Housing Secretary Shaun Donovan cheered draft legislation reforming the nation’s housing finance system, while acknowledging its shortcomings to a group of minority and housing advocates who have expressed concerns about the bill.
Senate Banking Committee chairman Tim Johnson, D-S.D. and Idaho Republican Sen. Michael Crapo, the committee’s ranking member, released a draft bill that would shut down the government-sponsored housing finance agencies of Fannie Mae and Freddie Mac and make other reforms to overhaul the housing financing in the U.S.
Donovan said the Obama administration has taken a number of steps to build sustainable home ownership such as expanding housing counseling and updating loan underwriting guidance.
But the financial crisis has made it harder to obtain credit, even for credit-worthy buyers, Donovan said at a National Council of La Raza-sponsored forum on the pending bill.
“This kind of work can only go so far. It can only reach so many families,” he said. “We cannot as a country have a dual mortgage market where (the Federal Housing Administration) is perhaps the only alternative for African Americans, Latinos, underserved communities _ and a system that serves everybody else. That can never be our goal,” said Donovan.
In its current form, the bill is raising concerns among civil rights groups and advocates for minority communities and fair housing.
Minority communities have been shut out of the mortgage market and "this bill simply does not do enough to address that," said Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights.
Janet Murguía, president of the National Council of La Raza, said the inequities are not only harmful to buyers but the entire housing sector.
“Despite changing demographics ... housing prices in many urban markets, with heavy minority populations are once again rising faster than income. Credit-worthy, low-income homebuyers cannot meet the overcorrection in today’s lending standards that have stemmed from the housing collapse,” she said.
Murguía said 1.3 million conventional mortgage loans were made in 2012. Latinos received 69,217 of the loans; African Americans received 29,405 and Asian Pacific American Islanders received 2,697.
Given the changing demographics of the country, any housing finance reform needs to recognize the characteristics of potential minority homebuyers, she said.
“If our housing market is to fully recover and thrive we must address our country’s broad and diverse population as we approach any changes to the housing finance reform system,” Murguía said.