Sen. Alan Cranston (D-Calif.) and other senators introduced sweeping legislation Wednesday that would make home ownership easier for first-time buyers and provide about $4.1 billion to state and local governments to increase affordable rental housing.
The bill, likely to be the most significant housing proposal to come before the 101st Congress, has drawn bipartisan support and stands a good chance of being embraced by the Bush Administration, despite its cost, Cranston said.
“It is imperative that we reverse a decade of neglect in housing policy in this country,” he said during a press conference, flanked by the bill’s main Republican co-sponsor, Sen. Alfonse M. D’Amato (R-N.Y.). “It’s deplorable that young families, even with two wage earners, have been priced out of housing markets across the nation.”
Cranston conceded that the Administration has yet to take a position on the bill but noted that Secretary of Housing and Urban Development Jack Kemp was “very enthusiastic” about the proposal in recent meetings, especially sections designed to bring young, two-paycheck families into the home ownership market for the first time.
“I think there’s a new attitude in this Administration toward the government’s role in housing,” D’Amato added. “You’re going to see an Administration that looks to work with Congress on this issue, to get something done.”
Would Lift Limit
Under the legislation, which is co-sponsored by 25 senators, the federal government would allow home buyers to use funds in their individual retirement accounts or 401(k) retirement plans to make down payments on homes. The benefit would be restricted to people who have not owned a home in three years.
Also, the bill would remove the current $101,250 limit for mortgages under which buyers may participate in the Federal Home Administration mortgage assistance program. Instead, purchasers could qualify for federal assistance on mortgages that are no more than 95% of a state’s median home sales price.
In California, which has some of the highest housing prices in the nation, the FHA ceiling would be raised to $155,000, enabling more families to qualify for assistance, Cranston said.
D’Amato, citing studies by private housing experts, said 500,000 families across the country could have been helped to buy homes in 1987, had the new provisions been in effect.
A second goal of the bill would be to expand the nation’s dwindling supply of affordable rental housing, especially for lower-income people. Under the measure, the federal government would provide $3 billion to state and local governments that are sponsoring housing programs in concert with private developers.
The legislation would distribute these funds through a new HUD agency called the Housing Opportunity Program.