Could the best-kept secret to homeownership reside in a 30-year-old federal program?
Family Self Sufficiency helps families save and buy their first home. Here’s how it works.
Originally published by the Boston Globe, June 26, 2024
By Esmy Jimenez
Homeownership is a dream for many Americans, and Jenny Marcelin was no exception.
Marcelin wanted a place to call her own. A home where her 11- and 14-year-old could have friends over or make noise and not worry about the neighbors. Still the cold reality would plague her: “Where am I gonna get that much money?”
Marcelin lived in affordable housing in Boston. She worked a full-time job and saved. But as she tells it, “The down deposit was always an issue. . . . I would think, ‘I’ll never make it.’ ”
In the fall of 2020, she got a flier in the mail advertising something she thought was too good to be true — an obscure federal program that would allow her to leverage her rent to save toward a nest egg.
The 34-year-old program, called the Family Self Sufficiency program or FSS, allows participants who live in public housing to save some of the money they would typically pay toward rent to reach certain financial goals, such as buying a new car, paying off college debt, or starting a business. For Marcelin, that meant saving around $8,600 that helped with a down payment on her first home, in Hyde Park.
In the affordable housing world, some experts ironically refer to FSS as one of the best-kept secrets: It’s a resource that could help more people buy a home or pay off debt, and yet so few people know it exists. Indeed, Massachusetts housing authorities served about 4,500 FSS participants last year, but 87,000 more people could benefit from the program.
“We think that this could be a really powerful tool among many, to help to narrow the racial and gender wealth divides,” said Markita Morris-Louis, chief executive of Compass Working Capital, a nonprofit financial services organization that helps run one of the FSS programs alongside the Boston Housing Authority.
The program is unique because it leverages what’s known as the benefits cliff, a phenomenon where even the smallest wage increase can push a low-income household above a maximum income limit for the public benefit they depend on. For a homeowner, that would be akin to a mortgage payment increasing every time they received a raise or promotion. So rather than celebrating the accomplishment, people living in affordable housing may dread the change as they risk losing out on the resource they need to stabilize.
That’s where FSS kicks in, offering families the ability to save what they would have paid as their rent increased in a separate escrow account. Participants typically stay in the program for five years and can save between $6,000 to $8,000.
Damali Omolade also found success in the program. Originally raised in Cambridge and a graduate of the University of Massachusetts Boston, she now owns a home in Hyde Park.
Omolade, who works as an administrator at Harvard Business School, points to the high cost of living in the region. While more education usually means a higher salary, she said that doesn’t feel true in Boston.
“Any other part of the country, you would be considered middle-class right now. I should be considered middle-class,” she said. “I’m still low-income.”
Housing prices in the city have skyrocketed; the median sale price for a single-family home in the Boston area hit $950,000. Massachusetts is among the most expensive places in the country when it comes to the average cost per square foot, alongside states like New York and California.
Homeownership has historically served as a way for families to build generational wealth, and though rates among Black and Latino residents in Boston have improved in recent years, they still fall behind their white counterparts.
Nearly three-quarters of the heads of household who participate in FSS are Black or Hispanic and Latino, according to a 2019 report.
“This type of program is the pathway out of poverty,” Omolade said. “Without a program like this, oftentimes it’s absolutely impossible to save because you’re literally living paycheck to paycheck.”
Part of what makes it successful is the collaboration between federal funds, local housing authorities, and organizations such as Compass that can leverage more resources, said Kelly Cronin, director of the rental assistance programs at the Boston Housing Authority.
The program also comes with financial coaches, who can provide expertise and accountability for recipients, supporting them with quarterly check-ins. They also provide budgeting and savings workshops along with credit and debt management education.
Marcelin, for example, originally wanted to use her money to upgrade her 2014 Honda Pilot, but her coach pushed her to dream bigger.
At first it was nerve-racking to open up her finances to a stranger, Marcelin said. It made her feel vulnerable and she was afraid of being judged, she said. But it was helpful to get support, almost like a therapist or trusted adviser.
“One thing that I learned with them is if I’m willing to hold their hand, they will not let go of my hand,” Marcelin said.
The same happened with Omolade. She wanted to first focus on paying down her student loans and then get to homeownership down the road. But her coach connected her to a program called First Home that provides up to $75,000 in down payment assistance for eligible residents who want to buy a home purchased in Boston.
Laureen McCollin-Gopie, who oversees the FSS program with the BHA, said one of the greatest challenges is people thinking the program is too good to be true. There is also a general distrust of government programs among some communities that have been historically disenfranchised.
Word of mouth has so far been their most successful way of reaching new members, but it has not proven to be enough.
Nationally, around 3 percent of all eligible households utilize the program, though Boston leads the way as one of the top three housing authorities with the most enrolled participants in the country.
“I see more people looking for better jobs, [higher] paying jobs,” McCollin-Gopie said. “With the resources and the financial coaching, more people are getting promoted, and they’re doing more. . . . I definitely see the change.”
Another barrier to scaling the program is that housing authorities have to choose to offer the program. Across the state, only 42 housing authorities — or roughly 17 percent — do so, according to the state Office of Housing and Livable Communities. Most providers in Massachusetts don’t because staffing and resources are limited; they are not equipped to manage escrow accounts for residents or handle the additional paperwork that comes with participating in a federal program.
Still, the demand is there. In Boston, about 1,400 families are enrolled, and McCollin-Gopie said “we get calls every day for people who want to transfer their [housing] voucher to Boston Housing just to get into our program.”
There has been a push to change the FSS program so that recipients of affordable housing are automatically enrolled and have to choose to opt out. That would make it easier for residents to start saving and reap the benefits of the program.
Senator Jack Reed, a Democrat from Rhode Island, introduced a bill this year that would create a pilot program that would do exactly that.
Reed called FSS a “proven tool” and said he wants to see the program reach more families. A hearing on the bill, which Reed said has some bipartisan support, was held in March, but the bill has seen limited traction so far.
For their part, Marcelin and Omolade have mentioned the program to everyone they can. They hope that others can reap the benefits they have, such as homeownership.
“It’s freedom,” Marcelin said. “It’s the best feeling ever.”
This story was produced by the Globe’s Money, Power, Inequality team, which covers the racial wealth gap in Greater Boston. You can sign up for the newsletter here.
