FOR IMMEDIATE RELEASE: June 29, 2004
Schumer: Orange County Middle Income Housing Shortages Reaching Crisis Levels - Unveils Major Plan To Make Housing Affordable
Orange County housing prices rising 25% over last two years alone
Schumer announces that oversubscribed Fannie Mae initiative increases to $500 million, letting middle income families purchase homes with little down payment; Plan does not take a penny from the federal tax rolls
Schumer joined by Aubrey Salome, who purchased her Middletown home with this Fannie Mae program,
US Senator Charles E. Schumer today announced a major newhousing plan to vastly expand access to middle income housing in Orange County where the median price of buying a new house has shot up 25 percent over the last two years. Schumer detailed a $300 million expansion of an already-oversubscribed Fannie Mae initiative that lets middle income families in the New York metropolitan area purchase homes with down payments as low as $500.
"We all know that middle income housing has been the bedrock and foundation of life in Orange County for generations," Schumer said. "But with prices shooting through the roof and incomes failing to keep pace, it's becoming harder and harder for people to raise their kids here. Today's announcement is a giant step forward toward ensuring that a nice home can become a reality for young people, not just a wish."
Schumer, a ranking Democrat on the Senate Banking, Housing and Urban Affairs committee, said today that New York's metropolitan area has among the highest housing costs in the nation. In the past two years Orange County housing prices have gone up 25%. Unless something can be done to increase access to the region's supply of housing that is affordable to young families, Schumer said, Orange County will not have the labor supply its growing economy demands. In short, a shortage of affordable housing threatens to stall the area's economy. The Fannie Mae program makes it possible to buy a home with much less cash up front, removing a stumbling block homebuyers often have with conventional mortgages that require a 10% to 20% down payment.
Schumer today announced that Fannie Mae – which has more than met a commitment it made to Schumer to purchase $200 million in low down payment mortgage products for working families in the Hudson Valley and Long Island – is expanding its Suburban Low Down Payment initiative to a total of $500 million effective immediately – $300 million more than its commitment over the last two years.
Since 2002, Fannie Mae through its lender partners has served 1164 households, providing over $244 million in purchase money mortgages for middle income families that have less than or equal to 165% of the Area Median Income, or an estimated $108,075 a year for Orange County (the median income itself is approximately $65,500). These funds were used to purchase homes with little down payment.
• In Orange County over $35 million (227 loans) in low down payment mortgages were purchased.
• In Ulster County over $12 million (79 loans) in low down payment mortgages were purchased.
• In Dutchess County over $24 million (126 loans) in low down payment mortgages were purchased.
According to the American Federation of Labor (AFL), the Hudson Valley has “hemorrhaged” young adults in the 20-34 year-old age group -- the ages when young people tend to leave their parents’ home and form their own households for the first time.
In the last decade, the region (Sullivan, Ulster, Dutchess, Orange, Putnam, Rockland, and Westchester Counties) has lost 87,980 20-34 year-old residents. This is an 18% decrease, three-and-a-half times the national demographic. The decline in the non-metro counties (Sullivan and Ulster) was 21% (11,627), nearly four times the national figure. The loss in the remaining, or metro, counties was 18% (76,353), more than 3 times the national number. There are still an estimated 298,500 young adults in this age bracket living at home with their parents. Schumer today said that they represent enormous pent-up demand for affordable housing.
"One of the keys to economic vitality in a community is attracting young new homeowners," Schumer said. "With the $500 million this initiative is spending on housing, more people will be able to find affordable housing in Orange County and that will not only be a wonderful gift to the new homeowners, but a shot in the arm for the local economy."
Fannie Mae does not receive any assistance from the government, or any subsidy at all, direct or indirect. It makes its money by managing one principal asset, US residential home mortgages. By doing that, it ensures that mortgage lenders always have enough funds to lend to home buyers.
Fannie Mae maintains a very low-cost business operation and its low costs allow it to invest in low-cost mortgages and make enough profit to pay taxes, give shareholders who supply their capital a reasonable return on their investment, and cover their costs, which are lower than most other large financial institutions such as banks.