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 MIAMI, Nov. 15 /PRNewswire/ -- A broad-based federal strategy to increase the rate of home ownership and expand affordable housing production was announced by U.S. Department of Housing and Urban Development (HUD) Secretary Henry G. Cisneros during a speech to members of the National Association of Realtors (NAR), said NAR.
 Cisneros outlined the plan during a meeting at the NAR's 86th Annual Convention and Trade Exposition. Nearly 20,000 Realtors and guests are attending the convention.
 According to Cisneros, a "comprehensive, national commitment to home ownership" could greatly help spur economic growth and urban revitalization. "It's time to turn things around and I know we can do it," he said.
 The HUD plan is based on four main strategies: 1) to increase the availability of financing insured by the Federal Housing Administration (FHA); 2) develop a strategy specifically to expand home ownership opportunities for low- and moderate-income people; 3) increase home ownership financing by working with state and local governments, as well as private sector sources of capital such as pension funds and foundations; and 4) vigorously enforce anti-discrimination laws. According to NAR President Bill Chee, HUD's plan indicates that the administration realizes the vital role housing plays in stimulating the economy. "A strong housing sector is crucial to the nation's economic health," he said. NAR looks forward to working with HUD on shaping a national housing policy that focuses on increasing home ownership, Chee said.
 Cisneros called the revival of FHA's single-family mortgage insurance program a "key element" in the housing production and home ownership strategy. Although use of the program had tapered off markedly in previous years, FHA use rose by 42 percent over the past year, assisting nearly 400,000 first-time buyers, he said.
 HUD is planning to further expand FHA by proposing an increase in the program's mortgage insurance limit from the current maximum of $152,725 to $172,675, Cisneros said.
 NAR would support such a measure; the association has long contended that FHA insurance limits should be adjusted to reflect home prices in high-cost markets. Such an increase would expand FHA's reach by enabling more buyers to use the program in more areas.
 "We arrived at this proposal (raising the limit) after we took a look at middle-class working people in high-cost areas and discovered they couldn't get FHA loans. ... They make good money but they live in communities where housing costs are high, and they can't accumulate enough money for down payments on conventional mortgages," Cisneros said.
 In addition, HUD is considering a no-down payment FHA program targeted to low-income families in urban renewal areas. The mortgage insurance limit for this program would be restricted to about $75,000 and an income restriction would be imposed, which would possibly be 115 percent of area median income, Cisneros said. Users would not be required to pay closing costs under this program, he noted.
 HUD also is considering a proposal to allow penalty-free withdrawals from Individual Retirement Accounts to be used toward a down payment on a home. This plan would help alleviate the down payment shortage many buyers face, Cisneros said. The HUD proposal would permit withdrawals from the accounts of family members such as parents or grandparents to enable the buyer to make the purchase, he said. NAR has testified before Congress numerous times in support of such a plan.
 Another part of HUD's home ownership strategy would involve helping working public housing residents to become home owners. Under this plan, they could purchase FHA-foreclosed homes or other publicly-owned single-family homes. "Many meetings with public housing residents have convinced us that most of them prefer to buy and move to a private home of their own, rather than purchase their existing apartment," Cisneros said.
 HUD is planning to act as a "catalyst" for housing capital, tapping new funding sources such as pension funds, life insurance companies and other institutional investors, to draw more funds into home production and home ownership. "Leveraging is key to all the new initiatives -- using the federal government's constrained budget in coordination with the additional private and public investment, resources and expertise," he said.
 With regard to anti-discrimination efforts, HUD's enforcement of the fair housing and fair lending laws is becoming increasingly aggressive, Cisneros noted. "We are changing the ways that we do business, and we mean business. We cannot accomplish our goal of expanding affordable home ownership unless we end discrimination and allow genuine choice," Cisneros said. NAR strongly supports equal opportunity in housing, and promotes fair housing education for members and the public. The association has an ongoing agreement with HUD, the Voluntary Affirmative Marketing Agreement (VAMA), which commits members to compliance with the federal fair housing law.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing nearly 750,000 members involved in all aspects of the real estate industry.
 -0- 11/15/93
 /CONTACT: Trisha Morris, 202-383-7560, or Liz Duncan, 202-383-1043, both of the National Association of Realtors/

CO: National Association of Realtors; U.S. Department of Housing and
 Urban Development ST: District of Columbia IN: FIN CST SU: EXE ECO

DT-DC -- DC019 -- 4503 11/15/93 13:57 EST
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Publication:PR Newswire
Date:Nov 15, 1993

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