NY to offer more mortgage assistance in low-income areas, in a bid to close the racial wealth gap

New York’s low-interest loan program will offer larger down payment assistance loans, expand to more lenders and provide additional assistance to distressed homeowners, in a bid to bridge the gap. wealth gap between whites and minorities, state officials said this week.

Governor Andrew M. Cuomo said he would ask the New York State Mortgage Agency, or SONYMA, to increase the minimum down payment assistance loan amount from $3,000 to $7,500. $, among other changes. Interest-free down payment loans can be canceled after 10 years and can cover up to 3% of the purchase price.

The state also plans to allow more small banks, community development financial institutions, and local credit unions to become eligible to offer SONYMA loans in low-income areas, and it will allow SONYMA lenders to help struggling homeowners by lowering interest rates, forgiving debt and making other changes to loan terms, he said.

Current program mortgage rates are as low as 2.625%. It is open to first-time buyers who meet certain criteria, such as income and purchase price ceilings.

“We know that the racial wealth gap is overwhelmingly a housing wealth gap and New York is taking action to correct the systemic injustices that have kept households of color from becoming wealthier,” Cuomo said. in a statement Monday. “Expanding access to loans and assistance for first-time homebuyers in communities disproportionately affected by the foreclosure crisis and predatory and illegal redlining practices is an important step towards equalizing homeownership rates and creating a stronger, fairer, and fairer New York for all.”

A typical white family had a net worth of $171,000 in 2016, nearly 10 times the net worth of a typical black family, the Washington, DC-based nonprofit Brookings Institution reported last year. One of the reasons for the gap is the highlighting or denial of access to credit in predominantly black communities, the political group said. The practice was named after the red lines that the federal government and lenders drew on maps, beginning in the 1930s, to delineate areas deemed risky for federal mortgages. The wealth gap cannot be fully explained by differences in income, debt or education, the policy group found.

Helping more people become homeowners is good for anyone hoping to increase their wealth, not just for minorities, said Quentin J. Hardy, Long Island regional manager for South Carolina-based lender Movement Mortgage and author of “A Guide to Becoming a Homeowner for African Americans”. .” The book is available at yourqualifier.com.

Hardy, who is black, said he and his wife spent a year living with his parents to save up to buy their first house in Freeport in 1997 for $160,000, and got help from relatives to raise a down payment 3% for their federal housing administration. to lend. Five years later, they sold the house for double the amount they paid, he said.

“The best thing most people can do to positively impact their financial future is to become a homeowner,” he said. “Anything we can do for any group, not just black people, that increases homeownership and increases it in a sustainable way…it will have a positive economic effect on that group.”

Elaine Gross, founder and president of the Syosset-based nonprofit Erase Racism, warned that as the state expands the program, it needs to make sure buyers don’t take on more debt than ‘they can’t bear it.

“A program like this, if done well, will be beneficial,” she said. “One of the big traps you don’t want is for people to walk into a house and not be able to stay there.”