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Republican Housing Finance Plan Will Make Mortgages More Expensive, Especially for Minorities
When you have greedy, ignorant people in charge, you are going to get results like this.
Fannie Mae and Freddie Mac, which back half of the nation’s mortgages, have a mandate to ensure access to affordable loans and are responsible for the broad availability of the 30-year fixed-rate mortgage.
The enterprises have had an obligation to make roughly a quarter of the mortgages they back to low-income borrowers, under affordable housing goals introduced in the 1990s and carried forward after entering into government conservatorship during the 2008 housing crash.
But the Trump administration has proposed replacing the affordable housing goals... their plan would not increase homeownership among low-income families.
You see, Fannie and Freddie were taken over by the government in 2008 due to the largest housing collapse in history following Republican George W. Bush's failed policies. Mnuchin, Carson, and Trump want to end Fannie and Freddie however they have continued to play a critical role in sustaining the U.S. housing market, specifically for lower income Americans who need a mortgage to buy a home.
The administration’s plan would lead to a bifurcated market that would block first-time home buyers and low-income borrowers, many of whom are people of color, from lower-cost conventional loans. Borrowers who cannot afford 20 percent down payments and have less-than-pristine credit scores would be channeled into more-expensive loans insured by the Federal Housing Administration, whose insurance premiums last for the life of the loan.
"The magnitude of the impact is huge. This continues the system where wealthier and mostly white families have access to affordable mortgage credit while keeping creditworthy families of color from accessing the mortgages they deserve," said Nikitra Bailey, executive vice president of the Center for Responsible Lending.
As always with Republicans, it comes back to institutional racism.
The housing finance proposals.... come at a time when black homeownership hovers just above 40 percent — slightly lower than when the Fair Housing Act was passed in 1968. In comparison, white homeownership has increased in the past five decades to 73 percent.
Black families were the hardest hit of any Americans during the 2008 housing crisis. African Americans....were disproportionately targeted by predatory lenders during the housing boom and faced foreclosure at greater rates. After the recession, stricter credit restrictions made it harder for black families to qualify for mortgages.
“In the middle of a housing affordability crisis, when the gap between the black and white homeownership rates is as big as it was when housing discrimination was legal, the Trump administration wants to make it harder for creditworthy working families — especially families of color — to buy a home and build wealth,” Senator Elizabeth Warren said. “That’s shameful.”