Guest post via Robert Bowes
The Biden regime racist housing plan is far worse than just favoring particular ethnicities. It adds a major economic attack against responsible homeowners who will now have to pay for the premiums and fees of the credit and default risk permitted for favored races.
In 2021, the Biden regime rescinded the successful Trump Administration economic and housing policies that resulted in unprecedented gains among minorities in employment, income and homeownership.
Citing Marxist buzzwords Diversity, Equity, Inclusion, Sustainability and disparity in ownership rates, the Biden Regime ignored Congress, and directed HUD and FHFA (regulator of Fannie Mae and Freddie Mac) to implement its Affirmatively Furthering Fair Housing (“AFFH”) scheme cheered by Senators Sherrod Brown, Elizabeth Warren, Patty Murray and Catherine Cortez-Masto.
The Trump team found AFFH to be a discriminatory program that would be fundamentally unfair.
Seizing power in 2021, just one pesky problem remained for the Biden Regime: The Fair Housing Act of 1968 that prohibits discrimination in the sale, rental, and financing of housing based on race, religion, national origin, sex, handicap and family status. Not much for abiding by law, the Biden crew replicated the tricks that had worked in the Obama years and decided to cook up a legal opinion “to take meaningful steps to improving fair housing outcomes.”
“HUD Secretary Marcia Fudge and FHFA Director Sandra Thompson took the lead and had HUD General Counsel Damon Smith draft guidance December 2021 that ignores The Fair Housing Act if you call the program a “Special Purpose Credit Program”
“HUD, Office of General Counsel Guidance on the Fair Housing Act’s Treatment of Certain Special Purpose Credit Programs That Are Designed and Implemented in Compliance with the Equal Credit Opportunity Act and Regulation B, December 6, 2021 Available at U.S. Department of Housing and Urban Development website.
No bogus legal opinion from HUD Counsel can re-write the plain text of the Fair Housing Act.
HUD tried this game on other matters during the Obama years. Picking winners among races has been smacked down by the U.S. Supreme Court.
On August 31, 2022, Bank of America announced a special mortgage program only for Blacks and Hispanics. The program packages a set of give aways and waivers including zero down payment, zero closing cost, no credit score, alternative appraisal, no mortgage insurance premiums and low or no title insurance. Asians, Whites, Native Americans and others need not apply.
The Bank of America version of the Biden program is one example of the AFFH program forced upon market participants including lenders, Fannie Mae, Freddie Mac, and Multi-Family Rental programs. Take one guess who will be paying for these policies. Homeowners and renters who are not in the favored races will pay for and subsidize the discounts, waivers, and giveaways to the favored races.
Whites and Asians will pay more for mortgage insurance, loan level pricing adjustments, and title insurance.
Whites and Asians will have minimum credit scores and capped ratios for Debt to Income and Loan to Value while Blacks and Hispanics will not.
In these ways, the Special Purpose Credit Programs, regardless of what HUD Counsel claims, will also violate the Equal Credit Opportunity Act and the GSE Charters. The Biden regime has also ignored State laws.
Free from any media or Congressional oversight, the Biden Marxists also targeted down payments, credit scores, appraisals, fees, mortgage insurance, title insurance, and debt to income ratios because they claim those are all racist too. Oh and so is climate change they say.
Never mind the hundreds of billions of taxpayer money thrown at these same wrongly perceived inequities with the only meaningful changes in minority homeownership rates those gains from the Trump years because of successful immigration, trade, tax, and housing policies and the only harm from the high defaults from Congressional malpractice and the failures of the Obama years.
The Biden Marxists are setting us up for a repeat of the policy failures and industry excesses in 2004-2011 that hammered minority homeowners. This time woke and racist schemes will have a larger adverse impact on minorities. It is exactly the wrong time to be easing underwriting standards as home prices peaked earlier this year and are expected by Moody’s to see a 20% drop in the next two years absent some sanity in fiscal and economic policy – unless your goal is to maximize foreclosures and make Blackrock rich again.
And it is patently racist to have disparate housing finance standards among races with the out of favor races paying the freight. If the Biden regime really wanted to help largely minority communities, they instead should reverse the catastrophic energy policies, end the massive illegal border invasion, get serious about the tragic drug death epidemic, and fight homelessness and crime.
Those with little home equity and those with permitted higher Debt to Income ratios and higher loan to value ratios were hardest hit by foreclosures and equity evaporation when home prices collapsed.
Homeownership rates (regionally blended) for Blacks
Home Ownership Rates (regionally blended) for All
From Freddie Mac Equitable Housing Finance Plan:
The Equitable Housing Finance Plan outlines a range of specific actions Fannie Mae will take over the next three years to knock down barriers faced by Black homeowners and renters throughout their housing journey.
The Plan includes efforts to enhance homebuyer education, pilot programs to improve credit scores and to explore security deposit alternatives as well as the creation of Special Purpose Credit Programs (SPCPs) to serve specific areas of need and opportunity, such as down payment assistance.
Our Plan is just one piece of a much larger and evolving strategy for Fannie Mae to address inequalities in the housing finance system and extend the wealth-building benefits of homeownership.
At Freddie Mac, diversity, equity and inclusion (DEI) is more than a business imperative – it’s a mindset. As leaders in DEI, we are committed to promoting equity, igniting innovation through diverse perspectives, and instilling a culture where people feel comfortable to be their authentic selves in the workplace. Most importantly, we’re committed to encouraging equitable and sustainable homeownership and rental opportunities for traditionally underserved Black and Latino communities.
More from Freddie Mac:
Today, we extend our commitment …to focus specifically on furthering equity in housing
Homeownership Gap – As of the first quarter of 2022, the Black homeownership rate (44.7 percent) and Latino rate (49.1 percent) were below the non-Latino white rate (74 percent). 8 These homeownership gaps are significant and underscore the need for us all to do better.
The 2019 Black median household income was $43,862 and the Latino median income was $55,658, as compared to white median income of $71,644
Climate Risk Inequity – Black and Latino households are disproportionately subject to climate and environmental risks and hazards .
Continued reliance on FICO® scores across industries disfavors Black and Latino households whose credit scores are often lower.
Freddie Mac will address the homeownership gap for Black and Latino borrowers through responsible and impactful initiatives that expand access to credit, implemented primarily through Special Purpose Credit Programs.
Marcia L. Fudge, HUD Secretary
Analysse Escobar, HUD White House Liaison
Damon Smith was sworn in as HUD General Counsel on August 12, 2021.