“‘We think that this [the FSS] 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 [that ultimately allows them to purchase their first home]. Participants typically stay in the program for five years and can save between $6,000 to $8,000.”