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As we emerge from this housing crisis and look to the future, it’s critical that the path going forward works for all Americans. Recently, Secretary Shaun Donovan spoke to a group of racially and ethnically diverse real estate leaders to outline how HUD is working to preserve financing options for minority communities.
Historically, homeownership built wealth for generations of Americans, particularly many generations of minority households. HUD continues to believe in expanding homeownership to everyone who has the credit, income, and desire to own a home. As we reform our mortgage finance system, we can’t do it at the expense of families in communities of color who are still in search of their shot at the American Dream.
The proposals being considered to wind down Fannie Mae and Freddie Mac seek to restore private capital to the marketplace. These private sources of mortgage capital fled during the housing crisis and it is essential they return. Yet equally essential is that we preserve opportunities for minority borrowers to purchase their first home. Whatever path is ultimately adopted, part of HUD’s mission is to ensure that all borrowers, regardless of their race or ethnicity, have a fair shake at securing mortgage financing.
For example, there are suggestions to raise FHA’s minimum down payment requirement to ensure borrowers have more ‘skin in the game,” and to make private capital loans more competitive. Some are concerned about the potential that changes like this one could create a dual credit market in this country. But as we have this discussion, we must not lose sight of FHA’s core mission – to provide access to homeownership for first-time homebuyers and underserved markets.
HUD has worked with multicultural real estate associations, civil rights groups and other stakeholders toward the support of this mission. Efforts include foreclosure prevention workshops, more than 100 vital documents translated into 16 languages, millions of housing counseling sessions, and the strongest consumer protections in our history through the Dodd-Frank Wall Street Reform law. HUD proposes a historic level of funding to enforce fair housing laws this year, including serving 86,000 more of the most vulnerable families than we served in our last budget. We will soon kick off a series of housing discrimination workshops related to national origin nationwide. And HUD awarded $40.8 million in Fair Housing grants to 108 organizations to combat housing and lending discrimination, including mortgage rescue scams.
We all agree that the mortgage systems in place a few years ago which allowed, and in many instances targeted, first-time homebuyers for the purchase homes they ultimately couldn’t afford caused significant distress on families and communities nationwide. Going forward, it may indeed be necessary for future borrowers to save for a longer period of time before purchasing a home. These are the critical issues HUD is currently grappling with.
Yet HUD is committed to preserving the idea that any family with the ability to sustain a mortgage should share in our American dream. So let’s have a full discussion over the future of our mortgage finance system, and let’s make certain everyone has a chance to be heard.