When the Federal Housing Finance Agency (FHFA) last month directed Fannie Mae and Freddie Mac to come up with equitable housing finance plans by the end of the calendar year, it asked for feedback.
In the six weeks that followed, industry stakeholders and housing groups offered up a staggering number of ideas, ranging from eliminating loan-level price adjustments, incorporating cash-flow or childcare payment data into underwriting, or spurring a new secondary market for acquisition, development and construction loans.
The FHFA, as both regulator and conservator of the government sponsored enterprises, shapes the conforming mortgage market. The GSEs’ influence also extends “beyond the conforming mortgage market to which their acquisitions are limited,” the National Association of Home Builders wrote.
In their comments, numerous industry stakeholders, as well as affordable and fair housing groups, said that it’s time for some new ideas. Underwriting processes don’t adequately capture today’s borrowers, who may have multiple streams of income and little traditional credit. The racial homeownership gap has not budged in decades. Even if Congress were to grant $100 billion in down payment assistance advocates seek, it would only return Black homeownership to its pre-2008 levels, the Center for Responsible Lending wrote.
Enter the FHFA. While not a cabinet-level agency, it is effectively one due to a Supreme Court decision allowing the president to fire the director at-will. Acting FHFA Director Sandra Thompson, appointed by Biden, has not been coy about addressing racial equity, and has already undone many of the previous administration’s efforts to reduce the footprint of the GSEs.
Evidently, housing advocates see those initial steps as a good start, and industry stakeholders, expectant of more change, want to log their viewpoints. What could be next at the FHFA?
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