Big plans for equitable housing

June 17, 2022
Posted in Programs
June 17, 2022 derekevansteam

Mortgage backing giants Freddie Mac and Fannie Mae have big plans for bolstering access to sustainable and equitable housing in 2022–2024, titled the Equitable Housing Finance Plans. The plans were announced Wednesday, June 8th by the Federal Housing Finance Agency (FHFA), which oversees Freddie Mac and Fannie Mae and backs more than $7.5 trillion in mortgages.

“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,” said FHFA Acting Director Sandra L. Thompson. “We look forward to working with the Enterprises, lenders, and other housing industry participants to further develop the ideas described in these plans.”

The plans will be updated annually and informed by input from renters, aspiring homeowners, and current homeowners, particularly in the Black and Latino communities. Currently, the plans address the following:

  • Consumer education initiatives for renters and homeowners.
  • Credit reporting to help tenants build credit profiles and enable better access to financial services.
  • Expanding counseling services to support housing stability.
  • Deploying technology to improve access to sustainable credit and fair home appraisals.
  • Special Purpose Credit Programs to address barriers to sustainable homeownership.

Both Freddie Mac and Fannie Mae’s plans acknowledge the historical context leading to the home ownership gap between white families and communities of color. Due to a history of systemic disadvantages, marginalized groups, particularly Black and Latinos, face difficulty in accessing quality and affordable housing that enables generational wealth accumulation. Years and years of discriminatory and even predatory housing policies aimed at these groups have led to this gap in homeownership that Freddie Mac and Fannie Mae seek to help close with these new plans.

Chart demonstrating factors leading to the housing gap

Freddie Mac’s Equitable Housing Plan

Freddie Mac’s statement on their new plan says, “We are focused on improving access to credit, housing choice, economic mobility, financial empowerment and assistance from trusted housing professionals. We will undertake actions that tackle the housing supply challenge, expand credit responsibly and promote sustainable housing opportunities in a safe and sound manner.” 

Plan Overview

  • Address the Homeownership Gap. Freddie Mac plans to close the gap for Black and Latino borrowers through responsible and impactful initiatives that expand access to credit through Special Purpose Credit Programs. 
  • Address Systemic Underinvestment within Formerly Redlined Areas. Redlining still disproportionately affects communities of color, leading to decreased home values in neighborhoods where minority and disenfranchised groups are the majority. Freddie Mac aims to strengthen support for underserved renters and multifamily borrowers in these communities, as well as expand financing for developers working on affordable housing projects. Finally, they seek to help Community Development Financial Institutions funds (CDFI), minority depository institutions (MDI) and smaller banks with improved access to capital. 
  • Finance the Creation and Preservation of Affordable Housing. High rent prices and home values stifle opportunity for social and economic mobility. Freddie Mac wants to leverage private, global investments to create and preserve affordable housing. 
  • Increase Opportunities for Renters. People tend to get stuck in the rental market, able to afford monthly rent payments but unable to qualify for a mortgage that costs less than their rent, leading to a lot of very valid frustration. Freddie Mac will increase opportunities for renters at multifamily properties and from within renters’ communities through financial empowerment, wealth building opportunities, tenant protections, and resident services for renters within Freddie Mac rental communities and ultimately the multifamily industry as a whole.
  • Eliminate Disparities Among Members of Black and Latino Communities. Freddie Mac is committing to rebuilding trust in the housing ecosystem by creating opportunities and expanding access to capital for multifamily developers. This aims to increase wealth-building opportunities and stimulate investment and growth into these communities. Freddie Mac will also continue to set standards in both renter support and renter protection.

Fannie Mae’s Equitable Housing Plan

Fannie Mae was directed by the Federal Housing Finance Agency (FHFA) to come up with a three-year plan to advance equity in housing finance. This plan, called the Enterprise Equitable Housing Finance Plan will include:

  • Insight into the barriers to sustainable housing opportunity.
  • Specific objectives and goals to address these barriers.
  • A plan of meaningful actions to address these barriers over the next three-year period.
  • A summary of consultations conducted by the Enterprise with underrepresented and affected groups and communities in preparing its plans. 

The main goals of this plan are to 1) reduce the racial or ethnic homeownership gap, 2) reduce underinvestment or undervaluation in

chart demonstrating breakdown of homeownership and race

 formerly redlined areas that remain racially or ethnically concentrated areas of poverty or otherwise underserved or undervalued. As you can see from the breakdown in this chart, there is a significant gap in homeownership based on race and income that becomes more stark on the lower end of household income. 

A great step in the right direction towards more equitable housing!

Overall, these plans are really exciting and signify a huge leap in the movement to more sustainable affordable housing for all. If you’re looking to buy a home and need some assistance immediately, we have a variety of great programs to help get you lower monthly payments, down payment assistance, credit support, and more. Just reach out to us and we’d love to walk you through it!