HUD Archives: News Releases

$1 BILLION HUD URBAN HOMEOWNERSHIP INITIATIVE
TO CREATE 15,000 INNER CITY HOMEOWNERS EACH YEAR

OAKLAND, CA -- A new federal initiative will stimulate at least $1 billion in annual mortgage loans to help about 15,000 families buy homes in America's inner cities each year, U.S. Housing Secretary Henry G. Cisneros announced today.

"Without costing taxpayers a dime, this new initiative will spark billions of dollars worth of homeownership to help transform the face of urban America and improve the lives of thousands of Americans," Cisneros said.

"Families will benefit because homeownership is the best way for them to build wealth and build better lives for their children," Cisneros said. "Urban neighborhoods will be revitalized as increased homeownership stimulates city economies, strengthens the urban tax base and brings greater stability."

The Targeted Urban Homeownership Initiative will be launched by the Department of Housing and Urban Development in September. Lending institutions worked with HUD to help design the program.

The program will be spearheaded by the Government National Mortgage Association (Ginnie Mae), which is part of HUD. Ginnie Mae helps increase the supply of affordable housing by guaranteeing securities issued by private lenders backed by pools of residential mortgages insured by three federal agencies -- the Federal Housing Administration, the Department of Veterans Affairs and the Rural Housing Service.

Ginnie Mae will cut the guarantee fees it charges to lenders by up to 50 percent when the lenders make home mortgage loans to central city homebuyers in one of 72 communities around the nation.

"By lowering costs for lenders that make inner city mortgages, we will stimulate the lenders to make at least $1 billion a year in new mortgage loans to homebuyers in urban neighborhoods," Cisneros said.

Cisneros made the announcement while in Oakland to attend HUD's Regional Homeownership Summit, a gathering of about 900 housing industry experts working to promote homeownership.

HUD will also work to recruit lenders to participate in the Targeted Urban Homeownership Initiative to further stimulate central city mortgages.

The 72 eligible communities (see attached list) have been designated by HUD as Urban Empowerment Zones, Supplemental Empowerment Zones, Enterprise Communities, or Enhanced Enterprise Communities. Underserved adjacent areas are also eligible for the new program.

The Empowerment Zones/Enterprise Communities initiative, announced by President Clinton in December 1994, is restoring opportunity to distressed communities by providing tax incentives to attract private enterprise, and also provides social services and other programs.

About 33 million people live in the 72 communities and about 60 percent of them are members of minority groups, whose homeownership rate lags behind that of other Americans. While 44 percent of blacks and 43.9 percent of Latinos are homeowners, 71.7 percent of whites own homes.

America's overall homeownership rate now stands at 65.4 percent -- the highest level in nearly 16 years. Since January, 1993 the number of American homeowners has grown by 4.4 million to reach a record-high level of 66.1 million.

The Targeted Urban Homeownership Initiative builds on HUD's success in increasing homeownership and creating more stable communities through President Clinton's National Homeownership Strategy.

The initiative will enhance the National Partners in Homeownership, an unprecedented public-private alliance that is working to dramatically increase homeownership opportunity in America. The group was formed in 1995 by Cisneros at the request of President Clinton.

The Partners include 58 national organizations representing lenders, real estate professionals, home builders, nonprofit housing providers, and federal, state and local governments. They have been working together for more than a year, seeking ways to make homeownership more affordable and available.