By Aaron Allen, The Seattle Medium
Federal Housing Administration (FHA) Commissioner Julia Gordon recently visited Seattle to attend three roundtable events with housing organizations in the region. During her visit Gordon heard from assistant housing providers, housing counselors, lenders and advocacy groups and talked about the barriers and challenges they were facing and how HUD and the FHA could help leverage their influence to expand homeownership and housing opportunities in the Pacific Northwest.
“We were thrilled to be able to invite the commissioner out to Seattle to get a chance to hear directly from folks who work on the ground with low-income community members, homebuyers and first-time homebuyers,” says Margaret Salazar, the NW Regional Administrator for HUD. “We work to really understand not only the challenges of getting folks into a position of homeownership, but some of the successes and the tools that they are using to get folks into safe and stable homeownership.”
While homeownership may not be for everyone, Gordon says that the FHA is focused on reducing barriers for homeownership that disproportionately impact underserved communities.
“FHA is focused every day and in everything we do in trying to increase opportunities for homeownership, particularly for population that have been underserved in the past,” says Gordon. “As you may know people of color have lower homeownership rates than white communities. It also difficult for lower and moderate-income families to achieve homeownerships.”
According to FHA, it insures mortgages for single family homes, multifamily properties, residential care facilities, and hospitals, which provides lenders with a government guarantee if a borrower defaults.
“What the FHA program does is provide mortgage insurance on mortgages made people who qualify for our program,” explained Gordon. “The purpose of this insurance is to encourage mortgage lenders to serve the communities they might not otherwise serve. And borrowers they might not otherwise serve.”
Home and land ownership is one of the foundations families use to build wealth. Yet, the system has not been kind to the African Americans, and this has hindered the African American community in taking advantage of the wealth building opportunities associated with homeownership.
Over the decades, redlining, gentrification and discrimination continued to disenfranchise and alienate African Americans from purchasing and using property to build generational wealth. However, FHA and HUD are looking to remedy this by creating variable pathways to help increase homeownership in historically underserved communities.
“To be candid, for the first 40 years that FHA was around, FHA did not serve communities of color very well, if at all,” says Gordon. “You may have heard of redlining where lenders would choose not to lend at all in certain geographies and that’s really a concept that dominated a lot of lending back in the day. A lot of our efforts now are trying to reverse the effects of redlining. Our focus right now particularly on Black homeownership is designed to help reverse the bad things that happened in the past and try to create more opportunities for Black households and other households of color to have the advantages that come from homeownership.”
In an effort to increase homeownership, Gordon says that FHA is planning to reduce annual mortgage insurance premium by 30 basis points. This reduction will benefit an estimated 850,000 borrowers over the coming year, saving these families an estimated $678 million in aggregate on their mortgage payments. An estimated $1,400 savings in the first year for mortgages at the national median home price of $467,700.
In addition, the FHA also is adding positive rental payments history in its credit assessment for potential homebuyers, as well as allowing post-COVID borrowers to have more flexible requirements for qualifying despite employment and income gaps due to pandemic.
“This [program] is designed to provide Black families, families of color, low- and moderate-income families to have the advantages of stability, the advantages of being able to build wealth, accumulate assets, live in neighborhoods with opportunities and good schools,” says Gordon. “And that’s what these efforts really come down to making sure everybody is able to live in the type of home they want to live in and should never be locked out because of historical injustices.
According to Salazar, FHA is also partnering with a number of local organizations like Homesight and others to increase awareness of FHA programs and its offerings.
“Because we know that this is a competitive housing market to say the least, we wanted to explore the role that FHA can play in expanding those opportunities,” Salazar. “We are excited to be partnering with a number of organizations to raise awareness on how to use FHA and some of these other resources to be able to access homeownership. Working with lenders and home purchasers and dispel the myth that homeownership is out of reach because there are folks that are able to achieve homeownership.”
