Low Income Mortgage Assistance Act Goes To Preside
Washington, DC, Dec. 11--Approximately 80,000 low-income families will receive millions in grants over the next two years to help them pay downpayment and closing costs on their first home under legislation backed by the National Association of Realtors. The American Dream Downpayment Act, H.R. 1276/S. 811, passed its final hurdle in Congress today and now heads to President Bush for his signature.
The bill, which was one of NAR's top priorities this year, was introduced by U.S. Sen. Wayne Allard (R-CO) and U.S. Rep. Katherine Harris (R-FL) and quickly gathered bipartisan support. President Bush and U.S. Housing and Urban Development (HUD) Secretary Mel Martinez first proposed the idea for the legislation earlier this year as part of the administration's commitment to help low-income and minority families achieve the American dream of the homeownership.
"Realtors commend Congress and the administration for their tremendous leadership and dedication to helping more families achieve the American dream of homeownership through the American Dream Downpayment Act," said NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, CA. "This is a major victory for thousands of American families. Although our homeownership rate is at a record high, one out of seven American families still faces critical housing needs. The American Dream Downpayment Act works by reducing two of the biggest hurdles to homeownership--downpayment and closing costs--for 40,000 families a year. This bill alone will create thousands of housing opportunities while simultaneously helping sustain the housing market, which has been the pillar of our economy."
The legislation will provide an average of $5,000 in downpayment and closing cost assistance to help first-time homebuyers with annual incomes that do not exceed 80 percent of the area median income. Grants will be made to state and local governments through HUD's HOME Investment Partnership program. Families interested in applying for grants should contact their state or local housing agency.
The American Dream Downpayment Act also includes two other important provisions backed by NAR. First, it will increase Federal Housing Administration (FHA) loan limits for the construction of multifamily housing in high-cost areas. This will increase private construction of affordable rental housing in the nation's high-cost urban and suburban areas like Boston, New York and San Francisco. The per unit maximum loan limit would increase from $194,190 to $218,465, which means the per unit loan limit for a typical two-bedroom apartment in a high-cost urban area would rise from $136,749 to $153,843. Second, the bill provides a technical correction to the FHA's Adjustable Rate Mortgage program that will make the product more available to consumers.
"Realtors have long supported raising the maximum loan limit in high-cost markets for FHA's multifamily programs. The new loan limit will provide additional housing opportunities for low-income families and more accurately reflects the real cost of rental housing in high-cost areas today," McDonald said.
