Washington, D.C. — Last week, the Federal Housing Finance Agency Director Mel Watt announced steps that the agency will take to try and ensure that qualified borrowers in all parts of the country have a shot at sustainable homeownership. A new analysis released today by the Center for American Progress examines Federal Housing Finance Agency’s, or FHFA’s, strategic plan, measuring the plan’s ability to save the mortgage market and expand access to sustainable homeownership to all qualified buyers.
The fallout from the housing crisis disproportionately affects first-time homebuyers and borrowers of color, as tight credit continues to keep many qualified prospective homeowners on the sidelines. However, unless lenders find a way to extend credit to qualified borrowers currently shut out of the housing market, we aren’t likely to see a full housing recovery anytime soon.
“The mortgage market is not working for large swaths of qualified borrowers, and that’s a problem for the health of our housing market,” said Julia Gordon, Director of Housing Finance and Policy at the Center for American Progress. ”FHFA’s leadership on this issue is a welcome development.”
In his announcement, Watt outlined that his agency will address systemic challenges that lenders say are keeping them from making the loans that Fannie Mae and Freddie Mac want to buy by working with the industry to address this uncertainty so that banks have a better understanding of the conditions under which Fannie Mae or Freddie Mac could require a repurchase. The FHFA strategic plan also calls for the agency to complete two rulemakings that can help expand access to credit.
Now that the Johnson-Crapo housing finance reform bill appears to have stalled in the Senate, responsibility rests squarely on FHFA to foster a healthier mortgage market. Although last week’s announcement were a good start, the agency has much work ahead to ensure that all qualified buyers in all part of the country have access to sustainable homeownership.