BILL NUMBER: S8521

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 4 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 offer-
ing financial options in accordance with this section's third subdivi-
sion. 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 subdi-
vision'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, exist-
ing mortgages, and student loans as necessary. Unless specifically stat-
ed 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 applica-
tion procedure via which potential homeowners who are state residents
and have student debt may apply to have their student debt consolidated
with a new mortgage or an existing mortgage. The program will not take
the applicant's first-home status, the home's cleanliness, or the appli-
cant'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 regu-
lations 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 addition, the commissioner of housing and community
2/7/24, 12:40 PM Legislative Information - LBDC
https://nyslrs.state.ny.us/nyslbdcl/navigate.cgi?NVDTO: 2/3 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
fouryear 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 a re 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 house-
hold'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 households encounter numerous obstacles. The
mortgage refusal rate for Black and Latino/a/x applicants is still twice
as high as it is for the general 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 households, and 29 percent for Hispanic households
in New York.  With Hispanic homeownership rates significantly below the
national average, the homeownership gap is highest for Hispanics in New
York, and 16 percentage points greater than the national Hispanic
homeownership gap relative 2/7/24, 12:40 PM Legislative Information -
LBDC https://nyslrs.state.ny.us/nyslbdcl/navigate.cgi?NVDTO: 3/3 to
White households. The 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 landmark 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-related 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

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
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.