Senate’s Housing Bill Needs to Enable Fair Shared Appreciation

This week brought encouraging news from Washington on housing.

Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren announced a bipartisan housing markup, the first in over a decade. The ROAD to Housing Act of 2025 signals real momentum toward addressing America's housing crisis, but as Congress moves forward, we have an opportunity to ensure the legislation includes tools that can truly restore homeownership as a pathway to middle-class wealth.

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The Scale of the Challenge

The data tell a sobering story to the reality of many hardworking American families. Home prices have risen 63% over the past decade while wages have largely stagnated. Today, even families with steady incomes, good credit, and savings find themselves priced out of homeownership. The median household can afford a starter home in only a handful of counties nationwide. The American Dream is bent, if not broken.

Traditional down payment assistance programs, while well-intentioned, typically provide around $12,000 per homeowner, far short of bridging the $138,000+ affordability gap facing working families. This isn't just a housing problem, it's an economic mobility crisis that poses existential risks to the foundation of middle-class prosperity in America.

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Investing in Affordable Homeownership

‍Rather than loading families with more debt or relying on unsustainable government grants, there's a proven alternative: fair and transparent shared appreciation loans. These are zero-interest second mortgages with no monthly payments, where borrowers share a proportional percentage of their home's appreciation only when they sell or refinance. When shared appreciation loans are designed with homeowner success as their goal, they are a powerful way for state and municipal HFAs to tap capital markets to co-invest in homeownership.

Think of it as a partnership. A loan provider provides down payment assistance today, and in return, receives a fixed percent of the home's future appreciation, but only when the homeowner actually receives that gain. The homeowner builds wealth by paying down their mortgage as well as earning the majority of their home's appreciation, accessing homeownership with a first mortgage they can afford. The homeowner chooses when they sell or refinance, just like any other loan. The loan provider, whether they're an HFA program, an impact investor or foundation, or a private institutional investor, receives a share of the home's value at payoff as a deferred return.

This model already exists in programs like California's Dream for All, which saw overwhelming demand when launched. The difference is scale and sustainability: current programs rely on limited government funding, while properly structured shared appreciation loans can attract institutional capital to serve far more families.

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Ensuring Fair Models Prevail

There are many interest groups vying for the committee's attention on homeownership. Some represent home equity investor groups whose products are complicated options contracts, or demand home appreciation well in excess of the loan to value percent at payoff. The worst examples extract homeowner equity and leave the homeowner, often a vulnerable borrower without access to other credit, even worse off than before they even bought the house.

The groups which offer these types of products want to be exempted from compliance on certain lending rules and regulations, and they use the language of homeownership and access while reserving the lion's share of the benefits for themselves. It's important that rules are established to define what a fair and transparent shared appreciation loan really is:

• No interest charges or monthly payments are ever required during the loan term

• In lieu of interest, borrowers share appreciation on a 1:1 basis with no multipliers, leverage, or "adjustments" to the home's third party appraised value

• Home values determined by independent third-party appraisals which don't impose negative bias on minority neighorhoods

• Loans can transfer to heirs, preserving intergenerational wealth

• Full compliance with existing disclosure consumer protection standards

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Getting the Policy Right

We are fortunate that many legislators care about making homeownership affordable and enabling shared appreciation to make that happen. There are currently proposals working their way through committees and agencies which, if codified in the Senate's bill, ‍would allow these models to reach their potential while protecting consumers:

• Tax Treatment: Current tax rules create a mismatch in tax treatment between borrowers and lenders, causing a "phantom income" problem that discourages investment in shared appreciation loans. Targeted reform to correct this inconsistency in the tax code would go a long way to freeing up private capital for qualifying loan programs.

• Tax Exemption for Assistance Loans: Exempting shared appreciation loans made to low-moderate income and working class households from income tax would allow significantly more capital to flow into assistance programs without adding risk or cost to investors or borrowers.

• GSE Integration: Government-sponsored enterprises like Fannie Mae and Freddie Mac already have programs for "Community Seconds" and "Affordable Seconds" that could accommodate shared appreciation loans, but current rules limit participation by for-profit entities that could bring institutional scale.

• Investment Framework: Broader housing investment legislation could qualify shared appreciation loans as covered investments, creating sustainable pipelines of private capital without ongoing government subsidies.

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Beyond Incremental Change

‍This moment demands more than incremental fixes and senators are right to look at new ideas which could make homeownership affordable for the next generation. Adding this simple framework can unleash a new source of capital to finance new home purchases by people seeking to join the middle class. Our pilot programs at Homium prove this model works and can scale. What's needed now is the political will to embrace solutions that match the magnitude of our housing challenge with our hardest-working families in mind. American families deserve dignified action that matches the scale of the challenge they face. By incorporating proven shared appreciation models with proper safeguards, Congress can unlock doors to middle-class wealth creation and the American Dream.

Marcus Martin is CEO of Homium, Inc., which develops shared appreciation loan solutions for affordable homeownership. Homium partners with housing finance agencies and mission-driven organizations to create sustainable pathways to homeownership while preserving wealth creation for working families.

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