The Center for Responsible Lending (CRL)1 appreciates the opportunity to comment on the Affordable Housing Goals Advance Notice of Proposed Rulemaking. In exchange for government support, Fannie Mae and Freddie Mac (GSEs) have an explicit public interest mission. This mission is foundational and part of their charters – the GSEs’ very reason for existing.2 The mission includes promoting access to mortgage credit to underserved borrowers, including Black and brown families, serving a countercyclical role in the mortgage market, and FHFA’s duty to reasonably support the safety and soundness of the GSEs and U.S. housing finance system. The affordable housing goals are a key metric to ensure that the GSEs are striving to meet their mission obligations. The housing goals also push the GSEs to develop and market products that support the primary market to better serve underserved borrowers.

The ongoing health pandemic continues its devastating impact on families hardest hit by COVID-19. Black, brown, and other low-wealth families are overwhelmingly burdened by the health and economic calamity borne by the crisis. Further, the nation is experiencing a reckoning of racial injustice that is rooted in federally sanctioned discriminatory housing policies and broader societal discrimination that excluded Black families and other people of color from entering homeownership on parity with whites. These exclusionary practices are a significant contributor to existing racial homeownership and wealth gaps. They are also a factor in why Black and brown communities have higher incidences of COVID-19 as they live in communities that are more environmentally toxic and are disproportionately employed in the service sector that has been most negatively impacted by the pandemic. Many Black and brown workers also did not have the ability to shelter in place and work from home.

Far too many Black and brown families lack the economic cushion that prior federal investments in homeownership have provided to many white families. It is critically urgent for a reversal of these trends as the pandemic has made it clear that having a home is a health priority. The GSEs have woefully unfulfilled their statutory obligations to ensure adequate activity in Black, Latino, and other communities of color since the Great Recession. FHFA must take swift and bold action now in creating affordable housing goals that can help return the GSEs to former periods when their activity was much stronger. A key goal of the affordable housing goals must be to help to build toward more racial equity in homeownership. 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.”

CRL provides the following recommendations:

  1. FHFA should conduct a mortgage market study for 2022-2023 goal setting and provide greater transparency into the impact of the COVID-19 crisis in the goal-affected markets.
  2. FHFA should significantly increase the GSEs’ affordable housing goals, particularly the low income purchase goal.
  3. FHFA and the GSEs should take robust measures to mitigate foreclosures. The GSEs should make rate term refinancing more available to lower wealth borrowers and borrowers of color, including implementing a streamline refinance program. In addition, the GSEs should support affordable loan modifications for homeowners who have been hit hard by the COVID-19 pandemic and recession, including by using the market interest rate for flex mods below 80% LTV and providing further guidance to servicers to help inform borrowers of forbearance options and ensure that borrowers can access relief.

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