Wall Street Journal: Fannie, Freddie Unlikely to Aid Mortgage Companies as Payments Dry Up, FHFA Chief Says

Wall Street Journal: April 7, 2020, Fannie, Freddie Unlikely to Aid Mortgage Companies as Payments Dry Up, FHFA Chief Says

A top U.S. housing-market regulator said he isn’t likely to heed mortgage companies’ calls to help ease the cash-flow crunch they are expecting when Americans who lose their jobs stop making mortgage payments.

The mortgage companies are on the hook to continue payments to investors even if homeowners fall behind. The companies are eventually reimbursed by Fannie and Freddie, but the process could take several months.

The industry has spent weeks lobbying Congress and the Trump administration to establish a lending facility to help finance the billions of dollars of payments they will be obligated to make to mortgage investors.

Fannie and Freddie were taken over by the U.S. government in 2008 after they came close to collapse during the financial crisis. They were given large infusions of cash to keep credit flowing to U.S. homeowners.

But Mr. Calabria said his push to return Fannie and Freddie to private ownership wasn’t a factor in deciding whether or not to help mortgage servicers.

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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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