Public servants, take heart: The Fat Lady is back on stage.
Several key federal legislators are back again with a bill that would make it easier for teachers, policemen and firemen to buy houses in the communities where they work through the Federal Housing Administration.
A similar measure passed the House last year but was waylaid in the Senate. This time, though, sponsors believe they will be able to get around the opposition of Sen. Phil Gramm, R- Texas, who thinks the FHA's programs should be open to anyone who wants to buy a house.
Under the legislation -- the Homeownership Opportunities for Uniformed Services and Educators Act, or HOUSE for short -- a teacher, cop or firefighter would need a down payment of only 1 percent of the purchase price. The lender would finance the rest, including all closing costs, and the FHA would insure the lender against default.
On a $125,000 house, for example, the total cash needed would be just $1,250 instead of the normal $5,938, or 4.75 percent. On a larger house, the savings would be even greater: Only a $2,000 down payment would be necessary instead of the usual $9,500.
According to Congressional Budget Office estimates, about 125,000 public servants would take advantage of the discount in the first five years. As an added incentive to keep public servants in their communities, the bill also would waive the 1.5 percent up-front FHA insurance premium if the buyer remains in the house for at least five years.
If the buyer stays for a shorter period, the waiver would be made on a pro-rated basis, 20 percent for each year. So if a teacher remained for just three years, the owner would have to reimburse the government for only 40 percent of the fee from the proceeds of the sale. The insurance fee currently ranges from $1,980 to $3,590.
By offering their bill early in the legislative session, the bill's chief sponsors, Sen.
Charles Schumer, D-N.Y., and Reps. John LaFalce, D-N.Y. and James Leach, R-Iowa, think they will be able to get around Sen. Gramm's objections.
Last year, the measure gained steam so late that the powerful Texas Republican, who heads the Senate Banking Committee, simply refused to consider it.
"There's a big difference between last year and this year," said Sen. Schumer. "Phil is very good at holding things up at the last minute. We're introducing this bill early on so that he doesn't have a chance" to block it.
Teachers and policemen already get special consideration under the Department of Housing and Urban Development's Teacher and Officer Next Door programs. Under those initiatives, educators and cops can purchase homes owned by the government in specially- designated neighborhoods for half their list price.
But LaFalce, the ranking democrat on the House Financial Services Committee, and Leach, the former chairman of that panel when it was the banking committee, maintained more could be and should be done to strengthen neighborhoods.
The bi-partisan legislation "will help school districts and localities recruit and retain qualified" public servants, LaFalce said.
"This approach is the single largest way in which we can provide support to the people who protect our children and our communities," said Leach.
For more articles by Lew Sichelman, please press here.
Published: March 5, 2001
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