From Out Of The Memory Hole
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Here is an informative June 24, 2002 article from Realty Times about Bush's plan to increase minority homeownership by 5.5 million households. This trade journal emphasized six years ago that the core of Bush's plan was raising the minority/low income quotas for Fannie Mae and Freddie Mac mortgage activity by a total of $440 billion. This is the kind of thing that gets lost in time because there's no partisan point to remembering it. Republican flacks want to blame Fannie Mae, but here's the Republican President leaning on Fannie Mae to increase its minority quota by $260 billion.

(By the way, do you ever get the feeling that historians will someday look back on the Bush-Obama years as a single era?)

When President Bush announced his Minority Homeownership plans last week in Atlanta, his top priorities were new federal programs: a $2.4 billion tax credit to facilitate home purchases by lower-income first-time buyers, and a $200 million national downpayment grant fund. But none of the new federal programs—if passed by Congress—will come even close to achieving the 5.5 million-household increase in minority homeownership the President set as his target.

Instead, most of the heavy lifting was assigned to two mortgage market players that have sometimes come under fire from Bush administration officials and Congressional Republicans: Fannie Mae and Freddie Mac.

Fannie's and Freddie's commitments are the bedrock core of the President's ambitious plans—but didn't get the headlines. Fannie Mae agreed to increase its already substantial lending efforts to minority families by targeting another $260 billion of mortgage purchases to them during the next nine years. Freddie Mac agreed to buy an additional $180 billion in minority-household home loans during the same period.

Both corporations also announced specific plans to increase home purchases by African-Americans, Hispanics and immigrants. Fannie Mae, for example, pledged to create an entirely new mortgage product ”designed to meet the unique needs of New Americans.” The new loan concept would include underwriting changes that remove some of the common barriers immigrants encounter here—denial of credit because of inadequate or short credit histories, reliance on communal funds for downpayment money, and language and cultural issues. Fannie also promised to establish 100 ”outreach partnerships” with predominantly-minority churches, mosques and ”other faith-based institutions” to fund mortgages for their congregations.

Besides its $180 billion mortgage purchase commitment, Freddie Mac gave President Bush a promise to implement a 25-point program aimed at increasing minority homeownership. Some of the points were cutting-edge. For example, as part of an effort to remove the fear of financial loss from first-time minority home buyers, Freddie committed itself to ”explor(e) the viability of equity assurance products to protect home values in economically distressed areas.”

Pressed for details on ”equity assurance” by RealtyTimes, Freddie Mac vice president Craig S. Nickerson said the idea is still at an embryonic stage, but might involve limited guarantees or insurance coverage to protect buyers from the possibility of loss of their initial equity stakes should property values in their neighborhoods decline.

Some ”urban neighborhoods get passed over (by potential buyers) because of fears of where the market might go,” said Nickerson. Freddie's effort would be to examine ”whether we can create structures to minimize (buyers') downside risks”—whether through some form of new equity-preservation insurance, public-private ”rainy day” funds, or federal assistance targeted to backstop values in predominantly minority neighborhoods.

Also on Freddie's 25-point to-do list: ”cross-border credit” efforts that would allow immigrants' credit files from their home countries to be acceptable to U.S. lenders; ”automating non-traditional credit,” where minority borrowers have no or minimal existing bank or credit reference but do have rental and utility payment histories; and a variety of new ”downpayment assistance” plans to put cash in the hands of first-time buyers.

Published: June 24, 2002

Also, I'm starting to realize that Bush's "faith-based initiatives" were not irrelevant to the mortgage meltdown. I don't have anything close to a full grasp of the story yet, but there's definitely a story there.

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