With the 2016 presidential election inching closer at a seemingly glacial pace, one issue that many of the main candidates have neglected to address is housing and its impact on the country’s economy.
Several now-former candidates for President spoke at last year’s New Hampshire Housing Summit hosted by the J. Ronald Terwilliger Foundation for Housing America’s Families and the Bipartisan Policy Center, but housing doesn’t often get mentioned in the stump speeches of Donald Trump, Ted Cruz, Marco Rubio, Bernie Sanders or Hillary Clinton.
But it appears that is about to change as Clinton, the Democratic hopeful and former Secretary of State, recently announced a sweeping economic agenda that includes some major housing reforms.
Clinton’s plan, which her campaign bills as the “$125 billion Economic Revitalization Initiative,” includes programs designed to “create good-paying jobs, rebuild crumbling infrastructure, and connect housing to opportunity in communities that are being left out and left behind.”
According to Clinton’s campaign, the plan is part of Clinton’s “Breaking Every Barrier Agenda,” which includes “providing every child in America a world-class education, “dismantling the school-to-prison pipeline, “tackling disparities in health and nutrition, and “fighting for environmental justice,” as well as housing reforms.
Part of Clinton’s $125 billion program is a $25 billion housing investment program that aims to “lift more families into sustainable homeownership,” by offering down payment assistance, increasing housing counseling programs, expanding beyond traditional credit scores, building more affordable rental housing, clarifying lending rules and other changes.
Clinton’s campaign states that the $25 billion housing investment program targets the blight that is still dragging down many communities, addresses “skyrocketing” rents that are impacting the country’s working families, and the “barriers” that prevent many families from becoming homeowners.
“Homeownership is about more than just owning a home. It is about putting roots down in a community with better schools, safer streets and good jobs,” Clinton’s campaign states.
“And it is about building wealth, as homeowners build equity in their home one mortgage payment at a time,” Clinton’s campaign continues. “But this opportunity is increasingly out of reach for too many families, particularly families of color.”
According to Clinton’s campaign, 42% of black households and 47% of Latino households own a home, compared to the homeownership rate among white households, which stands at 72%.
“We must make sure that everyone has a fair shot at homeownership,” Clinton’s campaign states.
But Clinton argues that this can and should be accomplished without lowering lending standards to reach families that are “not prepared” to become sustainable homeowners.
“Instead, we should lift more families up to enter a housing market that remains strong and inclusive,” Clinton’s campaign states.
Clinton’s campaign lays out four “critical” steps to improve the country’s housing system, including:
- Help responsible homeowners save for a down payment
“Hard-working families of modest means often find that saving the money needed for a down payment on their first home presents an insurmountable barrier to homeownership,” Clinton’s campaign states.
To help would-be homeowners save for a down payment, Clinton’s plan will provide funding for initiatives in “underserved communities” to match up to $10,000 in savings for “responsible homeowners who earn less than area median income to put towards a down payment on a first home.”
According to Clinton’s campaign, this plan will both incentivize savings and put the opportunity of homeownership within the reach of more families living in communities that will be well-served by more homeowners.
- Support counseling programs for the significant financial commitment of homeownership
Clinton’s plan will increase funding and broaden credit terms for housing counseling programs shown to help borrowers become sustainable homeowners.
- Update underwriting tools to reflect today’s job market
According to Clinton’s plan, to better equip government agencies to assess credit risk in today’s increasingly dynamic economy and broaden the pool of credit-worthy borrowers eligible for a loan, Clinton will push them to use the new generation of credit testing tools.
- Clarify the rules of the road to expand access
According to Clinton’s campaign, lending in many communities, particularly communities of color, has been held back by uncertainty over the rules of the road.
Clinton’s campaign states that the Clinton Administration would give every government agency that supports mortgage lending 90 days to present a plan to clarify their lending requirements.
“With this clarity, good lenders will finally have the confidence to make loans to all sustainable borrowers, and bad ones will think twice before violating the rules,” Clinton’s campaign states.
Clinton’s plan also addresses the “skyrocketing rise of rental costs in areas of opportunity.”
According to Clinton’s campaign, nearly half of all renters between age 25 and 34 pay 30% or more of their monthly income on rent, and one-fourth pay over half of their income on rent.
“High rents not only weigh heavily on the pocketbooks of these families but often displace entire communities in the face of local growth,” Clinton’s campaign states. “There is simply not enough affordable rental housing in many parts of the country to keep up with new demand, driving prices in these areas to a level that is unaffordable for large segments of the population.”
Clinton’s plan will tackle these issues by “increasing incentives for new affordable rental housing development and easing the local barriers to building affordable housing in areas of economic opportunity.”
According to Clinton’s campaign, this will be accomplished by:
- Reducing the cost
Clinton’s campaign states that Clinton will defend the current supply of Low Income Housing Tax Credits and provide additional credits in communities where the demand for these credits far exceeds the supply. The additional credits will be allocated through a competitive process to those cities and states that are in the best position to use them effectively.
- Easing local barriers
Clinton’s plan states that the Clinton Administration will encourage communities to implement land use strategies that “make it easier” to build affordable rental housing near good jobs by increasing funding available to those that do through both her infrastructure bank and competitive grant programs, like the Department of Transportation’s TIGER initiative.
Clinton’s campaign also states that Clinton will “defend” the Consumer Financial Protection Bureau, because “we must never again allow borrowers to be taken advantage of in the rush for corporate profits.”
Additionally, Clinton’s plan states that Clinton will enforce fair housing and fair lending laws.
To accomplish this, Clinton states that her administration will ensure that the Department of Justice enforces fair lending and fair housing laws, and will “work closely” with regulators to make sure that Fannie Mae, Freddie Mac and the nation’s lenders “meet their responsibility to provide lending in communities that have been historically underserved.”
Clinton’s plan was met with approval from J. Ronald Terwilliger of the Terwilliger Foundation for Housing America’s Families.
“I applaud Secretary Hillary Clinton for putting forth a comprehensive plan to revitalize our nation’s distressed communities and help the millions of American families struggling with skyrocketing rents and diminished access to first-time homeownership,” Terwilliger said in a statement.
“The Secretary’s proposals to increase investment in the Low-income Housing Tax Credit and encourage communities to embrace land use policies that foster the production of more affordable rental homes are essential to solving the rental affordability crisis,” Terwilliger continued.
“Her ideas to promote sustainable homeownership by adopting new credit-testing tools, increasing support for housing counseling, establishing greater regulatory certainty for mortgage lenders, and providing down payment assistance for lower-income first-time home buyers, are serious and thoughtful,” Terwilliger said. “By releasing the plan, Secretary Clinton has distinguished herself as a candidate who understands the critical connection between stable, affordable housing and opportunity for America’s families.”
The National Association of Home Builders also applauded Clinton’s plan.
“We applaud Secretary Clinton for recognizing the significant role that housing plays in our local communities and economy and being one of the first presidential candidates to present a housing and community development plan that will help boost homeownership, rental housing and employment opportunities for the American people,” Ed Brady, chairman of the National Association of Home Builders, said.
“We appreciate Secretary Clinton's leadership on these vital issues and for putting housing front and center on the national agenda, Brady said. “We hope her vision will encourage other presidential candidates as they move forward on the campaign trail to focus on how housing can spur job and economic growth, something they have disappointingly yet to do.”
(Image above courtesy of JStone / Shutterstock.com)