The House has given the green light to President Bush's plan to help 40,000 families annually become home owners. At the same time, the President has signed a continuing resolution that will fund suspended Federal Housing Administration mortgage insurance programs through the end of the month.
The House-passed measure provides $400 million in grant funds to help defray closing costs. The Senate Banking Committee is scheduled to vote on a similar bill on Oct. 14. The American Dream Downpayment Act, sponsored by Rep. Katherine Harris (R.-Fla.) and cleared by lawmakers on a voice vote, provides for $200 million in grants, for each of fiscal years 2004 and 2005, for low-income, first-time homebuyers.
HUD estimates that an average of $5,000 will go to each family to cover both their downpayments and closing charges.
The grants will be distributed through HUD's HOME program, which has a proven track record in providing state and local governments with grants. The recipients will be households with incomes below 80 percent of the area median income.
Rep. Harris called the House vote "a dramatic step toward fulfilling the obligation of a decent and compassionate society - the extension of quality, affordable housing opportunities to every American."
The bill was approved by the Housing Subcommittee on May 7 and the full House Financial Services Committee on May 21.
When the bill was passed by the full House on Wednesday, Subcommittee Chairman Bob Ney, R-Ohio, said "this single step forward will yield enormous benefits for not only (low-income) families, but for the neighborhoods, communities, and ultimately the nation in which we all live."
Saving enough money to cover up-front loan charges is considered the single greatest obstacle to home ownership for any first-time buyer.
Said Committee Chair Michael Oxley, R-Ohio: "By helping those struggling to meet these costs, we can give more families an opportunity to build assets, we can get more Americans into homes, we can create jobs, and we can boost local economies."
The Mortgage Bankers Association praised the House for passing the legislation, which President Bush first propose during his 2000 election campaign. So did Secretary Mel Martinez of the Department of Housing and Urban Development, which now bills itself as "the nation's housing agency."
And both called on the Senate to do the same. "I strongly urge the Senate to join us as we move closer to that day when everyone who can afford to own a home can become stakeholders in their own neighborhoods," Sec. Martinez said at a Capital Hill press conference.
At the White House, meanwhile, the President has put his John Hancock on a resolution that will fund government operations, including those that were suspended by the FHA on Sept. 16, through the end of October. Congress is hoping to pass regular funding bills by Sept. 30.
The Continuing Resolution insures that the single-family mortgage insurance program, which has not been suspend, will continue to run at normal capacity without interruption. It also provides $3.8 billion to restart the General and Special Risk Fund, which insures multi-family, condominium and reverse mortgages.
Of that amount, $2 billion will cover loans caught in the pipeline when the programs were shuttered, and the rest will be used to cover future endorsements for federal mortgage insurance.