Sen. Van Hollen Introduces Bill To Cut Mortgage Payments For First Gen. Home Owners
MARYLAND- U.S. Senator Chris Van Hollen has introduced a new bill in the Senate to help first-generation homeowners with their mortgage payments.
The LIFT program would apply to first-generation homeowners who fall within the 120% percent range or below median income levels in their communities. They would be able to apply for special 20-year mortgages subsidized by the federal government to have lower monthly payments that would compare with traditional 30-year fixed-rate mortgage loans.
Co-Sponsor’s on the bill, including Georgia Senator Jon Ossof, say the bill would help to bridge the wealth gap between black and white families in the U.S., by making it easier for black families to become homeowners, a cornerstone of building wealth and personal financial well-being.
Housing advocates, including former Dover NAACP President La Mar Gunn, told 47ABC that housing discrimination in the form of historic redlining played a large part in creating the wealth gap, due to how many factors rely on home value, including school district quality, loan eligibility, and credit score.
“Unemployment, crime, recidivism, all the things that put black America at the top of every bad category and the bottom of every good one comes back to things like homeownership,” Gunn said.
Gunn currently operates Gunn Wealth Management, a financial services company in Delaware that focuses on building financial literacy for the black community in an effort to help more people be in the financial position to purchase homes, and other large assets.
Gunn told 47ABC that he is encouraged by the LIFT program, but worries that a key part of the discrimination that traditionally locked out black families from homeownership is not addressed in the legislation.
“Based on certain areas, social security and credit score allows banks to deny loans and target African American families,” he said adding, “the huge down payments folks need to make on a mortgage, you could give them a five-year loan with the payments of a 30-year one but if folks can’t make these huge down payments then we are still in this system of poverty.”
He says while the program will help, he feels more needs to be done to help the housing market priorities in localities that don’t price out lower-income families.
Gunn believes that if banks continue to ask questions about financial portfolios during applications, the discrimination against black loan seekers will continue.