Vice President Kamala Harris on Wednesday announced a new action by the U.S. Department of Housing and Urban Development (HUD) to lower costs for homebuyers across the country.
Under the new action, HUD moved to reduce its annual mortgage insurance premium through the Federal Housing Administration (FHA), which insures home mortgages for millions of Americans every year. The new rule reduces annual mortgage insurance premiums by 0.30 percentage points — from 0.85% to 0.55% for most new borrowers — and will take effect on March 20.
On behalf of HUD Secretary Marcia Fudge, Harris delivered remarks at Bowie State University in Maryland highlighting the new action that the agency says will save an average of $800 in 2023 alone for an estimated 850,000 homebuyers and homeowners.
“A home represents financial security, the opportunity to build wealth and equity that can help put your child through college, afford retirement, create intergenerational wealth within your family — that’s what all this represents,” said Harris.
“It is so much bigger than a piece of property. And for so many people then, it is about what they can do to create a foundation for a better future for themselves, for their family and for their community.”
For nearly 90 years, FHA has provided low-income and first-time homebuyers with mortgage insurance that would otherwise be elusive through conventional insurers. According to a 2022 HUD report, 80% of FHA borrowers are first-time homebuyers and more than 25% are homebuyers of color.
Julienne Joseph, a senior advisor at HUD, noted in an interview with theGrio that FHA has “served three times as many Black borrowers as our counterparts.”
Joseph said in determining the new reduction in mortgage insurance premiums, HUD considered the “barriers” many low-income borrowers and borrowers of color encounter when attempting to purchase a home. Those barriers for borrowers include a need for down-payment assistance, problems with their credit and income gaps.
“It helps to find some savings for those borrowers who want the dream of homeownership … [and] we felt that this was absolutely the right thing to do,” she said.
Andre Perry, a senior fellow at the Brookings Institution, said the latest action by HUD is “critical” for making homeownership a reality for Black and brown Americans.
“Making mortgages more affordable for first-time homebuyers is critical for increasing ownership for people of color who are generally discriminated in the job market,” Perry said in a statement to theGrio.
“Insurances and fees have discouraged many from purchasing a home. The reduction in the rate may seem small, but it must be a part of a comprehensive approach to making homes more affordable.”
The agency strategically selected Bowie, Maryland as its destination for Wednesday’s announcement to highlight how HUD’s new rule will benefit communities of color. Bowie, located in Prince George’s County — the largest and wealthiest Black-majority county in the United States — is nearly 60% Black.
A White House fact sheet notes that in Bowie, the average homebuyer will save nearly $900 per year, based on the average home price in the county of around $300,000. On average, a family buying a home in Austin with a $500,000 mortgage can be expected to save as much as $1,500 annually.
Bowie State, an HBCU, was also carefully selected as the destination for HUD’s announcement to highlight the importance of financial and homeownership literacy.
Joseph explained: “Not only did we want to underscore the value of homeownership counseling to help these Black and brown students — who are going to be tomorrow’s homebuyers — we wanted to also be able to make this announcement to let them know that HUD is there to support them … when it is time for them to actually purchase.”
Joseph also praised Harris for her ongoing partnership with HUD, noting that the vice president “has always been a major supporter of all of the efforts that we’re doing in order to help communities of color as well and underserved communities. It just seems so fitting and we were so happy that she was able to join us today in order to roll out this amazing announcement,” she added.
During her remarks, Harris disclosed that access to homeownership is personal to her, recalling that as a child she witnessed her mother’s excitement after she was approved for a home loan after years of renting.
“I remember that day so vividly,” said Harris. “She called us into the kitchen and she showed us this photograph and it was a picture of a one-story, dark grey house with a shingled roof and a beautiful lawn. And mommy … was telling us that after her years of saving, she was ready to become a homeowner.”
She continued: “We were so excited because our mother was so excited about what this meant in terms of not only a symbol of her hard work, but what it means to be able to have that symbol of pride in yourself.”
The vice president said the pride that her mother showed is part of the reason as attorney general of California she used her prosecutor perch to hold banks accountable for victimizing vulnerable homebuyers with predatory lending practices. In total, the state of California secured at least $20 billion for impacted homeowners.
Harris also cited the efforts of the Biden-Harris administration to provide financial relief to renters and homeowners who experienced negative impacts from the COVID-19 pandemic.
“Millions of Americans had lost their jobs and fallen behind on their rent or mortgage payments,” she recalled. “We understood that people — through no fault of their own — were on the brink of eviction or foreclosure. And so we took action and we helped more than eight million households pay rent. And we also put a pause on mortgage payments for nearly three million more individuals.”
Joseph said HUD’s latest action is part of ongoing work it is doing to make homeownership more affordable for Americans, particularly Black and brown people.
“We are constantly trying to find ways to cut costs,” she said. “We got a whole lot of coals in the fire of amazing things that we’re trying to do … [and] we’re doing everything that we can to make sure that they not only acquire the home, but they can actually stay there and enjoy it.”
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