The National Association of Real Estate Brokers (NAREB) strongly supports the Federal Housing Finance Agency’s (FHFA) proposed rule strengthening and codifying the equitable housing finance plans submitted by mortgage giants Fannie Mae and Freddie Mac and the agency’s other measures addressing racial disparities in homeownership. These plans are one of the federal government’s most effective methods of increasing homeownership for families of color and expanding their opportunities for affordable rental housing.
Under the proposed rule, Fannie’s and Freddie’s fair lending and fair housing functions and equitable housing finance plans become statutory requirements. Further, their operations will receive clearer and more appropriate oversight, compliance, and enforcement.
These measures are necessary to address decades of racially biased public policies and private practices aimed at preventing Blacks from becoming homeowners. From rampant redlining to exclusion from Federal Housing Administration loans and benefits of the GI Bill, the federal government is responsible for the racial wealth gap in America.
In studies, Federal Reserve Banks acknowledge that racial wealth inequality is massive.
In 2019, the median wealth for White households was $188,200, compared to $24,100 for Black and $36,100 for Hispanic households. Black homeownership is the most important driver of Black wealth. But Black homeownership dropped nearly 20% since 2008, and despite the contributions of the 1968 Fair Housing Act, over 50 years later, the racial homeownership gap has widened. In 1960, 38% of Blacks owned homes, while White homeownership was 65%, a 27-point gap. Recent data shows the gap approaching 30%.
FHFA has determined it’s time for the government to get serious about redressing the pain and suffering that the racist policies caused. This year’s plans include more powerful provisions than the previous plans created by the Government Sponsored Enterprises:
- Enhanced focus on ensuring existing borrowers receive fair loss mitigation support and outcomes through monitoring and developing strategies to close gaps
- Financial capabilities coaching to build credit and savings
- Support for locally owned modular construction facilities in communities of color
- Increased utilization of Special Purpose Credit Programs to support homeownership attainment and housing sustainability in underserved communities
All these measures and more are needed. FHFA must be applauded for leading a process committed to change, to fairness, and to equality. The agency has earned the support of NAREB and other organizations that truly care about equitable communities. We stand with FHFA and a transformation allowing all Americans to enjoy the American Dream of homeownership.