Sec. 201. Down payment assistance program for communities formerly segregated by law
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/bill/116/s/787/is/section-201A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Congress finds the following: For generations, buying a home has been the primary way working families build wealth. A home is not only a place to live, but also an asset that may appreciate, help fund a new business, finance an education, or cover retirement expenses. A home provides stability and financial predictability, which are important foundations for prosperity and access to opportunity for a family. For decades, the Federal Government subsidized homeownership—for White families.
Until the 1960s, the Federal Government systematically denied African Americans and other marginalized groups the ability to obtain mortgage credit, buy homes, and build wealth for their families while subsidizing the American dream for White families. The Federal Government, through the Home Owners’ Loan Corporation and the Federal Housing Administration, standardized and institutionalized discriminatory policies on the basis of race, national origin, and religion that reflected practices in the private sector and became a model for their widespread adoption across the housing industry.
Racist restrictive covenants and zoning ordinances also robbed families of color of the opportunity to live and build opportunity for their families in the community of their choice. In the years before the 2008 financial crisis, lenders targeted borrowers of color with abusive loans while government regulators sat on their hands, further extracting wealth from these same communities. The legacy of housing discrimination and regulatory negligence is a contributor to a large and growing gap in wealth and outcomes between Black and White families.
The median income White family in the United States has almost 10 times the wealth of the median income Black family in the United States. The gap between the White homeownership rate and the Black homeownership rate is bigger today than it was when housing discrimination was legal. Seventy-five percent of formerly redlined communities are still low-income and 66 percent are still minority communities. The purpose of this section is for the Federal Government to take the first step toward addressing the racial wealth gap that it contributed to creating by helping individuals or descendants of individuals who were harmed by housing discrimination or negligence by the Federal Government.
In this section: The term eligible resident means a resident of a geographic area, as defined by the Secretary by regulation under subsection (g), who— is a first-time homebuyer; has an income that is less than 120 percent of the area median income; and resided in that geographic area during the 4-year period preceding the date of enactment of this Act; resided in that geographic area for a period of 4 years before moving out of the geographic area subsequent to a foreclosure, short sale, or deed in lieu of foreclosure on a home that— was the primary residence of the resident; and was purchased or refinanced during the period beginning on January 1, 2001, and ending on December 30, 2008; or resided in that geographic area for a period of 4 years before moving out of the geographic area due to a major disaster declared by the President or a State, territorial, or Tribal government.
The term first-time homebuyer means an individual (and if married, the spouse of the individual) who— has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property; or who surrendered an ownership interest in a principal residence during the 3-year period ending on the date of purchase of the property as part of a divorce proceeding. The term Secretary means the Secretary of Housing and Urban Development. There is established in the Office of Housing of the Department of Housing and Urban Development a fund, to be administered by the Secretary, that shall be used— to provide grants to eligible residents to purchase homes; for outreach to financial institutions in targeted areas and eligible residents, including for the administration of that outreach; for counseling or financial education administered by counseling agencies approved by the Secretary in order to ensure sustainable homeownership; to create and maintain the database described in subsection (g)(3); and to maintain any records required to implement this section.
Eligible residents may receive a grant from the fund established under subsection
(c)in an amount equal to— not more than 3.5 percent of the appraised value of the property to be purchased; or if the appraised value is more than the principal obligation amount limitation for mortgages insured under title II of the National Housing Act ( 12 U.S.C. 1707 et seq.), 3.5 percent of the maximum principal obligation limitation for the property to be purchased. An eligible resident is not required to obtain a mortgage that is insured under title II of the National Housing Act ( 12 U.S.C. 1707 et seq.) as a condition of receiving a grant under this section. An eligible resident is not required to purchase a home within the geographic area described in subsection (b)(1)(C) as a condition of receiving a grant under this section. Not later than 1 year after the date of enactment of this Act, the Secretary shall— in consultation with interested parties, including housing counseling agencies approved by the Secretary and individuals or groups with expertise in fair housing, finalize regulations relating to the use of the fund established under subsection (c), including defining the geographic areas in which residents are eligible to receive grants through the fund, which shall include— census tracts graded as hazardous or definitely declining in maps drawn by the Home Owners' Loan Corporation that are, as of the date of enactment of this Act, low-income communities; census tracts that were designated for non-White citizens in jurisdictions that historically had racially segregated zoning codes and are, as of the date of enactment of this Act, low-income communities; and census tracts that are racially or ethnically concentrated areas of poverty, which shall mean a census tract— with a non-White population of 50 percent or more; and in which not less than 40 percent of families living in the census tract have incomes that are at or below the poverty line; or in which the average tract poverty rate is 3 or more times the average tract poverty tract for the metropolitan or micropolitan area; finalize regulations relating to the disbursement of funds under this section to ensure that eligible residents are able to receive funds before the closing date for their home, which may include creating a program that allows a lender to be reimbursed by the fund established under subsection
(c)if the lender— provides the eligible resident with funds for the closing; or allows eligible residents to be preapproved to receive assistance under this section when arranging financing for their home; create a publicly accessible database that allows individuals, real estate professionals, and lenders to determine whether a borrower is eligible for assistance under this section; and establish methods to verify that an individual is an eligible resident. Out of funds in the Treasury not otherwise appropriated, there is appropriated to the fund established under subsection
(c)such sums as may be necessary for each of fiscal years 2020 through 2029 to provide grants under this section and to carry out consumer education efforts related to this section. Section 5(b) of the Real Estate Settlement Procedures Act of 1974 ( 12 U.S.C. 2604(b) ) is amended by inserting after paragraph
(14)the following: Information relating to the down payment assistance program established under section 201 of the American Housing and Economic Mobility Act of 2019 . . Section 203(f)(1) of the National Housing Act ( 12 U.S.C. 1709(f)(1) ) is amended by inserting , including the down payment assistance program established under section 201 of the after American Housing and Economic Mobility Act of 2019 , mortgage products .
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Sec. 201
Down payment assistance program for communities formerly segregated by law
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