By Anna Bahney, CNN Business

Mortgage giants Freddie Mac and Fannie Mae announced Wednesday a series of actions that aim to make it easier to buy a home and close the racial homeownership gap, in which 72% of White Americans are homeowners while only 42% of Black Americans own a home.

The sweeping changes include down payment assistance, lower mortgage insurance premiums and a credit reporting system that factors in rent payment history. The enterprises are also expanding counseling services to support housing stability and plan to introduce technology that would improve access to credit and make home appraisals more equitable.

The plans were developed in response to a request last fall from the Federal Housing Finance Agency, which regulates Fannie and Freddie, to address discrimination in access to homeownership.

The plans represent Fannie and Freddie’s commitment to “sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for generations,” said Sandra L. Thompson, acting director of FHFA.

The need

Throughout much of this country’s history, Black people were denied full access to housing and homeownership, wrote Jeffery Hayward, Fannie Mae’s executive vice president and chief administrative officer, in a blog post. He goes on to describe the practice of legalized redlining, which effectively prevented swaths of the Black community during the post-World War II era from getting loans and buying homes.

“We at Fannie Mae believe this racist legacy is one of the root causes of economic disparity in our country,” he wrote. “To ignore this — to pretend that our history does not affect our country’s present and future — is not only wrong, it’s also economically destructive.”

Fannie and Freddie’s plans, he said, aim to better prepare prospective homebuyers and renters, increase diversity within the housing industry, eliminate barriers to first-time homeownership and improve access to affordable rentals.

Fannie and Freddie do not issue loans, rather they purchase loans from lenders to hold, sell or repackage as investments. Their role in the mortgage market helps lenders issue more loans and keep lending stable and affordable.

Two plans, similar goals

Fannie Mae’s plan offers several pilot programs aimed at removing unnecessary obstacles to first-time homeownership and access to affordable, quality rental housing.

Fannie’s actions will be focused on three main areas: credit building and financial education, removing barriers Black people face when buying or renting a home, and keeping homeowners and renters in their homes.

“We want to knock down these barriers, one by …read more

Source:: The Mercury News

      

Fannie, Freddie unveil plans to tackle racial homeownership gap

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