Troubled with the widening income and homeownership rate inequality in the territory, the V.I. Senate Committee on Finance called on officials from local banks and the V.I. Housing Finance Authority during a hearing on Tuesday to discuss what options might help residents seeking to purchase a home.
“We are all really concerned with the lack of housing opportunities in the territory, particularly when it comes to low-income residents and getting opportunities for middle-income residents,” said Sen. Milton Potter, who is not a member of the committee but sat in on the hearing.
A housing market analysis done by the U.S. Department of Housing and Urban Development estimated the homeownership rate in the U.S. Virgin Islands is under 43 percent, based on 2019 data, while nationally the homeownership rate was estimated to be over 64 percent.
The HUD analysis shows that the lower incomes in the territory, compared to that of the nation, combined with relatively high home prices stemming from a strong demand by non-residents, contributed to the low homeownership rates in the territory.
While little can be done to stop the gentrification of the territory, several local banks and the United States Department of Agriculture’s Rural Development Division told the committee about various loan opportunities available for low-income families.
Representing the U.S. Department of Agriculture, Kimme Bryce, said the department offers:
– The Single Family Housing 502 Direct Home Loan Program,
– The Single Family Housing Section 502 Guaranteed Loan Program,
– The Single Family Housing Repair Loans and Grant Program, and
– The Single Family Housing Direct Program Home Loan Program.
The programs, though limited to specific applicant income requirements, are available to all residents and not just first-time homebuyers. Some of the programs offer residents the option to purchase a home without a down payment or a down payment considerably less than the customary 20 percent expected by most banks.
The Housing Finance Authority also can help homeowners through various programs, but the authority’s Executive Director Darryl Griffith said the programs suffer from a lack of funding, and some programs are so underfunded that they can only assist six residents a year.
“Currently the authority has a mortgage-ready pool of 110 clients in the district of St. Croix and 187 in the St. Thomas/St. John District totaling 297 mortgage-ready applicants. The authority does not have a shortage of clients, but it does have a dramatic shortage in local funding,” Griffith said.
But low-income residents are not the only ones struggling to purchase, refinance or rehabilitate a property.
“The big issue is being able to help subsidize them [homeowners] in terms of down payment assistance, and in terms of being able to help the middle class,” Griffith said. “Basically, all of the funding we have is for low- to very low-income individuals that come from HUD. So, for us to be able to assist as the VIHFA we are also going to need funding to be able to serve the middle class.”
Griffith said ultimately the power lies with the Legislature to appropriate funding to allow the authority to serve the middle-income population in the territory.
Additionally, Griffith told committee members that local banks need help in securing private mortgage insurance in the territory.
“When I bought my first home in Florida that is what I used,” Griffith said. “I put little to nothing down, but PMI was what was used to get me to my first home. Then I sold that house when I moved back home [the USVI] and I was able to put 20 percent down. So, if the Legislature can do anything to help the banks to get PMI, I think that is going to go a long way and funding the VIHFA of course.”
According to Griffith, fund allocations are needed for the Homestead, Veterans and Moderate Income programs which have not been funded for over a decade. Griffith suggested the STEP Program, which will generate over $35 million in gross receipts to the territory, have $21 million allocated from those gross receipts to be divided equally into the aforementioned housing programs.
Adding to the problem of low homeownership rates is the inability of residents to secure construction loans. Currently, the only institutions that assist with home construction loans in the territory are Banco Popular and the United States Department of Agriculture.
“That means if someone is not purchasing a turnkey home that is fully constructed, these two institutions are the only ones that can assist them,” Griffith said.
While legislation regarding these issues was not addressed during the hearing, the committee recognized the need to find solutions for the territory’s residents who will otherwise be forced to continue to rent property instead of purchase their own.
Sens. Kurt Vialet, Donna Frett-Gregory, Marvin Blyden, Samuel Carrion, Javan James Sr., Dwayne DeGraff and Janelle Sarauw were present for the hearing. Non-committee members were also present.