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Building Housing and Credit Opportunity for All: A Civil Rights Response to “Reforming America’s Housing Finance Market: A Report to Congress”

Building Housing and Credit Opportunity for All: A Civil Rights Response to “Reforming America’s Housing Finance Market: A Report to Congress”
2011Fair Credit/Fair Housing

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Aspiring homeowners must have access to sustainable mortgage products for aspiring homeowners and Americans must “have choices in housing that makes sense for them and for their families.”

Regulatory oversight, consumer protection, access to information, transparency of markets, and accountability in the housing finance market must be strengthened. Many of these reforms are currently being worked out through the Dodd Frank Wall Street Reform and Consumer Protection Act.

A robust, well-resourced, well-staffed Consumer Financial Protection Bureau is critical to the accomplishment of these goals.

Options 1 and 2 discussed in the White Paper will not achieve these principles. Simply stated, the complete privatization of the housing finance market will fail too many prospective homeowners, renters, and communities. The ongoing subprime and foreclosure catastrophe is only the most recent iteration of private market failure. Therefore, we have focused our response to a discussion of Option 3. Option 3 is characterized by a largely privatized system of housing finance, with the government role limited to providing affordable borrowing options for lower-income consumers through the Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) and Veteran’s Administration (VA), and to providing catastrophic reinsurance.

We address several big picture concerns about the White Paper, including (1) the lack of a detailed plan for ensuring equitable and sustainable access to credit for borrowers; (2) the restriction of affordable housing and credit through overreliance on the FHA; (3) the likely increased costs of mortgages, including under the proposed Qualified Residential Mortgage (QRM) standards; (4) the potential for big banks to grow even bigger; and (5) the lack of a clear data collection process and enforcement structure to support fair lending compliance in the secondary mortgage market. These points are discussed below. We look forward to working with the Administration regarding how we can advance an inclusive,