A proposal for a new 20-year mortgage has been announced via a group of Senators via the Senate Committee on Banking, Housing and Urban Affairs.
According to the L.A. Business Journal, Senators Mark Warner (D-VA), Chris Van Hollen (D-MD), Tim Kaine (D-VA), and Rev. Raphael Warnock and Jon Ossoff (D-GA) introduced the Low-Income First-Time Homebuyers Act, which would create a new 20-year loan for first-time homebuyers whose median incomes were 120 percent or less than their area’s median income.
The legislation would create a partnership program between HUD and the Treasury Department to subsidize interest rates and origination fees that would put the monthly payments of the loans on par with the 30-year Federal Housing Agency-backed mortgage.
“For too long, too many of our neighbors have been excluded from our nation’s housing market, unable to build equity and security after buying and moving into their first home,” said Sen. Warnock via press release. “Home equity accumulation is one of the best ways to build generational wealth for hardworking families in Georgia and across the nation, and to close the racial wealth gap.”
Under the proposed program, homeowners would accumulate home equity at twice the rate of traditional 30-year loan borrowers. The L.A. Business Journal notes that the Treasury Department would help originate these new loans by buying Ginnie Mae Mortgage Backed Securities that are collateralized by the LIFT mortgages at a premium and then sell those loans into the fixed-income market at a discount.
For more on the proposed legislation, click here.