Our research and analysis of Fannie and Freddie reveals two key takeaways. First, Fannie and Freddie were neither outright responsible for the current subprime and foreclosure crisis, nor will their restructuring alone eradicate the problem without broader financial reform. Second, sustainable homeownership, especially for marginalized borrowers, is not just about turning on the spigot of credit. Sustainable homeownership is about many factors, including human capital and mobility. We need to address the bigger picture of sustainable homeownership, research the different paths that lead to sustained homeownership for marginalized groups, and then determine how Fannie and Freddie can best be restructured to be more responsive to targeted groups’ needs.
The literature to date is largely silent on how policy in general, and Fannie and Freddie in particular, could be restructured or managed differently to improve sustainable homeownership in neighborhoods of opportunity. This paper represents a first step in that direction. Section I begins with a brief discussion on the key players influencing Fannie and Freddie, past and present. Section II provides an abbreviated history of how the Enterprises roles and missions have changed through the years. Sections III and IV discuss the Enterprises obligations to affirmatively further fair housing, and the outcomes of the Enterprises activities with regards to low- and moderate-income borrowers, respectively. The paper concludes with a call to action for developing an affirmative fair housing agenda for Fannie and Freddie.