Leading civil rights, consumer advocacy, and housing policy groups have submitted a detailed and comprehensive comment letter to the Federal Housing Finance Agency (FHFA) in response to their request for comment on their Policy Statement on Fair Lending, which was issued on July 9, 2021.
The letter emphasizes that FHFA’s fair lending oversight of Fannie Mae and Freddie Mac must ensure access to mortgage credit on fair terms for all creditworthy borrowers, regardless of their race, gender, national origin, disability, familial status, or other protected characteristics.
Such non-discrimination is required under existing statutes and regulations and is essential to closing the homeownership and wealth gaps created by exclusionary federal housing policies and ongoing discrimination in the marketplace.
“Housing discrimination is an ongoing evil in our country, from continued neighborhood segregation and inequitable distribution of resources to appraisal bias and unequal homeownership opportunities,” said Nikitra Bailey, Senior Vice President of Public Policy at the National Fair Housing Alliance. “We applaud the bold leadership of Acting Director Sandra Thompson in issuing this Policy Statement on Fair Lending.”
“For over 50 years, there are important components of the fair housing and lending laws that have never been effectively enforced,” said Bailey. “Without full enforcement of the law, the racial wealth gap will remain stubbornly entrenched.”
“Moreover, the racial homeownership gap and, in particular, the Black/White gap, which is larger today than when race-based discrimination against homebuyers was legal, will continue to widen without action,” said Bailey.
“The Enterprises have fallen woefully short when it comes to providing credit access to underserved communities, especially since the Great Recession,” said Bailey. “Less than 5 percent of purchase loans backed by the Enterprises in recent years have gone to Black borrowers and less than 10 percent to Latinos.”
“In 2019, their activity only supported a combined 13.1 percent of refinances for Black and Latino families,” said Bailey. “The Enterprises continue to require the use of an outdated credit score model in lieu of adopting models that are more up-to-date and that may have less discriminatory outcomes.”
“FHFA still requires the Enterprises to use a matrix that results in borrowers of color being disproportionately charged higher pricing,” said Bailey. “Moreover, in the face of numerous accounts of appraisal bias, FHFA should take greater measures to reduce disparate outcomes.
“It is imperative that FHFA ensure Fannie Mae and Freddie Mac fully comply with fair housing and lending laws, including the Fair Housing Act’s Affirmatively Furthering Fair Housing provision,” said Bailey.
“Since the start of the pandemic, existing homeowners saw their home equity grow by nearly 25 percent and now have more than a trillion dollars in new wealth that they can tap to deal with COVID-19’s economic disruptions or health challenges,” said Bailey. “This growth continues to be supported by the Federal Reserve’s ongoing monthly purchases of $40 billion in agency-backed mortgage securities, and it is mostly benefitting wealthier homeowners”
“Many Black and Brown people lack the economic cushion of home equity as they have been forced to rent because they are locked out of homeownership opportunity, or they live in homes in communities that are undervalued.,” said Bailey. “Closing the racial homeownership and wealth gaps will provide more housing stability for families, strengthen communities, increase the U.S.’s GDP, and make our nation more productive. FHFA plays a critical role in making this happen.”
Click here to read the advocate comment letter.
The comment letter was issued jointly by the following organizations:
- Americans for Financial Reform Education Fund
- Center for Community Progress
- Consumer Action
- Integrated Community Solutions, Inc.
- Leadership Conference on Civil and Human Rights
- Long Island Housing Services, Inc.
- MICAH- Metropolitan Interfaith Council on Affordable
- Mountain State Justice
- National Association of Real Estate Brokers, Inc.
- National CAPACD
- National Coalition For The Homeless
- National Community Reinvestment Coalition (NCRC)
- National Consumer Law Center (on behalf of its low-income clients)
- National Fair Housing Alliance
- National Urban League