It may become easier for banks, credit unions and other financial institutions in New York state to make certain loans to homebuyers in previously underserved communities if reforms proposed by Gov. Andrew M. Cuomo as part of his 2021 State of the State message are adopted.
Cuomo said that the proposed changes to the way the State of New York Mortgage Agency (SONYMA) operates will enable more low- and moderate-income borrowers, especially households of color, to own homes while helping underserved communities.
Cuomo has proposed expanding the agency”™s collaboration with community-based lenders. He explains that the current SONYMA statute requires that lenders be approved by Fannie Mae or Freddie Mac. That requirement, he said, can be a burdensome threshold for smaller community banks, community development financial institutions and credit unions to meet.
His office points out that of the 139 credit unions that are designated to serve low-income areas of the state, just three currently offer SONYMA mortgages.
Cuomo”™s proposal involves amending the statute to expand eligibility for becoming a SONYMA lender, greatly increasing the number of institutions able to offer such mortgage products in underserved communities and in the state overall.
“We know the racial wealth gap is overwhelmingly a housing wealth gap and New York is taking action to correct systemic injustices that have kept households of color from building wealth,” Cuomo said. “Expanding access to loans and assistance for first-time homebuyers in communities disproportionately impacted by the foreclosure crisis and predatory and illegal redlining practices is an important step toward equalizing homeownership rates and creating a stronger, fairer and more just New York for all.”
In addition to already offering low-interest mortgage loans, SONYMA has programs such as providing help securing funds for a down payment that assist qualified first-time buyers in their efforts to purchase a home.
Cuomo also plans to direct the agency to expand its down payment assistance program for first-time borrowers by increasing the minimum down payment assistance from $3,000 to $7,500.
Cuomo proposes amending the statute so that lending institutions involved in providing SONYMA loans can provide relief to borrowers facing emergency situations, such as the current Covid-19 situation. Examples of such relief would be lowering mortgage interest rates, forgiving mortgage arrears, or renegotiating the terms of a mortgage to allow borrowers to stay in their homes during times of crisis.
SONYMA would be directed by Cuomo to raise awareness of its lending options through print, radio and social media advertisements and by working with local elected officials, trade associations, nonprofits and the faith-based community for grassroots outreach in historically redlined and underserved communities.
