FHFA, GSEs release equitable housing finance plans

The plans are designed to complement FHFA strategic plan initiatives that promote safety and soundness and foster housing finance markets that provide equitable access to affordable and sustainable housing.

“The Equitable Housing Finance Plans represent a commitment to sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for generations,” FHFA Acting Director Sandra Thompson said. “We look forward to working with the Enterprises, lenders, and other housing industry participants to further develop the ideas described in these plans.”

Freddie Mac’s plan seeks to utilize both direct and systematic approaches to address the affordable housing supply shortage and establish new standards in opportunities for renters. The plan highlights five areas Freddie Mac will address through this new equitable housing finance plan. These five areas are:

• Address the homeownership gap. This will be done by expanding access to credit through special purpose credit programs.
• Address systemic underinvestment within formerly redlined areas. By expanding financing for affordable housing development and helping community development financial institution funds, minority depository institutions, and smaller banks with improved access to capital, Freddie Mac hopes to strengthen communities that have suffered from the vestiges of legalized redlining.
• Finance the creation and preservation of affordable housing. Freddie Mac plans to leverage private, global investments to create and preserve vital, affordable housing. These efforts will consider the need to preserve, not displace, the communities intended to benefit from new investments.
• Increase opportunities for renters. Freddie Mac will increase opportunities for renters at multifamily properties and from within renters’ communities. Efforts will focus on mainstreaming financial empowerment, wealth building opportunities, tenant protections and resident services for renters within Freddie Mac financed rental communities and ultimately the multifamily industry at large.
• Eliminate disparities among member of Black and Latino communities. Freddie Mac’s plan includes creating opportunities and access to capital for emerging diverse multifamily developers, in order to increase wealth-building opportunities and enhance the ability for people to invest in and grow their communities.

Fannie Mae’s equitable housing finance plan includes a 17-part action plan to increase Black homeownership. This action plan includes the development of pilot programs, increasing ease and accessibility to the different elements of a home sale transaction (i.e., appraisal, title insurance, closing costs, etc.), and research plans to ensure up-to-date and accurate information relating to housing access and affordability.

The new equitable housing finance plans from the GSEs have received extensive support from industry groups.

“ALTA and its members support expanding affordable and sustainable homeownership opportunities for more Americans across the country,” American Land Title Association (ALTA) CEO Diane Tomb said. “The title and settlement services industry remains committed to strengthening communities, while protecting property rights for all consumers. We look forward to continued engagement with the FHFA, as well as Fannie Mae and Freddie Mac, in a collaborative, transparent and informed process to help provide equitable access to housing opportunities in underserved communities. We appreciate the GSEs’ intent to work with the industry closely throughout the continued development and implementation of its respective plans.”

The National Association of Realtors (NAR) President Leslie Rouda Smith said:

“NAR applauds the FHFA’s long-term plan to bring historically underserved groups into homeownership through innovative equity solutions. The homeownership gap is a result of more than a century of problematic practices and will take years of refinement, application, and tenacity to resolve. NAR looks forward to these plans playing a key role in closing the homeownership gap and commends Director Thompson for taking this bold action. Homeownership is a centerpiece of the American dream, and the Enterprises play an important role in achieving that dream.”

“MBA commends FHFA and the GSEs’ proactive efforts to develop targeted, actionable plans to close the nation’s long-standing racial homeownership gap and to make affordable rental housing available on a more equitable basis,” Mortgage Bankers Association President and CEO Robert Broeksmit said. “The GSEs’ plans – focused on a typical consumer’s housing lifecycle – should allow for increased opportunities for minority households to secure affordable rental housing, prepare for homeownership and obtain access to safe and affordable mortgage credit. While the plans are targeted to Black and Hispanic borrowers, all low- and moderate-income borrowers and communities should benefit.”