Student load debt and other factors are standing in the way of more Black Americans purchasing homes, says Marcia L. Fudge, Housing and Urban Development (HUD) secretary, and she vows to address them immediately.
“Homeownership is the cornerstone of the American Dream and the best way to build generational wealth. We have never fully embraced the Fair Housing Act in this country,” Fudge said June 18 during a speech at the Black Homeownership Collaborate at Cleveland State University.
“Today we do. When I say it’s a new day in HUD, it is a new day in HUD.”
Fudge, the first Black woman to serve as HUD secretary, said her department will support a plan called “3 by 30,” which aims to help Black people own a net of 3 million more homes nationwide by 2030. It will involve education and programs at local and federal levels in areas including homeownership counseling, making loans easier to acquire and building more housing stock.
“I am proud that Federal Housing Administration is taking action to make it easier for borrowers with student loan debt to qualify for a federally insured mortgage,” she said.
“This new policy will make a big difference for individuals throughout our nation and is another step in our mandate to promote equity and opportunity for homeownership.”
The FHA student loan monthly payment calculations will “take steps to remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has a disproportionate impact on people of color,” according to the agency.
The policy updates remove the requirement that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing or are not in repayment.
The monthly payment will now be based on the actual student loan payment, which is often lower, and helps home buyers who, with student debt, meet minimum eligibility requirements for an FHA-insured mortgage.
More than 80 percent of FHA-insured mortgages are for first-time homebuyers on average each year. More than 45 percent of these borrowers also have student loan debt, with much of this debt impacting people of color.
“These changes remove unnecessary constraints for otherwise creditworthy borrowers and reinforce FHA’s ability to serve those who need us most, including first-time homebuyers and underserved communities,” said Lopa Kolluri, FHA principal deputy assistant secretary.
“It is critical that we reflect on all of the ways that racial discrimination is woven into our society, especially in our housing system. Too many generations of Black families are locked out of the opportunity to get an affordable mortgage, own their own home, and build wealth to pass on to their children and grandchildren,” said U.S. Sen. Sherrod Brown, D- Ohio, Senate Committee on Banking, Housing and Urban Affairs chair
“I commend HUD and Secretary Fudge for taking this first step to address inequities in our housing system and look forward to continuing to work together to increase access to homeownership and address disparities.”
Fudge, a Cleveland State law school graduate who served as the city’s U.S. Representative, said to loud applause, “When I say there’s no place like home, I meant that.”
“It is so good to be at home.”