Real Estate

White House announces new housing initiatives to boost homeownership

New initiatives include changes to ADUs and the 203k rehab program

The White House on Monday announced a series of new initiatives designed to boost U.S. homeownership, alongside data detailing housing aid that has been provided since 2021.

New initiatives include allowing homebuyers to leverage income from accessory dwelling units (ADUs), expanding mortgage lending for U.S. Tribes, the launch of a new pilot program at the U.S. Department of Agriculture (USDA) for alternative eligibility criteria and additional home retention assistance programs for U.S. veterans.

New HUD, FHA policies

The U.S. Department of Housing and Urban Development (HUD) announced through the Federal Housing Administration (FHA) the publication of new policy designed to allow homeowners “to use a portion of the actual or prospective rental income from an [ADU] to be added to the borrower’s effective income for purposes of qualifying for an FHA-insured mortgage,” the White House said.

The new policies will allow U.S. homebuyers to “obtain access to affordable mortgage credit when seeking to purchase properties with ADUs, add ADUs to existing structures, or construct new homes with ADUs,” with such flexibilities designed to allow first-time homebuyers, seniors and inter-generational families to establish generational wealth, the announcement said.

HUD will also continue to work on updates for its 203(k) Rehabilitation Mortgage Insurance Program.

“FHA is considering potential policy changes that could increase the funds available to borrowers to make renovations and repairs,” the announcement said. “Other policies under review would permit more time for completion of those improvements.”

USDA, CFPB initiatives

USDA is also awarding $9 million to nine Native American Community Development Institutions (NCDIs) as a part of its efforts to “increase access to homeownership for Native Americans on Tribal Lands through a relending demonstration program,” the White House said.

The agency will also launch a pilot program “to test alternative eligibility criteria related to community representation for Community Land Trust Organizations” through its Section 502 Direct Home Loan Program.

The U.S. Department of Veterans Affairs (VA) will also launch a new home retention program to for veteran borrowers, saying the new “VA Servicing Purchase (VASP) program will help veteran borrowers who are behind on their mortgage loan who do not qualify for traditional home retention options.”

The Consumer Financial Protection Bureau (CFPB) is also currently developing “reforms to existing rules to help homeowners when they have trouble making their mortgage payments,” the announcement said.

“The reforms build on observations during the COVID-19 pandemic about places where the rules could be streamlined and simplified,” the White House explained. “The reforms will ensure homeowners can get the help they need without unnecessary delays or hurdles and are better able to not fall into foreclosure.”

Response from FHA

During a Monday morning session taking place at MBA Annual in Philadelphia, FHA Commissioner Julia Gordon spoke about the new initiatives.

“Just a few minutes ago, our office posted a new policy for single-family homes with [ADUs], and we’re going to allow both existing rental income for ADUs and prospective rental income to be included in the underwriting process to allow more borrowers to purchase properties with ADUs, to rehab existing houses to ADUs and to construct new homes with ADUs,” she said.

The new policies are designed to help more people build wealth that stems from homeownership, and is also designed to help “boost the supply of affordable housing in many of the neighborhoods where it’s most needed,“ she added.

New data

The U.S. Department of the Treasury also released new data measuring housing aid distributed by the Biden administration thus far, pegging the total figure at more than $12 billion in support. This includes the Homeowners Assistance Fund (HAF), a $10 billion fund designed to assist those financially impacted by the COVID-19 pandemic.

The Treasury Department estimated that HAF “has assisted nearly 400,000 homeowners at risk of foreclosure,” the White House said. “Through Q2 2023, the state, territorial, and Tribal recipients of HAF have expended over $5.5 billion to assist homeowners, a 32% increase from Q1 2023.”

HUD also announced that FHA’s first-time homebuyer rate is “the highest since at least 2000,” and that “FHA has supported nearly 1.8 million homeowners with purchase mortgages, and 83.6 percent or 1.5 million of whom are first-time homebuyers” since the start of the administration.

Flávia Furlan Nunes contributed reporting.

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