Package of reforms to increase access to mortgages for low- and moderate-income borrowers in underserved communities
Governor Andrew M. Cuomo today announced a package of targeted reforms aimed at increasing homeownership rates in communities that have been negatively affected by redlining under the State of State 2021 The program will enable low and moderate income borrowers – especially households of color – to access homeownership and put historically underserved communities on track to close the racial wealth gap. The reforms will increase the number of community lenders who offer loans to the State of New York Mortgage Agency, or SONYMA, in low-income communities, increase down payment assistance for borrowers in underserved areas of the city. ‘State and will give SONYMA the flexibility to make mortgages. changes in times of crisis so that borrowers can stay at home.
“We know that the racial wealth gap is essentially a real estate wealth gap and New York is taking action to correct the systemic injustices that have kept households of color from creating wealth,” Governor Cuomo said. “Expanding access to loans and assistance for first-time buyers in communities disproportionately affected by the foreclosure crisis and predatory and illegal redlining practices is an important step towards equalizing mortgage rates. homeownership and building a stronger, fairer and more just New York for all. “
SONYMA offers low interest mortgage loans and programs to help qualified buyers buy their first home. SONYMA helps remove many of the barriers faced by first-time homebuyers by improving understanding of the whole house purchase process and help secure the funds for a down payment. Experts say equalizing homeownership rates would reduce the racial wealth gap between white and black families by 31%, and the wealth gap between white and Hispanic families by 28%.
Expand collaboration with community lenders
SONYMA’s current status requires lenders to be approved by Fannie Mae or Freddie Mac, which can be a binding threshold for small community banks, community development finance institutions, and local credit unions. Of the 139 credit unions designated to serve low-income areas of the state, only three currently offer SONYMA mortgages. Governor Cuomo will pass an amendment to SONYMA’s statute to expand eligibility to become a SONYMA lender, dramatically increasing the number of institutions able to offer SONYMA mortgage products in underserved communities and the state in general.
Increased down payment assistance for borrowers
One of the main obstacles to house purchase is a lack of resources to cover the down payment and closing costs. The governor will order SONYMA to expand its down payment assistance program for new borrowers by increasing the minimum down payment. Payment assistance from $ 3,000 to $ 7,500, making home ownership a reality for low- and middle-income families.
Stabilize owners in times of crisis
Communities that have historically been victims of redlining have also felt the disproportionate impact of recent crises like the 2008 foreclosure crisis and the COVID-19 pandemic. When low- and middle-income homeowners experience financial disruption like loss of short-term income or unexpected expenses, lenders need the flexibility to provide temporary relief to borrowers by modifying their mortgage. Governor to adopt SONYMA statute amendment allowing SONYMA lenders to provide relief to borrowers in a major market events, in a financially responsible manner. Interventions can include lowering mortgage interest rates, canceling mortgage arrears, or renegotiating mortgage terms to allow borrowers to stay at home during times of crisis.
The Governor will also ask SONYMA to publicize its lending options through a targeted awareness campaign, which will include a combination of print, radio and social media ads. The Agency will also leverage partnerships with local elected officials, trade associations, nonprofit organizations and the faith community to raise awareness in historically demarcated and underserved communities.
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