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HUD, FHFA: Freddie Mac Can Buy Group Home-Backed Loans

David Krechevsky
Sep 23, 2021
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Agencies issue rule clarification after a mortgage lender refused to lend to an individual renting to a group home

KEY TAKEAWAYS
  • HUD, FHFA say mortgage lender incorrectly believed Freddie Mac would not buy a mortgage secured by a group home.
  • Group homes are protected under the Fair Housing Act.

Freddie Mac will purchase mortgages secured by a property owned by an individual and rented to a group home for persons with disabilities.

The U.S. Department of Housing & Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) issued a joint statement Wednesday to make that clear. The clarification was needed after a HUD investigation of a mortgage lender who had refused to lend to a homeowner who was renting their property to a company operating a group home.

The lender’s refusal was based on the incorrect belief that Freddie Mac would not agree to buy the mortgage.

After HUD reported the misunderstanding to Freddie Mac and FHFA, Freddie Mac worked with both agencies and ultimately agreed to revise its policies and make the announcement to clarify that Freddie Mac has always been willing to buy mortgages secured by a group home.

“Clarifying these policies regarding the eligibility of group homes for the secondary mortgage market is an important step to fulfilling the Fair Housing Act’s promise of providing individuals with disabilities equal access to housing opportunities,” HUD Secretary Marcia L. Fudge said. “We appreciate our colleagues at FHFA, who share our goal of advancing fair housing and collaborated closely with us and Freddie Mac in helping to clarify these policies.”

FHFA Director Sandra L. Thompson was equally appreciative. “Group homes provide opportunities for persons with disabilities to live in the community among neighbors and access important opportunities for independent living,” Thompson said. “We are proud to stand with HUD to ensure that all people are afforded fair access to housing, recognizing that diverse experiences contribute to communities that thrive.”

Group homes, which are protected under the Fair Housing Act, are dwellings occupied by unrelated persons with disabilities and provide opportunities for ongoing interaction and socialization in a familial setting.

The agencies said this week’s assurance that Freddie Mac will purchase mortgages secured by group homes, where the property is owned by an individual, should encourage lenders to extend credit for such mortgages, providing more community-based living opportunities for persons with disabilities.

Group homes must still meet other eligibility requirements applicable to other transactions to be eligible for purchase by Freddie Mac, the agencies said.

HUD and FHFA recently signed a Memorandum of Understanding (MOU) to cooperate on fair housing and fair lending matters, and to strengthen oversight of Fannie Mae, Freddie Mac, and the primary mortgage market.

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