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House Co-Sponsorship Memoranda
House of Representatives
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | October 23, 2023 02:42 PM |
|---|---|
| From: | Representative Robert Freeman |
| To: | All House members |
| Subject: | Lease Purchase Option Home Ownership Program |
| To assist families with less wealth in accessing sustainable home ownership, I plan to re-introduce legislation to establish the Pennsylvania Lease Purchase Option Home Ownership Program. Home ownership has dropped significantly since 2000, decreasing from 68% in 2003 to 63% in 2016, its lowest level since 1965. Access to credit has become increasingly limited, especially for first-time home buyers. Combined with the impacts of rents and housing prices rising faster than incomes, an inadequate inventory of affordable homes, high levels of student loan debt, and demographic shifts, young families are increasingly locked out of the homeownership market. Alternate models are especially needed to ensure that lower-income households have access to sustainable homeownership. One such model, the lease-purchase mortgage, allows a household to rent a home for a period before taking on the mortgage and ownership of the property with a portion of each month’s rent set aside in an escrow account and used to cover the down payment and closing costs. This rental period allows households to build a positive credit history and increase their savings before taking on the responsibility of a mortgage, while at the same time “locking in” lower interest rates and house prices. Lease-purchase programs can also contribute to neighborhood stabilization, providing a means for low-income families to build wealth through equity in their house and bringing the stability and investment associated with home ownership to neighborhoods experiencing the potential negative effects associated with a lack of owner-occupied properties. Under my legislation, the Pennsylvania Finance Housing Agency would administer a program which would specify the dates within which the option to purchase may be exercised, the amount of the purchase price, estimated closing costs, and the percentage of the purchase price needed for downpayment. The bill also includes protections for lessor liability, prohibited contract provisions and a process for reinstating the agreement after default. Further, at least 30% of program funds would be allocated for lease-purchase housing projects that benefit households with incomes that are less than 80% of the median area income. I hope you will join me in co-sponsoring this critical measure which will help to expand access to affordable home ownership and assist local governments with revitalizing neighborhoods throughout the Commonwealth. |
Introduced as HB1922