SALEM — Proposed legislation could significantly increase state funding and widen eligibility for down payment assistance for low- and moderate-income home buyers.
The bill, House Bill 3192, would set aside $5 million for the next two years to help people earning up to their county’s median income a down payment on a home. The money would be distributed in the form of grants to local nonprofits, housing authorities and governments.
The state already has a grant program to help first-time home buyers from low-income households. It’s funded by specific fees. Since 2009, when the program began, the amount dedicated to the program has hovered below or at about $1 million per biennium.
A $20,000 cap for individual recipients means the funding could assist at least 250 families, advocates say, although some funding would be allowed to go to administrative costs.
The legislation would create a specific down payment assistance fund and increase the pool of people eligible for state help with down payments. Currently, only people who make 80 percent or less of the area’s median income are eligible. HB 3192 would allow people making as much as the full median income eligible.
In testimony before the House Revenue Committee Monday, Rep. Mark Meek, D-Clackamas County, a Realtor and sponsor of the bill, acknowledged that the program has limits in the face of Oregon’s housing crunch.
“While this is not a complete solution, it will provide a meaningful boost to assist first-time buyers from low-income households,” Meek said.
The bill is one of several legislative responses to the state’s housing issues. The proposal appears to be less divisive than initiatives such as repealing a state’s mortgage interest tax deduction or lifting a statewide ban on rent control.
State Rep. Knute Buehler, a Republican from Bend, a popular tourist destination where owning a home is out of reach for many low- and moderate-income earners, called the bill a “great concept.”
But he asked the Department of Housing and Community Services for more information about how state funding for all types of housing assistance is distributed geographically, saying he was concerned that grants had been concentrated in certain counties “at the expense of others.”
Housing and Community Services says it has worked recently to improve geographic equity in grant distribution.
Any new spending will likely face extra scrutiny as lawmakers are trying to resolve a $1.6 billion gap. But advocates say that home ownership contributes to financial and housing security because once a down payment is made, monthly mortgage payments are often cheaper than monthly rents, and do not rise as rents do.
Emily Reiman, executive director of the nonprofit Neighborhood Economic Development Corporation, called the down payment assistance program a “powerful tool.”
Citing data from the Corporation for Enterprise Development, a Washington, D.C. nonprofit that advocates for economic opportunities for low-income people, Reiman told lawmakers Monday that Oregon ranks 46th among U.S. states in the rate of homeownership.
That’s in part because while monthly mortgage payments may be doable for many families, the initial down payment is beyond their means, Reiman said.
“What we’re seeing is generations of low-income and working-class families that are not going to be able to afford home ownership,” Reiman said, “and as a result of that, they’re not going to be able to afford the housing and financial security that comes with home ownership.”
Currently, the approximately $1 million in state help for first-time home buyers comes from fees people pay when they file certain documents, such as foreclosure forms.
Housing advocates are angling this session to increase those document recording fees from $20 to $40 through separate legislation.
The current allocation, Reiman said, is a “drop in the bucket” compared to need.
NEDCO serves Marion, Clackamas and Lane counties. Reiman said the organization, is approached by about 400 low-income potential first-time buyers each year who can’t afford the down payment. Through current funding, the organization can provide only about a dozen down payment assistant awards. The organization’s awards currently top out at $10,000, and must be repaid if the homeowner moves, rents out the home or refinances.
The bill is scheduled for a work session Thursday before Revenue, and is expected to be referred to the Joint Committee on Ways and Means, the Legislature’s budget-writing committee.