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Housing Regulator Must Take Bold Steps to Make Homeownership Opportunity Attainable for More Americans, Says Coalition

Wednesday, October 14, 2020

Especially Given National Reckoning on Racial Injustice and the Economic Crisis, FHFA Must Do More to Fulfill Affordable Housing Mission

Washington, D.C. – As low-income homeowners struggle with bills and as millions of mortgage-ready people of color are excluded from sustainable homeownership, several leading civil rights, consumer, and housing groups yesterday submitted an official comment letter that calls for the Federal Housing Finance Agency (FHFA) to take action now to expand access to responsible home loans, including by setting more robust affordable housing goals. The affordable housing mission is required in the congressional charter that established Fannie Mae and Freddie Mac, Government-Sponsored Enterprises (GSEs) overseen by the FHFA. Fannie and Freddie provide financial backing for about half of all mortgages in America.

The comment letter was submitted by the Center for Responsible Lending, Consumer Federation of America, The Leadership Conference on Civil and Human Rights, NAACP, National Association of Real Estate Brokers, National Community Stabilization Trust, National Fair Housing Alliance, National Housing Conference, and National Urban League.

In their comment letter, linked here, the groups state:

We contend that the GSEs should focus explicitly on addressing racial homeownership gaps; marginal improvements are insufficient given the GSEs’ charters that cite the GSEs’ responsibility to underserved communities and borrowers of color, including to ‘minority census tracts.’ FHFA should significantly increase the GSEs’ affordable housing goals, particularly the low-income purchase goal. Furthermore, FHFA and the GSEs should take measures that make rate term refinancing more available to lower wealth borrowers and borrowers of color. In addition to bolstering access to responsible mortgage credit, the GSEs should also take all possible actions to mitigate foreclosures and to support affordable loan modifications for homeowners who have been hit hard by the COVID-19 pandemic and recession. FHFA and the GSEs should do more to provide guidance to servicers to help inform borrowers of forbearance options and ensure that borrowers can access relief...

At a time of national reckoning on systemic racism rooted in discrimination and exclusion, the GSEs must take concrete actions to alleviate racial homeownership and wealth gaps. The GSEs should be leading – not lagging – the market in providing access to affordable homeownership.

Additional Background

The affordable housing goals, as required by the Housing and Economic Recovery Act of 2008, are a key metric to ensure that the GSEs are striving to meet their mission obligations.

FHFA proposes to set benchmark levels for the single-family and multifamily goals only for calendar year 2021 and to keep the levels the same as those for the 2018-2020 period. FHFA states it will subsequently conduct a new round of notice and comment rulemaking to establish benchmark levels for 2022 and beyond.

The comment letter also supplies the following points:

Given that FHFA did not conduct its typical mortgage market study in setting the goals for this rulemaking, we urge FHFA to provide greater transparency into the goal-affected markets by conducting additional analysis and making more data publicly available. This is particularly important now, during an unprecedented health pandemic that created an economic crisis...

We reiterate our prior call for FHFA to increase the low-income purchase goal to 27%. But at a minimum, as FHFA plans for future rulemakings, the agency should increase the low-income purchase goal to at least 27% in 2022 and 2023. Additionally, as described in detail in our comment on the 2018-2020 goals, the GSEs should be required to meet both the benchmark and the market metrics. Also, it should be noted that the GSEs’ own policies obstruct them from increasing the goals and these policies should be modified. Lastly, FHFA should monitor the low-income areas home purchase subgoal to ensure policy objectives are met and that the subgoal does not facilitate displacement of lower-income families...

The GSEs are obligated to serve the entire market and ensure that underserved borrowers, including Black and Brown homebuyers, first time homebuyers, and lower wealth families, have access to responsible forms of mortgage credit. Homeownership is a critical component of family wealth, particularly for low-income families and people of color, and has been shown to explain much of the observed racial wealth gap. There continues to be a stark disparity in the homeownership rate between whites and people of color, with the white homeownership rate at 73% while the rate is 44% and 48% for Black and Latino borrowers respectively.


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