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FHFA Announces New Refinance Options for Low-Income Families on GSE-backed mortgages

The Federal Housing Finance Agency (FHFA) yesterday approved new refinance options for low-income borrowers, allowing Fannie Mae and Freddie Mac (government sponsored enterprises, or GSEs) to offer new loan products that will bring lower interest rates and lower monthly payments within reach for more lower-income households.

Jesse Van Tol, CEO of the National Community Reinvestment Coalition (NCRC), made the following comment:

“We are pleased to see FHFA opening the door to allow Fannie and Freddie to offer more refinance options for lower-income households and families of color. Too many of these families are missing the opportunity to reduce their interest rate and lower their monthly payments.  Fannie and Freddie should be leading the market here to ensure that more conventional products are affordable and accessible to these households.   

“We remain concerned that Fannie and Freddie failed to purchase enough refinance loans in 2020 to benefit low-income families and families of color, and the companies will barely meet or may fail to meet their affordable housing goals in this area. We also believe that the caps on the GSEs refinance business included in the January amendments to their Preferred Stock Purchase Agreements will limit the reach of these new products.”

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

Complete the form to download the full report: