National Urban League Leads Civil Rights Community in Laying Out Key Principles for Comprehensive Housing Finance Reform
NEW YORK (September 5, 2019) – The National Urban League has vowed to oppose any reform of Freddie Mac and Fannie Mae that does not preserve and strengthen access to stable, affordable, and equitable homeownership opportunities for all American families, the League has insisted in a letter to the National Economic Council Director.
"As organizations representing the majority of future homebuyers, including many communities of color and low-to-moderate income families that have traditionally been underserved in mortgage lending, we are committed to ensuring that any effort to restructure GSE operations builds on the critical affordable housing reforms adopted since the 2008 financial crisis that have allowed the GSEs to continue to fulfill their public mission. We view failure to maintain these goals in any forthcoming proposals as antithetical to meaningful and comprehensive housing finance reform, and stand ready to vehemently oppose any such efforts,” the League wrote in the letter, which was co-signed by other civil rights and economic justice organizations.
The homeownership rate for black families in 2019 is lower than it was in 1968 when the Fair Housing Act was signed into law by President Lyndon B. Johnson. Equally troubling is the widening gap in the homeownership rate between black and white households in America, with white households at 73.1% and black households at 40.6%. Any proposals that would reduce transparency or raise costs to homebuyers and renters just to generate returns for investors would only serve to exacerbate the nation's affordable housing crisis while eliminating the government oversight we need to assure fair play and practices.
“It is important to note that the challenges facing the housing market today reflect, in large part, a failure of the private market to make necessary investments to meet demand, making clear the need for federal government’s engagement in addressing this crisis. This isn’t a new phenomenon; history demonstrates that the private market, left solely to its own devices, has left major parts of the housing market underserved. Left unaddressed, the inequities of the affordable housing crisis will continue to have far reaching negative consequences that fall most heavily on working families in our society,’” the organizations wrote.
The letter points out that the housing crisis of 2008 was precipitated by a confluence of factors, notably the “perverse incentives” in the secondary mortgage market that drove unscrupulous brokers and loan officers to target otherwise creditworthy borrowers in communities of color with abusive and predatory loans. Reforms enacted after the financial crisis have significantly improved the safety and soundness of the GSEs by addressing the most dangerous pre-crisis lending practices while maintaining the essential tools that allow the system to build more equity. They have also supported our nation's longstanding goal to protect against lending discrimination and to ensure that the secondary market provides fair and equitable access to borrowers in all markets, including underserved areas.
The organizations outlined principles with which any meaningful and comprehensive housing finance reform must align, such as preserving and strengthening the system’s affordable housing mission, enhancing anti-discrimination protections and protecting taxpayers.
Senator Sherrod Brown, ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, applauded the organizations’ work to preserve and expand access to sustainable, affordable rental and homeownership opportunities throughout the housing market.
“Civil Rights organizations have laid out a strong plan for an equitable housing market that works for all families and communities,” Brown said. “Ignoring these important voices does a disservice to vulnerable communities and puts our housing market and taxpayers at risk.”
The full letter is available here.