Bill Would Set Aside $25M Annually In Down Payment Aid For First-Time Home Buyers

Measure is part of effort to close the racial wealth gap

A Senate panel has unanimously advanced a measure setting aside millions for down payment assistance for some first-time home buyers, but questions remain about the bill’s future.

The bill, which cleared the panel in a unanimous vote Monday, would set aside $25 million annually for four years to fund grants of up to $10,000 for down payment assistance or home repairs for would-be homeowners making no more than 80% of their area’s median income.

“We feel this is the proper tool to help them get through the initial hurdles, as it were, to be able to move forward and get their piece of the American dream,” said Sen. Troy Singleton (D-Burlington), the bill’s prime sponsor in the upper chamber and chair of the Senate Community and Urban Affairs Committee.

Singleton said his bill, dubbed the New Jersey American Dream Act, was modeled after a federal policy launched by President George W. Bush. The federal program, which also provided down payment assistance for homebuyers,  lapsed in 2008.

The bill would also require grant recipients to complete at least eight hours of a homebuyer counseling course that includes information on home maintenance costs, property taxes, inspections, and more.

There are stark gaps in homeownership rates along racial lines. In a report released last week, the New Jersey Institute for Social Justice found white New Jersey households were nearly twice as likely to own their homes as Black households, 75.9% to 38.4%.

It also found Black households are saddled with higher home lending costs, are more likely to be foreclosed upon, and are underrepresented among recipients of an existing $10,000 down payment assistance program operated by the state.

A difference between chambers

The measure seeks to set aside a portion of its awards for disadvantaged communities.

At least 20% of all grant awards must go to overburdened communities. Under the bill’s definitions, that includes census block groups where at least 35% of residents meet the law’s income thresholds, or where 40% or more identify as members of a minority group or speak limited English.

Those provisions are missing from the Assembly version of the bill, and their absence could be a sticking point for lawmakers.

“I can tell you the bill that I’m going to move forward will have the language in it that is reflective of trying to be mindful of overburdened communities and trying to make sure we are helping those in those communities achieve the dream of homeownership,” Singleton said.

While Singleton has backed the bill since 2019, Assemblyman Roy Freiman (D-Somerset) took up his sponsorship of it during the current legislative session.

Freiman did not rule out amendments to his bill that would align it with the Senate version, though he said those talks may have to wait until the legislation sees movement in the lower chamber.

“I have had no conversations with the senator so far on this, and I suspect we would as soon as this gets scheduled for committee, but right now it isn’t,” Freiman said. “I have a good relationship with the senator, and I’m sure we’d be able to talk through it at the time.”

Singleton said, “Hopefully, we’ll end up in the same place.”

Original Article