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HUD No. 97-95
Further Information:For Release
In the Washington, DC area: 202/708-1420Thursday
Or contact your local HUD officeJune 12, 1997

CUOMO ANNOUNCES INITIATIVES TO BOOST HOMEOWNERSHIP AND CREATE 2 MILLION NEW URBAN HOMEOWNERS BY YEAR 2000

WASHINGTON -- Housing Secretary Andrew Cuomo today announced a series of initiatives to boost homeownership across the nation. He set a goal of creating 2 million new homeowners in America's cities by the year 2000 -- boosting the urban homeownership rate above 50 percent. Cuomo said the measures include:

  • A cut in the Department of Housing and Urban Development's home mortgage insurance premium, announced today by President Clinton, that will save as many as 600,000 first-time homebuyers hundreds of dollars each in closing costs every year. (SEE ATTACHED RELEASE)

  • An additional $10 million investment to create new Homeownership Zones designed to revitalize blighted inner cities by transforming them into thriving neighborhoods of new homes.

  • An initiative by the Government National Mortgage Association (Ginnie Mae), which is part of HUD, to stimulate an additional $1 billion in annual mortgage loans to help 15,000 families in inner cities buy homes each year.

  • Proposed legislation to allow communities to use HUD Section 108 economic development loan guarantees to promote homeownership.

  • Proposed legislation to allow rental subsidies under the Section 8 program to help low-income families become homeowners.

Through the efforts of the Clinton Administration and the National Partners in Homeownership, the nation's homeownership rate has grown to 65.4 percent -- the highest since 1980.

"Unfortunately, there is a huge gap between homeownership in cities and suburbs," Cuomo said. "While 72.1 percent of suburban families own their homes, only 49.4 percent of families in cities are homeowners. We must narrow this gap. As a first step, I'm setting a goal of creating 2 million new urban homeowners by the year 2000, to push the urban homeownership rate past 50 percent."

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

Cuomo called on the National Partners in Homeownership -- a coalition of 63 national groups representing the housing industry, lenders, non-profit groups and all sectors of government -- to work together to achieve the new urban homeownership goal.

Cuomo's announcement came during National Homeownership Week, a nationwide campaign celebrating homeownership and marking the historic strides made since President Clinton challenged HUD in 1994 to devise a strategy for boosting homeownership to an all-time high of 67.5 percent by the year 2000.

Throughout Homeownership Week, industry and community leaders, and federal, state and local officials have been participating in nearly 600 events in more than 300 cities in every state, promoting homeownership opportunities.

Here are additional details on the initiatives Cuomo announced:

HOMEOWNERSHIP ZONES

HUD will use an additional $10 million in grants to cities to create new Homeownership Zones. These large-scale single-family housing developments can spur millions of dollars of additional local investment, helping to reinvigorate the nation's cities. Earlier this year, HUD awarded $30 million in Homeownership Zone grants to Baltimore, Philadelphia, Louisville, Sacramento, Buffalo, and Cleveland.

  • Homeownership Zones enable cities to bring mixed-income and more working households back to inner city neighborhoods in need of revitalization.

  • Other Homeownership Zones, reflecting close public-private participation, will be promoted through the National Partners in Homeownership. These locally developed zones will not require direct Federal funding.

GINNIE MAE

Ginnie Mae will increase its Targeted Lending Initiative commitment by $1 billion and introduce a new mortgage loan pre- qualification software program for future homebuyers. The increased lending will help create approximately 15,000 new urban homeowners.

  • The Targeted Lending Initiative provides a reduction in the guarantee fee charged to lenders that issue inner city home mortgages by up to 50 percent. This will stimulate the lenders to make new mortgage loans to homebuyers in urban neighborhoods.

  • The initiative was started last October. In the first eight months, more than $750 million has been used. The additional $1 billion commitment supplements the $1 billion a year for four years previously committed by Ginnie Mae.

  • The initiative is targeted to 72 urban areas throughout the country designated by HUD as Empowerment Zones and Enterprise Communities. 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.

  • Ginnie Mae will unveil a new software program, designed to demystify the mortgage lending process and to accurately predict costs associated with buying a home.

LOAN GUARANTEES

HUD will propose legislation that would amend the Section 108 Loan Guarantee provision of the Community Development Block Grant (CDBG) program to substantially increase the opportunity to use that program to promote homeownership.

  • City officials are increasingly seeking new, flexible resources to fund new homeownership initiatives. Currently, Section 108 loan guarantees can be used for economic development and property rehabilitation.

  • Through this legislative proposal, the loan guarantees could be used to fund such activities as new construction of affordable homes, downpayment assistance, closing cost assistance, mortgage subsidies, and other means of increasing homeownership. This change would create additional funding for cities without requiring additional appropriations.

    Content Archived: January 20, 2009

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