new aid contained in the Pandemic Aid Act passed earlier this year and administered by the Finance Department.

Ms. Fudge’s top funding priority, according to two officials who informed her during the transition, was an increase in rent support – vouchers that renters can use to bridge the gap between their income and market rents.

The budget released on Friday includes an additional 200,000 vouchers in addition to the 2.3 million families already receiving the aid. That alone would increase the agency’s annual budget by $ 5.4 billion.