NCRC applauds HUD, FHFA plan to strengthen enforcement of the Fair Housing Act, and inclusion of rental payment data for mortgage risk assessments at Fannie Mae

Today, the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) announced a plan to combine resources and strengthen their examination and enforcement of fair housing and fair lending laws. Through a memorandum of understanding, the agencies pledged to coordinate monitoring and investigations, improve data collection, and provide a structure for HUD and FHFA to regularly meet to coordinate fair housing and fair lending activities and share confidential information related to fair housing and fair lending complaints. FHFA also announced this week that Fannie Mae will include rental payment data in its risk assessment of mortgage applications. These actions follow an earlier White House executive order to advance racial equity and fair housing.

Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition, made the following statement:

“This is a bold and promising move to align and combine forces at agencies that should work together to end housing and lending discrimination and, importantly, to ensure their policies expand access to affordable homeownership for more borrowers and communities of color.   

“Discrimination in lending and housing is an enduring problem more than 50 years after passage of the Fair Housing Act. It’s long past time for more rigorous enforcement of fair lending and fair housing laws. Let’s hope the agencies that have now pledged to combine and strengthen their enforcement efforts will move swiftly.

“We will continue to monitor for evidence of discrimination, and file complaints for enforcement action by HUD, but I hope the agencies themselves will be much more aggressive, take action and do much more to drive discrimination out of our housing and housing finance system. The Biden administration pledged to advance racial equity in America and this is one step toward that goal. It’s a smart step, but the real test will be whether it makes a difference. The plan is solid. Now we need action.

“The inclusion of positive rental payment history at Fannie Mae can really help home buyers with little or no credit history – borrowers who tend to be disproportionately borrowers of color.  We are anxious to see how much this expands the credit box and increases the number of mortgages that Fannie backs to families of color.  

“This is an important and obvious shift to recognize the payment history of all renters, but it’s especially important to address racial disparities in credit ratings.  Rent is as expensive as a mortgage payment in many places and lenders should recognize that when they judge an individual’s ability to make payments on a home loan. Many people of color who have been excluded from home ownership have consistently made rent payments, and that is strong evidence that they can make a similar payment on a mortgage. That data should be used in the mortgage underwriting process, and more should be done to make sure it does. But this is a smart step to access and recognize this positive payment history.

“Thanks to HUD Secretary Marcia Fudge and FHFA Acting Director Sandra Thompson for these important shifts in approach and for setting a new course to expand access to home ownership and drive discrimination out of America’s housing market.”

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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

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