FHFA Announces Equitable Housing Finance Plans for GSEs
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac last week released three-year plans to address equality in housing finance.
Creation of the Equitable Housing Finance Plans was directed by the Federal Housing Finance Agency (FHFA) in September 2021. FHFA said the plans are designed to complement the initiatives outlined in the agency’s four-year strategic plan.
“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 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."
Plan activities will be updated annually and include:
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 (SPCPs) to address barriers to sustainable homeownership
Fannie’s plan includes 17 specific actions that encompass more education, expanded mortgage eligibility and lowering closing costs. These activities are divided into four sections of the home-buying process: preparation, renting and buying, moving in and maintaining, and selling.
“We can knock down barriers standing in the way of greater equity in housing. Under the auspices of this plan, Fannie Mae is prepared to do more. And we will,” said David C. Benson, Fannie President and interim CEO.
Freddie’s plan is divided into three sections: Special Purpose Credit Programs, targeted outreach and interventions, and broad interventions to address systemic barriers to equitable housing.
“Our Equitable Housing Finance Plan is the result of countless hours of research and analysis from across our company,” said Michael Hutchins, President of Freddie Mac. “We plan to partner with lenders, investors and other stakeholders to make meaningful progress towards an equitable housing finance system that provides access to wealth, opportunity, and a sense of home to people and communities across the United States.”
Both plans provide a year-by-year list of targets and outcomes. FHFA has created a pilot transparency framework that requires the enterprises to publish and maintain a list of pilots and test-and-learn activities on their websites.
“A key determinant of whether the enterprises will be able to meet their responsibilities under FHFA’s Equitable Housing Finance Framework will be the extent to which they invest capital and personnel in their plans,” said David M. Dworkin, President and CEO of the National Housing Conference. “Both enterprises have lost significant intellectual capital and experience in this space in recent years. Sustainably increasing homeownership in underserved markets will require concerted effort and long-term investment.”
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
