Rent to Own
For struggling New Yorkers to reach their full potential, New York state must immediately take action to eliminate poverty traps.—Larry Sharpe
Rent to Own
For renters, we will create a rent-to-own program to (1) build generational wealth through equity and (2) increase residents’ investment in the local community, now having personal equity in the community. Regardless of credit score, if residents have consistent income and a history of on-time rent, they can experience the American dream of home ownership. With more homeowners in the community, there will be greater concern and care for the quality of the local community, which prevents crime, builds the local economy, and increases general happiness. As governor, Larry will make all this possible by having the state back the mortgage of rent-to-own program participants. Ownership is key for building generational wealth and increasing the quality of local communities, and Larry will make this possible for all New Yorkers.
How It Works
Home ownership empowers a renter to start building generational wealth through equity. Now the renter has a greater stake in the local community and is more likely to invest economically and socially. The community benefits with a greater sense of pride and belonging, which decreases the likelihood of crime and litter.
Affordable Housing Providers
Renters join the rent-to-own program through various affordable housing providers, which are programs that purchase homes on behalf of the renter with an option to buy the property later. If a renter is not able to buy the home by the agreed time, such providers may offer in-house financing, but they are typically at a higher interest rate than traditional banks. As such, we encourage rent-to-own participants to get a mortgage from a local credit union in order to (1) get a competitive interest rate and (2) support local businesses. Affordable housing providers typically benefit by purchasing “fix up” properties at a discount. Renters may then repair and enhance the property, which they would have done anyhow if bought directly, and such enhancements may be credited towards the renter’s down payment, so everyone wins.
Local Credit Unions
Local credit unions will provide mortgages for rent-to-own participants. These mortgages will be backed by NYS’ public bank, lowering risk for the credit union. Additionally, the credit union will require rent-to-own participants to enroll in a financial literacy program approved by the credit union, which lowers mortgage default risk for the credit union. In summary, credit unions benefit 3-fold, (1) more mortgage customers, (2) lower risk of mortgage default due to public bank backing and required financial literacy training, and (3) lower FDIC insurance premiums when paid to public bank.
Financial Literacy Programs
Local credit unions will require rent-to-own participants to enroll in a financial literacy program approved by the credit union. This helps renters keep and maintain their home by learning how to manage their finances in a comprehensive manner. The credit unions do not have to create a financial literacy program, they can leverage existing programs whether they be non-profit or for-profit.
NY State Public Bank
NY State will have a public bank that backs the mortgages of rent-to-own participants. Not only does this widen home ownership opportunity for renters, it provides a revenue stream for the state since participating credit unions will pay their FDIC insurance premiums to the public bank rather than the Federal government. This new revenue stream lowers the tax burden of NY residents.