In a historic move, the Federal Housing Finance Agency (FHFA) on Wednesday released finalized equity plans for Fannie Mae and Freddie Mac, each with the goal of assisting consumers in disadvantaged communities to purchase homes.
According to the FHFA, the plans for the government-sponsored enterprises (GSEs) are intended to “address barriers experienced by renters, aspiring homeowners, and current homeowners before, during, and after getting a mortgage.” They include actions to address financial education, access, and costs. Each company's plan will span between 2022 and 2024,
Freddie Mac’s plan includes a series of ambitious actions to advance equity in both the single-family and multifamily housing markets in underserved communities.
The two GSEs' plans are separate, but simultaneously seek to address the systemic barriers associated with homeownership and housing eligibility. Both GSEs are rolling out a new credit reporting system that factors rent payments into creditworthiness scores to remove these barriers.
“Freddie Mac’s Equitable Housing Finance Plan lays out meaningful actions designed to help make home possible and sustainable for more renters, buyers and homeowners, particularly in traditionally underserved communities,” said Michael DeVito, Freddie Mac CEO. “Our multi-pronged approach reinforces Freddie Mac’s commitment to working across the housing industry to support opportunities for more Black and Latino families to access the American Dream. We are pleased to report that this work is already underway.”
Freddie Mac’s three-year plan aims to address the homeownership gap, bolster investment into former redlined areas, finance affordable housing, increase renter opportunities and eliminate disparities.
This is not Freddie Mac’s first attempt at opportunity enrichment: earlier this year, the company hired a diversity and inclusion officer.
“Our Equitable Housing Finance Plan is the result of countless hours of research and analysis from across our company,” said Michael Hutchins, Freddie Mac president. “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.”
Fannie Mae’s plan also focuses on empowering Black renters and homeowners in three key areas: homeownership preparation, buying or renting, and moving into stable environments.
"Our Equitable Housing Finance Plan lays the groundwork to meaningfully address housing barriers faced by Black renters and homeowners," said David C. Benson, Fannie Mae's president and interim CEO. "We want to knock down these barriers, one by one, doing our part to undo the legacy of discriminatory practices that perpetuate racial housing gaps in America. The plan is a solid step toward this goal and a milestone in our work to make housing stronger, fairer, and more sustainable for the people and communities we serve."
The National Association of Realtors said it supports the equity plans.
“NAR applauds the FHFA’s long-term plan to bring historically underserved groups into homeownership through innovative equity solutions," NAR president Leslie Rouda Smith said in a news release. "The homeownership gap is a result of more than a century of problematic practices and will take years of refinement, application, and tenacity to resolve."
Smith added; “Homeownership is a centerpiece of the American dream, and the Enterprises play an important role in achieving that dream.”
