Reinvesting in Homeownership & Homelessness Prevention

Reinvesting in Homeownership & Homelessness Prevention

Earlier this month, the Oregon House introduced the Homeownership and Housing Opportunity Bill (HB 3349). This bill strengthens homeownership opportunities for Oregonians by phasing out mortgage interest deductions for the top five percent and reinvesting those funds.

It’s without debate that Oregon is facing a housing crisis. Many people and their families experience housing instability and according to a recent report from the U.S. Department of Housing and Urban Development, 61.7% of Oregon’s homeless folks are unsheltered.

HB 3349 offers an opportunity to provide common-sense measures to address homelessness and support homeownership.

Phasing out mortgage interest deductions

HB 3349 eliminates the mortgage interest tax deduction for vacation homes unless they are rentals--rental homes would not be affected, but if someone owns a second home for their own exclusive use, they would no longer be able to deduct the mortgage interest.

The bill also would eliminate the mortgage interest tax deduction on primary residences for the richest 5% of Oregonians.

Mortgage deductions cost Oregon nearly $1 billion every budget period -- making it the state’s largest housing subsidy. But this deduction is structured to benefit the most well-off homeowners since 60 percent of the deduction benefits the richest fifth of Oregonians. Many low and middle-income homeowners do not benefit from this deduction at all and renters are completely cut off from the housing subsidy.

Reinvesting in homeownership and homelessness prevention

With this reform to the mortgage interest deduction, HB 2249 would save $150 million every year to dedicate to the Homeownership Assistance Account and the Emergency Housing Account.

Both programs help Oregonians build starter homes, help keep struggling homeowners in their homes, allow homeowners to conduct critical home repairs and house children who are currently homeless.

According to the Oregon Housing Alliance, the funds could also be invested to create:

  • Long-term rental assistance vouchers including some level of case management to help stabilize families who are struggling
  • Build additional affordable housing for youth phasing out of the foster care system
  • Funding to help families seeking safety from violence with rent assistance, case management, and flexible funds.
  • A revolving loan fund to build new affordable homeownership options in communities
  • Additional funding for downpayment assistance to first-time home buyers
  • Loans for homeowners with low and moderate incomes to build ADUs
  • Foreclosure counseling for families who are facing foreclosure