Warner, Kaine, Colleagues Introduce Legislation To Help First-Time, First-Generation Homebuyers Narrow The Wealth Gap

WASHINGTON, D.C. – Today, U.S. Senators Tim Kaine (D-VA), Mark R. Warner (D-VA), Chris Van Hollen (D-MD), Rev. Raphael Warnock (D-GA), Jon Ossoff (D-GA), and U.S. Rep. Emanuel Cleaver (D-MO) introduced bicameral legislation to help first-time, first-generation homebuyers – predominately Americans of color – build wealth much more rapidly. By offering new homeowners a 20-year mortgage for roughly the same monthly payment as a traditional 30-year loan, LIFT will allow individuals traditionally underrepresented in the housing market to grow equity twice as fast. 

“Homeownership is not only a key part of the American dream but also one of the best ways to build generational wealth,” said Sen. Kaine, a former fair housing attorney. “I’m proud to be joining my colleagues in introducing this bill to help first-generation homebuyers, particularly those from communities of color, build wealth and help address the racial wealth gap in our country.”

“Homeownership is one of the key ways Americans build capital and wealth. Unfortunately, racism and systemic discrimination in our housing laws have put this opportunity out of reach for far too many families of color,” said Sen. Warner. “The LIFT Act will help narrow the racial wealth gap by allowing qualified home buyers to build equity – and wealth – at twice the rate of a conventional 30-year mortgage.”

“It’s about time Congress took bold steps to support the American dream of homeownership for working class families that for too long have been left behind, which will not only allow more hardworking Americans to build generational wealth but also help close the racial wealth gap,” said Rep. Cleaver. “The LIFT Act builds upon President Biden’s economic agenda that focuses on building our economy from the bottom up and middle out, allowing more families to qualify for homeownership and build equity and stability in their home at an accelerated rate. As the Ranking Member of the Subcommittee on Housing and Insurance, I’m proud to introduce this legislation with Senator Warner and his colleagues in the Senate, as we seek to ensure every American has an opportunity to share in the prosperity of this great nation.”

“Homeownership is a key tool for Americans to grow their wealth and build economic stability, but for far too many people, this goal remains out of reach. This is especially true for people of color – which is why we need to address the legacy of discrimination in our housing policy. This bill will help level the playing field for first-time, first-generation buyers and empower them to build more wealth,” said Sen. Van Hollen.

“Housing is dignity and security for hardworking families in Georgia and across the nation, and owning a home is a long-held pathway to building generational wealth. But too many families have been left out of the American dream of buying a home, and Congress should act to make it a reality for more people,” said Sen. Reverend Warnock. “I’m proud to join my colleagues in reintroducing the LIFT Act to help put the dream of homeownership in reach for working families in Georgia and nationwide, boosting our economy and helping provide families safety and security. Let’s get this done.”

“This is about helping first-time homebuyers pay down their mortgages and build wealth in their homes more quickly. I'm teaming up with Senator Warner to help low-income Georgians and first-time homebuyers build generational wealth,” Sen. Ossoff said.

First introduced in 2021, the Low-Income First Time Homebuyers (LIFT) Act would establish a program at the Department of Housing and Urban Development (HUD), in consultation with the Department of the Treasury, to sponsor low fixed-rate 20-year mortgages for first-time, first-generation homebuyers who have incomes equal to or less than 120 percent of their area median income. Treasury would subsidize the interest rate and origination fees associated with these 20-year mortgages so that the monthly payment would be in line with a 30-year Federal Housing Administration (FHA)-insured mortgage.

For example: A first time homebuyer of modest means who purchases a property for $210,000 is likely to put down $10,000 and take out a $200,000 mortgage. In today’s market, a lender would offer this borrower a 6.5% 30 year FHA insured mortgage, for which the borrower would pay an annual 0.55% FHA insurance fee and a 1.75% up-front insurance fee, which would be folded into the mortgage. The borrower would have a monthly payment of $1,377. Under the LIFT program, the lender would instead offer this homebuyer a 5.5% 20-year FHA insured mortgage, which would include an up-front 4.00% FHA fee that would be folded into the loan and no annual FHA premium. The borrower would have a monthly payment of $1,430. By paying roughly the equivalent monthly payment, a borrower with a LIFT loan would build equity more than twice as fast.

By allowing borrowers to build equity through their homes at twice the rate of a comparable 30-year loan without meaningfully increasing the monthly payment, LIFT will improve the power of homeownership for millions of families. Coupled with well-targeted down-payment assistance, the LIFT program will make meaningful progress in narrowing the racial wealth gap, expanding and greatly strengthening the wealth-building benefits of homeownership in communities too long left behind by our existing financial structures.

A copy of the legislation is available here. A summary is available here.

This legislation has the support of a number of organizations including the National Consumer Law Center (on behalf of its low-income clients), the Center for Responsible Lending.

“The LIFT Act would be a groundbreaking new approach to help close the nation’s significant and troubling shortfall in homeownership among people of color and the associated substantial wealth racial gap.  Focusing eligibility on first-time, first-generation homebuyers would target this assistance to families and individuals most in need of assistance while also narrowing racial homeownership gaps. And the use of subsidies to make a 20-year mortgage as affordable as a 30-year loan puts homebuyers on a path to rapidly accumulate home equity while also making homeownership less risky. The proposed approach is also highly cost effective by leveraging federal subsidies to enable homeowners to build wealth over time more quickly and effectively,” said Chris Herbert, Managing Director, Harvard Joint Center for Housing Studies.

“Homeownership is the major source of wealth and assets for most American families. Senator Warner's proposed LIFT Act is a worthy initiative that can help families build equity faster and Opportunity Finance Network is pleased to endorse this legislation,” said Jennifer A. Vasiloff, Chief External Affairs Officer, Opportunity Finance Network.

“Homeownership is the best way to build wealth, especially for lower and moderate income households and families of color, and LIFT supercharges that wealth-building. By helping homeowners get a 20-year mortgage with a lower monthly payment consistent with a 30-year mortgage, LIFT preserves affordability and supports homeownership, but also allows homeowners to rapidly accumulate equity in their homes. LIFT is among the most effective ways policymakers have to address the nation’s pernicious problem of large and widening economic disparities,” said Mark Zandi, Chief Economist, Moody’s Analytics.

“One of the most important benefits of homeownership is the ability to build wealth. In fact, it is the primary way millions of middle-income Americans have achieved economic stability for 75 years. While legally sanctioned racial discrimination seems like a thing of the past, outlawed in the 1968 Fair Housing Act, the reality is that the housing wealth affect continues to disadvantage people of color whose parents and grandparents never benefitted from a wide range of government programs that made homeownership possible to most Americans,” said David Dworkin, President and CEO, National Housing Conference. “The LIFT bill evens that playing field and will not only help close the wealth gap, but it will strengthen the economy for all Americans. Senator Warner has a long history of thinking outside the box and writing legislation that makes a difference in new and innovative ways. The LIFT Act is another example of his leadership.”

“The LIFT Act allows more first-time, first-generation prospective homeowners to realize their American Dream. This creates more generational wealth across different communities and supports low to middle-income Americans. AREAA is proud to support the continued efforts by Senator Warner to pass this legislation,” said Kurt Nishimura, President, Asian Real Estate Association of America (AREAA).

“NAHREP is pleased to support the re-introduction of the LIFT Homebuyers Act. The bill’s goal of helping homeowners expedite earning equity in their properties means the opportunity to build intergenerational wealth is all that more achievable,” said Gary Acosta, Co-Founder & CEO, NAHREP. “NAHREP is committed to helping Latinos realize their economic potential through homeownership and is encouraged by Senator Warner, Senator Kaine, Senator Warnock, Senator Ossoff, and Senator Van Hollen’s commitment to the same goal as evidenced in the LIFT Homebuyers Act.”

“The Virginia Housing Alliance applauds Senator Warner’s leadership and commitment to ensuring that the wealth building opportunity of homeownership becomes a reality for many more Americans through the Low-Income First Time Homebuyers Act (LIFT Act). In Virginia, the homeownership rate for non-Hispanic white households is 73% compared to just 48% for Black households. The LIFT Act will provide a transformative opportunity to close this gap and make the American dream of homeownership a reality for thousands of first time homebuyers in Virginia,” said Brian Koziol, Executive Director, Virginia Housing Alliance.

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