Senate Bill S5790

                                 
BILL NUMBER: S5790

SPONSOR: SEPULVEDA
 
TITLE OF BILL:

An act to amend the public authorities law, in relation to establishing
the "New York student loan assistance and home purchase act"

 
PURPOSE:

To amend the public authorities law, in relation to establishing the
"New York student loan assistance and home purchase act.

 
SUMMARY OF PROVISIONS:

A new section 2405-g is added to the public authorities statute, and it
now reads as follows: Student loan assistance and home purchase program,
section 2405-g. Definitions, first The following terms shall have the
following definitions for the purposes of this section: 8(a) "Program"
refers to the house purchase and student loan assistance program created
in accordance with this section's subdivision two.  10(b)"Student loan"
refers to any loan made to a borrower for the purpose of paying for
              

post-secondary education or expenses associated with post-secondary
education. The term "student loan" shall not be restricted to loans as
that term is defined in subdivision ten of section twenty-four hundred
two of this part for the purposes of this section. The agency must
create a "student loan aid and home purchase program," which the agency
will oversee, in order to make it easier for people to purchase homes
who are struggling with academic debt by offering financial options in
accordance with this section's third subdivision. A director of the
program will be appointed by the agency's chair to oversee the program's
implementation.23(a)The program will help people who apply and are
accepted into it in accordance with this subdivision's paragraph(b) by
consolidating all or a portion of their student loans into mortgages. To
carry out the terms of this section, the program shall be permitted to
purchase from banks new mortgages, existing mortgages, and student loans
as necessary. Unless specifically stated otherwise by state or federal
law, there is no cap on the amount of student loan debt that may be
included in a new mortgage or an existing mortgage under this section.

4(b)The program shall develop an application procedure via which poten-
tial homeowners who are state residents and have student debt may apply
to have their student debt consolidated with a new mortgage or an exist-
ing mortgage. The program will not take the applicant's first-home
status, the home's cleanliness, or the applicant's foreclosure history
into account when deciding whether to accept them into the program.
10(c)Those who are admitted into the program in accordance with this
section are obliged to continue living in the bought house as their
primary residence for a minimum of five years after the closing. The
housing and community renewal commissioner will establish the fines and
costs that will be charged for transgressions of this section. 13(d)The
program must abide by all relevant federal regulations and laws. 17(e).
Laws and guidelines. Any rules and regulations required for the creation
and execution of the program under this section must be promulgated
by-the commissioner of housing and community revitalization. In addi-
tion, the commissioner of housing and community renewal must issue rules
and regulations establishing: 22(a)eligibility standards for program
acceptance; 23 (b) interest rates and other fees, penalties, and charges
in an amount required to carry out the program.
 
JUSTIFICATION:

Instead of fulfilling education's promise to be the "great equalizer,"
our higher education system rather widens the racial wealth disparity by
necessitating substantial borrowing. Moreover, the cycle that results in
elevated degree of student loan debt distress is driven by the same
systemic racial injustices that are responsible for our country's racial
wealth, school quality, and income gaps. People of color in New York
State and the rest of the nation will continue to struggle with debt
repayment if structural racial inequities are not addressed. Student
loan debt is a problem for everyone, not just young people and people
with higher earnings; it affects people of all ages and income levels.
More than 25% of those in poverty in New York State reported having
school debt, either themselves or a family member. Like the percentage
of New Yorkers between the ages of 25 and 34, more than one-third of
older adults (aged 45 to 54) reported having student loan debt in their
home. People of color are substantially more likely to have student loan
debt, particularly Black and Latina/x women. In New York State 38
percent of Latina/x and 43 percent Black women reported having college
debt, and a third of Black men reported being burdened with student loan
debt. Low-income borrowers, New Yorkers of color, and those without a
four year degree are more likely to encounter difficulties paying off
student debt, including wage garnishment, and to suffer from heightened
economic hardship as a result of their debt loads. More than a third of
low-income New Yorkers with student debt and 31% of those without a
college degree reported that they or a family member had defaulted on or
had delinquent loans. Households of all ages, economic levels, and
racial/ethnic backgrounds are being impacted by higher education debt.
However, households with members who did not finish college, those who
made less money, those who were Black or Latino/a/x, and those who were
lower income, are bearing the heaviest pressures related to student
debt. This will result in higher default rates for borrowers who a
majority are part of underserved communities which will continue to
contribute over time to"the racial wealth, housing, education, and wage
gaps. These borrowers may see student loans as an essential step toward
a higher education and financial security, but the difficulties they
confront as a result of their debt amplify the current wealth disparity
and encourage generational poverty. Black and Brown students are more
likely to accumulate debt and fail on their loans, and higher student
loan payments have been linked to lower homeownership rates. Home equity
makes up a higher portion of a household's net worth for Black and
Hispanic households than it does for White households that own their
homes, according to research from the Federal Reserve Board of New York.
When trying to purchase a property in the United States, minority house-
holds encounter numerous obstacles. The mortgage refusal rate for Black
and Latino/a/x applicants is still twice as high as it is for the gener-
al population, reflecting decades of unjust regulations. According to
the National Association of Realtors, White households are 40% more
likely to be able to afford to buy a home than households of color, and
government statistics show that in the second quarter of 2022, the
homeownership rate for White households was 75%, compared to 45% for
Black households. In 2021, homeownership rates were 67 percent for White
households, 52 percent for Asian households, 34 percent for Black house-
holds, and 29 percent for Hispanic households in New York.  With Hispan-
ic homeownership rates significantly below the national average, the
homeownership gap is highest for Hispanics in New York, and 16 percent-
age points greater than the national Hispanic homeownership gap relative
to White households. T he issue of homeownership is one of wealth and
has significant effects on our entire economy. People frequently believe
that the racial homeownership gap is an issue of income inequality;
however, this is not the case, the subject of this story goes beyond
money. It truly has to do with access to financial services, particular-
ly credit, and wealth transfers across generations. Even after the land-
mark Fair Housing Act of 1968, the racial homeownership gap persists,
with homeownership rates for households of color more than 24 percentage
points lower than the rate among white households. This bill is a way to
level the playing field regarding the substantial barriers faced by
minority households by assisting those individuals with education-relat-
ed debt to purchase a home by incorporating all or a portion of student
debt held by the borrower into the home loan. This essential piece of
legislation could greatly reduce the disparate costs borne by minority
communities.

 
LEGISLATIVE HISTORY:

S.8521 of 2023-2024: Referred to Corporations, Authorities and Commis-
sions;

 
FISCAL IMPLICATIONS:

To be determined.

 
LOCAL FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act will take effect on the one hundredth eightieth day after it
shall have become a law.