To: +Mr. Jens Tingleff (7307 )
From: +Chris Considine
Friday, Jul 30 1999 1:49PM ET
Reply # of 7325
HUD Earmarks $488 Billion for Mortgage Effort Housing: The L.A. region will get $34
billion as part of the program to help moderate- and low-income families secure home
loans. More than 360,000 in the area could benefit.
By DARYL STRICKLAND and JOHN BALZ, Times Staff Writers
WASHINGTON--The federal government on Thursday
unveiled one of the most ambitious programs ever to house
moderate- and low-income families, announcing $488 billion in
funding that could turn tens of millions of families into new
homeowners and renters in the next decade.
More than $34 billion will be spent in the five-county Los
Angeles area, helping more than 360,000 families in the region,
which has seen home prices and rents soar in the last year as the
economy continues to create more jobs than housing. One study
last year found Los Angeles and Orange counties to have the
nation's widest gap in affordable housing.
California will get $84 billion of the pot.
Housing and Urban Development Secretary Andrew Cuomo
said Thursday that he will require the two biggest housing finance
companies under his influence, Freddie Mac and Fannie Mae, to
boost the number of mortgages made available to low- and
moderate-income families over the next decade by more than 20%,
or nearly a half-trillion dollars.
Los Angeles County would receive the lion's share of funding in
the Southland, $17.6 billion, the third-largest percentage increase
nationwide, behind Washington and Chicago. As a result, the
shortage of affordable housing will be eased, and the huge
homeownership gap between whites and minorities, and between
suburbs and cities will be reduced, Cuomo said.
Under the plan, known as Affordable Housing Goals, the two
companies would raise the number of mortgages used for buying
homes and constructing apartment buildings for low- and
moderate-income families from 42% of its portfolio, to 50%.
A portion of the money will be available to developers for
multifamily housing. Overall, $2.4 trillion in financing would be
provided, up from a previously committed $1.9 trillion, helping an
estimated 7 million more families nationwide obtain housing.
While HUD doesn't issue loans, an agency spokesman said the
government will encourage lenders to be more flexible in their
lending terms. Individuals would obtain the loans through regular
banks and lending agencies.
The additional money for the program would come from funds
raised in the financial markets by Fannie Mae and Freddie Mac,
formerly known as the Federal National Mortgage Assn. and the
Federal Home Loan Mortgage Corp., respectively. The two are
quasi-governmental agencies that buy mortgages of up to $240,000
from traditional lenders and package and sell them to the so-called
secondary markets. The two agencies set lending guidelines to
which banks strictly adhere.
"This action will transform the lives of millions of families across
our country by giving them new opportunities to buy homes or
move into apartments with rents they can afford," he said. "Even
though we've made great, great strides, there is still an obvious
distance to go," Cuomo said.
Housing advocates for low-income people were more reserved
in their assessment of the announcement. While the new loans will
help low- and moderate-income families, they will not reach those
who live in the most strained circumstances--the roughly 6 million
people who are in minimum-wage jobs or are moving from welfare
to work.
"Strengthened affordable housing goals are not enough to help
poor and near-poor households, including working families," said
Jeffrey Lubell, a housing analyst for the Center on Budget and
Policy Priorities, a Washington-based organization that studies
policies that affect low-income and poor people. "HUD's most
recent report to Congress shows there are 5.3 million very
low-income households that cannot afford their rent or live in
substandard housing."
Others said that additional mortgage money only addresses half
the equation.
"It will have a positive effect, but it won't drive the numbers up
alone," said Eric Belsky, director of the Joint Center for Housing
Studies at Harvard University. "What drives significant
homeownership has more to do with the strength of the economy."
Other analysts said that an important gauge for assessing the
program will be how much rental housing will be created in the
Southland, where rental rate hikes have left the poor with few
options.
What's going to be key here is how much rental housing
development there will be, not just single-family housing," said Sally
Richman, policy and planning manager for the city of Los Angeles
Housing Department.
Too few rentals exist in Los Angeles, even for middle-class
wage earners, as community groups bitterly oppose new
development, Richman said. With fewer apartments being built,
families have a harder time finding housing that allows them to save
enough money for a detached home, she said.
Moreover, low-income families far outnumber available funds.
More than 150,000 households signed up last year for 43,000
vouchers that would enable them to find subsidized housing.
Rentals have risen 7% across the Southland during the last year,
far outstripping inflation or pay raises, and breaking the $1,000
barrier in Orange County for the first time ever, according to
RealFacts Inc., a housing research firm in Novato, Calif.
That run-up has mirrored a sharper increase in housing prices,
which also have risen to record levels in the Southland. The median
price--meaning that half sold for more, half for less--of a resale
home in the five-county region hit a record $204,000 in June.
Several housing advocates noted that HUD's announcement
comes just as a congressional committee in the House decided
against spending any new money on housing subsidies for the poor
even though last year Congress authorized an additional 100,000
vouchers for low-income housing.
"This is half the equation," said Jan Breidenbach, director of the
Southern California Assn. of Nonprofit Housing, a trade group for
affordable-housing developers, adding that there remains a vast
shortage of affordable homes for low-income families to buy. "If
you want to house very low-income people, you have to use
subsidies."
The latest push for expanding homeownership comes at a time
when two out of three families nationwide already own a home,
creating an all-time high rate. But minorities and lower-income
families have been unable to keep pace with the gains made in the
broader population.
Minority homeownership, now at an all-time high, has been on
the rise faster in the 1990s than during any other decade except the
1940s. In 1993, 42% of African Americans and 39% of Latinos
owned a home. Today, 46.9% of African Americans and 46.2% of
Latinos own homes. Homeownership by African Americans is
growing almost three times as fast as that among whites, and Latino
homeownership nearly five times.
Much of the increase can be attributed to a combination of
overall low interest rates as well as the government's enforcement of
the Community Reinvestment Act, which requires banks to serve
low-income communities. During President Clinton's first four years
in office, loans to African Americans increased by 72% and loans to
Latinos increased by 45%.
Raising the goals, Clinton said, "will help us generate increased
momentum in addressing the nation's housing needs."
Copyright Los Angeles Times
chris |
