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Low-Income Families Get Shot at the American Dream

A federal program will help thousands of first-time home buyers with down payments.

June 03, 2004|Elizabeth Shogren | Times Staff Writer

WASHINGTON — Touting President Bush's commitment to provide better housing for low-income Americans, Housing and Urban Development Secretary Alphonso Jackson announced Wednesday that $161 million would be made available this year to help thousands of first-time home buyers enter the market.

Bush's program to aid families with down payments, which was signed into law in December, would be available for those earning up to 80% of the median income in their area, which in Los Angeles would be $47,600.

Although that aid will be welcome news to thousands trying to get into the market, low-income housing advocates say it will be of no help to many more who are lower on the income ladder.

And, they say, the program is overshadowed by the president's proposal to decrease by $1.1 billion the funds available next year to help the very poor pay their rent. Although the poorest Americans also qualify for the new home-buying program, they are not likely to take advantage of it because they cannot afford mortgage payments.

Three-quarters of those who rely on rent vouchers have incomes that are less than 30% of their area's median. In Los Angeles, a typical family receiving a housing voucher earns less than $17,850.

"What you're seeing is rhetoric from the administration that doesn't match up with reality," said Kim Schaffer, spokeswoman for the National Low Income Housing Coalition. "What they're putting into their homeownership initiatives is a fraction of what they are taking away from the voucher program and other rental housing programs."

These proposed cuts and an administration proposal to turn the voucher program into a block grant to housing authorities are expected to affect another homeownership program promoted by the administration since Bush took office.

That program allows states and localities to let recipients use their housing vouchers to pay for mortgages instead of rent. Some housing authorities and banks say that the uncertainties in the voucher program caused by the proposed cuts and policy changes have threatened their efforts to use it to support home buying.

"They are undercutting themselves on their homeownership program," said Paul Dettman, director of the Burlington Housing Authority in Vermont.

Dettman runs one of the country's most vigorous programs to help low-income Americans use vouchers to subsidize new homeownership. That program is at risk, he said, because the administration is cutting funds available for vouchers and administrative costs.

"If our resources are going to be cut back, our resources are going to go to people in the greatest need," he said. "That's not going to be people wanting to be homeowners."

HUD Secretary Jackson and congressional Republicans defended the administration's focus on homeownership. He said that for the first time more than half of minorities owned homes. "The gap is still there, but we're closing it," he said.

In answer to criticism of the proposed funding cuts for vouchers, Jackson stressed that two-thirds of his agency's funds still went to rental assistance.

"HUD is not getting out of the affordable- and assisted-housing business," Jackson said.

But groups representing officials at local and state housing authorities said that while the funds to boost homeownership would help some people, the cuts the president was proposing would hurt many more.

About 100,000 low-income families are at risk of losing vouchers or suffering rent increases because of a new HUD formula for deciding how much housing authorities receive for the voucher program, according to an analysis by the National Assn. of Housing and Redevelopment Officials.

The administration has proposed cutting the voucher program's funding from $14.4 billion available this year to $13.3 billion in 2005. That would be about $2 billion less than what would be needed to keep up with inflation and continue serving the same number of families at the same rate, administration officials have told Congress.

On Tuesday, the Los Angeles County Board of Supervisors unanimously approved a motion stating that the president's proposed cuts would "drastically affect all 20,271 families currently on the program."

By contrast officials predict that the $1 million they expect to receive as part of the president's homeownership initiative will "enable us to assist a few more homeowners," said Calvin Naito, a spokesman for the county.

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