Senate Banking Republicans have forwarded correspondence to the Federal Housing Finance Agency (FHFA) Director Sandra Thompson regarding race-based housing subsidies concerns.
The Equitable Housing Finance Plans were developed by Fannie Mae and Freddie Mac at the FHFA’s direction. The recently-released proposals would use Special Purpose Credit Programs to issue race-based subsidies to Black, Latino, or American Indian/Native American homebuyers in the form of down payment assistance, lower rates, and reimbursements for appraisals.
“The administration’s proposal seems intent on repeating the mistakes of the recent past,” the legislators wrote. “It is worth recalling the GSEs’ (Fannie Mae and Freddie Mac) central role in the 2008 financial crisis. Against this backdrop, we urge FHFA to reconsider these affirmative action housing subsidy plans for the following reasons: First, the plans are manifestly unfair and should be unconstitutional. Discrimination on the basis of skin color is simply wrong. That remains true even when intended to benefit minorities.”
The plans risk setting up another generation of minority borrowers for failure, citing Black and other minority homeowners lost significant wealth via lax underwriting by the GSEs.
“The plans raise significant legal concerns,” the legislators concluded. “By statute, FHFA’s mandate as conservator is to conserve and preserve each GSE’s assets and restore it to a sound and solvent condition. No law authorizes FHFA to use a GSE’s assets to pursue affirmative action in housing.”