In an effort to tackle the challenges of a competitive housing market, a Virginia state senator announced several proposals aimed at making homeownership more accessible.
While the ambitious plans from Republican Sen. Glen Sturtevant (District 12) are getting attention on social media, there are questions about whether they are truly realistic.
“I’m … actively crafting the legislation to be introduced this General Assembly session,” said Sturtevant. “We’ve got a housing shortage, we’ve got high interest rates, we don’t have enough supply of houses in the market.”
Many loans taken out a just few years ago have interest rates between 2% and 3%. Currently, 30-year fixed mortgage rates stand at around 6.5%.
One of Sturtevant’s proposals would allow buyers to take over the interest rate of the person who is selling them the home.
“What my legislation is going to do is make all mortgages in Virginia assumable,” Sturtevant said. “If you have a conventional mortgage that you got through your local bank or through a local mortgage company, your … low interest rate would be assumable by a new buyer.”
Assumable mortgages are not a new thing, but most conventional mortgages — those not backed by a government agency but by a private lender — are not assumable.
“When people close on a mortgage, they sign a note, and those notes dictate whether or not the mortgage is assumable,” said Michael Ullmann, president of the Northern Virginia Mortgage Bankers Association. “Industry experts will ask, ‘How can you create a law that goes against the paperwork that was signed?'”
Sturtevant said he expects to get pushback from banks and mortgage lenders.
“It’s certainly a change from the status quo,” Sturtevant said. “When you have changes from the status quo, some folks are going to have heartburn over that.”
Another idea proposed by Sturtevant would be to prohibit hedge funds from buying single family homes.
“It’s not fair to let private equity firms compete against regular folks trying to buy a home,” Sturtevant wrote in a post on X.
That idea also seems problematic, according to Ullmann.
“Ultimately, a seller can decide who they want to sell to,” Ullmann said. “I understand the logic behind it. … But I don’t know how they actually put that in place. How do you stop somebody from purchasing a home?”
Sturtevant’s third and final proposal is to incentivize employers to provide down payment assistance to their employees.
When a homebuyer goes to purchase a house, they can receive a gift for a down payment. That gift usually comes from a family member, but there is no rule against the gift coming from an employer.
But Sturtevant said the state could possibly provide tax breaks to employers who decide to give that gift.
According to Ullmann, that idea sounds like it could be a win-win situation.
“The benefit to the employer would be the tax savings, and the benefit to the buyer is it helps them buy,” Ullmann said. “That seems very feasible and could be very helpful to buyers and employers.”
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