[Congressional Record Volume 146, Number 100 (Thursday, July 27, 2000)]
[Extensions of Remarks]
[Page E1385]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE HOME OWNERSHIP TAX CREDIT ACT: MAKING THE AMERICAN DREAM A REALITY 
                           FOR ALL AMERICANS

                                 ______
                                 

                       HON. LUCILLE ROYBAL-ALLARD

                             of california

                    in the house of representatives

                        Thursday, July 27, 2000

  Ms. ROYBAL-ALLARD. Mr. Speaker, today, I am introducing the Home 
Ownership Tax Credit Act (HOTCA). This bill will help address a crisis 
in home ownership among low-income Americans.
  The booming economy has helped boost the national home ownership rate 
to a record high level. However, home ownership among low-income 
households, minorities, women and families living in rural areas still 
lags behind. Although the national average of home ownership is 67%, 
only 45% of low-income families own their homes.
  While present Federal policy promotes home ownership for higher 
income families by allowing taxpayers to deduct mortgage interest and 
real estate taxes, it does little to help low-income families achieve 
home ownership. The deductions of mortgage interest and real estate 
taxes benefit almost exclusively middle and upper-income Americans. In 
fact, only 10% of these tax benefits go to home owners who make less 
than $40,000 a year. Rental assistance is available for poor families 
through a variety of federal subsidies (primarily HUD's Section 8 
program), but there's little help for low to middle income families who 
want to make the transition from renters to home owners.
  This legislation will lend a hand to our hard-working families so 
that they too can achieve home ownership. By leveraging private 
resources and without creating new programs or bureaucracies, this bill 
will help hundreds of thousand of families finally realize the American 
dream of home ownership.
  This tax credit tackles the two leading obstacles of home ownership: 
affordability and lender risk. First, many low income families simply 
cannot afford the monthly mortgage payments and initial downpayment for 
even a modest home in their area. The home ownership tax credit 
addresses this ``wealth hurdle'' by offering interest-free second 
mortgages to the low-income buyer. This is critical because this second 
mortgage will reduce the buyer's down payment and monthly mortgage 
costs by as much as 30%.
  Second, lenders are often reluctant to make so-called ``risky'' loans 
due to fear of foreclosures. By lowering the loan amount needed for the 
first mortgage, the home ownership tax credit reduces the risk for the 
lender.
  Similar programs implemented in North Carolina and New York have 
already proven successful in increasing homeownership for low-income 
families and jump-starting formerly distressed neighborhoods. It's time 
we take this program nation-wide and help families throughout the 
country achieve the American dream of owning their own home.
  I urge my colleagues to join me and co-sponsor the Home Ownership Tax 
Credit Act.

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