By Charlene Crowell
In recent days, threats to the nation’s housing finance system have emerged. At the center of the controversy are two key issues: the obligation of mortgage lenders to ensure broad mortgage credit for all credit-worthy borrowers, and secondly, whether the nation will enforce its own laws banning unlawful discrimination.
On February 2, a leaked Senate proposal to overhaul the secondary mortgage market’s government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, would drop important access and affordability provisions that now govern the system. For example, the GSEs now are required to always serve all markets, as well as have in place affordable housing goals.
The proposal from U.S. Senators Bob Corker (TN) and Mark Warner (VA) was quickly and unanimously rejected by a broad coalition of civil rights and housing advocates that included: the Lawyers’ Committee for Civil Rights Under Law, Leadership Conference on Civil and Human Rights, NAACP, UnidosUS (formerly the National Council of La Raza), National Coalition for Asian Pacific American Community Development, National Fair Housing Alliance, National Community Reinvestment Coalition, National Urban League, and the Center for Responsible Lending (CRL).
“Ten years after the 2008 Housing Crisis, it is disheartening to turn the secondary mortgage market back over to Wall Street,” wrote the coalition. “Who can forget the 7.8 million completed home foreclosures and trillions of dollars in lost family wealth?”
“Many Americans still face immense housing challenges,” the leaders continued. “This ill-conceived approach places the risk on the backs of hardworking families who already rescued the big banks.”
The draft legislation also fell short for Massachusetts Senator Elizabeth Warren, a member of the Senate Committee on Banking, Housing, and Urban Affairs.
“I appreciate the dedication Senators Warner and Corker have shown to address this critical issue, but this draft isn’t even close to a solution that works for families who hope to buy homes, said Warren. “This bill would end up creating more problems than it solves.”
As early as 2008, Congress moved swiftly to enact the Housing and Economic Recovery Act. This bipartisan legislation provided strong regulatory oversight of the housing finance system and brought forward important affordable housing goals to ensure that hard-working families would be able to access mortgage loans. But with the housing market’s lengthy path to recovery, many have renewed calls for legislative reform of Fannie and Freddie. And just as the GSEs are now pledged to serve the entire market, some want to take away the system’s access and affordability requirements. That kind of change would harm Black families and communities, as well as other low-wealth families.
“The big-ticket items that we are looking for is the national duty-to-serve and affordable housing goals that have a regulator able to enforce those,” said Scott Astrada, CRL’s Director of Federal Advocacy.
Days later, on February 5, Mick Mulvaney, the White House hand-picked Acting Director for the Consumer Financial Protection Bureau (CFPB) announced he would move the Bureau’s staff for its Office of Fair Lending and Equal Opportunity (OFLEO) directly under his control.
The Dodd-Frank Act mandates that OFLEO perform “oversight and enforcement of federal laws to ensure the fair, equitable, and nondiscriminatory access to credit.”
By moving fair lending experts to the CFPB’s Director’s office, to focus instead on consumer education and coordination, there are real concerns that the OFLEO will be unable to perform its enforcement and oversight mission.
“This action could open up the floodgates on lending discrimination, which would damage the ability for people of color to build wealth,” noted Debbie Goldstein, CRL’s Executive Vice President. “One of the reasons the CFPB was established was because lending discrimination targeted people of color with predatory, high-cost loans that led to foreclosures.”
Mulvaney’s personnel shift is yet another consistent sign that the nation’s financial cop-on-the-beat is walking a new patrol.
Since assuming unlawful leadership at CFPB, Mulvaney has also dropped a lawsuit against predatory payday lenders, supported repeal of the Bureau’s auto lending guidance that took direct aim at pervasive and discriminatory practices. He has also made clear his plans to reopen rulemaking under the Home Mortgage Disclosure Act (HMDA).
HMDA is a federal law that requires most financial institutions to provide mortgage data to the public. It ensures that mortgage lenders are serving the credit needs of communities in which they are located. The annual HMDA report is the only comprehensive one that enables a comparison of private mortgage lending compared to that of government-backed mortgages like FHA, VA and USDA. This report is also unique for its tracking of mortgage lending and denials by race and ethnicity. This unique feature enables policymakers to discern discriminatory trends.
As 2018 commemorates the 50th anniversary of Dr. Martin Luther King, Jr.’s assassination, we must remain vigilant in the fight for access to safe and affordable mortgage loans – for many consumers, the single, largest investment of their lifetimes.
With hard-fought anti-discrimination laws now under assault, this generation has a duty to protect and defend all civil rights laws. Failure to do so would be to forget that the nation enacted the 1968 Fair Housing Act for this very purpose.
Charlene Crowell is the deputy communications director with the Center for Responsible Lending. She can be reached at [email protected].