The red-hot housing market has been a growing concern for millions of prospective buyers over the past year, with soaring prices, low inventory and rising interest rates giving pause to many people who would typically be primed to enter the marketplace.
Homeownership used to be a rite of passage and a sign of achieving the American dream. But it’s now become a battle of the highest bidders and all-cash offers, with the question for many shifting from, “Do I want to buy a home?” to “Can I afford to buy a home?” and “Is there even one available?”
There is one largely forgotten class of individuals that has been fighting every day on the front lines but suffering on the sidelines. First responders — including police officers, firefighters, EMTs and pre-K-12 teachers — have put their personal health and the health of their loved ones on the line every single day so that they can better serve their communities.
What have they received in return? An ever-widening gap between housing prices and annual wage growth, a lack of affordable housing in the communities they serve and not nearly enough support from elected officials. Something has got to give.
Historical precedent
After World War II, a housing crisis loomed over America and the government swiftly enacted the G.I. Bill so veterans could obtain low-interest, fully insured loans that covered 100% of housing costs upfront. They were rightfully rewarded for risking their lives.
When the housing stock is already severely limited due to an oversaturated pool of buyers and low supply, having maximum resources at your disposal is crucial.
The G.I. Bill’s no-money-down benefit for veterans lives on today through the U.S. Department of Veterans Affairs (VA). This same type of home loan program for first responders and educators is needed to ease the financial burdens of homeownership.
First responders in urban areas are especially feeling the heat. It’s a domino effect — housing is not affordable so firefighters, police officers, EMTs and educators cannot live in the communities where they work. In a recent Case-Shiller Index report, the median housing price jumped nearly 20% year over year, with cities like Tampa, Miami and Phoenix reporting the highest gains of up to 32%. That’s more than 10 times greater than the average annual salary increase for a typical police officer or firefighter.
These public servants can’t afford to live in the city, so they move to the outskirts, sometimes several counties away. Longer commutes mean greater response times to crises, increased chances of burnout on the job and a higher likelihood of exiting agencies that are already undermanned. Some first responders are even changing careers entirely in hopes of improving their housing outlook.
Legislative solution
There are some initiatives out there for first responders, like the Good Neighbor Next Door Sales Program, which allows them to purchase foreclosed homes for 50% of their value. The supply of homes is limited, however, and no existing program has addressed this need in its entirety.
The Homes for Every Local Protector, Educator and Responder (HELPER) Act, a piece of legislation currently making its way through Congress, aims to take the next step and provide much-needed relief for those serving on the front lines and looking to live in the communities they are employed in.
The HELPER Act would allow the Federal Housing Administration (FHA) to honor first responders in the same way the VA honors military service members — by eliminating downpayment requirements and offering 100% financing for one-time purchases. If a police officer or a fifth-grade teacher wanted to purchase a $200,000 home, they would receive a loan to finance the entire purchase price.
Key benefits
Under the Good Neighbor program, the available housing stock is restricted to a collection of revitalization areas based on neighborhood household income, homeownership rate and foreclosure activity, making these houses difficult to find. Most states do not even have a single listing.
The program’s list of vacant properties also changes rapidly as qualifying homes stay listed for only seven days before going to the general market at full price, putting additional unwanted pressure on homebuyers who are already undertaking a massive financial decision.
The HELPER Act supplements this, allowing first responders to purchase any home, in any neighborhood across the country. When the housing stock is already severely limited due to an oversaturated pool of buyers and low supply, having maximum resources at your disposal is crucial.
Another key differentiating factor of the HELPER Act is the elimination of monthly mortgage insurance premium requirements. Under the FHA system, in most cases, homebuyers who cannot afford a 20% downpayment must pay a monthly insurance premium and an upfront cost. A $200,000 home, for example, would normally require a monthly premium of $140. With the HELPER Act, this additional monthly cost would be eliminated.
Bipartisan support
The HELPER Act is currently supported by more than 75 Republican and Democratic lawmakers from every corner of the country, including Sen. Marco Rubio, R-Fla., Rep. John Katko, R-N.Y., and Sen. Jon Ossoff, D-Ga. Passage of this legislation would not only have a lasting impact on the front-line buyers but also on the general safety and well-being of the community.
The bill needs support at a national, regional and local level — from elected officials and nationwide departments to mortgage companies and the random stranger on the street. The time for action is now. This legislation is designed to help the people who serve others every day, and the odds of success are high due to a similar model for military service members and veterans over the past several decades.
It’s imperative that originators and lenders put their weight behind the bill and urge others to do the same. All mortgage professionals should be in contact with their state and local trade groups to make sure this legislation is on the radar of their respective associations. Ask them what their next step is.
Lenders that have strong ties to law enforcement and other first responder agencies should leverage these connections. Educate key leaders and influencers within these jurisdictions so they also can raise awareness within their own fields. Calling local lawmakers, and advising them of the bill and its ramifications, will make all the difference in transforming the American dream of homeownership into reality for these public servants.
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Inflation, rising interest rates and the supply-demand imbalance within the housing market show no signs of slowing. Affordability will continue to be a major point of contention, and it’s imperative that the brave men and women who continue fighting for this country have the resources they need to support their families and remain in their calling.
The stakes are too great and continued inaction will eventually lead to a reckoning that is easily preventable. Support the HELPER Act or run the risk of losing police officers, firefighters, paramedics and teachers that can’t afford to be nearby when an emergency occurs — the choice is yours. ●
