NCRC supports removing GSEs from conservatorship, but not like this

The Trump Administration yesterday outlined sweeping policy reforms to the nation’s housing finance system, including those related to the conservatorship of Fannie Mae and Freddie Mac (“the GSEs”). The U.S. Senate Banking Committee is set to convene a hearing next week to discuss the administration’s plan. The plans from the U.S. Treasury and HUD include over 115 recommended legislative and administrative reforms that outline a much more limited role for the federal government in the mortgage market. NCRC wrote a letter to the White House in July outlining a series of recommendations and concerns in advance of the release of these plans.

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

“While NCRC supports ending the conservatorship of Fannie Mae and Freddie Mac, the fundamental restructuring of the nation’s housing finance system envisioned across several federal agencies and programs represents a significant turnaround in the nation’s commitment to facilitating homeownership for low- and moderate-income (LMI) families. Homeownership has helped generations of Americans build wealth and climb the economic ladder. If fully implemented, these plans will have sweeping impacts on their ability to do so in the future, plain and simple.

“In the midst of an affordable housing crisis, the Trump administration is serving up plans that will make it worse. These plans propose the federal government backing far less mortgage credit risk, overall, and doing far less to make credit affordable to LMI and minority families. A great many Americans are able to buy a home because Fannie, Freddie and FHA stand behind it and because, like other insurance, they pool a lot of credit risk in ways that allow them to make mortgage credit more affordable for everyone. Consistent with their public mission, the GSEs have affordable housing goals and related obligations that ensure the market serves the underserved. The administration’s plans recommend upending much of the system today that has was already significantly reformed post-crisis.

“This isn’t reform; it’s a radical and risky scheme to enable hedge funds and other private financiers to capture a greater share of the housing finance market. It’s an attempt to give them an edge when competing with a government-backed system that is foundational to our economy and to the financial well being of millions of Americans. Private label securitizations drove a race to the bottom and some of the most irresponsible behavior in the lead-up to the financial crisis. 

“The administration wants to dismember a critical system. All while the country grapples with affordable housing supply needs, a homeownership rate at a near a historic low, and a widening gap between white and African American homeownership. 

“The GSEs affordable housing goals ensure that all credit-worthy people have access to quality mortgages. Their affordable housing obligations should be strengthened, not weakened, before ending the government’s conservatorship. And then they can be set free to do what they have done well for millions of people over decades: help working-class Americans move from being renters to homeowners so they can build equity for their families and futures.”

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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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